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Management Of Financial Services

Reliance Mutual Fund


Presented By: Amit Ramawat MBA/8001/12

INTRODUCTION

There are a lot of investment avenues available today in the financial market for an investor with an invest able surplus. He can invest in Bank Deposits, Corporate Debentures, and Bonds where there is low risk but low return. He may invest in Stock of companies where the risk is high and the returns are also proportionately high. The recent trends in the Stock Market have shown that an average retail investor always lost with periodic bearish tends. People began opting for portfolio managers with expertise in stock markets who would invest on their behalf. Thus we had wealth management services provided by many institutions. However they proved too costly for a small investor. These investors have found a good shelter with the mutual funds. Like most developed and developing countries the mutual fund cult has been catching on in India. The reasons for this interesting occurrence are: 1. Mutual funds make it easy and less costly for investors to satisfy their need for capital growth, income and/or income preservation. 2. Mutual fund brings the benefits of diversification and money management to the individual investor, providing a Opportunity for financial success that was once available only to a select few.

HISTORY
Unit Trust of India is the first Mutual Fund set up under a separate act, UTI Act in 1963, and started its operations in 1964 with the issue of units under the scheme US-641. In 1978 UTI was delinked from the RBI and Industrial Development Bank of India (IDBI) took over the Regulatory and administrative control in place of RBI.

In the year 1987 Public Sector banks like State Bank of India, Punjab National Bank, Indian Bank, Bank of India, and Bank of Baroda have set up mutual funds.

Apart from these above mentioned banks Life Insurance Corporation [LIC] and General Insurance Corporation [GIC] too have set up mutual fund. LIC established its mutual fund in June 1989.while GIC had set up its mutual fund in December 1990.The mutual fund industry had assets under management of Rs. 47,004 cr. Reliance group was founded by Dhirubhai Ambani in 1966 as a polyester firm. Dhirubhai started the equity cult in India. Reliance later entered into financial services, petroleum refining, power sector. By 2002 Reliance had grown into a U$15 billion conglomerate. After the death of Dhirubhai Ambani on 6 July 2002, Reliance was headed by his sons. The group was formed after the two feuding brothers Mukesh Ambani and Anil Ambani, split Reliance Industries. Anil Ambani got the responsibility of Reliance Infocomm, Reliance Energy, Reliance Capital and RNRL. This led to a new beginning called RELIANCE. Later this group entered the power sector through Reliance Power and the entertainment sector by acquiring Ad labs.

SECURITIES AND EXCHANGE BOARD OF INDIA (MUTUAL FUNDS) (SECOND AMENDMENT) REGULATIONS, 2013.
No. LAD-NRO/GN/12/6108.- In exercise of the powers conferred under section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby makes the following regulations to amend the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, namely:-

1. These regulations may be called the Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2013. 2. They shall come into force on the date of their publication in the Official Gazette. 3. In the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996,

i. in regulation 34,
the following new proviso shall be inserted, namely,Provided that in case of mutual fund schemes eligible under Rajiv Gandhi Equity Savings Scheme, the period specified in this regulation shall be not be more than thirty days.

ii. in regulation 35,a. in sub-regulation (3), the following proviso shall be inserted, namely,-

Provided that in case of mutual fund schemes eligible under Rajiv Gandhi Equity Savings Scheme, the period specified in this sub-regulation shall be fifteen days from the closure of the initial subscription list.

b. in sub-regulation (4), the following proviso shall be inserted, namely,Provided that in case of mutual fund schemes eligible under Rajiv Gandhi Equity Savings Scheme, the period specified in this sub-regulation shall be fifteen days from the closure of the initial subscription list.

iii. in regulation 36,a. in sub-regulation (1), after the proviso, the following new proviso shall be inserted, namely,Provided further that in case of mutual fund schemes eligible under Rajiv Gandhi Equity Savings Scheme, the period specified in this sub-regulation shall be fifteen days from the closure of the initial subscription list.

b. in sub-regulation (2), the following proviso shall be inserted, namely,Provided that in case of mutual fund schemes eligible under Rajiv Gandhi Equity Savings Scheme, the period specified in this sub-regulation shall be fifteen days from the closure of the initial subscription list.

U. K. SINHA CHAIRMAN (SEBI)

ADVANTAGES OF MUTUAL FUNDS


There are numerous benefits of investing in mutual funds and one of the key reasons for its phenomenal success in the developed markets like US and UK is the range of benefits they offer, which are unmatched by most other investment avenues. Diversification The nuclear weapon in your arsenal for your fight against Risk. It simply means that you must spread your investment across different securities (stocks, bonds, money market instruments, real estate, fixed deposits etc.) and different sectors (auto, textile, information technology etc.). Tax Benefits Any income distributed after March 31, 2002 will be subject to tax in the assessment of all Unit holders. However, as a measure of concession to Unit holders of open-ended equity-oriented funds, income distributions for the year ending March 31, 2003, will be taxed at a concessional rate of 10.5%. Regulations Securities Exchange Board of India (SEBI), the mutual funds regulator has clearly defined rules, which govern mutual funds. These rules relate to the formation, administration and management of mutual funds and also prescribe disclosure and accounting requirements. Such a high level of regulation seeks to protect the interest of investors Affordability A mutual fund invests in a portfolio of assets, i.e. bonds, shares, etc. depending upon the investment objective of the scheme. Azn investor can buy in to a portfolio of equities, which would otherwise be extremely expensive.

DISADVANTAGES OF MUTUAL FUND

Professional ManagementDid you notice how we qualified the advantage of professional management with the word "theoretically"? Many investors debate over whether or not the so-called professionals are any better than you or I at picking Mutuals. Management is by no means infallible, and, even if the fund loses money, the manager still takes his/her cut. .

CostsMutual funds don't exist solely to make your life easier--all funds are in it for a Profit. The mutual fund industry is masterful at burying costs under layers of jargon .Because funds have small holdings in so many different companies, high returns from a few Investments often don't make much difference on the overall return. Dilution is also the result of a successful fund getting too big. When money pours into funds that have had strong Success, the manager often has trouble finding a good investment for all the new money

TaxesWhen making decisions about your money, fund managers don't consider your personal tax situation. For example, when a fund manager sells a security, a capital-gain tax is triggered, which affects how profitable the individual is from the sale. It might have been more advantageous for the individual to defer the capital gains liability

RISKS INVOLVED IN MUTUAL FUND


In short, how stable is the company or entity to which you lend your money when you invest? How certain are you that it will be able to pay the interest you are promised, or repay your principal when the investment matures?

Inflation risk
Changing interest rates affect both equities and bonds in many ways. Investors are reminded that predicting which way rates will go is rarely successful. A diversified portfolio can help in offsetting these changes.

Effect of loss of key professional and inability to adopt

An industries key asset is often the personnel who run the business i.e. intellectual properties of the key employees of the respective companies. Given the ever-changing complexion of few industries and the high obsolescence levels, availability of qualified, trained and motivated personnel is very critical for the success of industries in few sectors. It is, therefore, necessary to attract key personnel and also to retain them to meet the changing environment and challenges all investments involve some form of risk, which should be evaluated them potential Rewards when an investment is selected.

Managing risk
At times the prices or yields of all the securities in a particular market rise or fall due to broad outside influences. When this happens, the Mutual prices of an out standing, highly profitable company and a fledgling corporation may be affected.
This change in price is due to market risk.

Interest rate risk


Sometimes referred to as loss of purchasing power. Whenever inflation sprints forward faster than the earnings on your investment, you run the risk that you will actually be able to buy less, not more. Inflation risk also occurs when prices rise faster than your returns.

Credit risk
The sector offers. Failure or inability to attract/retain such qualified key personnel may impact the prospects of the companies in the particular sector in which the fund invests.

Exchange risks
A number of companies generate revenues in foreign currencies and may have investments or expenses also denominated in foreign currencies. Changes in exchange rates may, therefore, have a positive or negative impact on companies which in turn would have an effect on the investment of the fund.

Investment risks
The sectoral fund schemes, investments will be predominantly in equities of select companies in the particular sectors. Accordingly, the NAV of the schemes are linked to the equity performance of such companies and may be more volatile than a more diversified portfolio of equities.

Changes in government policy


Changes in Government policy especially in regard to the tax benefits may impact the business prospects of the companies leading to an impact on the investments made by the fund.

Reliance Mutual Fund (RMF)


Its one of Indias leading Mutual Funds, with Average Assets under Management (AAUM) of Rs. 1, 07,749 Cr and an investor count of over 72 Lac folios. (AAUM and investor count as of September 2010) AAUM Source : http://www.amfiindia.com/ Reliance Mutual Fund, a part of the Reliance - Anil Dhirubhai Ambani Group, is one of the fastest growing mutual funds in the country. RMF offers investors a well-rounded portfolio of products to meet varying investor requirements and has presence in 159 cities across the country. Reliance Mutual Fund constantly endeavors to launch innovative products and customer service initiatives to increase value to investors. "Reliance Mutual Fund schemes are managed by Reliance Capital Asset Management Limited., a subsidiary of Reliance Capital Limited, which holds 93.37% of the paid-up capital of RCAM, the balance paid up capital being held by minority shareholders." Reliance Capital Ltd. is one of Indias leading and fastest growing private sector financial services companies, and ranks among the top 3 private sector financial services and banking companies, in terms of net worth. Reliance Capital Ltd. has interests in asset management, life and general insurance, private equity and proprietary investments, stock broking and other financial services. Sponsor: Reliance Capital Limited

Trustee: Reliance Capital Trustee Co. Limited

Investment Manager: Reliance Capital Asset Management Limited Statutory Details: The Sponsor, the Trustee and the Investment Manager are incorporated under the Companies Act 1956. Reliance Mutual Fund (formerly known as Reliance Capital Mutual Fund), a Trust under Indian Trust Act, 1882 and registered with SEBI vide registration number MF/022/95/1 dated June 30, 1995.

Reliance Features related mutual funds


Reliance was the first fund house to launch sector funds with flexibility to invest in a range of 0% to 100% in either equity or debt instruments. Mutual fund investments linked to an ATM/debit card a Reliance innovation Indias first long-short fund comes from Reliance Mutual Fund .

As at 31st May 2008, more than 6.6 million people had invested in Reliance Mutual Fund;the investments comprised 16% of the countrys entire mutual fund.

India's Best Offering: Reliance Mutual Fund


Investing has become global. Today, a lot of countries are waking up to the reality that in order to gain financial growth, they must encourage their citizens to not only save but also invest. Mutual funds are fast becoming the mode of investment in the world. In India, a mutual fund company called the Reliance Mutual Fund is making waves. Reliance is considered India's best when it comes to mutual funds. Its investors number to 4.6 billion people. Reliance Capital Asset Management Limited ranks in the top 3 of India's banking companies and financial sector in terms of net value. The Anil Dhirubhai Ambani Group owns Reliance; they are the fastest growing investment company in India so far. To meet the erratic demand of the financial market, Reliance Mutual Fund designed a distinct portfolio that is sure to please potential investors. Reliance Capital Asset Management Limited manages RMF.

Vision and Mission


Reliance Mutual Fund is so popular because it is investor focused. They show their dedication by continually dishing out innovative offerings and unparalleled service initiatives. It is their goal to become respected globally for helping people achieve their financial dreams through excellent organization governance and customer care. Reliance Mutual fund wants a high performance environment that is geared at making investors happy. RMF aims to do business lawfully and without stepping on other people. They want to be able to create portfolios that will ensure the liquidity of the investment of people in India as well as abroad. Reliance Mutual Fund also wants to make sure that their shareholders realize reasonable profit, by deploying funds wisely. Taking appropriate risks to reach the company's potential is also one of Reliance Mutual Fund's objectives.

PRODUCT S : RELIANCE MONEY


The products on offer from Reliance Mutual Fund fall into four main categories: equity, debt, sector specific and ETF (Exchange Traded Fund).Each taps into a specific audience profile fulfilling their varying needs. Under the equity category, Reliance has118 SUPERBRANDS sixteen schemes with Reliance Growth Fund and Reliance Vision Fund as its flagship schemes. Reliance Equity Opportunities Fund is a scheme which operates in the multi-cap/multi-sector segment; Reliance Equity Fund is a long-short fund, Reliance Quant plus Fund is a quant fund. Reliance offers investments in banking, power, media, entertainment and pharmaceuticals; Reliance Tax Saver Fund and Reliance Equity-Linked Savings Fund Series 1 are tax saving schemes; an NRIdedicated equity scheme is tailored for non-resident Indians. Reliance Regular Savings Fund is an asset-allocation fund with three options. Under the debt and liquid categories, Reliance has liquid funds, liquid plus funds, income funds, an NRI-dedicated debt fund, gilt funds, fixed maturity plans and an interval fund. In the hybrid category, Reliance Monthly income Plan is a popular option

Reliance understands that investments in mutual fund share a function of knowledge dissemination and awareness of products amongst potential investors. In building its own base of assets under management it will necessarily have to carry the entire mutual fund industry. Towards this end Reliance has launched at wo-pronged initiative. In the first pincer it has created a formidable network of 26,000 distributors including some of the biggest names in the banking sector. This whos who of the financial industry comprises such giants as Citibank, Standard Chartered, HSBC, ICICI, AXIS, Bank of Baroda, Central Bank of India, Allahabad Bank and fund houses such as JM, DSP Merrill Lynch and Karvy in addition to a massive infrastructure of direct financial investment officers. This prodigious effort is supplemented by the brands captive network of 120 branch offices and 30 financial centers. In the second prong, Reliance has created a series of information packed presentations which help dispel misinformation Group. This mega business house dominates this key area in the financial sector. Figures for March 2008 show that it has emerged as the top Indian mutual fund with average assets under management of Rs. 90,938 cr (US$ 22.73 billion) and an investor base of over 6.6 million (Source:www.amfiindia.com).

Reliances mutual fund schemes are managed by Reliance Capital Asset Management Limited (RCAM), a subsidiary of Reliance Capital Limited, which holds 93.37% of the paid-up capital of RCAM. The company not chedup a healthy growth of Rs. 16,354 cr (US$ 4.09billion) in assets under management in February2008 and helped propel the total industry-wide AUM to Rs. 565,459 cr (US$ 141.36 billion) (Source: indiainvestments.com). A sharp rise in fixed maturity plans (FMPs) and collection of Rs. 7000 cr (US$ 1.75 billion) through new fund offers (NFOs) created this surge. In AUM rankings, Reliance continues to be in the number one spot.

Reliance was the first fund house to launch sector funds with flexibility to invest in a range of 0% to 100% in either equity or debt instruments Mutual fund investments linked to an ATM/debit card are a Reliance innovation Indias first long-short fund comes from Reliance Mutual Fund As at 31st May 2008, more than 6.6 million people had invested in Reliance Mutual Fund; the investments comprised 16% of the countrys entire mutual fund asset base.

CONCLUSION
Mutual Fund investment is better than other raising fund .Reliance Mutual Fund having good returns in investment. A good brand is always welcomed over here people are more aware and conscious for the brand so they go for they are ready to spend some extra bucks for the quality. At last all con be concluded by that Reliance Money is still growing industry in India and is still exploring its potential and prospects in here.

Cash Reserve Ratio (CRR)


Definition:
Cash Reserve Ratio (CRR) is a specified minimum fraction of the total deposits of customers, which commercial banks have to hold as reserves either in cash or as deposits with the central bank. CRR is set according to the guidelines of the central bank of a country.

Introduction
The reserve requirement (or cash reserve ratio) is a central bank regulation employed by most, but not all, of the world's central banks, that sets the minimum fraction of customer deposits and notes that each commercial bank must hold as reserves (rather than lend out). These required reserves are normally in the form of cash stored physically in a bank vault (vault cash) or deposits made with a central bank. The required reserve ratio is sometimes used as a tool in monetary policy, influencing the country's borrowing and interest rates by changing the amount of funds available for banks to make loans with. Western central banks rarely alter the reserve requirements because it would cause immediate liquidity problems for banks with low excess reserves; they generally prefer to use open market operations (buying and selling government-issued bonds) to implement their monetary policy. The People's Bank of China uses changes in reserve requirements as an inflation-fighting tool, and raised the reserve requirement ten times in 2007 and eleven times since the beginning of 2010 .

The conventional view


The economic theory that a reserve requirement can act as a tool of monetary policy is frequently found in economics textbooks. The higher the reserve requirement is set, the theory supposes, the less funds banks will have to loan out, leading to lower money creation and perhaps ultimately to higher purchasing power of the money previously in use. The effect is multiplied, because money obtained as loan proceeds can be redeposited; a portion of those deposits may again be loaned out, and so on. The effect on the money supply is governed by the following formulas:

: definitional relationship between monetary base Mb (bank reserves plus currency held by the non-bank public) the narrowly defined money supply, M1, : derived formula for the money multiplier mm, the factor by which lending and re-lending leads M1 to be a multiple of the monetary base: where notationally, the currency ratio: the ratio of the public's holdings of currency (undeposited cash) to the public's holdings of demand deposits; and the total reserve ratio (the ratio of legally required plus non-required reserve holdings of banks to demand deposit liabilities of banks). However, in the United States (and other countries except Brazil, China, India, Russia), the reserve requirements are generally not frequently altered to implement monetary policy because of the short-term disruptive effect on financial markets.

Statutory liquidity ratio (SLR)


It refers amount that the commercial banks require to maintain in the form of gold or govt. approved securities before providing credit to the customers. Here by approved securities we mean, bond and shares of different companies. Statutory Liquidity Ratio is determined and maintained by the Reserve Bank of India in order to control the expansion of bank credit. It is determined as percentage of total demand and time liabilities. Time Liabilities refer to the liabilities, which the commercial banks are liable to pay to the customers after a certain period mutually agreed upon and demand liabilities are such deposits of the customers which are payable on demand. example of time liability is a fixed deposits for 6 months, which is not payable on demand but after six months. example of demand liability is deposit maintained in saving account or current account, which are payable on demand through a withdrawal form of a cheque. SLR is used by bankers and indicates the minimum percentage of deposits that the bank has to maintain in form of gold,cash or other approved securities.Thus, we can say that it is ratio of cash and some other approved liabilities(deposits). It regulates the credit growth in India

The liabilities that the banks are liable to pay within one month's time, due to completion of maturity period, are also considered as time liabilities. The maximum limit of SLR is 40% and minimum limit of SLR is 23% In India, Reserve Bank of India always determines the percentage of SLR. There are some statutory requirements for temporarily placing the money in government bonds. Following this requirement, Reserve Bank of India fixes the level of SLR. At present, the minimum limit of SLO that can be set by the Reserve Bank is 23% AS ON September 2013 Objectives of SLR: The main objectives for maintaining the SLR ratio are the following:

to control the expansion of bank credit. By changing the level of SLR, the Reserve Bank of India can increase or decrease bank credit expansion.

to ensure the solvency of commercial banks. to compel the commercial banks to invest in government securities like government bonds. If any Indian bank fails to maintain the required level of Statutory Liquidity Ratio, then it becomes liable to pay penalty to Reserve Bank of India. The defaulter bank pays penal interest at the rate of 3% per annum above the Bank Rate, on the shortfall amount for that particular day. But, according to the Circular, released by the Department of Banking Operations and Development, Reserve Bank of India; if the defaulter bank continues to default on the next working day, then the rate of penal interest can be increased to 5% per annum above the Bank Rate. This restriction is imposed by RBI on banks to make funds available to customers on demand as soon as possible. Gold and government securities (or gilts) are included along with cash because they are highly liquid and safe assets.

The RBI can increase the SLR to contain inflation, suck liquidity in the market, to tighten the measure to safeguard the customers money. In a growing economy banks would like to invest in stock market, not in government securities or gold as the latter would yield less returns. One more reason is long term government securities (or any bond) are sensitive to interest rate changes. But in an emerging economy interest rate change is a common activity.

Difference between CRR and SLR

Both CRR and SLR are instruments in the hands of RBI to regulate money supply in the hands of banks that they can pump in economy SLR restricts the banks leverage in pumping more money into the economy. On the other hand, CRR, or cash reserve ratio, is the portion of deposits that the banks have to maintain with the Central Bank to reduce liquidity in banking system. Thus CRR controls liquidity in banking system while SLR regulates credit growth in the country. The other difference is that to meet SLR, banks can use cash, gold or approved securities whereas with CRR it has to be only cash. CRR is maintained in cash form with central bank, whereas SLR is money deposited in govt. securities. CRR is used to control inflation

References

Websites: www.reliancemoney.com www.indiainfoline.com en.wikipedia.org www.slideshare.com