Summer Internship

Project Report

ON

Quantitative Analysis of SBI Mutual Fund

Submitted for the Partial Fulfilment of Two years Full Time Course

MBA (2017-2019)

External Guide : Internal Guide :

Name: Ms. Kemy srivastava Name: Dr. C.K. Tiwari

SBI Funds Management pvt. Ltd. Kanpur STEP-HBTI, Kanpur

Submitted By : Saurabh Pathak

 DECLARATION

I hereby declare that the major project report, entitled Quantitative Analysis of SBI Mutual
Fund”, is based on my original study and has not been submitted earlier for award of any
degree or diploma to any institute or university.The work of other author(s), wherever used,
has been acknowledged at appropriate place(s).

Place: Kanpur Candidate’s Signature

Date: 30th july 2018 Name: Saurabh Pathak

 ACKNOWLEDGEMENT

An independent project is a contradiction. Every project involves contribution of many

people. This project also bears the imprints of many people and it is a pleasure for me to

acknowledge and thank them all.

I am deeply indebted to Ms. Kemy srivastava who acted as a mentor and guide, providing

knowledge and giving me their valuable time out of their busy schedule, at every step

throughout the research. It is only because of her this project came into being.

I also thank my mentor Dr. C.K Tiwari Sir of STEP-HBTI, for providing an opportunity of

doing this project under his leadership.

I also take opportunity to express my sincere gratitude to each and every person, who directly

or indirectly helped me throughout the project and without anyone of them the research,

would not have been possible.

The immense learning from this project would be indelible forever.

Saurabh Pathak
 EXECUTIVE SUMMARY

State Bank of India is the largest and one of the oldest commercial bank in India, in

existence for more than 200 years. The bank provides a full range of corporate, commercial

and retail banking services in India. Indian central bank namely Reserve Bank of India

(RBI) is the major share holder of the bank with 59.7% stake. The bank is capitalized to the

extent of Rs.646bn with the public holding (other than promoters) at 40.3%. SBI has the

largest branch and ATM network spread across every corner of India. The bank has a

branch network of over 14,000 branches (including subsidiaries). Apart from Indian

network it also has a network of 73 overseas offices in 30 countries in all time zones,

correspondent relationship with 520 International banks in 123 countries. In recent past,

SBI has acquired banks in Mauritius, Kenya and Indonesia.

The bank had total staff strength of 198,774 as on 31st March, 2006. Of this, 29.51% are

officers, 45.19% clerical staff and the remaining 25.30% were sub-staff. The bank is listed

on the Bombay Stock Exchange, National Stock Exchange, Kolkata Stock Exchange,

Chennai Stock Exchange and Ahmedabad Stock Exchange while its GDRs are listed on the

London Stock Exchange. SBI group accounts for around 25% of the total business of the

banking industry while it accounts for 35% of the total foreign exchange in India. With this

type of strong base, SBI has displayed a continued performance in the last few years in

scaling up its efficiency levels. Net Interest Income of the bank has witnessed a CAGR of

13.3% during the last five years. During the same period, net interest margin (NIM) of the

bank has gone up from as low as 2.9% in FY02 to 3.40% in FY06 and currently is at

3.32%.
 Chapter-1:

Introduction

The origin of the State Bank of India goes back to the first decade of the nineteenth century

with the establishment of the Bank of Calcutta in Calcutta on 2 June 1806. Three years

later the bank received its charter and was re-designed as the Bank of Bengal (2 January

1809). A unique institution, it was the first joint-stock bank of British India sponsored by

the Government of Bengal. The Bank of Bombay (15 April 1840) and the Bank of Madras

(1 July 1843) followed the Bank of Bengal. These three banks remained at the apex of

modern banking in India till their amalgamation as the Imperial Bank of India on 27

January 1921. Primarily Anglo-Indian creations, the three presidency banks came into

existence either as a result of the compulsions of imperial finance or by the felt needs of

local European commerce and were not imposed from outside in an arbitrary manner to

modernise India's economy. Their evolution was, however, shaped by ideas culled from

similar developments in Europe and England, and was influenced by changes occurring in

the structure of both the local trading environment and those in the relations of the Indian

economy to the economy of Europe and the global economic framework. The three banks

were governed by royal charters, which were revised from time to time. Each charter

provided for a share capital, four-fifth of which were privately subscribed and the rest

owned by the provincial government. The members of the board of directors, which

managed the affairs of each bank, were mostly proprietary directors representing the large

European managing agency houses in India. The rest were government nominees,

invariably civil servants, one of whom was elected as the president of the board.
 Objectives of Study

Thus the basic objectives of this study are following:

1. To find out the Preferences of the investors for Asset Management Company.

2. To know the Preferences for the portfolios.

3. To know why one has invested or not invested in SBI Mutual fund.

4. To find out the most preferred channel.

5. To find out what should do to boost Mutual Fund Industry

Scope of the study

A big boom has been witnessed in Mutual Fund Industry in resent times. A large

number of new players have entered the market and trying to gain market share in this

rapidly improving market.

The study will help to know the preferences of the customers, which company, portfolio,

mode of investment, option for getting return and so on they prefer. This project report may

help the company to make further planning and strategy.

A big boom has been witnessed in Mutual Fund Industry in resent times. A large

number of new players have entered the market and trying to gain market share in this

rapidly improving market.

The research was carried on in Kanpur. I had been sent at one of the branch of State Bank of

India Kanpur where I completed my Project work. I surveyed on my Project Topic “A

study of preferences of the Investors for investment in Mutual Fund” on the visiting
customers of the SBI Mutual Fund Sai Square Bada Chauraha Kanpur Branch.

Research Methodology

This report is based on primary as well secondary data, however primary data

collection was given more importance since it is overhearing factor in attitude studies. One

of the most important users of research methodology is that it helps in identifying the

problem, collecting, analyzing the required information data and providing an alternative

solution to the problem .It also helps in collecting the vital information that is required by

the top management to assist them for the better decision making both day to day decision

and critical ones.

Data Sources

Research is totally based on primary data. Secondary data can be used only for the

reference. Research has been done by primary data collection, and primary data has been

collected by interacting with various people. The secondary data has been collected

through various journals and websites.

Duration of Study

The study was carried out for a period of 45 Days, from 1st July to 14th August.

Sampling

The sample was selected of them who are the customers/visitors of State Bank if India, SBI

Mutual Fund Sai Square Bada Chauraha Kanpur Branch., irrespective of them being

investors or not or availing the services or not. It was also collected through personal visits
to persons, by formal and informal talks and through filling up the questionnaire prepared.

The data has been analyzed by using mathematical/Statistical tool.

Sample Size

The sample size of my project is limited to 200 people only. Out of which only 120

people had invested in Mutual Fund. Other 80 people did not have invested in Mutual

Fund.

Sample Design

Data has been presented with the help of bar graph, pie charts, line graphs etc.

Business

The business of the banks was initially confined to discounting of bills of exchange or

other negotiable private securities, keeping cash accounts and receiving deposits and

issuing and circulating cash notes. Loans were restricted to Rs.one Lakh and the period of

accommodation confined to three months only. The security for such loans was public

securities, commonly called Company's Paper, bullion, treasure, plate, jewels, or goods

'not of a perishable nature' and no interest could be charged beyond a rate of twelve per

cent. Loans against goods like opium, indigo, salt woollens, cotton, cotton piece goods,

mule twist and silk goods were also granted but such finance by way of cash credits gained

momentum only from the third decade of the nineteenth century. All commodities,

including tea, sugar and jute, which began to be financed later, were either pledged or

hypothecated to the bank. Demand promissory notes were signed by the borrower in
favour of the guarantor, which was in turn endorsed to the bank. Lending against shares of

the banks or on the mortgage of houses, land or other real property was, however,

forbidden. Indians were the principal borrowers against deposit of Company's paper, while

the business of discounts on private as well as salary bills was almost the exclusive

monopoly of individuals Europeans and their partnership firms. But the main function of

the three banks, as far as the government was concerned, was to help the latter raise loans

from time to time and also provide a degree of stability to the prices of government

securities.

First Five Year Plan

In 1951, when the First Five Year Plan was launched, the development of rural India was

given the highest priority. The commercial banks of the country including the Imperial

Bank of India had till then confined their operations to the urban sector and were not

equipped to respond to the emergent needs of economic regeneration of the rural areas.

In order, therefore, to serve the economy in general and the rural sector in particular, the All

India Rural Credit Survey Committee recommended the creation of a state-partnered and

state- sponsored bank by taking over the Imperial Bank of India, and integrating with it, the

former state-owned or state-associate banks. An act was accordingly passed in Parliament in

May 1955 and the State Bank of India was constituted on 1 July 1955. More than a quarter

of the resources of the Indian banking system thus passed under the direct control of the

State.
Later, the State Bank of India (Subsidiary Banks) Act was passed in 1959, enabling the

State Bank of India to take over eight former State-associated banks as its subsidiaries (later

named Associates).

The State Bank of India was thus born with a new sense of social purpose aided by the 480

offices comprising branches, sub offices and three Local Head Offices inherited from the

Imperial Bank. The concept of banking as mere repositories of the community's savings and

lenders to creditworthy parties was soon to give way to the concept of purposeful banking

sub serving the growing and diversified financial needs of planned economic development.

The State Bank of India was destined to act as the pacesetter in this respect and lead the

Indian banking system into the exciting field of national development.

Competitors

Competitors and other players in the field

Top Performing Public sectorbanks

Andhra Bank

Allahabad Bank

Dena Bank

Vijaya Bank

Punjab National Bank

Top Performing Private Sector Banks

Kotak Mahindra Bank

Centurion Bank of Punjab

Top performing foreign Banks

Citibank

Standard Chartered

HSBC Bank

ABN AMRO Bank

American Express
 Chapter-2: Data Reduction & Presentation

The mutual fund industry in India started in 1963 with the formation of Unit Trust of India,

at the initiative of the Government of India and Reserve Bank. Though the growth was

slow, but it accelerated from the year 1987 when non-UTI players entered the Industry. In

the past decade, Indian mutual fund industry had seen a dramatic improvement, both qualities

wise as well as quantity wise. Before, the monopoly of the market had seen an ending phase;

the Assets Under Management (AUM) was Rs67 billion. The private sector entry to the

fund family raised the Aum to Rs. 470 billion in March 1993 and till April 2004; it reached

the height if Rs. 1540 billion. The Mutual Fund Industry is obviously growing at a

tremendous space with the mutual fund industry can be broadly put into four phases

according to the development of the sector. Each phase is briefly described as under.

First Phase – 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament by the

Reserve Bank of India and functioned under the Regulatory and administrative control of

the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial

Development Bank of India (IDBI) took over the regulatory and administrative

control in place of RBI. The first scheme launched by UTI was Unit scheme 1964. At the

end of 1988 UTI had Rs.6700 crores of assets under management.

Second Phase – 1987-1993 (Entry of Public Sector Funds)

1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks

and Life Insurance Corporation of India (LIC) and General Insurance Corporation

of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June

1987 followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug

89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual

Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its

mutual fund in December 1990.At the end of 1993, the mutual fund industry had assets

under management of Rs.47, 004 crores.

Third Phase – 1993-2003 (Entry of Private Sector Funds)

1993 was the year in which the first Mutual Fund Regulations came into being, under

which all mutual funds, except UTI were to be registered and governed. The erstwhile

Kothari Pioneer (now merged with Franklin Templeton) was the first private sector

mutual fund registered in July 1993.

The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and

revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI

(Mutual Fund) Regulations 1996. As at the end of January 2003, there were 33 mutual

funds with total assets of Rs. 1, 21,805 crores.

Fourth Phase – Since Feb 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was

bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of

India with assets under management of Rs.29,835 crores as at the end of January 2003,

representing broadly, the assets of US 64 scheme, assured return and certain other

schemes The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC.

It is registered with SEBI and functions under the Mutual Fund Regulations. Consolidation

and growth. As at the end of September, 2004, there were 29 funds, which manage assets

of Rs.153108 crores under 421 schemes

 Categories of Mutual Fund

Mutual Funds Can Be Classified As Follow

Based On Their Structure

Open-Ended Funds

Investors can buy and sell the units from the fund, at any point of time.
Close-Ended Funds

These funds raise money from investors only once. Therefore, after the offer period, fresh

investments can not be made into the fund. If the fund is listed on a stocks exchange the

units can be traded like stocks (E.g., Morgan Stanley Growth Fund). Recently, most of the

New Fund Offers of close-ended funds provided liquidity window on a periodic basis such

as monthly or weekly. Redemption of units can be made during specified intervals.

Therefore, such funds have relatively low liquidity.

Based On Their Investment Objective

Equity Funds

These funds invest in equities and equity related instruments. With fluctuating share prices,

such funds show volatile performance, even losses. However, short term fluctuations in the

market, generally smoothens out in the long term, thereby offering higher returns at

relatively lower volatility. At the same time, such funds can yield great capital

appreciation as, historically, equities have outperformed all asset classes in the long term.

Hence, investment in equity funds should be considered for a period of at least 3-5 years. It

can be further classified as:

i) Index funds- In this case a key stock market index, like BSE Sensex or Nifty is

tracked. Their portfolio mirrors the benchmark index both in terms of composition and

individual stock weightages.

ii) Equity diversified funds- 100% of the capital is invested in equities spreading across

different sectors and stocks.

iii) Dividend yield funds- it is similar to the equity diversified funds except that they invest

in companies offering high dividend yields.

iv) Thematic funds- Invest 100% of the assets in sectors which are related through some

theme. e.g. -An infrastructure fund invests in power, construction, cements sectors etc.

v) Sector funds- Invest 100% of the capital in a specific sector. e.g. - A banking sector fund

will invest in banking stocks.

vi) ELSS- Equity Linked Saving Scheme provides tax benefit to the investors.

Balanced Fund

Their investment portfolio includes both debt and equity. As a result, on the risk-return

ladder, they fall between equity and debt funds. Balanced funds are the ideal mutual funds

vehicle for investors who prefer spreading their risk across various instruments. Following

are balanced funds classes:

i) Debt-oriented funds -Investment below 65% in equities.

ii) Equity-oriented funds -Invest at least 65% in equities, remaining in debt.

Debt Fund

They invest only in debt instruments, and are a good option for investors averse to idea of

taking risk associated with equities. Therefore, they invest exclusively in fixed-income

instruments like bonds, debentures, Government of India securities; and money market

instruments such as certificates of deposit (CD), commercial paper (CP) and call money.

Put your money into any of these debt funds depending on your investment horizon and

needs.

i) Liquid funds- These funds invest 100% in money market instruments, a large

portion being invested in call money market.

ii) Gilt funds ST- They invest 100% of their portfolio in government securities of and T-

bills.

iii) Floating rate funds - Invest in short-term debt papers. Floaters invest in debt

instruments which have variable coupon rate.

iv) Arbitrage fund- They generate income through arbitrage opportunities due to mis-

pricing between cash market and derivatives market. Funds are allocated to equities,

derivatives and money markets. Higher proportion (around 75%) is put in money

markets, in the absence of arbitrage opportunities.

v) Gilt funds LT- They invest 100% of their portfolio in long-term government
securities.

vi) Income funds LT- Typically, such funds invest a major portion of the portfolio in long-

term debt papers.

vii) MIPs- Monthly Income Plans have an exposure of 70%-90% to debt and an

exposure of 10%-30% to equities.

viii) FMPs- fixed monthly plans invest in debt papers whose maturity is in line WITH

THAT OF THE FUND.

Investment stradegies

Systematic Investment Plan under this a fixed sum is invested each month on a

fixed date of a month. Payment is made through post dated cheques or direct debit

facilities. The investor gets fewer units when the NAV is high and more units when the

NAV is low. This is called as the benefit of Rupee Cost Averaging (RCA).

Systematic Transfer Plan under this an investor invest in debt oriented fund and

give instructions to transfer a fixed sum, at a fixed interval, to an equity scheme of the

same mutual fund.

Systematic Withdrawal Plan if someone wishes to withdraw from a mutual fund

then he can withdraw a fixed amount each month.

Risk V/S. Return

Company Profile and Product Profile

Introduction to SBI Mutual Fund

SBI Funds Management Pvt. Ltd. is one of the leading fund houses in the

country with an investor base of over 4.6 million and over 20 years of rich

experience in fund management consistently delivering value to its investors.

SBI Funds Management Pvt. Ltd. is a joint venture between 'The State Bank of

India' one of India's largest banking enterprises, and Society General Asset

Management (France), one of the world's leading fund management companies

that manages over US$ 500 Billion worldwide.

Today the fund house manages over Rs 28500 crores of assets and has a diverse

profile of investors actively parking their investments across 36 active schemes.

In 20 years of operation, the fund has launched 38 schemes and successfully

redeemed 15 of them, and in the process, has rewarded our investors with

consistent returns. Schemes of the Mutual Fund have time after time

outperformed benchmark indices, honored us with 15 awards of performance

and have emerged as the preferred investment for millions of investors. The trust

reposed on us by over 4.6 million investors is a genuine tribute to our expertise in

fund management. SBI Funds Management Pvt. Ltd. serves its vast family of

investors through a network of over 130 points of acceptance, 28 Investor

Service Centres,46 Investor Service Desks and 56 District Organizers.SBI Mutual

is the first bank- sponsored fund to launch an offshore fund – Resurgent India

Opportunities Fund. Growth through innovation and stable investment policies is the SBI

MF credo.
Products of SBI Mutual Fund

Equity Schemes

The investments of these schemes will predominantly be in the stock markets

and endeavour will be to provide investors the opportunity to benefit from the

higher returns which stock markets can provide. However they are also exposed to

the volatility and attendant risks of stock markets and hence should be

chosen only by such investors who have high risk taking capacities and are

willing to think long term. Equity Funds include diversified Equity Funds,

Sectoral Funds and Index Funds. Diversified Equity Funds invest in various

stocks across different sectors while sectoral funds which are specialized Equity

Funds restrict their investments only to shares of a particular sector and hence,

are riskier than Diversified Equity Funds. Index Funds invest passively only in

the stocks of a particular index and the performance of such funds move with the

movements of the index.

 Magnum COMMA Fund

 Magnum Equity Fund

 Magnum Global Fund

 Magnum Index Fund

 Magnum Midcap Fund

 Magnum Multicap Fund

 Magnum Multiplier plus 1993

 Magnum Sectoral Funds Umbrella

  MSFU- Emerging Business Fund

 MSFU- IT Fund

 MSFU- Pharma Fund

 MSFU- Contra Fund

 MSFU- FMCG Fund

 S B I A r b i t r a g e O p p o r t un i tie s F u n d

 S B I Blue ch ip Fun d

 S B I I n f r a st r u c t ur e F u n d - S e r i e s I

 S B I M a g n u m Ta x g a i n Sc h e m e 1 9 9 3

 S B I ON E I n d i a F u n d

 S B I TA X AD VAN TA G E FUN D - S E R I E S I

Debt Schemes

Debt Funds invest only in debt instruments such as Corporate Bonds, Government

Securities and Money Market instruments either completely avoiding any

investments in the stock markets as in Income Funds or Gilt Funds or having a

small exposure to equities as in Monthly Income Plans or Children's Plan. Hence

they are safer than equity funds. At the same time the expected returns from

debt funds would be lower. Such investments are advisable for the risk-averse

investor and as a part of the investment portfolio for other investors.

 Magnum Children’s benefit Plan

 Magnum Gilt Fund

  Ma g nu m I n c o m e F u n d

 Ma g nu m In s t a C as h F u n d

 Magnum Income Fund- Floating Rate Plan

 Magnum Income plus Fund

 Ma g nu m In s t a C as h F u n d - L i q u i d F l o a t e r P l a n

 Ma g nu m M o n t h l y I n c o m e P l a n

 Ma g nu m M o n t h l y I n c o m e P l a n - Floater

 Ma g nu m N R I I n v e s t m e n t F u n d

 S B I P r e m ie r Li q u i d F u n d

Balanced Schemes

Magnum Balanced Fund invests in a mix of equity and debt investments. Hence

they are less risky than equity funds, but at the same time provide

commensurately lower returns. They provide a good investment opportunity to

investors who do not wish to be completely exposed to equity markets, but is

looking for higher returns than those provided by debt funds.

Competitors of SBI Mutual Fund

Some of the main competitors of SBI Mutual Fund in Kanpur are as follows:

i. ICICI Mutual Fund

ii. Reliance Mutual Fund
 iii. UTI Mutual Fund
iv. Birla Sun Life Mutual Fund
v. Kotak Mutual Fund
vi. HDFC Mutual Fund
vii.Sundaram Mutual Fund
viii. LIC Mutual Fund
ix. Principal
x. Franklin Templeton
Awards and Achievements

SBI Mutual Fund (SBIMF) has been the proud recipient of the ICRA Online Award – 8

times, CNBC TV - 18 Crisil Award 2006 - 4 Awards, The Lipper Award (Year 2005-

2006) and most recently with the CNBC TV - 18 Crisil Mutual Fund of the Year Award

2007 and 5 Awards for our schemes.

VISION & MISSION

Vision

Premier Indian financial services group with global perspective, world class standards of

the efficiency and professionalism and core institutional values.

Retain its position in the country as a pioneer in developing countries.

Maximize shareholder value through high sustained earnings per share.

An institution with a culture of mutual care and commitment a satisfying and exciting.

Work environment and continuous learning opportunity.

Mission

To retain the banks position as the premier Indian financial services.

Group with world class standards and significant global business commitment to

excellence in customer, shareholder and employee satisfaction and to play a leading role in

the expanding and diversifying financial service sector while continuing emphasis on its

development banking role.

Business Quality Objective

1. Development of the banking in rural areas.

2. Establishment of the powerful bank.

3. Provide help for agriculture sector.

4. Normal help.

Organizational structure

Definition

Formal and informal framework of policies and rules, within which an organization

arranges its lines of authority and communications, and allocates rights and duties.

Organizational structure determines the manner and extent to which roles, power, and

responsibilities are delegated, controlled, and coordinated, and how information flows

between levels of management. This structure depends entirely on the organization's

objectives and the strategy chosen to achieve them. In a centralized structure, the decision

making power is concentrated in the top layer of the management and tight control is

exercised over departments and divisions. In a decentralized structure, the decision making

power is distributed and the departments and divisions have varying degrees of autonomy.

An organization chart illustrates the organizational structure.

Importance of Organizational Structure

Organisation structure involves how a business organizes, categorizes and delegates tasks

to achieve a specific goal. A company's organizational structure determines how

business decisions are made and implemented at all levels of the business.
Organizational Chart

An organizational chart shows how departments, divisions and various levels of an

organization interact with one another. Organizational charts are expressed as a visual

illustration or outline.

Chain of Command

An important purpose of organizational structure is to identify who's involved in the

decision-making process and how those decisions are actualized.

Distribution of Authority

Organizational structure plays a role in determining how a structure distributes

authority throughout an organization. Important factors must be addressed for an

organization to effectively pursue a goal, such as whether subordinates are involved in

the decision-making or if that is reserved for a few main authority figures within the

departments.

Departmentalization

Organizational structure defines how specific tasks and activities are assigned to their

functional departments. For example, sale representatives may be grouped within a

sales department or division.

Span of Control

Span of control defines the number of employees over whom a manager exercises

authority.
Types of organisational structure

Different types of Organisation structure can be created on the basis of arrangement of

activities. Accordingly, three broad types of structural forms are:

· Functional Structure

· Divisional Structure, and

· Adaptive Structure

Functional Structure

When units and sub-units of activities are created in organisation on the basis of functions,

it is known as functional structure. Thus, in any industrial organisation, specialised

functions like manufacturing marketing, finance and personnel constitute as separate units

of the organisation. All activities connected with each such function are placed in the same

unit. As the volume of activity increases, sub-units are created at lower levels in each unit

and the number of persons under each manager at various levels gets added. This results in

the interrelated positions taking the shape of a pyramid.

Divisional Structure

The divisional organisation structure is more suited to every large enterprise particularly

those which deal in multiple products to serve more than one distinctive markets. The

organisation is then divided into smaller business units which are entrusted with the
business related to different products or different market territories. In other words,

independent divisions (product divisions or market division), are created under

the overall control of the head office. Each divisional manager is given autonomy to run

all functions relating to the product or market segment or regional market. Thus, each

division may have a number of supporting functions to undertake. The divisional structure

is characterised by decentralisation of authority. Thus, it enables managers to take

Decisions promptly and resolve problems appropriate to the respective divisions. It also

provides opportunity to the divisional managers to take initiative in matters within their

jurisdiction. But such a structure involves heavy financial costs due to the duplication of

supporting functional units for the divisions. Moreover, it requires adequate number of

capable managers to take charge of the respective divisions and their functional units.

Adaptive Structure

Organisation structures are often designed to cope with the unique nature of undertaking

and the situation.

This type of structure is known as adaptive structure. There are two types in structures.

i) Project Organisation, and

ii) Matrix Organisation

Project Organisation: When an enterprise undertakes any specialised, time-bound work

involving one-time operations for a fairly long period, the project organisation is found

most suitable. In this situation the existing organisation creates a special unit so as to

engage in a project work without disturbing its regular business. This becomes necessary

where it is not possible to cope with the special task or project. Within the existing system,

the project may consist of developing a new project, installing a plant, building an office
complex, etc.. A project organisation is headed by a project manager in charge, who holds

a middle management rank and reports directly to the chief executive. Other managers and

personnel in the project organisation are drawn from the functional departments of the

parent organisation. On completion of the project they return to their parent departments.

Matrix Organisation: This is another type of adaptive structure which aims at combining

the advantages of autonomous project organisation and functional specialisation. In the

matrix organisation structure, there are functional departments with specialised personnel

who are deputed to work full time in different projects sometimes in more than one project

under the overall guidance and direction of project managers. When a project work is

completed, the individuals attached to it go back to the irrespective functional department

to be assigned again to some other project. This arrangement is found suitable where the

organisation is engaged in contractual project activities and there are many project

managers, as in a large construction company or engineering firm.

 Organisational Structure of SBI

Functioning of the department (finance)

The State Bank of India acts as an agent of the Reserve Bank of India and performs the

following functions

1. Borrows money The Bank borrows money from the public by accepting deposits

such as current account deposits, fixed deposit and savings deposits.

2. Lends money It lends money to merchants and manufacturers for short periods.

It also lends to farmers and co-operative institutions. It lends mostly on the

security of easily realizable commodities like rice, wheat, cotton, oil-seeds, cloth,
 gold and government securities. The Bank can lend against agricultural bills upto a

maximum period of fifteen months and in case of other bills upto a maximum

period of six months.

3. Banker’s Bank The State Bank of India acts as the banker’s bank. In discharging

this responsibility, the bank provides loans to commercial bank when required and

also rediscount their bill. It also acts as the clearing house of the commercial bank.

4. Government’s Bank The State Bank of India also acts as the agent of the

Reserve Bank of India. As an agent, the State Bank of India maintains the

treasuries of the State Government. The Bank also manages the debts floated by

the State Governments.

5. Remittance The State Bank of India facilitates remittance of money from one

place to another. It also helps in the transfer on the funds of the State and Central

Government.

6. Functions as Central Bank The State Bank of India performs the functions of a

Central Bank.

7. Subsidiary functions The State Bank performs various subsidiary services also.

It collects checks, drafts, bill of exchange, dividends interest, salaries and pensions

on behalf of its customers. It purchases and sells securities on behalf of its

customer. It receives valuables and documents for safe custody and maintains safe

deposit vaults.

HRD functions in SBI Bank

I Staff Meetings
  Staff Meeting aims at group synergy, team building, open culture, family feeling

and talent recognition which individually and cumulatively benefit the

organizations.

 Goals/Targets set for the unit/Bank is discussed in the monthly Staff Meetings

conducted at all branches/units and action plan is drawn in achieving them.

 The forum is being effectively utilized for harmonious functioning of all the

branches and administrative units through greater involvement and collective

contribution of all staff members.

II Brain Storming Sessions

 This is a technique for generating ideas and suggestions on topics of relevance and

also to provide alternate solutions to problems by simulative thinking and

imaginative power of cross section of employees.

 Corporate Topics are selected for each quarter and BSS are conducted in

administrative offices/ braches on the topic during every quarter.

 Worthy implement able suggestions emanated are circulated for necessary action.

III Study Circle

 Concept of Study Circle aims at self development of employees by kindling the

desire to acquire/update knowledge, information and experience.

 Guest lectures/ Power Point Presentation / Group Discussions, etc are arranged on

topics of general interest by inviting experts in the field.

  Study Circle Meeting are conducted once in two months in administrative offices

and once in a quarter in braches

Marketing functions at SBI

The trend in financial marketing is more and more toward micro-marketing. This means

the bank tailors its products, services, communications, service levels, and sales to meet

the local needs of niche markets. In major cities, markets may vary dramatically from

block to block. In other communities, the market may vary by section of town or even

county.

It is the responsibility of marketing to insure the bank acts in accordance with local needs.

From time-to-time, this may involve market research to determine the precise strategy

needed. But at a minimum, the marketing function can help tailor the sales and marketing

plan to each market by staying abreast of changing local conditions using input from the

bank's personnel.

The marketing audit relies heavily on the ideas and needs expressed by bank officers and

employees. Frankly, a good idea can come from anywhere within the organization. By

talking with tellers, customer service representatives and secretaries on a regular basis in

each branch, the bank's marketing department can solicit input and feedback on customer

needs without incurring a huge market research bill. And, it can avoid expensive mistakes.

A savvy marketing plan in one area can easily fail in another.

The same concept also holds true for specialized functions within the bank. Functions such

as investments, trust, cash management, mortgage banking, credit cards and others require

specialized marketing plans. While these functions may benefit from the bank's overall

marketing plan, they frequently target unique markets. Therefore, these functions often

require mini-marketing plans of their own.

Strengths

 The growth for SBI in the coming years is likely to be fueled by the following

factors:
 Continued effort to increase low cost deposit would ensure improvement in NIMs

and hence earnings.

 Growing retail & SMEs thrust would lead to higher business growth.
 Strong economic growth would generate higher demand for funds pursuant to

higher corporate demand for credit on account of capacity expansion.

Weakness

The weakness that could ensue to SBI in time to come are as under:

 SBI is currently operating at a lowest CAR. Insufficient capital may restrict

the growth prospects of the bank going forward.

 Delay in technology upgradation could result in loss of market shares.
 Management structure.
 Non-performing asset.

Opportunities

 Merger of associate banks.

 Addition of branches.
 Opportunity to expand in foreign soil.

Threats

 Stiff competition especially in retail segment could impact retail growth of SBI and

hence slowdown in earnings growth.

 Low down in domestic company would pose a concern over credit off – take

thereby impacting earnings growth.

 Venturing of private banks.

 Employee strikes.
Ethical Practices And Safety In SBI

Ethics Towards Employees

Ethical Code of Conduct

 To provide services in professional, efficient, courteous,diligent and speedy

manner.
 Not to discriminate on the basis of religion, caste, sex,descent or any of them.
 To be fair and honest in advertisement and marketing.
 To provide accurate and timely disclosure of terms, costs,rights and liabilities.
 To comply with all the regulatory requirements.
 To spread general awareness about potential risks in contracting loans
 To provide financial advice to the customers.
 Low loan interest rates and high interest rates on deposits.
 Medical reimbursements, accommodation, insurance, PF,pension, etc.
 Healthy, safe and productive work environment.
 Still unrest in employees. Latest SBI strike!

Ethics Towards Customers

 Keep customer information confidential.

 Notify interest rate changes.
 Send details for all charges payable by customers.

Ethics Towards Society

 Interest free loans for crop production, horticulture and plantation crops etc.
 Launched ”Gram Nivas Scheme” with focus on the poor for Housing Loans.
 Contributed in poverty alleviation programme by Micro finance.
A

Structure of Mutual Funds in India

Like other countries, India has a legal framework within which mutual funds must
be constituted. Unlike in the UK, where two distinct structures - trust and corporate are
allowed with separate regulations, depending on their nature - open - ended or close -
ended. In India, open - ended and close - ended funds are constituted along one unique
structure - as unit trusts. A mutual fund in India is allowed to issue open - ended and
close-ended schemes under a common legal structure. Therefore, a mutual fund may have
several different schemes (open and close-ended) under it i.e., under one unit trust, at any
point of time. However, like the U.S.A. all the funds and their open - ended and close -
ended schemes are governed by the same regulations and the regulatory body, the SEBI.
The structure that is required to be followed by mutual funds in India is laid down under
SEBI (Mutual Fund) Regulations, 1996.

The Fund Sponsor

Sponsor is defined under SEBI regulations as any person who, acting alone or in
combination with another body corporate, establishes a mutual fund. The sponsor of a
fund is akin to the promoter of a company as he gets the fund registered with SEBI.
The sponsor will form a Trust and appoint a Board of Trustees. The sponsor will also
generally appoint an Asset Management Company as fund managers. The sponsor, either
directly or acting through the Trustees, will also appoint a Custodian to hold the fund
assets. All these appointments are made in accordance with SEBI Regulations. As per the
existing SEBI regulations, for a person to qualify as a sponsor, he must contribute at least
40% of the net worth of the AMC and possess a sound financial track record over five
years prior to registration.

Mutual Funds as Trusts

A mutual fund in India is constituted in the form of a Public Trust created under
the Indian Trusts Act, 1882. The Fund Sponsor acts as the Settler of the Trust,
contributing to its initial capital, and appoints a Trustee to hold the assets of the Trust for
the benefit of the unit-holders, who are the beneficiaries of the trust. The fund then
invites investors to contribute their money in the common pool, by subscribing to “units”
issued by various schemes established by the trust, units being the evidence of their
beneficial interest in the fund.
It should be understood that a mutual fund is just “a pass-through” vehicle. Under
the Indian Trusts Act, the Trust or the Fund has no independent legal capacity itself,
rather it is the Trustee or Trustees who have the legal capacity and therefore all acts in
relation to the trust are taken on its behalf by the Trustees. The Trustees hold the
unitholders
money in a fiduciary capacity, i.e., the money belongs to the unit-holders and is
entrusted to the fund for the purpose of investment. In legal parlance, the investors or the
unit-holders are the ‘beneficial owners’ of the investments held by the Trust, even as
these investments are held in the name of the trustees on a day-to-day basis. Being Public
Trusts, mutual funds can invite any number of investors as beneficial owners in their
investment schemes.

Trustees

The Trust- the mutual fund - may be managed by a Board of Trustees - a body of
individuals, or a Trust Company a corporate body. Most of the funds in India are
managed by Board of Trustees. While the Board of Trustees is governed by the
provisions of the Indian Trusts Act, where the Trustee is a corporate body, it would also
be required to comply with the provisions of the Companies Act, 1956. The Board or the
Trustee Company, as an independent body, acts as protector of the unit-holders interests.
The Trustees do not directly manage the portfolio of securities. For this specialist
function, they appoint an Asset Management Company. They ensure that the fund is
managed by the AMC as per the defined objectives and in accordance with the Trust
Deed and SEBI Regulations.
The trust is created through a document called the Trust Deed that is executed by
the Fund Sponsor in favour of the Trustees. The Trust Deed is required to be stamped as
registered under the provisions of the Indian Registration Act and registered with SEBI.
Clauses in the Trust Deed, inter alia, deal with the establishment of the Trust, the
appointment of Trustees, their powers and duties, and the obligations of the Trustees
towards the unit-holders and the AMC. These clauses also specify activities that the
fund/AMC cannot undertake. The Third Scheduled of the SEBI (MF) Regulations, 1996
specifies the contents of the Trust Deed.
The Trustees being the primary guardians of the unit-holders’ funds and assets, a
Trustee has to be a person of high repute and integrity. SEBI has laid down a set of
conditions to be fulfilled by the individuals being proposed as trustees of mutual fundsboth
independent and non-independent. Besides specifying the ‘disqualifications’, SEBI
has also set down the Rights and Obligations of the Trustees. Broadly, the Trustees must
ensure that the investors’ interests are safeguarded and that the AMC’s operations are
along professional lines. They must also ensure that the management of the fund is in
accordance with SEBI Regulations. To ensure the independence of the trustee company.
SEBI mandates a minimum of two-third independent directors on the board of the
trustees company.

The Asset Management Company - Appointment and Functions

The role of an AMC is to act as the Investment Manager of the Trust.

The sponsors, or the trustees, if so authorised by the Trust Deed, appoint the AMC. The
AMC so appointed is required to be approved by SEBI. Once approved, the AMC
functions under the supervision of its own Board of Directors, and also under the
direction of the Trustees and SEBI. The Trustees are empowered to terminate the
appointment of the AMC and appoint a new AMC with the prior approval of SEBI and
unit-holders.
The AMC of a mutual fund must have a net worth of at least Rs. 10 crores at all
times. Directors of the AMC, both independent and non-independent, should have
adequate professional experience in financial services and should be individuals of high
moral standing, a condition also applicable to other key personnel of the AMC. The AMC
cannot act as a trustee of any other mutual fund. Besides its role as the fund manager, it
may undertake specified activities such as advisory services and financial consulting,
provided these activities are run independently of one another and the AMC’s resources
(such as personnel, systems, etc.) are properly segregated by activity. The AMC must
always act in the interest of the unit-holders and report to the trustees with respect to its
activities. To ensure the independence of the asset management company. SEBI
mandates that a minimum of 50% of the directors of the board of the asset management
company should be independent directors.

Independent Directors and Trustees

SEBI places certain obligation on independent directors on boards of the Trust

and the AMC. They must pay specific attention to the Investment Management
Agreement and the compensation paid under it, any service contracts with affiliates to
ensure higher than market-level fees have not been charged by the AMC to the fund, any
securities transactions with affiliates if permitted, principal underwriting contracts, and
any service contracts with the associates of the AMC. The broad purpose of these
obligations is to ensure the reasonability of all fees paid to sponsors, AMC and their
associates for services provided. The independent directors/trustees must also design a
code of ethics for the AMC and Trust personnel for any personal securities transactions,
based on SEBI guidelines and regulations in this respect. They must also oversee the
selection of their independent director’s appointments.

OTHER FUND CONSTITUENTS

In this section, the role of the other fund constituents- the custodian, the bankers,
the transfer agents and the marketing/distribution participants are discussed.

Custodian and Depositories

Mutual funds are in the business of buying and selling of securities in large
volumes. Handling these securities in terms of physical delivery and eventual safekeeping
is therefore a specialized activity. The custodian is appointed by the Board of Trustees for
safekeeping of physical securities or participating in any clearing system through
approved depository companies on behalf of the mutual fund in case of dematerialized
securities. A custodian must fulfill its responsibilities in accordance with its agreement
with the mutual fund. The custodian should be an entity independent of the sponsors and
is required to be registered with SEBI.
Note that the Indian capital markets have moved away from having physical
certificates for securities, to ownership of these securities in ‘dematerialised’ form with a
depository. Thus, a mutual fund’s dematerialised securities holdings are held in a
depository through a Depository Participant. A fund’s physical securities will continue to
be held by a custodian. Thus, deliveries of a fund’s securities are given or received by a
custodian or a depository participant, at the instruction of the AMC, although under the
overall direction and responsibility of the Trustees.

Bankers

A fund’s activities involve dealing with money on a continuous basis primarily

with respect to buying and selling units, paying for investments made, receiving the
proceeds on sale of investments and discharging its obligations towards operating
expenses. A fund’s bankers, therefore, play a crucial role with respect to its financial
dealings by holding its bank accounts and providing it with remittance services.

Registrars and Transfer Agents

Registrars and Transfer Agents are responsible for issuing and redeeming units of
the mutual fund and providing other related services such as preparation of transfer
documents and updating investor records. A fund may choose to carry out this activity
inhouse
and charge the scheme for the service at a competitive market rate. Where an
outside Transfer Agent is used, the fund investor will find the transfer agent to be an
important interface to deal with, since all of the investor services that a fund provides
(besides the investment management) are going to be dependent on the transfer agent.
Such services include buying/repurchase of units, switching from one scheme to another,
systematic investment/ withdrawals, recording of nomination & bank details.

Distributors

Mutual funds operate as collective investment vehicles, on the principle of

accumulating funds from a large number of investors and then investing on a big scale.
For a fund to sell units across a wide retail base of individual investors, an established net
work of distribution is essential.
AMCs usually appoint distributors (Agents, Brokers, Intermediaries) who sell
units on behalf of the fund. Some funds even require that all transactions be routed
through their distributors. A sponsor or an associate (or in some cases, an employee) may
act as a distributor for the AMC with which he or she is associated, only if adequate
disclosure of such involvement and the brokerage/ commission paid is made to unit
holders. A distributor usually acts on behalf of several mutual funds simultaneously and
may have several sub-brokers under for the purpose of distribution of units.
In India, the distributor community includes brokers, as also independent
individuals who are appointed as ‘agents’ for the purpose of selling the fund schemes to
investors. These agents are not brokers in a formal sense and do not belong to any stock
exchange or organised self-regulatory body of brokers.
Advantages of Mutual Funds

If mutual fund is emerging as the favourite investment vehicle, it is because of the

many advantages it has over other forms and avenues of investing, particularly for the
investor who has limited resources available in terms of capital and ability to carry out
detailed research and market monitoring. The following are the major advantages offered
by mutual funds to all investors.

Portfolio Diversification
Mutual Funds normally invest in a well-diversified portfolio of securities.
Each investor in a fund is a part owner of all of the fund’s assets. This enables him to
hold a diversified investment portfolio even with a small amount of investment, which
would otherwise require big capital.

Professional Management
Even if an investor has a big amount of capital available to him, he benefits from
the professional management skills brought in by the fund in the management of the
investor’s portfolio. The investment management skills, along with the needed research
into available investment options, ensure a much better return than what an investor can
manage on his own. Few investors have the skills and resources of their own to succeed
in today’s fast-moving, global and sophisticated markets.

Reduction/Diversification of Risk
An investor in a mutual fund acquires a diversified portfolio, no matter how small
his investment. Diversification reduces the risk of loss, as compared to investing directly
in one or two shares or debentures or other instruments. When an investor invests
directly, all the risk of potential loss is his own. While investing in the pool of funds with
other investors, any loss on one or two securities is also shared with other investors.
This risk reduction is one of the most important benefits of a collective investment
vehicle like the mutual fund.

Reduction of Transaction Costs

What is true of risk is also true of the transaction costs. A direct investor bears all
the costs of investing such as brokerage or custody of securities. When going through a
fund, he has the benefit of economies of scale; the funds pay lesser costs because of
larger volumes, a benefit passed on to its investors.

Liquidity
Often, investors hold shares or bonds they cannot directly, easily and quickly sell.
Investment in a mutual fund, on the other hand, is more liquid. An investor can liquidate
the investment by selling the units to the fund if it is an open-ended fund, or by selling
the units in the stock market if the fund is a close-ended fund, since close - ended funds
have to be listed on a stock exchange. In any case, the investor in a close - ended fund
receives the sale proceeds at the end of a period specified by the mutual fund or the stock
exchange.

Convenience and Flexibility

Mutual fund management companies offer many investor services that a direct
market investor cannot get. Within the same fund family, investors can easily
transfer/switch their holdings from one scheme to another. They can also invest or
withdraw their money at regular intervals in most open - ended schemes. Mutual fund
investment process has been made further more convenient with the facility offered by
funds for investors to buy or sell their units through the internet or email or using other
communication means. The investors also get updated market information from the
funds. The information about the schemes is also shared by the fund managers in a
transparent manner, with all material facts required by regulators to be disclosed to the
investors.

Safety
Mutual Fund industry is well-regulated and all funds are registered with SEBI
which lays down rules to protect the investors. Thus, investors also benefit from the
safety of a regulated investment environment.

Disadvantages of Investing through Mutual Funds

While the benefits of investing through mutual funds far outweigh the
disadvantages, an investor and his advisor will do well to be aware of a few shortcomings
of using the mutual fund as an investment vehicle.

No Control over Costs

An investor in a mutual fund has no control over the overall cost of investing. He pays
investment management fees as long as he remains with the fund, albeit in return for the
professional management and research. Fees are usually payable as a percentage of the value of
his investments, whether the fund value is rising or declining. A mutual fund investor also pays
fund distribution costs, which he would not incur in direct investing. However, this
shortcoming only means that there is a cost to obtain the benefits of mutual fund services, and
this cost is often less than the cost of direct investing by the investors. Besides, the regulators
have prescribed a ceiling on the maximum expenses that the fund managers can charge to the
schemes, thus limiting the investor’s expense of investing through mutual funds.

No Tailor-made Portfolio
Investors who invest on their own can build their own portfolio of shares, bonds
and other securities. Investing through funds means he delegates this decision to the fund
managers. High -net-worth individuals or large corporate investors may find this to be a
constraint in achieving their objectives. However, most mutual funds help investors
overcome this constraint by offering families of schemes- a large number of different
schemes within the same fund. In each scheme there are various plans and options. An
investor can choose from different investment schemes/plans/options and construct an
investment portfolio that meets his investment objectives.

Managing a Portfolio of Funds

Availability of a large number of options from mutual funds can actually mean too
much choice for the investor. He may again need advice on how to select a fund to achieve his
objectives, quite similar to the situation when he has to select individual shares or bonds to
invest in. Fortunately, India now has a large number of AMFI registered and tested fund
distributors and financial planners who are capable of guiding the investors.
 Chapter-3: Data Analysis

1. (a) Age distribution of the Investors of Kanpur

Age Group <= 30 31-35 36-40 41-45 46-50 >50

No. of 12 18 30 24 20 16

35
Investors invested in Mutual

30

25
Fund

20

15 30

24

10 20
18 16

12
5

<=30 31-35 36-40 41-45 46-50 >50

 Age group of the Investors

Interpretation:

According to this chart out of 120 Mutual Fund investors of Kanpur the most are in the

age group of 36-40 yrs. i.e. 25%, the second most investors are in the age group of 41-

45yrs i.e. 20% and the least investors are in the age group of below 30 yrs.

(b). Educational Qualification of investors of Kanpur

Educational Qualification Number of Investors

Graduate/ Post Graduate 88

Under Graduate 25

Others 7

Total 120

6%

23%

71%

Graduate/Post Graduate Under Graduate Others

Interpretation:

Out of 120 Mutual Fund investors 71% of the investors in Kanpur are Graduate/Post
Graduate, 23% are Under Graduate and 6% are others (under HSC).

c). Occupation of the investors of Kanpur

Occupation No. of Investors

Govt. Service 30
Pvt. Service 45
Business 35
Agriculture 4
Others 6

50
No. of Investors

40

30

20 45
3

30

10

4 6
0

Govt. Pvt.

Service Service Business Agriculture Others

Occupation of the customers

Interpretation:

In Occupation group out of 120 investors, 38% are Pvt. Employees, 25% are
Businessman, 29% are Govt. Employees, 3% are in Agriculture and 5% are in

others.

(d). Monthly Family Income of the Investors of Kanpur.

Income Group No. of Investors

<=10,000 5
10,001-15,000 12
15,001-20,000 28
20,001-30,000 43
>30,000 32

50

45

40
No. of Investors

35

30

25

43
20

15 32
28

10

5 12

<=10 10-15 15-20 20-30 >30

 Income Group of the Investorsn (Rs. in Th.)

Interpretation:

In the Income Group of the investors of Kanpur out of 120 investors, 36% investors that is

the maximum investors are in the monthly income group Rs20,001 to Rs. 30,000,

Second one i.e. 27% investors are in the monthly income group of more than Rs.

30,000 and the minimum investors i.e. 4% are in the monthly income group of below

Rs. 10,000.
2. Preference Of Factors While Investing

Factors (a) Liquidity (b) Low Risk (c) High Return (d) Trust

No. of 40 60 64 36

18% 20%

30%
32%

Liquidity Low Risk High Return Trust

Interpretation:

Out of 200 People, 32% People prefer to invest where there is High Return, 30% prefer

to invest where there is Low Risk, and 20% prefer easy Liquidity and18% prefer Trust.
3. Awareness About Mutual Fund And Its Operations

Response Yes No
No. of Respondents 135 65

33%

67%

Yes No

Interpretation:

From the above chart it is inferred that 67% People are aware of Mutual Fund and its

operations and 33% are not aware of Mutual Fund and its operations.
4. Source Of Information For Customers About Mutual Fund

Source of information No. of Respondents

Advertisement 18
Peer Group 25
Bank 30
Financial Advisors 62

70

60
Responde

50
No.

nts
of

40

30 62

20

25 30
10 18

Advertisement PeerGroup Banks

Financial

Advisors

Sourceof Information
Interpretation:

From the above chart it can be inferred that the Financial Advisor is the most

important source of information about Mutual Fund. Out of 135 Respondents, 46%

know about Mutual fund Through Financial Advisor, 22% through Bank, 19%

through Peer Group and 13% through Advertisement.

5. Investors Invested In Mutual Fund

Response No. of Respondents

YES 120
NO 80
Total 200

No

40%

Yes

60%

Interpretation:

Out of 200 People, 60% have invested in Mutual Fund and 40% do not have invested

in Mutual Fund.
6. Reason For Not Invested In Mutual Fund

Reason No. of Respondents

Not Aware 65
Higher Risk 5
Not any Specific Reason 10

6 %
13 %

81%

Not Aware Higher Risk Not

Any

Interpretation:

Out of 80 people, who have not invested in Mutual Fund, 81% are not aware of Mutual Fund,

13% said there is likely to be higher risk and 6% do not have any specific reason.
 8. Investors Invested In Different Assets Management Co. (AMC)

Name of AMC No. of Investors

SBIMF 55
UTI 75
HDFC 30
Reliance 75
ICICI Prudential 56
Kotak 45
Others 70

Others
70

HDFC
30
Name of AMC

Kotak
45

SBIMF
55

ICICI
56

Reliance
75

UTI
75

0 20 40 60 80

No. of Investors

Interpretation:
In Kanpur most of the Investors preferred UTI and Reliance Mutual Fund. Out of 120

Investors 62.5% have invested in each of them, only 46% have invested in SBIMF, 47% in
8. Reason For Invested In SBIMF

Reason No. of Respondents

Associated with SBI 35
Better Return 5
Agents Advice 15

27%

9% 64%

Associated with SBI Better Return

AgentsAdvice

Interpretation:

Out of 55 investors of SBIMF 64% have invested because of its association with Brand
SBI, 27% invested on Agent’s Advice, 9% invested because of better return.

9. Reason For Not Invested In SBIMF

Reason No. of Respondents

Not Aware 25
Less Return 18
Agent’s Advice 22

34%

38

28%

Not Aware LessReturn Agent'sAdvice

Interpretation:

Out of 65 people who have not invested in SBIMF, 38% were not aware with SBIMF, 28%

do not have invested due to less return and 34% due to Agent’s Advice.
10. Preference Of Investors For Future Investment In Mutual Fund

Name of AMC No. of Investors

SBIMF 76
UTI 45
HDFC 35
Reliance 82
ICICI Prudential 80
Kotak 60
Other 75

Others 75

Kotak 60

ICICI Prudential 80
Name of

Reliance 82
AMC

HDFC 35

UTI 45

SBIMF 76

0 20 40 60 80 100

No. of

Investors
Interpretation:

Out of 120 investors, 68% prefer to invest in Reliance, 67% in ICICI Prudential, 63% in

SBIMF, 62.5% in Others, 50% in Kotak, 37.5% in UTI and 29% in HDFC Mutual Fund.
11. Channel Preferred By The Investors For Mutual Fund Investment

Channel Financial Advisor Bank AMC

No. of Respondents 72 18 30
 25%

60%

15%
 Financial Advisor Bank AMC

Interpretation:

Out of 120 Investors 60% preferred to invest through Financial Advisors, 25% through AMC

and 15% through Bank.

12. Mode Of Investment Preferred By The Investors

Mode of Investment One time Investment Systematic Investment Plan (SIP)

No. of Respondents 78 42

35%
 65%

One time Investment SIP

Interpretation:

Out of 120 Investors 65% preferred One time Investment and 35 % Preferred through

Systematic Investment Plan.

13. Preferred Portfolios By The Investors

Portfolio No. of Investors

Equity 56
Debt 20
Balanced 44
 37%

46%

17%

Equity Debt Balance

Interpretation:

From the above graph 46% preferred Equity Portfolio, 37% preferred Balance and 17%

preferred Debt portfolio

14. Option For Getting Return Preferred By The Investors

 Option Dividend Payout Dividend Growth

No. of Respondents 25 10 85

21%

8%

71%

Dividend Payout Dividend

Reinvestment Growth

Interpretation:

From the above graph 71% preferred Growth Option, 21% preferred Dividend Payout and

8% preferred Dividend Reinvestment Option.

15. Preference of Investors Whether To Invest In Sectoral Funds

Response No. of Respondents

Yes 25
No 95
21%
 79%

Yes No

Interpretation:

Out of 120 investors, 79% investors do not prefer to invest in Sectoral Fund because there

is maximum risk and 21% prefer to invest in Sectoral Fund.

 Chapter-4: Summary and Conclusions

Running a successful Mutual Fund requires complete understanding of the peculiarities of

the Indian Stock Market and also the psyche of the small investors. This study has made

an attempt to understand the financial behaviour of Mutual Fund investors in connection

with the preferences of Brand (AMC), Products, Channels etc. I observed that many of

people have fear of Mutual Fund. They think their money will not be secure in Mutual

Fund. They need the knowledge of Mutual Fund and its related terms. Many of people do

not have invested in mutual fund due to lack of awareness although they have money to

invest. As the awareness and income is growing the number of mutual fund investors are

also growing.

“Brand” plays important role for the investment. People invest in those Companies where

they have faith or they are well known with them. There are many AMCs in Kanpur but

only some are performing well due to Brand awareness. Some AMCs are not performing

well although some of the schemes of them are giving good return because of not

awareness about Brand. Reliance, UTI, SBIMF, ICICI Prudential etc. they are well known

Brand, they are performing well and their Assets Under Management is larger than

others whose Brand name are not well known like Principle, Sunderam, etc. Distribution

channels are also important for the investment in mutual fund. Financial Advisors are the

most preferred channel for the investment in mutual fund. They can change investors’ mind

from one investment option to others. Many of investors directly invest their money

through AMC because they do not have to pay entry load. Only those people invest

directly who know well about mutual fund and its operations and those have time.
Limitation of the Study

 Some of the persons were not so responsive.

 Possibility of error in data collection because many of investors may have not given

actual answers of my questionnaire.

 Sample size is limited to 200 visitors of State Bank of India , SBI Mutual Fund Sai

Square Bada Chauraha Kanpur Branch., Kanpur out of these only 120 had invested

in Mutual Fund.
 The sample size may not adequately represent the whole market.
 Some respondents were reluctant to divulge personal information which can affect the

validity of all responses.

 The research is confined to a certain part of Kanpur.

Findings

 In Kanpur in the Age Group of 36-40 years were more in numbers. The second

most Investors were in the age group of 41-45 years and the least were in the age group

of below 30 years.

 In Kanpur most of the Investors were Graduate or Post Graduate and below HSC there

were very few in numbers.

 In Occupation group most of the Investors were Govt. employees, the second most

Investors were Private employees and the least were associated with Agriculture.

 In family Income group, between Rs. 20,001- 30,000 were more in numbers, the

second most were in the Income group of more than Rs.30,000 and the least were in the

group of below Rs. 10,000.

 About all the Respondents had a Saving A/c in Bank, 76% Invested in Fixed Deposits,
 Only 60% Respondents invested in Mutual fund.

 Mostly Respondents preferred High Return while investment, the second most

preferred Low Risk then liquidity and the least preferred Trust.

 Only 67% Respondents were aware about Mutual fund and its operations and 33%

were not.

 Among 200 Respondents only 60% had invested in Mutual Fund and 40% did not have

invested in Mutual fund.

 Out of 80 Respondents 81% were not aware of Mutual Fund, 13% told there is not any

specific reason for not invested in Mutual Fund and 6% told there is likely to be higher

risk in mutual fund.

 Most of the Investors had invested in Reliance or UTI Mutual Fund, ICICI Prudential

has also good Brand Position among investors, SBIMF places after ICICI Prudential

according to the Respondents.

 Out of 55 investors of SBIMF 64% have invested due to its association with the

Brand SBI, 27% Invested because of Advisor’s Advice and 9% due to better return.

 Most of the investors who did not invested in SBIMF due to not Aware of SBIMF,

the second most due to Agent’s advice and rest due to Less Return.

 For Future investment the maximum Respondents preferred Reliance Mutual Fund, the

second most preferred ICICI Prudential, SBIMF has been preferred after them.

 60% Investors preferred to Invest through Financial Advisors, 25% through AMC

(means Direct Investment) and 15% through Bank.

 65% preferred One Time Investment and 35% preferred SIP out of both type of

Mode of Investment.

 The most preferred Portfolio was Equity, the second most was Balance (mixture

of both equity and debt), and the least preferred Portfolio was Debt portfolio.

 Maximum Number of Investors Preferred Growth Option for returns, the second most
 preferred Dividend Payout and then Dividend Reinvestment.

 Most of the Investors did not want to invest in Sectoral Fund, only 21% wanted to

invest in Sectoral Fund.

 Suggestions and Recommendations

 The most vital problem spotted is of ignorance. Investors should be made aware of the

benefits. Nobody will invest until and unless he is fully convinced. Investors should

be made to realize that ignorance is no longer bliss and what they are losing

by not investing.

 Mutual funds offer a lot of benefit which no other single option could offer. But most

of the people are not even aware of what actually a mutual fund is? They only

see it as just another investment option. So the advisors should try to change

their mindsets. The advisors should target for more and more young investors.

Young investors as well as persons at the height of their career would like to go for

advisors due to lack of expertise and time.

 Mutual Fund Company needs to give the training of the Individual Financial Advisors

about the Fund/Scheme and its objective, because they are the main source to

influence the investors.

 Before making any investment Financial Advisors should first enquire about the

risk tolerance of the investors/customers, their need and time (how long they want to

invest). By considering these three things they can take the customers into consideration.

 Younger people aged under 35 will be a key new customer group into the future, so

making greater efforts with younger customers who show some interest in investing

should pay off.

 Customers with graduate level education are easier to sell to and there is a large

untapped market there. To succeed however, advisors must provide sound advice and

high quality.
Systematic Investment Plan (SIP) is one the innovative products launched by Assets

Management companies very recently in the industry. SIP is easy for monthly salaried

person as it provides the facility of do the investment in EMI. Though most of the

prospects and potential investors are not aware about the SIP. There is a large scope for the

companies to tap the salaried persons.

 References and Bibliography

Consulting various reference points on the aforementioned topics became pertinent. A list
of such references is provided as follows:

a. direct interaction with bank customers

b. Brochures of product offerings of SBI MUTUL FUND.
c. www.SBIMF.com
d. www.mutualfundsindia.com
e. www.bseindia.com
f. www.nseindia.com
g. www.investopedia.com
h. www.moneycontrol.com
Questionnaire

A Study Of Preferences Of The Investors For Investment In Mutual Funds.

1. Personal Details:

(a). Name:-

(b). Add: - Phone:- (c). Age:-

(d). Qualification:-

Graduation/PG Under Graduate Others

(e). Occupation. Pl tick (√)

Govt. Ser Pvt. Ser Business Agriculture Others

(g). What is your monthly family income approximately? Pl tick (√).

Up to Rs. 10,001 to Rs. 15,001 to Rs. 20,001 to Rs. 30,001 and

2. While investing your money, which factor will you prefer?

.

(a) Liquidity (b) Low Risk (c) High Return (d) Trust

3. Are you aware about Mutual Funds and their operations? Pl tick (√).YesNo

4. If yes, how did you know about Mutual Fund?

a. Advertisement b. Peer Group c. Banks d. Financial Advisors

5. Have you ever invested in Mutual Fund? Pl tick (√). Yes No

6. If not invested in Mutual Fund then why?

(a) Not aware of MF (b) Higher risk (c) Not any specific reason

7. If yes, in which Mutual Fund you have invested? Pl. tick (√). All applicable.

a. SBIMF b. UTI c. HDFC d. Reliance e. Kotak f. Other. specify

 8. If invested in SBIMF, you do so because (Pl. tick (√), all applicable).

a. SBIMF is associated with State Bank of India.

b. They have a record of giving good returns year after year.
c. Agent’ Advice

9. If NOT invested in SBIMF, you do so because (Pl. tick (√) all applicable).

a. You are not aware of SBIMF.

b. SBIMF gives less return compared to the others.
c. Agent’ Advice

10. When you plan to invest your money in asset management co. which AMC will you

prefer?

Assets Management Co.

a. SBIMF
b. UTI
c. Reliance
d. HDFC
e. Kotak
f. ICICI

11. Which Channel will you prefer while investing in Mutual Fund?

(a) Financial Advisor (b) Bank (c) AMC

12. When you invest in Mutual Funds which mode of investment will you prefer? Pl. tick (√).
 a. One Time Investment b. Systematic Investment Plan (SIP)

13. When you want to invest which type of funds would you choose?

a. Having only b. Having debt equity c. Only equity

debt portfolio portfolio portfolio.

14. How would you like to receive the returns every year? Pl. tick (√).

a. Dividend payout b. Dividend re-investment c. Growth in NA

15. Instead of general Mutual Funds, would you like to invest in sectorial funds?

Please tick (√).Yes No