A

TRAINING REPORT

ON

ICICI DIRECT

SUBMITTED TO:MAHARISHI DAYANAND UNIVERSITY, ROHTAK

in the partial fulfillment of the requirements for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION(INDUSTRY INTEGRATED)

(II Semester)

Submitted byNIKITA KANAUJIARegn. No.-1073901750

1

GURUGRAM BUSINESS SCHOOLELC CODE: 151012055Plot no 467, Near H B Town, Old Paradi

Naka,Bhandara Road, Nagpur, Maharashtra

2

DECLARATION

I, hereby declare that the Training Report conducted at

ICICI DIRECT, NAGPUR

Under the guidance of

Mr. Ajay Patole

Submitted in Partial fulfillment of the requirements for the

Degree of

MASTER OF BUSINESS ADMINISTRATION

(Industry Integrated)

TO

MAHARISHI DAYANAND UNIVERSITY, ROHTAK

Is my original work and the same has not been submitted for the

award of any other Degree/diploma/fellowship or other similar titles

or prizes.

Date: NIKITA KANAUJIA

Place: Regn. No.: 107390175

3

CERTIFICATE

This is to certify that Ms. Nikita Kanaujia a student of the

Maharishi Dayanand University Rohtak, has prepared her Training

Report at ICICI DIRECT under my guidance. She has fulfilled all

requirements leading to award of the degree of MBA (Industry

Integrated). This report is the record of bonafide training undertaken

by her and no part of it has been submitted to any other University or

Educational Institution for award of any other

degree/diploma/fellowship or similar titles or prizes.

I wish her all success in life.

(Signature)

Mr. Ajay Patole

<Faculty & Coordinator>

<B.E , MBA>

4

CERTIFICATE

This is to certify that Ms. Nikita Kanaujia who is pursuing MBA

(Industry Integrated) course of Maharishi Dayananad University,

Rohatak, at Gurugram Business School, Nagpur has undergone

management training.

Her performance during the training was found to be GOOD.

We wish her success for her future Endeavour’s.

MR. SUMAN BHATTACHARYA

5

ACKNOWLEGDEMENT

Apart from the efforts of me, the success of any project depends largely on the

encouragement and guidelines of many others. I take this opportunity to express my

gratitude to the people who have been instrumental in the successful completion of this

project.

First off all, I would like to extend my gratitude towards MAHARISHI DAYANAND

UNIVERSITY, Rohatak for giving me an opportunity to take up this project as

preparing this project has definitely broadened my horizons.

Next, I would like to extend my thanks to GURUGRAM BUSINESS SCHOOL,

NAGPUR for providing me with the necessary ware withal to successfully complete this

project

.I would also like to thank my college director Mr. Sumit Walia, my very helpful project

guide Prof. Ajay Patole for his continuous support and guidance

.I would also like to express my gratitude towards Mr. Suman Bhattacharya at ICICI

Direct. D, for helping me whenever the need arise in spite of their busy schedules and

for encouraging me and providing me with the necessary information and material, the

blend of which has made it a Knowledgeable project

Last but not the least; my heartfelt love for my friends, whose constant support and

blessings helped me throughout this project.

6

Contents:

SR.NO PARTICULARS PAGE NO

1 Cover Page 1

2 Declaration 2

3 Certificate of the College 3

4 Certificate of the Organization 4

5 Acknowledgement 5

1 INTRODUCTION 8-24

1.1 General Introduction about the sector 8

1.2 Industry Profile 14-24

1.3 a. Origin and development of the industry

14

b. Growth and present status of the industry

22

C. Future of the Industry 24

2 Profile of ICICI Direct 26-46

2.1 Origin of the ICICI Direct 26

2.2 Growth and development of ICICI Direct 32

2.3 Present status of ICICI Direct 35

2.4 Functional Departments of ICICI Direct 36

2.5 Structure of ICICI Direct 41

7

2.6 Product and Service profile of ICICI Direct

42

2.7 Market Profile of ICICI Direct 46

3 DISCUSSIONS ON TRAINING 48-50

3.1 Key Learnings 48

3.2 SWOT Analysis 49

Achievements and Awards

8

INTRODUCTION

FINANCIAL SECTOR

Financial Sector of India is intrinsically strong, operationally sundry and exhibits

competence and flexibility besides being sensitive to India’s economic aims of

developing a market oriented, industrious and viable economy. An established financial

sector assists greater standards of endowments and endorses expansion in the economy

with its intensity and exposure. The fiscal sector in India entails banks, financial

organization, markets and services. The sector is classified as organized and

conventional that is also recognized as unofficial finance market. Fiscal transactions in

an organized industry are executed by a number of financial organizations which are

commercial in nature and offer monetary services to the society. Further classification

includes banking and non-banking enterprises, often recognized as activities that are

client specific.

The chief controller of the finance in India is the Reserve Bank of India (RBI) and is

regarded as the supreme organization in the fiscal structure. Other significant fiscal

organizations are business banks, domestic rural banks, cooperative banks and

development banks. Non-banking fiscal organizations entail credit and charter firms and

other organizations like Unit Trust of India, Provident Funds, Life Insurance

Corporation, mutual funds, GIC, etc.

Financial Sector of India – Chief Characteristics :-

The financial sector of India allows Most Favored Nation (MFN) reputation to all

international banks and firms offering financial facilities.

The sector has relaxed previous MFN tax exemption on banking activities.

Allows 12 new financial bank division authorizations every year to

international banks, that is higher as compared to the existing 8 every year.

9

Raises the 10% limit of reinsurance by insurance firms in India.

Permits 51% foreign endowment in fiscal advisory, issuing, hiring, business

enterprise capital, business banking and non-banking credit firms.

Financial services refer to services provided by the finance industry. The finance

industry encompasses a broad range of organizations that deal with the management

of money. Among these organizations are credit unions, banks, credit

card companies, insurance companies, consumer finance companies, stock

brokerages, investment funds and some government sponsored enterprises. As of

2004, the financial services industry represented 20% of the market capitalization of

the S&P 500 in the United States.

Banks:-

A "commercial bank" is what is commonly referred to as simply a "bank". The term

"commercial" is used to distinguish it from an "investment bank," a type of financial

services entity which, instead of lending money directly to a business, helps businesses

raise money from other firms in the form of bonds (debt) or stock (equity).

Banking services

• The primary operations of banks include:

• Keeping money safe while also allowing withdrawals when needed

• Issuance of checkbooks so that bills can be paid and other kinds of payments can

be delivered by post

• Provide personal loans, commercial loans, and mortgage loans (typically loans to

purchase a home, property or business)

• Issuance of credit cards and processing of credit card transactions and billing

• Issuance of debit cards for use as a substitute for checks

• Allow financial transactions at branches or by using Automatic Teller

Machines (ATMs)

• Provide wire transfers of funds and Electronic fund transfers between banks

10

• Facilitation of standing orders and direct debits, so payments for bills can be

made automatically

• Provide overdraft agreements for the temporary advancement of the Bank's own

money to meet monthly spending commitments of a customer in their current

account.

• Provide internet banking system to facilitate the customers to view and operate

their respective accounts through internet.

• Provide Charge card advances of the Bank's own money for customers wishing

to settle credit advances monthly.

• Provide a check guaranteed by the Bank itself and prepaid by the customer, such

as a cashier's check or certified check.

Other types of bank services:-

• Private banking - Private banks provide banking services exclusively to high

net worth individuals. Many financial services firms require a person or

family to have a certain minimum net worth to qualify for private banking

services.[3] Private banks often provide more personal services, such as

wealth management and tax planning, than normal retail banks.

• Capital market bank - bank that underwrite debt and equity, assist company

deals (advisory services, underwriting and advisory fees), and restructure

debt into structured finance products.

• Bank cards - include both credit cards and debit cards. Bank Of America is

the largest issuer of bank cards.

• Credit card machine services and networks - Companies which provide credit

card machine and payment networks call themselves "merchant card

providers".

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Foreign exchange services

Foreign exchange services are provided by many banks around the world. Foreign

exchange services include:

Currency exchange - where clients can purchase and sell foreign currency

banknotes.

Foreign Currency Banking - banking transactions are done in foreign currency.

Wire transfer - where clients can send funds to international banks abroad.

Investment services

Asset management - the term usually given to describe companies which

run collective investment funds. Also refers to services provided by others, generally

registered with the Securities and Exchange Commission as Registered Investment

Advisors.

Hedge fund management - Hedge funds often employ the services of "prime

brokerage" divisions at major investment banks to execute their trades.

Custody services - the safe-keeping and processing of the world's securities

trades and servicing the associated portfolios. Assets under custody in the world are

approximately $100 trillion.[5]

Insurance:-

Insurance brokerage - Insurance brokers shop for insurance (generally corporate

property and casualty insurance) on behalf of customers. Recently a number of websites

have been created to give consumers basic price comparisons for services such as

insurance, causing controversy within the industry.[6]

Insurance underwriting - Personal lines insurance underwriters actually

underwrite insurance for individuals, a service still offered primarily through

agents, insurance brokers, and stock brokers. Underwriters may also offer similar

commercial lines of coverage for businesses. Activities include insurance

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and annuities, life insurance, retirement insurance, health insurance, and property &

casualty insurance.

Reinsurance - Reinsurance is insurance sold to insurers themselves, to protect

them from catastrophic losses.

Other financial services :-

Intermediation or advisory services - These services involve stock brokers

(private client services) and discount brokers. Stock brokers assist investors in

buying or selling shares. Primarily internet-based companies are often referred to as

discount brokerages, although many now have branch offices to assist clients. These

brokerages primarily target individual investors. Full service and private client firms

primarily assist and execute trades for clients with large amounts of capital to invest,

such as large companies, wealthy individuals, and investment management funds.

Private equity - Private equity funds are typically closed-end funds, which

usually take controlling equity stakes in businesses that are either private, or taken

private once acquired. Private equity funds often use leveraged buyouts (LBOs) to

acquire the firms in which they invest. The most successful private equity funds can

generate returns significantly higher than provided by the equity markets

Venture capital is a type of private equity capital typically provided by

professional, outside investors to new, high-potential-growth companies in the

interest of taking the company to an IPO or trade sale of the business.

Angel investment - An angel investor or angel (known as a business angel or

informal investor in Europe), is an affluent individual who provides capital for a

business start-up, usually in exchange for convertible debt or ownership equity. A

small but increasing number of angel investors organize themselves into angel

groups or angel networks to share research and pool their investment capital.

Conglomerates - A financial services conglomerate is a financial services firm

that is active in more than one sector of the financial services market e.g. life

insurance, general insurance, health insurance, asset management, retail banking,

wholesale banking, investment banking, etc. A key rationale for the existence of

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such businesses is the existence of diversification benefits that are present when

different types of businesses are aggregated i.e. bad things don't always happen at

the same time. As a consequence, economic capital for a conglomerate is usually

substantially less than economic capital is for the sum of its parts.

Debt resolution is a consumer service that assists individuals that have too much

debt to pay off as requested, but do not want to file bankruptcy and wish to payoff

their debts owed. This debt can be accrued in various ways including but not limited

to personal loans, credit cards or in some cases merchant accounts. There are many

services/companies that can assist with this. These can include debt

consolidation, debt settlement and refinancing.

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INDUSTRYPROFILE:

I

ORIGIN AND DEVELOPMENT OF THE INDUSTRY :-

One of the major economic developments of this decade has been the recent takeoff

of India, with growth rates averaging in excess of 8% for the last four years, a stock

In 2006, total equity issuance reached $19.2bn in India, up 22 per cent.

market that has risen over three-fold in as many years with a rising inflow of foreign

investment Merger and acquisition volume was a record $27.8bn, up 38 per cent, driven

by a 371 percent increase in outbound acquisitions exceeding for the first time inbound

deal volumes. Debt issuance reached an all-time high of $13.7bn, up 28 per cent from a

year earlier. Indian companies were also among the world's most active issuers of

depositary receipts in the first half of 2006, accounting for one in three new issues

globally, according to the Bank of New York.

The questions and challenges that India faces in the first decade of the

new millennium are therefore fundamentally different from those that it has wrestled

with for decades after independence. Liberalization and globalization have breathed

new life into the foreign exchange markets while simultaneously besetting them with

new challenges. Commodity trading, particularly trade in commodity futures, have

practically started from scratch to attain scale and attention. The banking industry

has moved from an era of rigid controls and government interference to a more

market-governed system. New private banks have made their presence felt in a very

strong way and several foreign banks have entered the country. Over the years,

microfinance has emerged as an important element of the Indian financial system

increasing its outreach and providing much-needed financial services to millions of

poor Indian households.

Indian Economy and Financial Markets since liberalization

The Domestic Economy

15

There is hardly a facet of economic life in India that has not been radically altered

since the launch of economic reforms in the early 90’s. The twin forces of globalization

According to the official definition, the unorganized sector is comprised of: 1) all the

enterprises except units registered under Section 2m(i) and 2m(ii) of the Factories Act,

1948, and Bidi and Cigar Workers(condition of employment) Act, 1966; and 2) all

enterprises except those run by the government (central, state and local bodies) or Public

Sector Enterprises and the deregulation have breathed a new life to private business and

the long-protected industries in India are now faced with both the challenge of foreign

competition as well as the opportunities of world markets. The growth rate has continued

the higher trajectory started in 1980 and the GDP has nearly doubled in constant prices

The end of the “License Raj” has removed major obstacles from the path of new

investment and capacity creation. The effect is clearly visible in ratio of capital

formation in the private sector to that in the public sector for a decade preceding

liberalization and for the period following it.

The unmistakable ascent in the ratio following liberalization points to the unshackled

private sector’s march towards attaining the “commanding heights” of the economy. In

terms of price stability, the average rate of inflation since liberalization has stayed close

to the preceding half decade except in the last few years when inflation has declined to

significantly lower levels. Perhaps the biggest structural change in India’s macro-

economy, apart from the rise in the growth rate, is the steep decline in the interest rates.

interest rates have fallen to almost half in the period following the reforms, bringing

down the corporate cost of capital significantly and increasing the competitiveness of

Indian companies in the global marketplace.

The Financial Sector

Despite the history of India’s stock exchanges (4 at independence to 23 today)

and the large number of listed firms (over 10,000), the size and role in terms of

allocating

resources of the markets are dominated by those of the banking sector, similar to many

other emerging economies. The equity markets were not important as a source of

funding

16

for the non-state sector until as recently as the early 1980s. The ratio of India’s market

capitalization to GDP rose from about 3.5% in the early 1980’s to over 59 % in 2005,

which ranks 40th among 106 countries while the size of the (private) corporate

bond market is small. On the other hand, total bank deposits (of over

$527 billion dollars) are equivalent to 52 % of GDP in 2005, and constitute three-

quarters

of the country’s total financial assets. The efficiency of the banking sector, measured by

the concentration and overhead costs, is above the world average.

In a series of seminal papers beginning in the late 1990s, La Porta, Lopez de

Silanes, Shleifer and Vishny (LLSV) have empirically demonstrated the effects that the

investor protection embedded in the legal system of a country has on the development

and nature of financial systems in the country. Broadly speaking, they posit the

common-law countries provide better investor protection than civil law countries leading

to “better” financial and systemic outcomes for the former including a greater fraction of

external finance, better developed financial markets and more dispersed shareholding in

these countries as compared to the civil law countries. Consequently, the LLSV averages

of financial system indicators across different legal system groups serve as a benchmark

against which an individual country’s financial system can be compared.

India’s banking sector is much smaller than the (value-weighted) average of LLSV

sample countries, even though its efficiency (overhead cost as fraction of total banking

assets) compares favorably to most countries. The size of India’s stock market, measured

by the total market capitalization as fraction of GDP, is actually slightly larger than that

of the banking sector, although this figure is still below the LLSV average. However, in

terms of the “floating supply” of the market, or the tradable fraction of the total market

capitalization, India’s stock market is only half of its banking sector.

“Structure activity” and “Structure size” measure whether a financial system is

dominated by the market or banks. India’s activity (size) figure is below (above) even

the average of English origin countries, suggesting that India has a market-dominated

system; but this is mainly due to the small amount of bank private credit (relative to

GDP) rather than the size of the stock market. In terms of relative efficiency (“Structure

efficiency”) of the market vs. banks, India’s banks are much more efficient than the

17

market (due to the low overhead cost), and this dominance of banks over market is

stronger in India than for the average level of LLSV countries. Finally, in terms of the

development of the financial system, including both banks and markets, we find that

India’s overall financial market size (“Finance activity” and “Finance size”) is much

smaller than the LLSV-sample average level. Overall, based on the above evidence, we

can conclude that both India’s stock market and banking sector are small relative to the

size of its economy, and the financial system is dominated by an efficient (low overhead

cost) but significantly under-utilized (in terms of lending to non-state sectors) banking

sector.

However, the situation has changed considerably in recent years: Since the middle

of 2003 through to the third quarter of 2007, Indian stock prices have appreciated

rapidly.

In fact, as shown in Figure 1, the rise of the Indian equity market in this period allowed

investors to earn a higher return (“buy and hold return”) from investing in the Bombay

Stock Exchange, or BSE’s SENSEX Index than from investing in the S&P 500 Index

and

other indices in the U.K., and Japan during the period. Only China did better. Many

credit the continuing reforms and more or less steady growth as well as increasing

foreign

direct and portfolio investment in the country for this explosion in share values.4

it compares the two major Indian exchanges, the Bombay Stock Exchange

(BSE), and the much more recent, National Stock Exchange, (NSE)) vis-à-vis other

major exchanges in the world. At the end of 2005, BSE was the sixteenth largest stock

market in the world in terms of market capitalization, while NSE ranked eighteenth.

It also shows that trading in the BSE is one of the most concentrated among the

largest exchanges in the world, with the top 5% of companies (in terms of market

capitalization) accounting for over 72% of all trades, but the (share) turnover velocity of

BSE (35.4% for the year) is much lower than that of exchanges with similar

concentration ratios.5 Figure 1.9 shows that Indian markets outperformed most major

global markets handsomely during 1992-2006 period.

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In 2004-05, non-government Indian companies raised $2.7 billion from the market

through the issuance of common stocks, and $378 million by selling bonds/debentures

(no preferred shares). Despite the size of new issues, India’s financial markets, relative

to the size of its economy and population, are much smaller than those in many other

countries. It presents a comparison of external markets (stock and bonds) in India and

different country groups (by legal origin) using measures from LLSV (1997a). The

horizontal axis measures overall investor protection (protection provided by the law,

rule of law, and government corruption) in each country, while the vertical axis

measures the (relative) size and efficiency of that country’s external markets.6 Most

countries with the English common-law origin (French civil-law origin) lie in the top-

right region (bottom-left region) of the graph. India is located in the south-eastern region

of the graph with relatively strong legal protection (in particular, protection provided by

law) but relatively small financial markets.

The Financial Sector

Along with the rest of the economy and perhaps even more than the rest, financial

markets in India have witnessed a fundamental transformation in the years since

liberalization. The going has not been smooth all along but the overall effects have been

largely positive.

Over the decades, India’s banking sector has grown steadily in size (in terms of

total deposits) at an average annual growth rate of 18%. There are about 100 commercial

banks in operation with 30 of them state owned, 30 private sector banks and the rest 40

foreign banks. Still dominated by state-owned banks (they account for over 80% of

deposits and assets), the years since liberalization have seen the emergence of new

private sector banks as well as the entry of several new foreign banks. This has resulted

in a much lower concentration ratio in India than in other emerging economies

(Demirgüç-Kunt and Levine 2001). Competition has clearly increased with the

Herfindahl index (a measure of concentration) for advances and assets dropping by over

28% and about 20% respectively between 1991-1992 and 2000-2001 (Koeva 2003).

Within a decade of its formation, a private bank, the ICICI Bank has become the second

19

largest in India.

Compared to most Asian countries the Indian banking system has done better in

managing its NPL problem. The “healthy” status of the Indian banking system is in part

due to its high standards in selecting borrowers (in fact, many firms complained about

the

stringent standards and lack of sufficient funding), though there is some concern about

“ever-greening” of loans to avoid being categorized as NPLs. In terms of profitability,

Indian banks have also performed well compared to the banking sector in other Asian

economies, as the returns to bank assets and equity.

Private banks are today increasingly displacing nationalized banks from their

positions of pre-eminence. Though the nationalized State Bank of India (SBI) remains

the

largest bank in the country by far, new private banks like ICICI Bank, UTI Bank

(recently renamed Axis Bank) and HDFC Bank have emerged as important players in

the

retail banking sector. Though spawned by government-backed financial institutions in

each case, they are profit-driven professional enterprises.

The proportion of non-performing assets (NPAs) in the loan portfolios of the

banks is one of the best indicators of the health of the banking sector, which, in turn, is

central to the economic health of the nation the distribution of NPAs

in the different segments of the Indian banking sector for the last few years. Clearly the

foreign banks have the healthiest portfolios and the nationalized banks the worst, but the

downward trend across the board is indeed a positive feature. Also, while there is still

room for improvement, the overall ratios are far from alarming particularly when

compared to some other Asian countries.

While the banking sector has undergone several changes, equity markets have

experienced tumultuous times as well. There is no doubt that the post-reforms era has

witnessed considerably higher average stock market returns in general as compared to

before.

.Since the beginning of the reforms, “equity culture” has spread across the country

20

to an extent more than ever before. This trend is clearly visible which shows the ratio of

BSE market capitalization to the GDP. Although GDP itself has risen faster than before,

the long-term growth in equity markets has been significantly higher.

The rise in stock prices (and the associated drop in cost of equity) has been

accompanied by a boom in the amounts raised through new issues – both stocks as well

as debentures – beginning with the reforms and continuing at a high level for over half a

decade

The ride has not been smooth all along though. At least two major bubbles have

rocked the Indian stock markets since liberalization. The first, coinciding with the initial

reforms, raised questions about the reliability of the equity market institutions. A joint

parliamentary committee investigation and major media attention notwithstanding

another crisis hit the bourses in 1998 and yet again in 2001. Clearly several institutional

problems have played an important role in these recurring crises and they are being fixed

in a reactive rather than pro-active manner. Appropriate monitoring of the bourses

remains a thorny issue and foul play, a feature that is far from absent even in developed

countries, is, unfortunately, still common in India. Consequently, every steep rise in

stock

values today instills foreboding in some minds about a possible reversal. Nevertheless,

institutions have doubtless improved and become more transparent over the period. The

time-honored “badla” system of rolling settlements is now gone and derivatives have

firmly established themselves on the Indian scene.

Indeed the introduction and rapid growth of equity derivatives have been one of

the defining changes in the Indian financial sector since liberalization. Notwithstanding

considerable resistance from traditional brokers in Indian exchanges, futures and options

trading began in India at the turn of the centuries. The rapid growth in

the turnover in the NSE derivatives market broken down into different instrument-types.

Evidently futures – both on individual stocks as well as index futures – have been more

popular than options, but the overall growth in less than half a decade has been

phenomenal indeed. Tradable interest rate futures have made their appearance as well

but

their trading volume has been negligible and sporadic. Nevertheless, the fixed-income

21

derivatives section has witnessed considerable growth as well with Interest Rate Swaps

and Forward Rate Agreements being frequently used in inter-bank transactions as well

as

for hedging of corporate risks. Similarly currency swaps, forward contracts and currency

options are being increasingly used by Indian companies to hedge currency risk.

Finally the market for corporate control has seen a surge of activity in India in recent

years. The evolution of mergers and acquisitions involving Foreign private equity has

been a major player in this area with inflows of over $2.2 billion in 2006, the largest in

any Asian country.

Hence the Financial sector development in developing

countries and emerging markets is part of the private sector development strategy to

stimulate economic growth and reduce poverty .A solid and well-functioning financial

sector is a powerful engine behind economic growth. It generates local savings, which in

turn lead to productive investments in local business. Furthermore, effective banks can

channel international streams of private remittances. The financial sector therefore

provides the rudiments for income-growth and job creation.

Development of financial sector in India:-

The Financial Sector Development Project aims to foster greater market orientation,

allocative efficiency, technical competence and competition in India's financial system

and contribute to meeting the long-term financing needs of its investors as a means of

stimulating economic growth. It will assist the Government of India to sustain financial

liberalization, institutional development of public sector commercial banks and

integration into the global capital markets. It will facilitate expansion of private equity

ownership in public sector commercial banks and development of term foreign currency

lending. The project comprises the following three components:

1) capital restructuring to support selected nationalized commercial banks which commit

to plans for increasing private equity through public offerings and modernization

initiatives, this support will be through subordinated loans from the government to

22

strengthen their capital base as required by capital adequacy norms.

2) The project will support a modernization and institutional development program

fostering action in strategic planning, automation and computerization of payment and

accounting functions, human resource development, organizational improvements, and

enhanced capability in the areas of asset-liability credit and treasury management.

3) The backstop facility component will assist eligible Indian banks and financial

institutions in India to source private funds to meet rapidly expanding demand for foreign

currency term loans. It will assist in meeting such demand from small- and medium-sized

companies with foreign exchange earnings and exporters whose direct access to offshore

markets is hampered by high issue cost, the facility will provide a medium-term liquidity

assurance at a market-related price to financial institutions by offering them the option to

borrow funds from the facility at a market-related price representing a market perception

of systemic disruption.

GROWTH AND PRESENT STATUS OF THE INDUSTRY :-

The growth of financial sector in India at present is nearly 8.5% per year. The rise in

the growth rate suggests the growth of the economy. The financial policies and the

monetary policies are able to sustain a stable growth rate.

The reforms pertaining to the monetary policies and the macro economic policies over

the last few years has influenced the Indian economy to the core. The major step towards

opening up of the financial market further was the nullification of the regulations

restricting the growth of the financial sector in India. To maintain such a growth for a

long term the inflation has to come down further.

The financial sector in India had an overall growth of 15%, which has exhibited stability

over the last few years although several other markets across the Asian region were

going through a turmoil. The development of the system pertaining to the financial

23

sector was the key to the growth of the same. With the opening of the financial market

variety of products and services were introduced to suit the need of the customer. The

Reserve Bank of India (RBI) played a dynamic role in the growth of the financial sector of India.

The growth of financial sector in India was due to the development in sectors

Growth of the banking sector in India

The banking system in India is the most extensive. The total asset value of the entire

banking sector in India is nearly US$ 270 billion. The total deposits is nearly US$ 220

billion. Banking sector in India has been transformed completely. Presently the latest

inclusions such as Internet banking and Core banking have made banking operations

more user friendly and easy.

Growth of the Capital Market in India

The ratio of the transaction was increased with the share ratio and deposit system

The removal of the pliable but ill-used forward trading mechanism

The introduction of infotech systems in the National Stock Exchange (NSE) in

order to cater to the various investors in different locations

Privatization of stock exchanges

Growth in the Insurance sector in India

With the opening of the market, foreign and private Indian players are keen to convert

untapped market potential into opportunities by providing tailor-made products.

The insurance market is filled up with new players which has led to the introduction

of several innovative insurance based products, value add-ons, and services. Many

24

foreign companies have also entered the arena such as Tokyo Marine, Aviva, Allianz,

Lombard General, AMP, New York Life, Standard Life, AIG, and Sun Life.

The competition among the companies has led to aggressive marketing, and

distribution techniques.

The active part of the Insurance Regulatory and Development Authority (IRDA) as a

regulatory body has provided to the development of the sector.

Growth of the Venture Capital market in India

• The venture capital sector in India is one of the most active in the financial

sector inspite of the hindrances by the external set up.

• Presently in India there are around 34 national and 2 international SEBI

registered venture capital funds.

FUTURE OF FINANCE SECTOR:-

The financial sector has witnessed changes in many respects. Banking has seen many

changes in the last two decades, as has the mutual fund business. During the first three

decades after independence, the financial sector and changes in it were largely

dominated by SBI, IDBI, IFCI, UTI, ICICI, and LIC but the last two decades saw a

significant contribution by many other players, smaller in size, but faster on their feet.

Each one of these large players was created with very specific mandates, but with sector-

wide responsibilities. For example formation of SBI was the result of the Rural Credit

Survey Committee recommendation to create an entity that among other things, would

help the government in stimulating banking in the entire country. Similarly, the UTI was

created in 1964 with the explicit objective of stimulating investment in the stock market.

In other words, these organizations were created with specific purposes and a vision for

the future. They have significantly served the purposes that drove them all these years,

25

and delivered on the agenda set for them. The present day financial sector has been built

on the achievements of these organizations. However, in the last few years, we see

organisations like SBI and UTI endeavoring to compete with every player in the market.

As a consequence, these organisations are trying to become everything to everybody.

The negative image associated with a public enterprise has only added to their attempt to

emulate private enterprise behavior. Survival has become the objective of these pioneers.

In sum, these organisations are fast losing their initial identity without gaining a new

one! These organisations are trying to respond by tinkering with their organisation

design or by changing the ownership pattern. Such interventions are likely to be

inappropriate given the status of these organisations. A comprehensive relook at the

existence of these organisations is an imperative. They will have to introspect on their

relevance in the present context. For example, SBI will have to contemplate on the role it

can play in the market given the state of the market today and a desirable state in the

future. Similarly, UTI may have to examine its role in the mutual fund sector.

Organisations, which have played defining roles in economies, have often found

themselves at such crossroads because they reach there first. The genius of the

organisation is in identifying the moment as such and in reinventing itself to play a

similar pivotal role again although in a different context. AT&T was one such

organisation, which during the early seventies went through an elaborate exercise of

reinventing itself for the future state of communications business that it envisioned. The

task was not just about being prepared for the future but about preparing to shape the

future of the industry. The major players of the financial markets in India will have to do

something similar; they need to envision the desirable future state of the market and

define their role in shaping the future. This would mean playing a pioneering role once

again in a new context; any other role would probably be insignificant for these

organisations. The finance ministry as the de facto owner of these organisations needs to

encourage their managements to undertake this critical task immediately.

26

PROFILE OF THE ORGANISATION :-

ORIGIN OF ICICI GROUP :-

1955:

The Industrial Credit and Investment Corporation of India Limited (ICICI) incorporated

at the initiative of the World Bank, the Government of India and representatives of

Indian industry, with the objective of creating a development financial institution for

providing medium-term and long-term project financing to Indian businesses.

Mr.A.Ramaswami Mudaliar elected as the first Chairman of ICICI Limited.

ICICI emerges as the major source of foreign currency loans to Indian industry. Besides

funding from the World Bank and other multi-lateral agencies, ICICI was also among

the first Indian companies to raise funds from international markets.

1967 - ICICI made its first debenture issue for Rs.6 crore, which was oversubscribed.

1977 - ICICI sponsors the formation of Housing Development Finance Corporation.

& Managed its first equity public issue.

1986 - First Indian Institution to receive ADB Loans

- The first public issue by any Indian equity in the Swiss Capital Market.

(75 million Swiss Franc)

- Along with UTI sets up Credit Rating Information Services of India Limited.

1994- ICICI sets up ICICI Bank.

1997 - The name "The Industrial Credit and Investment Corporation of India

Limited " was changed to "ICICI Limited".

2001- ICICI Ltd and ICICI Bank were Merged.

2002 – Merger of ICICI Limited, ICICI Capital Services Ltd and ICICI Personal

Financial Services Limited with ICICI Bank.– “A Reverse Merger”.

ICICI India’s Largest Pvt. Sector Bank.

International Presence in UK, Canada, Eurasia etc.

Assets Worth Rs. 34,46,581.1 million – 2007.

27

889.78 Million Equity Share – Issued & Subscribed.

Providing Services Like

Retail Banking

Corporate Banking

Structured Finance

ICICI Group offers a wide range of banking products and financial services to corporate

and retail customers through a variety of delivery channels and through its specialised

group companies, subsidiaries and affiliates in the areas of personal banking, investment

banking, life and general insurance, venture capital and asset management. With a strong

customer focus, the ICICI Group Companies have maintained and enhanced their

leadership position in their respective sectors.

ICICI Bank is India's second-largest bank with total assets of Rs. 3,793.01 billion (US$

75 billion) at March 31, 2009 and profit after tax Rs. 37.58 billion for the year ended

March 31, 2009. The Bank has a network of 1,451 branches and about 4,721 ATMs in

India and presence in 18 countries.

ICICI Prudential Life Insurance Company is a 74:26 joint venture with Prudential plc

(UK). It is the largest private sector life insurance company offering a comprehensive

suite of life, health and pensions products. It is also the pioneer in launching innovative

health care products like Diabetes Care Active and health Saver.The company operates

on a multi-channel platform and has a distribution strength of over 2,76,000 financial

advisors operating from more than 2000 branches spread across 1800 locations across

the country. In addition to the agency force, it also has tie-ups with various banks,

corporate agents and brokers. In fiscal 2009, ICICI Prudential attained a market share of

10.9% based on retail weighted premium and garnered a total premium of Rs 153.56

billion registering a growth of 13% and held assets of Rs. 327.88 billion as on March 31,

2009.

ICICI Lombard General Insurance Company, a joint venture with the Canada based

28

Fairfax Financial Holdings, is the largest private sector general insurance company. It

has a comprehensive product portfolio catering to all corporate and retail insurance

needs and is present in over 300 locations across the country. ICICI Lombard General

Insurance has achieved a market share of 27.2% among private sector general insurance

companies and an overall market share of 11.2% during fiscal 2009. The gross return

premium grew by 2.2% from Rs. 33.45 billion in fiscal 2008 to 34.20 billion in fiscal

2009.

ICICI Securities Ltd is the largest equity house in the country providing end-to-end

solutions (including web-based services) through the largest non-banking distribution

channel so as to fulfill all the diverse needs of retail and corporate customers. ICICI

Securities (I-Sec) has a dominant position in its core segments of its operations -

Corporate Finance including Equity Capital Markets Advisory Services, Institutional

Equities, Retail and Financial Product Distribution.

ICICI Securities Primary Dealership Limited is the largest Primary Dealer in

Government Securities. It is an acknowledged leader in the Indian fixed income and

money markets, with a strong franchise across the spectrum of interest rate products and

services - institutional sales and trading, resource mobilization, portfolio management

services and research. One of the first entities to be granted Primary Dealership license

by RBI, I-Sec PD has made pioneering contributions since inception to debt market

development in India. I-Sec PD is also credited with pioneering debt market research in

India. I-Sec PD has been recognized as the 'Best Domestic Bond House in India' by Asia

money every year from 2002 to 2007 and selected as 'Best Bond House' by

Financeasia.com for the years - 2001, 2004 to 2007 and 2009."

ICICI Prudential Asset Management is the third largest mutual fund with average asset

under management of Rs. 514.33 billion and a market share of 10.43% as on March 31,

2009. The Company manages a comprehensive range of mutual fund schemes and

portfolio management services to meet the varying investment needs of its investors

through162 branches and 185 CAMS official point of transaction acceptance spread

29

across the country.

ICICI Venture is one of the largest and most successful private equity firms in India with

funds under management in excess of USD 2 billion. ICICI Venture, over the years has

built an enviable portfolio of companies across sectors including Life Sciences,

Information Technology, Media, Manufacturing, Retail, Financial Services, and Real

Estate thereby building sustainable value. It has several “firsts” to its credit in the Indian

Private Equity industry. Amongst them are India’s first leveraged buyout (Infomedia),

the first real estate investment (Cyber Gateway), the first mezzanine financing for a

acquisition (Arch Pharmalabs), the first ‘royalty-based’ structured deal in Pharma

Research & Development (Dr Reddy’s Laboratories - JV) and the first fund level

secondary transaction (Collar Capital)

ORIGIN OF ICICI DIRECT :-

Even as the European and American stock markets reckon with the changes brought

about by the Internet and IT/telecom advances, the Indian stock market has quickly

moved to global standards.

The sheer breadth of the changes since the National Stock Exchange started

operations in 1994 and with the Securities and Exchange Board of India (SEBI) also

driving the changes in the market system, have enabled the Indian market to move well

ahead in just five years.

Even as online automated trading and better clearing and settlement

mechanisms have been put in place, perhaps, the most significant change in the Indian

market has been the coming of paperless trading; it may well be a precursor to the next

big changes – rolling settlements and Internet trading. But the push towards paperless

trading stands out even in a decade when the market landscape has changed beyond

recognition.

30

Dematerialization (holding and trading securities in paperless mode) was

an alien concept in India before 1995; in five years, large quantities of paper have been

flushed out of the system. Since the entry of the foreign institutional investors (FIIs) and

online trading, the old system, laden with paperwork at every conceivable stage, was out

of place in an otherwise fast trading environment.

As the FIIs complained about the paperwork as a major

constraining factor, the government and SEBI took notice. The requisite legislative

changes were put in place quickly - the Depositories Act, 1996 was passed and the NSE,

with the UTI and the IDBI, set up the National Securities Depository Ltd (NSDL).

But the depository concept did not gain popularity; the FIIs

which had clamored for its introduction, now ignored it. The reason: Lack of liquidity.

But, unless the institutional investors stepped in, there could be no liquidity. This

stalemate frustrated the push for a paperless environment.

Until SEBI stepped in, that is.

With regulatory pushes SEBI, in phases, made demat trading in stocks

mandatory for institutions first and, then, for all investors. Mandatory paperless trading,

forced the FIIs to dematerialize their holdings quickly.

As a consequence of SEBI's action, most major stocks are traded in

the paperless mode now. The second phase will involve some 200 stocks in a few

months time. The effect of SEBI's action is evident from NSDL's statistics. A total of

698 companies, with a market capitalization of Rs. 7,37,300 crores (almost 80 per cent

of the market capitalization of all listed stocks), is enrolled with the NSDL.

With 13.65 billion shares in the demat mode, nearly 19 million

investor accounts, and securities valued at Rs. 3,96,800 crores ($91 billions) actually

dematerialized, the concept of dematerialization can be said to have taken roots. If the

regulatory direction is any indication, more paper will be flushed out of the system in the

next two years.

The costs of dematerialization have declined as the NSDL slashed

charges as volumes expanded and the competition _ from the Central Depository

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Services Ltd (CSDL) floated by the BSE _ started in 1999 second half. A series of

measures by SEBI and NSDL also helped ease the strain faced by retail investors.

From a long-term perspective, demat in India is of considerable

significance. Not only has the general trading environment improved and quickened,

volumes too have perked up, even in the demat segment. With demat taking off, there is

now scope for an improvement in the quality of investor services.

As a consequence of dematerialization, the Indian market is

also well prepared for web-based trading though the quality of telecom infrastructure

and inadequacies in the banking system-stock exchange linkages may cause delays.

Notably, with regard to the thrust towards paperless trading, the Indian market managed

in three years what took even the US much longer.

With a high degree of dematerialization a reality, the stage is set for rolling settlements

and web-based trading. Once these are in place, the Indian market will have moved

closer to the standards in advanced markets, such as the US. And paperless trading may

well be the catalyst for such a rapid advancement.

This is the concluding week of Business Line's 20-week series

Markets – a Century in Retrospect, which featured the most significant market- and

corporate-related events. Other, equally significant, specific topics of a micro-nature will

be published through the year.

The dematerialized form of shareholding and the depository

mode of trade (scrip less trade) have been in operation in developed financial markets for

over 15 years. In India, the first depository commenced operation a decade back and is

relatively new. The Indian financial market is in need of both scrip-based and scrip less

trade, but the investing community, which is used scrip-based trade, is bound to take

some time to accept the latter. The scrip less trading, till now a domain of the western

world, institutional investors and GDR holders is now mandatory even for small

investors. All those who hold physical share certificates have to get them dematerialized.

If they do not, they will be forced to do so at the time of sale.

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The countless numbers of conservative Indians have to

digest it, whether they like it or not. First, the institutional investors succumbed. Then

the high net worth individuals, trading in more than a certain numbers of shares, were

forced to give in. now, it is the turn of the small investors of select-companies.

With their share certificates being replaced by small slips and

receipts, naturally the average investors will have their share of fears and apprehensions.

It is necessary to educate and convince these investors about the benefit of Demat rather

than forcing them to take part in the game.

GROWTH AND DEVELOPMENT OF THE ORGANISATION :-

ICICI Consolidating gains

It is a surprise to everyone if the newspapers or the late night editions of the TV

news do not carry anything about the ICICI. One of India's biggest financial

institution is always in the limelight. The growth of the ICICI over the years has

proved repeatedly the ability of the institution in adopting new technologies and

products. It is through its ability to nourish new products and services that the

institution has become a household name in a very short span of time.

This time again the FI is in the news in a big way. Previously, the institution has

been in the limelight for controlling the market turbulence or expansion into new

markets. However, the reason this time is totally different from the earlier ones.

After a constant expansion of the number of subsidiaries in the last five years, the

leading financial institution has announced its plans of restructuring. Things are

moving fast at the Bandra-Kurla complex of ICICI. Also, after substantially

diluting its stake in the ICICI Bank, the group is also planning for a reverse

merger.

Exponential growth

The Industrial Credit and Investment Corporation of India limited founded way

33

back in 1955, has witnessed more than it could have dreamed of at the time of its

inception. However, following the economic liberalization of Indian economy, it

has renamed itself as ICICI. The principal objective behind setting up this

organization at that time was to make available long-term capital for industrial

development and investment in India. Gopalan Ramachandran, Chief executive,

Business Economics and Risk Management says, "Considering the fact that it was

established at a time when India had a stock market but not a reliable capital

market to supply long-term debt and equity, the growth of ICICI is wonderful."

Not only did the institution withstand the test of time but also witnessed

exponential growth that anybody can ever imagine. Under its group umbrella,

ICICI has around 27 subsidiaries. Of course, the most prominent and most

successful among them is the ICICI bank. One observer puts the constant increase

in the number of subsidiaries as part of their decentralization strategy.

The major reason for the exponential growth of ICICI is due to its willingness to

adapt itself to changes. It is the first one to start Internet banking. Also it has been

the first ever institution to start a web based securities trading through its

subsidiary ICICI Web Trade Ltd. Says Gopalan Ramachandran, "ICICI is a

financial institution that has seldom resisted change. It has been an ardent

promoter of internal and external change." Truly, it has been the best in the

business to adopt to the changes in the environment. And what more can it ask for

from its employees who were most willing to adopt new things. And all this is due

to the comfort provided by the subsidiaries identifies an industry observer.

Not only it witnessed increase in the number of subsidiaries during the last few

years, it has also witnessed one of the best years in existence in terms of rise in its

total assets. At the end of the financial year 2000, its assets stood at Rs. 706 bn. In

the process, it has become the second largest financial institution in India. Also,

today the group manages around 7.4 mn customer accounts. It includes three mn

customers' accounts of the ICICI bank. The well-diversified portfolio of the

34

company will tell the story of its success. Out of the total portfolio, corporate

finance accounts for 37 percent while the structured project finance accounts for

23 percent. Slowly it is also gaining momentum in the retail loans segment,

though at present it represents only 2 percent of the total portfolio.

It is no doubt that ICICI has now become India's best-managed financial

institution catering to the needs of different customers. The key to success has

been the constant endeavor to implement new technologies and products.

According to Anurag Khanna, Founder and CEO of BanknetIndia.com, "The

company is making constant efforts to exploit first mover advantage in the

technology-related businesses." The principal achievements of ICICI according to

Gopalan Ramachandran, are, "It has been able to reduce drastically the percentage

of problem loans and the surge in the size of its balance sheet. Also, it has rapidly

assimilated the technology and had developed institutional and managerial

process aimed at managing risk." The result is the rapid increase in the

shareholder value compared to others in the industry.

SOME MAJOR HIGHLIGHTS OF THIS GROWTH ARE:-

1."As ICICI has transformed its business from a development financial institution

to a diversified financial service group offering a wide variety of products and

services it required various subsidiaries to handle particular activities." Justifying

the reason behind the floating of the subsidiaries and their contribution to the

overall success he adds, "These subsidiaries helped in focusing on their specific

areas of operation and facilitated attention to their specific customer segments and

activities."

2. Subsidiaries enable special managerial talent to deploy cutting-edge

technologies. The internalisation of risk and reward in subsidiaries is a potent

impetus for the growth of the ICICI group

35

3. . "ICICI has empowered managers to try new techniques, technologies and

process and above all, to establish new beachheads for exploitation in the future,"

4. , "The retail subsidiaries have hitherto focused on their specific areas of

operation in order to facilitate rapid time to market and dedicate attention to their

customer segments and channels."

PRESENT STATUS OF ICICI DIRECT:-

More than 1,30,000 persons, including NRIs in the Gulf, who trade in shares listed on the

NSE, are registered with the site, which is India’s largest and worlds tenth share-trading

portal. The site was launched last April by ICICI Web Trade Ltd, a fully-owned subsidiary

of ICICI. Around 15,000 people trade via ICICIdirect.com every day. The unique three-in-

one trading account of the site offers a hassle-free and seamless trading experience for the

customer. The customers bank, demat and broking accounts are linked automatically. All

that the customer needs to do is to just place the order of the chosen scrip and the desired

price - our system does the rest of the work.

Under the Spot facility, ICICI direct customers are given a daily limit of Rs 50,000. These

funds can be withdrawn at the end of the day and customers would not have to wait until the

payout day of the stock exchange to receive their funds for sales. This would increase the

liquidity for the customers and all S&P CNX Nifty and CNX Nifty Junior scrip’s would be

available on Spot.

Despite the existence of so many online share trading portals how could ICICI direct capture

65 per cent of the market share and emerge a front-runner. Another reason for the immense

popularity of the site is due to ICICIs countrywide network, which comprises 110 branches,

93 centre’s and 589 ATMs.

➢ Direct Business Catalyst (DBC):

A Direct Business Catalyst (DBC) is an entity which gets new clients for

ICICI Direct and nurtures them by offering them the trade facility on phone. For all its

effort it gets a fixed referral fee and trail commission.

○ Role

36

Acting as a facilitator between ICICI Direct and the end customer, he introduces a client

to ICICI Direct, get his I-direct account opened and subsequently on the request of the

client he places orders for him on his behalf in clients account.

37

FUNCTIONAL DEPARTMENTS OF ICICI :-

Infrastructure financing, corporate financing and retail have been the strong pillars of

ICICI's growth. They expect these to remain thrust areas in the future too. The financial

institution sees significant opportunities in the power sector, and in the rapid de-

regulation of the Telecom sector. On the retail side, ICICI has established a retail

franchisee through a physical presence across 42 cities. Its retail thrust has been on the

planks of technology enabled low cost distribution channels like the Internet, Call

centers and ATMs.

It occupies the number one position in automobile financing (over 20% of the market

share), number one in credit cards on an incremental basis. It also has a growing

presence in home finance and on-line trading.

ICICI BANK

ICICI Bank is a commercial banking outfit set up by the ICICI Group. The Bank was

registered a banking company on January 5th, 1994 and received its banking license from

the Reserve Bank of India on May 17th, 1994. The Bank has an authorized capital of INR

300crore (USD 75.96 million), of which subscribed and paid-up capital is INR 165 crore

(USD 41.78 million). The first ICICI Bank branch was started in Madras in June 1994.

The branches are fully computerized with state-of-the-art technology and systems. All of

them are fully networked through V-SAT (Satellite) technology. The Bank is connected

to the international SWIFT network since March 1995. ICICI Bank offers a wide

spectrum of domestic and international banking services to facilitate trade, investment,

cross-border business, and treasury and foreign exchange services. This is in addition to

a whole range of deposit services offered to individuals and corporate bodies. ICICI

Bank’s Infinity was the first Internet banking service in the country, and a prelude to

banking in the next millennium. Currently the Bank has around 150,000 customers

ICICI VENTURE FUNDS MANAGEMENT COMPANY LIMITED

With the recent spurt in entrepreneurship in the country, venture capital and private

equity capital financing are fast attaining a role of prominence. Uniquely positioned to

38

take the Indian entrepreneur further is ICICI Venture Funds, the wholly owned

subsidiary of ICICI, with its keen understanding of the Indian Financial Markets,

entrepreneurial ethos, access to global capital and a network through influential global

alliances. Strong parentage and affiliates provide ICICI Venture with access to a broad

spectrum of financial and analytical resources. An affiliation with (Trust Company of the

West) provides a platform for networking Indian Companies to global markets and

technology. ICICI Venture Funds currently manages / advises 11 Funds aggregating

US$ 400 million, making it the most significant private equity investor in the country.

The investment experience of ICICI Venture’s professionals is the foundation its

strengths and success in several areas of investing. ICICI Venture seeks to invest in

opportunities where its network through ICICI and TCW can create value for all

involved. ICICI Venture’s primary investment objective is capital investment through

investments by way of equity or equity-related securities in unlisted companies with

significant growth potential. ICICI Venture’s investments span a broad spectrum of

industries and stages of development, the investment focus being on

• Information Technology

• Biotechnology and Life Sciences

• Media and entertainment

• Retail Services

ICICI SECURITIES AND FINANCE COMPANY LIMITED

Formed in 1993 when ICICI’s Merchant Banking Division was spun off into a new

company, I-SEC today are India’s leading Investment Bank and one of the most

significant players in the Indian capital markets. Its client list includes some of the best

known, most respected names in Indian business and industry, and I-SEC offers them

what are probably the widest, most in-depth range of services in the market, with the

highest standards of professionalism. Backed by a strong distribution network, I-SEC is

acknowledged to be at the forefront of all new developments in the Indian debt market.

I-SEC Research Reports, Compendia, Updates, I-BEX and sovereign Bond Index, have

become industry standards, sought after by finance, business and reputed publications

alike. The Project Finance Group has helped take strategic projects from the drawing

board to financial closure, leveraging the expertise of parent organization. I-SEC has

39

also executed several assignments in M & A, including business valuations, spin-offs

and mergers, for both domestic and overseas clients. The range of products offered by

i-SEC includes:

Corporate Finance – Mergers and Acquisitions, Equity, Bidding (especially for Telecom

Projects)

Fixed Income – Primary Dealership, Debt Research

Equities – Lend management, Underwriting, Syndication, Private Equity placement,

Sales, Trading, Broking, Sectoral and Company Research I - SEC

Continues to sustain a steady rate of growth by offering the most extensive range of

services combined with unrivalled standards of professionalism.

ICICI BROKERAGE SERVICES LIMITED

Set up in March 1995, ICICI Brokerage Services is a 100% subsidiary of I-SEC. It

commenced its securities brokerage activities in February 1996 and is registered with

the National Stock Exchange of India Limited and The Stock Exchange, Mumbai. We

are a joint venture between ICICI and the leading financial services provider in India,

and prudential plc of U.K., one of the finest Life insurance companies in the world.

Together we provide you with an extensive range of insurance products to suit your

various needs at various life stages. We aim to keep you covered, at every step in life.

Their policies are need-specific and address particular age groups. This means that no

matter where in life you are, we offer specific products to suit your needs for savings,

protection and retirement. Our products can be categorized into the following:

• Saving plans

• Protection plans

• Retirement plans

ICICI PERSONAL FINANCIAL SERVICES LIMITED

ICICI Personal Financial Services Limited (ICICI PFS), formerly ICICI-Credit, was one

of the first four companies to obtain registration as a Non-Banking Financial Company

(NBFC) from the Reserve Bank of India (RBI) on September 10, 1997 under the new

section 45IA of the Reserve Bank of India Act, 1934. During the year 1998-99, there

was a significant shift in the Company’s operation from leasing to hire purchase to

40

distribution and servicing of all rental products for the ICICI Group. It is now a focal point

for marketing and distribution of all rental asset products for ICICI, including auto loans,

consumer durable finance and other financial products. The Company has thus become

part of ICICI’s retail strategy aimed at offering a comprehensive range of products and

services to retail customers. In view of this reorientation of the business, the name of

the Company was changed from ICICI Credit Corporation to ICICI Personal Financial

Services Limited (ICICI PFS) effective March 22, 1999.

ICICI CAPITAL SERVICES LIMITED

ICICI Capital Services Ltd. was incorporated in the name of SCICI Securities Ltd. on

September 24, 1994 as a wholly owned subsidiary of erstwhile SCICI Ltd. with the

objective of providing stock broking services to the institutional clients and undertaking

activities such as underwriting, primary market placements & distribution industry &

company research etc. After the amalgamation of SCICI with ICICI effective from April

1, 1996, resulting in the change of the name. The company is mandated, under review

by ICICI, to carry out on its behalf the retail resource raising activities and to provide

front office services related to all retail and semi retail liability products of ICICI. The

company also operates the network of ICICI Centers being set up by ICICI. As on date

the company has set up 91 centers across the country.

ICICI INFOTECH

ICICI InfoTech is a leading provider of end-to-end IT solutions. We have an in-depth

experience of having worked on varied technologies with leading corporations

worldwide. Our service portfolio includes the following:

IS & IT Consulting

Software Design and Development

Enterprise Application Integration

Value Chain Management Solutions (SCM, CRM etc.)

Application Re-engineering and Management

Knowledge Management Solutions

Embedded System Applications

Technology Incubation, IT-enabled Services & IT Outsourcing

ICICI Capital Ltd.

41

Its products are

RBI Bonds

E-invest (ICICI Direct.com)

Fixed Deposits

Mutual Funds

Bonds

De-mat

Equity IPO

ICICI DIRECT.COM (ONLINE SHARE TRADING):

ICICI Direct.com is a truly online share-trading site. Which means that from the time

you punch in a buy or sell trade on your computer to the final settlement in your

account, everything happens completely online? The 3-in-1 e-invest account integrates

your brokerage, bank and one or more depository accounts to make sure that you can

do the otherwise cumbersome share trading from the comfort of your home or office, at

absolutely any time of the day or night

42

ORGANISATIONAL STRUCTURE:-

43

PRODUCT AND SERVICE PROFILE OF THE

ORGANISATION:-Products:-

A product for every need: ICICIdirect.com is the most comprehensive website,

which allows you to invest in Shares, Mutual funds, Derivatives(Futures and Options)

and other financial products. Simply put we offer you a product for every investment

need of yours.○ Trading in shares:

ICICIdirect.com offers you various options while trading in shares.

Cash Trading

This is a delivery based trading system, which is generally done with

the intention of taking delivery of shares or monies.

Margin Trading

You can also do an intra-settlement trading upto 3 to 4 times your available

funds, wherein you take long buy/ short sell positions in stocks with the intention of

squaring off the position within the same day settlement cycle. Margin PLUS Trading

Through Margin PLUS you can do an intra-settlement trading up to 25times your

available funds, wherein you take long buy/ short sell positions in stocks with the

intention of squaring off the position within the same day settlement cycle. Margin

PLUS will give a much higher leverage in your account against your limits. Spot Trading :

This facility can be used only for selling your demat stocks which are already

existing in your demat account. When you are looking at an immediate liquidity option,

'Cash on Spot' may work the best for you, On selling shares through "cash on spot",

money is credited to your bank a/c the same evening & not on the exchange payout date.

This money can then be withdrawn from any of the ICICI Bank ATMs. BTST:

Buy Today Sell Tomorrow (BTST) is a facility that allows you to sell shares even

on 1st and 2nd day after the buy order date, without you having to wait for the receipt of

shares into your demat account.

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Call N Trade®:

Call N Trade® allows you to call on a local number in your city &trade on the

telephone through our Customer Service Executives. This facility is currently available

in over 11 major states across India.

Trading on NSE/BSE:

Through ICICIdirect.com, you can trade on NSE as well as BSE.

Market Order:

You could trade by placing market orders during market hours that allows you to

trade at the best obtainable price in the market at the time of execution of the order.

Limit Order:

Allows you to place a buy/sell order at a price defined by you. The execution can

happen at a price more favorable than the price, which is defined by you, limit orders

can be placed by you during holidays & nonmarket hours too.

DE-MAT:-

The dematerialized form of shareholding and the depository mode of trade (scrip less

trade) have been in operation in developed financial markets for over 15 years. In India,

the first depository commenced operations a decade back and is relatively new. The

Indian Financial Markets is in need of both scrip-based trade, but the investing

community, which is used to scrip-based and scrip less trade, is bound to take some time

to accept the latter. The scrip less trading, till now a domain of the western world,

institutional investors and GDR holders is now mandatory even for small investors. All

those who hold physical share certificates have to get them dematerialized. If they do

not, they will be forced to do so at the time of sale.

A process by which the physical certificates of an investor are taken back

by the company / registrar and actually destroyed and an equivalent number of securities

are credited in the electronic holdings of the investor.

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Offers services to clients dealing in Government securities through the SGL A/C.

besides holding the securities, ICICI Capital Services Ltd.

Provides records update based on the transactions made by the clients.

Collects and credits the benefits and proceeds from sale to the clients’ account;

and

Supplies periodical reports on the transactions and holding of the clients.

TRADING:

Next function activates when an investor buys or sells in the market.

Buying:

1. An investor gets order executed and makes payment to the broker.

2.Investor instructs his Depository Participant to expect credit on settlement day. Broker

instructs his DP to debit his Clearing Member account on settlement day.

3.Before settlement day Broker makes payment to clearinghouse through Clearing Bank.

4.On settlement day Clearing house releases shares to broker’s Clearing Member

account which is then transferred to investors account through NSDL (National

Securities Depository Limited). Investor gets credit in his account.

SELLING:

An investor gets order executed.

1.Investor instructs his Depository Participant to debit his account with immediate effect.

2.The shares move from investors account to Brokers Clearing Member account via

NSDL. A Broker clearing member accounts is credited.

3.Before settlement day broker transfers shares from his clearing member account to

Clearinghouse via NSDL. His account is debited.

4.On settlement day Broker receives payment from clearing house which he passes on to

the investor.

ICICIDirect.com

ICICIDirect.com is a truly online share-trading site. This means that from the time you

punch in a buy or sell trade on your computer to the final settlement in your account,

everything happens completely online. The 3-in-1 e-invest account integrates your

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brokerage, bank and one or more depository accounts to make sure that you can do the

otherwise cumbersome share trading from the comfort of your home or office, at

absolutely any time of the day…or night.

HOW CAN ONE OPEN AN ACCOUNT IN DEMAT?

First an investor has to approach a DP and fill up an account opening form. The

account opening form must be supported by copies of any one of the approved

documents to serve as proof of identity (POI) and proof of address (POA) as specified by

SEBI. Besides, production of PAN card in original at the time of opening of account has

been made mandatory effective from April 01, 2006.

All applicants should carry original documents for verification by an

authorized official of the depository participant, under his signature.

Further, the investor has to sign an agreement with DP in a depository prescribed

standard format, which details rights and duties of investor and DP. DP should provide

the investor with a copy of the agreement and schedule of charges for their future

reference. The DP will open the account in the system and give an account number,

which is also called BO ID (Beneficiary Owner Identification number).

The DP may revise the charges by giving 30 days notice in advance.

SEBI has rationalised the cost structure for dematerialisation by removing account

opening charges, transaction charges for credit of securities, and custody charges vide

circular dated January 28, 2005.

Further, SEBI has vide circular dated November 09, 2005 advised that

with effect from January 09, 2006, no charges shall be levied by a depository on DP and

consequently, by a DP on a Beneficiary Owner (BO) when a BO transfers all the

securities lying in his account to another branch of the same DP or to another DP of the

same depository or another depository, provided the BO Account/s at transferee DP and

at transferor DP are one and the same, i.e. identical in all respects. In case the BO

Account at transferor DP is a joint account, the BO Account at transferee DP should also

be a joint account in the same sequence of ownership.

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MARKET PROFILE OF ICICI DIRECT :-

ICICI direct is started in March, 1995. Anil kaul is the CEO of this company. The sales

turnover of the company is 2602 million. It’s a sister concern company of ICICI limited.

This organization basically deals this organization basically deals with on-line share

trading. Regd. Office of the company is at regd. Office of the company is at Mumbai.

Company has a diversified client base that includes retail customers (including High Net

worth Individuals), mutual funds, foreign institutional investors, financial institutions

and corporate clients. Company’s headquarter is in Mumbai. Its de-mat account holders

are diverse but ICICI direct service is ok but the brokerage charges are touching sky.

A unique 3-in-1 On-line Trading Account

Seamless, Secure and Integrated 3-in-1 trading platform...

Our 3-in-1 trading platform links your banking, trading and demat accounts, ensuring

unmatched convenience for customers.

With an ICICIdirect.com account, you get the following benefits:

Wide range of products

Share trading in both NSE and BSE, innovative offerings like - Margin, Margin Plus,

BTST, SPOT. Derivatives trading, overseas trading, mutual funds, IPOs and on-line life

insurance.

Control

You can be rest assured, that your order will be precisely for the amount you wanted it

to be, without any deviation, giving you full control of your money and your trades

Tracking and Review

Monitoring your investments is as important if not more than making that investment

itself. Our portfolio tracker and watch list along with SMS alerts will always keep you

updated on the status of your investments with us and act on them when required.

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Security

Instead of transferring monies to a broker's pool or towards deposits, you can manage

your own demat and bank accounts when you trade through ICICIdirect.com. It provides

you the flexibility to pay only when you trade.

Award Winning Research

We understand the need for the right research to make the right investment decision and

has focused heavily n this area.

Our team with its consistent delivery has been voted as the 'Most preferred brand of

financial advisory services' at the CNBC Awaaz Consumer Awards, 2007.

Its main competitors are HDFC, Reliance and SBI .

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DISCUSSIONS ON TRAINING

KEY LEARNINGS:-

This project has been a great learning experience for me; at the same time it gave me

enough scope to implement my analytical ability..

This project has given me a insight about financial sector and a true vision about ICICI DIRECT.

I have got a deeper knowledge about de-mat account, bonds and online trading etc. Working

with ICICI DIRECT was an great experience as working with this organization helped me a lot

to know about securities and stock market. By working on this project, I also gain the knowledge

about the service profile of the company and its way of working.

How to open an DE-MAT account was a learning experience for me.

By the help of this project, I become able to know about the departmentation and

structure of the company. As on-line share trading is increasing day by day it is very

necessary to know the working of this particular work. This project gave me a golden

chance to work with the organization and learn all the important key points. The

manager’s work profile was the main ingredient I got to know.

The overall project was helpful for me as it covered financial sector’s

knowledge and financial services. ICICI direct .com is an unique account that integrates

your saving, trading and de-mat account.

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SWOT ANALYSIS OF THE COMPANY:

Strengths

1. Management philosophy and commitment to maximize shareholders returns

2. Upgraded product design and development facilities to develop new products and aid

diversification

3. Ongoing activities to support up gradation of operational performance and rise in

productivity

4. Team of talented and committed professionals available to improve companies

performance Weakness

1. Competition from cheap imports

2. Low customer base

Opportunities

1. UFSL has initiated development of products for diesel application. This will provide

tremendous scope for diversification and growth

2. Acquisition of AMTEC to provide opportunities to access global OEMs

3. Opportunity to support AMTECs operations by supplying products from India

4. The introduction of new emission norms will provide UFSL opportunity to develop

injection systems and thereby upgrade the status of the company from product to system

supplier.

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Threats, Risks & Concerns

1. Constant pressure to be cost competitive to meet customer expectations

2. Relentless pressure to maintain profitability due to rising input/raw material prices

3. Increasing popularity of alternative fuel vehicles, such as Hybrid, Hydrogen powered,

CNG and LPG vehicles poses new challenges for the company

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ACHIEVEMENT AND AWARD

Winning is a habit that is assiduously cultivated at ICICI Securities Limited (i-

SEC). Be it deals, mandates or awards, we manage them all in our quite and efficient

way.

For us winning awards is a matter of pride and honor. Each new award is a manifestation

of our hard work and commitment to our clients.

Since inception, i-SEC’s expertise has been time and again widely recognized by both

domestic and international agencies.

Our Fixed Income team for the last two years (CY 2004 and 2005) has been

adjudged the “Best Bond House” in India by both Asia money and Finance Asia. The

equities team was adjudged the ‘Best Indian Brokerage House-2003’ by Asia money.

The Corporate Finance team, according to Bloomberg topped the M&A league tables in

2003.

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