SUMMER INTERNSHIP PROJECT ON

NFO PROCESS IN MUTUAL FUNDS

Undertaken at

PARUL UNIVERSITY

Submitted in partial fulfillment of the requirement for the award of the degree

Of

MASTER OF BUSINESS ADMINISTRATION

BATCH (2019-20)

Submitted by Name of the Industry Mentor

Hiral Rathva Prerak Shah

MBA Semester II Agent

180617200141

Under the Guidance of

Prof.Tejal Shah

PARUL UNIVERSITY
FACULTY OF MANAGEMENT STUDIES
P.O. Limda, Tal. Waghodia, District Vadodara-391760
 Declaration

I Hiral Rathva, Enrolment No. 180617200141 from ( N a m e o f yo u r In s t i t u t e PIMR, Semester

III of the Parul University, Vadodara hereby declare that the Summer Internship Report entitled
“ NFO PROCESS IN MUTUAL FUND” is an original work and the same has not been
submitted to any other Institute for the award of any other degree.

Date: 11/7/2019 Signature of the Student

 INSTITUTE CERTIFICATE

It is here by certified that the Summer Internship Report submitted in partial fulfillment of M a s t e r
o f B u s i n e s s A d m i n i s t r a t i o n PIMR (MBA), Vadodara by HIRAL RATHVA, Enrolment
No. 18067200141 has been completed under my guidance and is Satisfactory.

Signature of the Guide Signature of the Director

<Name of the Director>

<Name of the Guide> Designation of Director

 (ON COMPANY’S LETTER HEAD)

CERTIFICATE

This is to certify that HIRAL RATHVA, s t u d e n t o f M a s t e r o f B u s i n e s s

A d m i n i s t r a t i o n , from Batch 2018-2020, P I M R ( MBA), Enrolment No.
180617200141, has undertaken the Summer Internship Training at INDIA INFOLINE
during 13th May To 25th June under my supervision & guidance. She has successfully
conducted a study & completed the Project on “NFO PROCESS IN MUTUAL FUNDS”.

Seal of Organization Signature of Industry

Mentor: Date: Full name of the Mentor:
Designation:
Address:
 PREFACE

Investments goals vary from person to person. While somebody wants security, others might
give more weightage to returns alone. Somebody else might want to plan for his child's
education while somebody might be saving for the proverbial rainy day or even life after
retirement. With objectives defying any range, it is obvious that the products required will vary
as well.

Indian Mutual Funds industry offers a plethora of schemes and serves broadly all type
of investors. The range of products includes equity funds, debt, liquid, gilt and balanced funds.
There are not cheated out of their hard earned money. All in all, benefits provided by them cut
across the boundaries of investor category and thus create for them, a universal appeal

Investors of all categories could choose to invest on their own in multiple options but
also funds meant exclusively for young and old, small and large investors. Moreover, the setup
of a legal structure, which has enough teeth to safeguard investors intersts, ensures that the
investors are opt for Mutual Funds for the sole reason that all benefits come in a package. The
Mutual Fund industry is having its hands full to cater to various needs of the investors by
coming up with new plans, schemes and options with respect to rate of returns, dividend
frequency and liquidity.

In view of the growing competition in the Mutual Funds industry, it was felt necessary
to study the investors orientation towards Mutual Funds i.e. their pattern of risk apetite and
preferences in various schemes, plans and options in order to provide a better service,
The study is an attempt in that direction.
 AKNOWLEDGEMENT

In regard to this programme, I would like to acknowledge my gratitude and thanks respected
PARUL INSTITUTE OF MANAGEMENT & RESEARCH for giving me this opportunity
to gain some practical knowledge in the area in which I will be pursuing my career.

I am also thankful to my director Dr. BIJAL ZAVERI for giving me this opportunity. Prof.
Tejal Shah (ASSISTANT PROFESSOR) faculty of PARUL INSTITUTE OF
MANAGEMENT & RESEARCH, who providing me proper guidance and help regarding
my training project whenever I required.

I express my sincere regard to, Mr. Prerak Shah from INDIA INFOLINE for his guidance
and help for successful completion of my research project.

Yours Sincerely,

Hiral Rathva
 EXECUTIVE SUMMARY

The purpose of this project creates a design in relation to process of NFO (NEW FUND
OFFER) and how this process is carried out till the end. The school work of this project is
based on the procedure takes place in india infoline while going through the NFO.
To school work the technical procedure, legal dimensions of NFO at India info line and
examine briefly the organizational structure, communication network, resource, requirements
to launch a new fund. The analysis is made by carrying the applications of reliance equity fund
The data for his study is collected from various sources like magazines, Books, Websites, and
from the staff of Indian Info Line. It generates an Idea to the investors in knowing the technical
procedure in carrying a NFO by the Organization. New Fund Offer process may not be same
for all Mutual funds that are released. It may differ from one fund to other depending up on the
size like NO. of Applications received, Subscriptions amount received.
 CONTENTS
SR.NO PARTICULAR PAGE.NO

1 CHAPTER - 1

2 CHAPTER – 2

3 CHAPTER – 3

4 CHAPTER – 4

5 CHAPTER – 5

6 CHAPTER – 6

7 CHAPTER - 7
 CHAPTER-1
INTRODUCTION
1.1 INTRODUCTION

Mutual Fund Industry which is a relatively of a post-economic reforms phenomena in India,

has been expanding during this Period in branch and bound Many commercial banks, insurance
companies entered into mutual fund industry apart from foreign players. In the early years of
evolution of mutual fund industry in the Indian financial market it was a monopoly and
continued to be the same till very recent time. Then many players both foreign and Indian
entered in the Mutual Fund Industry.

This increased the competition between the various firms working in the mutual fund
Industry. The need for developing various new schemes arises so as to attract investors towards
the firm and equally encouraging them to invest. This growth in the Mutual Fund Industry and
scope of increasing markets has further increased the competition between the firms in the
industry.

The competitions had given raise to demand for specialized products and skills of
various individuals who can contribute towards the containment and growth of individual firms
in the mutual firm industry. This gave rise to various related organizations and individuals
working as specialized teams in the various areas of mutual funds. One such organization is
INDIA INFO LINE PVT LTD it comes into pictures where the investors apply for the units in
a Mutual Fund schemes and verify the validity and eligibility of the investor and allots the
units.

The mutual fund companies now receive millions of applications if a new scheme is
launched. This is due to the wide spread awareness created among the urban and rural
Population of India. It therefore becomes a Herculean task to Manage the flooding applications
However it should be noted that this is a One time activity similar to that of a short run project
It is needless to State that a given mutual fund firm will not be possessing.

The technological, human and knowledge resources to take up such a gigantic task,
it is in fact not needed by a mutual fund firm to create such a vast organizational structure when
it is seen from the point of view scale of economies. Further to this problem, the mutual fund
industry does not know where it stands in the current volatile and turbulent environment. This
may be the reason they prefer to hire the services of professionals firm with specialized
knowledge and Expertise.

These developments have led to an outcome that today, launching of mutual

funds scheme has become a well organized activity which is accomplished through the
coordinated endeavors of task groups.

The asset management companies have designed various schemes in

accordance with the requirements of the various sections on investors on basis of equity linked,
debt instruments linked, commodities linked and specific industry linked instruments. The
investor today is given a wide range of options to invest in various types of funds according to
his interests and capabilities.

Mutual funds enable even a small investor to investor to invest, as most of the
mutual funds just start from a minimum amount of investment of RS.5000 hence even a small
investor can invest into a mutual fund and reap returns in the same proportions as the other big
time investors. This shows that mutual fund industry is one which aims at every section of the
society. To deal with this large population of investors and the competition, the asset
management company has been forced to develop and design new schemes and hire the
services of professionals.

Mutual fund industry involves various operations from the stage of

identification of the target group or defining a market segment, designing a scheme which
comes up to the expectations and aspirations of the target group or market segment, reaching
the selected market through launching the scheme which is thereby called NFO, till the stage
of investing the amount raised in accordance with the norms stipulated with offer document
and distributing the returns to the investor by way of dividend, after making adequate provision
for taxation and other operating costs. All this process is well organized and performed in a
specific order. There are various related organizations which specialize in the activities at
various stages of the functioning of the mutual funds.

It is therefore felt expedient to examine the various intricacies involved in the

new fund offer (NFO). Specifically the various documents that are being processed, the
parameters evolve either customarily or by legal mandate to scrutinize the applications. Various
stages involved in the scrutiny, the rejection criteria, the creation of human organization to
monitor the activities, the communication channel and the structure of the organized activities
and the legal environment of NFO to some extent. Such a dissertation would help to come out
with a comprehensive report which may serve as a guide for the prospective entrants into
mutual fund investment and to the existing mutual fund investors to some extent.
1.2 Objectives of the study:
 The main objective of an NFO is to raise capital from market to further invest in various
asset classes such as stocks and bonds.
 To study the technical, procedural, legal dimensions of the NFO.
 To examine briefly the organizational structure, communication network,
resource requirements to launch a new fund.

Limitations of study:

 Analysis of the applications is carried out by taking the applications from Reliance
equity Fund. The data available is therefore restricted by the design of the
application.

 The inspection of applications is done on the basis of a sample of 120 applications.

Though the sample is drawn randomly, the possibility of sampling fluctuations
affecting the findings cannot be ruled out.

 Numerical data like number of applications received, total subscription amount

received, statement of accounts, investor details, etc are not available and therefore a
description of these aspects is given.

 NFO process may not be same for all mutual funds that are released. It may differ
from one fund to other depending upon the size like the no. of applications received,
subscription amount received, etc.
New fund offer (NFO):

When a mutual fund asset management company announces Public issue of units of a new
fund/scheme it is called a New Fund Offer (NFO). When a mutual fund company plans for a
new fund offer it first informs to the registrar or the back office functions provider like INDIA
INFO LINE through email. This is called as “NFO Launching Information Mail” send by the
fund manager of the asset management company to the NFO coordinator of the INDIA
INFOLINE. In this Mail the fund manager will ask the NFO coordinator to get ready for the
new fund with the required man power and software.

Later they send the sample application form, the key information memorandum (KIM) and
offer document to INDIA INFO LINE. This offer document sets forth concisely, necessary
information about the scheme for a prospective investor to make an informed investment
decision on the scheme described.

The offer document contains the salient features of the scheme like NFO opening date, NFO
closing date, Scheme name, Scheme class, reopening date, plans available banks involved,
number of bank branches involved, minimum amount fresh purchase, maximum amount fresh
purchase, expected number of applications, entry load and exit load.

The unit manager or the NFO coordinator will arrange a meeting where the AMC team, NFO
expert’s team, Data entry team, Reconciliation team and the dispatch team will discuss and fix
the target dates by which the work has to be completed accordingly.
What is a mutual fund?

Mutual fund is a mechanism for pooling the resources by issuing to the investors and investing
funds in securities in accordance with objectives as disclosed in offer document.

Investments in securities are spread across a wide cross-section of industries and sectors and
thus the risk is reduced, Diversification reduces the risk because all stocks may not move in
the same direction in the same proportion at the same time. Mutual fund issues units to the
investors in accordance with quantum of money invested by them. Investors of mutual funds
are known as unit holders.

The profits or losses are shared by the investors in proportion to their investment. The mutual
funds normally come out with a number of schemes with different investment objectives which
are launched from time to time. A mutual fund is required to be registered with Securities and
Exchange Board of India (SEBI) which regulates securities markets before it can collect funds
from the public.

Mutual fund is a collection of stocks and / bonds. A mutual fund as a company brings together
a group of people and invests their money in stocks, bonds and other securities. Each investor
owns shares, which represent a portion of the holdings of the fund.

With increased uncertainties or fluctuations in the primary market and decreasing bank interest
rates, mutual funds are gaining popularity day by day Now-a- day’s mutual funds are
performing well will high returns to the investors. There are various types of schemes and plans
available to all type of investors.

Let us assume that you inertia million rupees overnight and want to invest the same to get better
returns you can consider the following investment avenues that are popular in Indian context.

 Company shares
 Fixed deposits in banks
 Government bonds
 Fixed deposits in NBFC
 Chit fund
 Real estate
 PROS AND CON’S OF THE INVESTMENTS:
EFFORT TO
INVESTMENT REQUIRE TO
SR NO. RISK RETURN
AVENUE TRACK/MAINTAIN
INVESTMENT

1. Company shares High High High

and stocks

2. Fixed deposites Low Low Low

in banks

3. GOVT. bonds Medium Medium Medium

4. Fixed deposites High High High

in NBFC

5. Chit funds High Medium Medium

6. Real estate Medium Medium Medium

7. Other money Medium Medium Medium

lending options

How you can make money from a mutual fund?

If the fund sells the securities that have increased in price, the fund has a capital gain Most of
the funds also pass on these gains to investors in a distribution. If fund holdings increase in
price but are not sold by the fund manager, the funds shares increase in price. You can then sell
your mutual fund units for profit. Funds will also usually give you a choice either to receive a
check for distributions or to reinvest the earnings and get more shares. Income it earned from
dividends on stocks and interest on bonds. A fund pays out nearly all income it receives over
the year to fund owners in the form of a distribution.
Types of Funds:

Mutual funds also come in various sizes and shapes. There are about dozen fund classes but all
of them are derivatives of three basic classes are as follows.

 Growth
 Income
 Liquidity

Growth: Long term growth, since these funds invest in equities, they are also called as equity
funds. Their risk level is high so is the return.

Income: This type of fund provides regular income by investing in debt instruments like
bonds, debentures etc., Because of their nature of investment, they are also called debt schemes.
Their risk and return levels are medium.

Liquidity: These are primarily invested in money market instruments and thus most volatile,
safer and give lower returns. These funds are also known as cash or money market funds.

These are called mutual fund schemes. It is based on the investment objective. There is another
Classification based on the capitalization of funds. If the fund offers purchase or selling on a
Continuous basis it is called open ended mutual fund. On the contrary, if the fund is open only
for a particular period, it is called closed ended fund.

Differences: Open ended and Closed ended funds

SR NO. FEATURE OPEN ENDED CLOSED ENDED

1. Capitalization Unlimited Limited

2. Any time entry Yes No

3. Any time exit Yes No

4. Tax advantage Yes No

5. Available for a fixed No (with exemption of FMP Yes

period schemes)
 6. Listed on the exchange Generally No Yes

Open ended funds gained popularity because of their flexibility and variety of features they
offer. For this reason, majority of the mutual funds are ‘open’ in nature.

Arms of a mutual fund:

Primarily mutual fund is formed as a trust by a group of sponsors. They are the owners of the
mutual funds and forms trust by a group of sponsors. They are the owners of the mutual funds
and forms trustees who in turn appoint AMC and manage the mutual fund.

SEBI regulations require that at least two at least two thirds of the directors of trustee
company or board of trustees must be independent i.e. they should not be associated with the
sponsors. Also, 50% of the directors of AMC must be independent. All mutual funds are
required to be registered with SEBI before they launch any scheme.

This entity… Does this…

Sponsor Forms MF as a trust. Registers

with SEBI.

Trustees Holds funds invested in a form of

units.

Ensure compliance with SEBI.

Appoints AMC

Assets management company Floats MF schemes, manages funds

and cash.

Registrar Holds investor data. Do services to

investors

Distributors Market various schemes of MF

Transaction types (commercial & non-commercial):

Let’s compare various transactions of mutual funds with those of banks.
 In a bank, you will… In a mutual fund…

Open an account with initial You subscribe in a scheme and buy

deposit units

Deposit money Do additional purchases

With draw money You redeem units

Opt for a recurring deposit Start a systematic investment plan

Since mutual fund offers many more options to investors, it will have many more transaction
types as well. Let us see some popular transactions in mutual funds

SR NO. TRANSACTION DESCRIPTION

1. New purchase New investment. Buying units in a

scheme

2. Additional purchase Buying additional units in a scheme

3. Redemption Selling units and getting money back.

4. Switch/shift Transferring investment from one

scheme to other.

5. Dividend When AMC announces dividend in a

scheme.

6. Systematic investment Investing fixed amounts periodically like

a recurring deposit.

7. Systematic with drawl Reverse of systematic investment

Selling units periodically.

Rest are relating to general maintenance only. So they are non-commercial transactions.

Net asset value:

As you must have noticed, we always talk about ’units’ in a mutual fund and not money
itself. A unit is basic measure of investment and a mutual fund. Each scheme / plan will have
a different market value is called the Net asset value or simply NAV. Since market value of
the underlying securities changes every day, NAV of a scheme also varies on a day to day
basis.

NAV = Total assets – Total liabilities/Number of units

SEBI Guidelines on New Fund Offer:

1. Procedure for launching of schemes:

(1) No scheme shall be launched by the asset management company unless
such scheme is approved by the trustees and a copy of the offer document
has been filed with the Board.
(2) Every mutual fund shall along with the offer document of each scheme
pay filing fees as specified in the Second Schedule.

2. Disclosures in the offer document:

(1) The offer document shall contain disclosures which are adequate in order
to enable the investors to make informed investment decision [including the
disclosure on maximum investments proposed to be made by the scheme in
the listed securities of the group companies of the sponsor].
(2) The Board may in the interest of investors require the asset management
company to carry out such modifications in the offer document as it deems
fit.
(3) In case no modifications are suggested by the Board in the offer
document within 21 [working] days from the date of filing, the asset
management company may issue the offer document.
(4) No one shall issue any form of application for units of a mutual fund
unless the form is accompanied by the memorandum containing such
information as may be specified by the Board.

3. Advertisement material:
(1) Advertisements in respect of every scheme shall be in conformity with
the Advertisement Code as specified in the Sixth Schedule and shall be
submitted to the Board within 7 days from the date of issue.
(2) The advertisement for each scheme shall disclose [investment objective
for each scheme]
 4. misleading statements:
The offer document and advertisement materials shall not be misleading or
contain any statement or opinion, which are incorrect or false.
5. Listing of close ended schemes:
Every close ended scheme shall be listed in a recognized stock exchange
within six months from the closure of the subscription Provided that listing of close ended
scheme shall not be mandatory.

(a) If the said scheme provides for periodic repurchase facility to all the unit
holders with restriction, if any, on the extent of such repurchase; or
(b) if the said scheme provides for monthly income or caters to special
classes of persons like senior citizens, women, children, widows or physically
handicapped or any special class of persons providing for repurchase of units
at regular intervals; or
(c) If the details of such repurchase facility are clearly disclosed in the offer
document; or
(d) If the said scheme opens for repurchase within a period of six months
from the closure of subscription.

6. Repurchase of close ended scheme:

(1) The asset management company may at its option repurchase or reissue
the repurchased units of a close ended scheme.
(2) The units of close ended schemes referred to in the proviso to regulation
may be open for sale or redemption at fixed pre-determined intervals if the
maximum and minimum amount of sale or redemption of the units and the
periodicity of such sale or redemption has been disclosed in the offer
document.
(3) The units of close ended scheme may be converted into open ended
scheme.
(a) If the offer document of such scheme discloses the option and the period
of such conversion; or
(b) The unit holders are provided with an option to redeem their units in full.
(4) A close ended scheme shall be fully redeemed at the end of the maturity
period [Provided that a close ended scheme may be allowed to be rolled over
if the purpose, period and other terms of the roll over and all other material
details of the scheme including the likely composition of assets immediately
before the roll over, the net assets and net asset value of the schemes, are disclosed to
the unit holders and a copy of the same has been filed with the
Board.
 Provided further, that such roll over will be permitted only in case of those
unit holders who express their consent in writing and the unit holders who
do not opt for the roll over or have not given written consent shall be
allowed to redeem their holdings in full at net asset value based price.

7. Offering Period:

No scheme of a mutual fund other than the [initial] offering period of any equity
linked savings schemes shall be open for subscription for more than 45 days.

8. Allotment of Units and refund of money:

(1) The Asset management company shall specify in the offer document
(a) The minimum subscription amount it seeks to raise under the scheme and
(b) In case of over subscription the extent of subscription it may retain Provided that
where the asset management company retains the over subscription referred to in
clause (b), all the applicants applying up to five thousand units shall be given full
allotment subject to the oversubscription mentioned in clause (b).
(2) The mutual fund and asset Management Company shall be liable to
refund the application money to the applicants
(i) If the mutual fund fails to receive the minimum subscription amount
referred to in clause (a) of sub-regulation (1);
(ii) If the moneys received from the applicants for units are in excess of
subscription as referred to in clause (b) of sub-regulation (1). (3) Any amount
refundable under sub-regulation (2) shall be refunded within a period of six Weeks
from the date of closure of subscription list, by Registered A.D and by cheque or
Demand Draft marked "A/C Payee" to the applicants.
(4) In the event of failure to refund the amounts within the period specified
in sub-regulation (3), the asset management company shall be liable to pay
interest to the applicants at a rate of fifteen percent per annum on the
expiry of six weeks from the date of closure of the subscription list.

9. Unit certificates or Statement of Accounts:

The asset management company shall issue to the applicant whose

application has been accepted, unit certificates or a statement of accounts
specifying the number of units allotted to the applicant as soon as possible
but not later than six weeks from the date of closure of the [initial
subscription list and or from the date of receipt of the request from the unit
 holders in any open ended scheme]. Provided that if an applicant so desires,
the asset management company shall issue the unit certificates to the
applicant within six weeks of the receipt of request for the certificate.

10. Transfer of units:

(1) A unit certificate unless otherwise restricted or prohibited under the

scheme, shall be freely transferable by act of parties or by operation of law.
(2) The asset management company shall, on production of instrument of
transfer together with relevant unit certificates, register the transfer and
return the unit certificate to the transferee within thirty days from the date
of such production. Provided that if the units are with the depository such
units will be transferable in accordance with the provisions of the Securities
and Exchange Board of India (Depositories and Participants) Regulations,
1996.

11. Dispatch of warrants and proceeds:

Every mutual fund and asset management company shall,

(a) Dispatch to the unit holders the dividend warrants within [30 days] of
the declaration of the dividend.
(b) Dispatch the redemption or repurchase proceeds within 10 working days
from the date of redemption or repurchase.
(c) In the event of failure to dispatch the redemption or repurchase
proceeds within the period specified in sub-clause (b), the asset
management company shall be liable to pay interest to the unit holders at
such rate as may be specified by Board for the period of such delay.
(d) Aside payment of such interest to the unit holders under sub-clause (c)
the asset management company may be liable for penalty for failure to
dispatch the redemption or repurchase proceeds within the stipulated time.
Wherever an application for a total value of RS. 50,000 or more, the
applicant or in the case of application in joint names, each of the applicants, should
mention his/her permanent account number (PAN) allotted under the
Income Tax Act, 1961 or where the same has not been allotted, the GIR
number and the income-tax Circle/Ward/District should be mentioned. In
case where neither the PAN nor the GIR number has been allotted, the fact
of non-allotment should be mentioned in the application form. Any
application form without these details should not be accepted by the mutual
fund. The above clarification is being issued in accordance with Regulation
 77 f the SEBI (Mutual Funds) Regulations, 1996.

12. Instructions for filing scheme offer document with SEBI:

As advised in SEBI circular MFD/CIR/06/275/2001 dated July 9, 2001, while

filing offer document for launching a new scheme/revising and filing existing
offer document with SEBI, the mutual funds should highlight and clearly
mention the page number of the offer document on which each of the
following observation has been incorporated. In case of any amendment to
Regulations, the new provisions should be incorporated in the offer
Documents.
1.4 COMPANY PROFILE:

1.4.1 Name: IIFL(India Infoline Limited) , Founded 1995(17 Oct 1995)

Address:-
3rd Floor, Bhagwandas chamber, RC dutt road, Alkapuri Vadodara ,Opp circuit house

Phone number:-
7039050000

Website:-
Iifl.com

It’s a national as well as multinational company

Headquarters :- Mumbai
I IFL is a financial services conglomerate which was started by a group of passionate
entrepreneurs in 1995. The genesis of IIFL lies in the power of dreaming big and
believing in your dreams.
IIFL is a key player in both retail and institutional segments with 4% share of daily
cash turnover. Our strength has been to continuously innovate and reinvent ourselves
with strong digital footprint. The company is a leading player in the broking industry
with more than a million accounts being opened since inception. The company provide
execution, advisory and research service across products like equity, F&O,
Commodity& Currency and Mutual Funds. The company also of the top distributors of
AIF products, mutual funds.
IIFL serves more than 4 million satisfied customers across various business segments
and is continuously building on its strengths to deliver excellent service to its
expanding customer base.

National Centres:-

IIFL Holdings Limited

 Corporate Office
IIFL Center, Kamala City,
 Senapati Bapat Marg,
Lower Parel (West),
Mumbai - 400013

 Registered Office
IIFL House, Sun Infotech Park,
Road No. 16V,Plot No.B-23
Thane Industrial Area,
Wagle Estate, Thane - 400604

India Infoline Finance Limited

 Registered Office
India Infoline Finance Limited,
802, 8th Floor, Hubtown Solaris,
N. S. Phadke Marg, Vijay Nagar,
Andheri East, Mumbai – 400 069

International centres:-
 IIFL Singapore
 IIFL Dubai (Private wealth management)
 IIFL USA (Inc)
 IIFL UK(Wealth)
 IIFL Geneva (Private wealth management)
 IIFL Hong Kong (Private wealth management)
 IIFL Mauritius (Private wealth management)
 IIFL Capital Canada Ltd

 Business :- NBFC
 Industry :- Financial services
 Functional Area :- Finance
1.4.3 IIFL Mission and vision

 Vision:- To be the most respected financial services company in India (Not

necessarily the largest or most profitable)
 Mission 2020:- From an entrepreneurial start-up in 1995, we have steadily
grown to emerge as one of India’s leading financial services group. Ever since
our inception, our strategy has been to align our capabilities and market
insights to the country’s rapidly changing business environment. Our growth
trajectory has only served to reinforce our focus on our domain of financial
services.

1.4.4 Product Range :

 Business loan
 D mart account + stock brokerage
 Mutual funds
 Home loans
 Gold loans
 Equity funds
 Wealth management
 Commercial vehicle loan
 Asset management
 Investment banking

1.4.5 Size :
5542 Cr Net worth ($808 Mn)

19000+ work force

1600+ branches

500+ stocks under research

40 lac+ customers
1.4.6 Organization structure of IIFL

1.4.7 Market share and position of IIFL

 Market share: NSE: IIFL

 Position : 168.40 as on 10 June 2019 changes everyday

1.5 INDUSTRY PROFILE

 CHAPTER-2
REVIEW OF LITERATURE
 Seema Vaid (2016) has discussed in details the conceptual and regulatory
framework and the growth of mutual funds in India. The entire book is very
comprehensive and it explains the technical terms and concepts in a very
simple manner.

 Further all the regulations and other aspects related to the regulatory
framework have been covered extensively in the book. It also deals with the
different types of schemes, classifications of the mutual fund schemes. The
features and their importance and usefulness for the investors have been dealt
with by this author in a precise manner. Another important feature of this book
is that the growth of mutual funds in India has been examined by the author
very critically. Thus this book is a guideline for researchers and readers
interested in this area of study.

 Venkatapath Raju (2014) has authored a book which explains in detail

about the description about different types of products of mutual funds with
their investment objectives. The book also tries to match the objectives of the
mutual fund schemes with the investors’ expectations from such schemes. The
author has tried to match the expectations of the investors’ expectations with
the objectives of the mutual fund schemes so that the investors get a proper
scheme for investment. A detailed explanation of various types of mutual
funds schemes explains the benefits and limitations so that the investor can
select the proper scheme. The book also attempts to provide information to
assist to investor to assess their risk return profile and accordingly choose the
right product. One unique thing about the book is that it analyses the factors
which motivates the mutual fund investors to take their investment decisions.

 Vivek Bhalla (2011) explained the topics related to the areas of investment
environment in his book. He has unfolded the topics in to related chapters
covering specific areas of alternative investment outlets for funds, security
analysis, portfolio analysis and management, financial derivatives and
international financial flows. The book is in very lucid language and it
describes techniques, vehicles and strategies for planning, implementing and
overseeing the optimal allocation of the funds of an investor or an institution
in the changing environment. The book is useful for the investors and the
financial experts who are already aware of the basic terminologies and
concepts of mutual fund investments.
 Rachna Baid (2014) has authored a book on mutual funds, their products,
and various services provided by the mutual fund companies. The book is
logically divided into various chapters as below

- Concept of mutual funds

- Role of mutual funds
- Organization of mutual funds,
- Accounting and valuation
- Investment management
- Development of model portfolios and the unit holders’ protection.

 Amit Singh Sisodiya (2012) has focused the journey of the mutual fund
industry development in India. The book has highlighted the milestones in the
development of the mutual fund industry in the country. It has also explained
various phases of the industry over four decades of existence and how
increased deregulation paved the way for a healthy competition which
benefited both the investors and the industry players. This book is a very good
attempt to offer incisive insights into the Indian mutual fund industry.

 Naidu Kumarswamy G and Sravana Kumar B (2014) have

concentrated their study on gold Exchange Traded Funds. They have
explained that the investment in gold ETF is cheaper and simpler way of
investment in gold than the traditional purchase of gold. The gold ETFs are
like the trading in stock market which gives the benefit of the real time value
of the gold. Further they can be used for speculation also in the short term.
Gold ETFs are very much liquid in nature and the investors can liquidate it
fully or partly as per his need. It also eliminates the maintenance cost.
However the researchers point it out that the investors should be well aware
about the transactions and other regulations related to gold ETFs.

 Bansal Manish (2013) details an eight-step strategy for the Indian mutual
fund industry so as to achieve greater penetration and hence fuel its growth.
Some of the major recommendations of the article are-

• Revisit mutual funds’ core competence

• Rebuild investors’ confidence

• Manage risks through derivatives

• Treat investors like customers

 Jaideep Sarkar and Sudip Majumdar (2010) studied the
performance of mutual fund schemes. They selected five growth oriented
schemes for the period February 1991 to August 1993. They used the
technique of CAPM for measuring to evaluate the performance of these
schemes. They evaluated the boom period performance of these schemes also.
Their conclusions include that the mutual fund schemes have not delivered
better returns during the study period than the market in common.

 Raychaudhuri Arjun (2012) studied the mutual fund performance in

India from the year 2001 to the year 2004. The study measured the
performance of the mutual funds and concluded that there is wide gap between
the predictions and the actual performance of the mutual fund schemes. The
author has used various tests from the literature to study the persistence in the
mutual fund market. Based on the outcomes of the study the author has
concluded that the predictions for the longer term are more accurate than that
of the short term period. He has concluded that the investors should apply his
own judgment along with the predictions given by the mutual fund scheme
while taking buying decisions.

 Barua (2017) concentrated on a specific scheme of the mutual fund namely

MasterShare. The scheme was launched by the UTI AMC. The author has
studied the scheme from the investors’ point of view. He has used the CAPM
technique by relating the relative risk and returns of the investment in
MasterShare. He used the benchmark of Economic Times Ordinary Share
Price Index. He pointed out the importance and issues for the regulation of
mutual funds in 1993 by SEBI. According to the author these rules which are
framed regulations for mutual funds would have long run effects on mutual
fund industry in India.

 Susan Thomas and Ajay Shah (2012) studied the performance of the
selected mutual fund schemes. They selected 11 mutual fund schemes and
studied the performance evaluation of these schemes on the basis of market
price data. They computed returns for these schemes on weekly basis since
their inception. All the schemes were evaluated by using Sharpe measures.
They have concluded with specific conclusions like they have mentioned that
except UGS 2000 of UTI, none of the schemes earned superior returns that
the market in general. They further mentioned that risk of these schemes was
very high and funds were not adequately diversified.
 Shukla Sharad, Kulraj J and Vikraman Shaji (2015) studied in
their articles whether there is any relationship between the past performance of
a particular mutual fund scheme and its future performance. The conducted
this evaluation of mutual funds schemes by comparing the changes in NAVs.
However these analyses were purely for short period and ignored the concept
of risk. These articles were published in financial dailies like Financial
Express, Economic Times, Business Standard and the periodicals like Dalal
Street, etc.

 Jayant Sarkar (2014) evaluated financial performance of five close-

ended growth funds to find out whether there is relationship between the lock-
in of funds and performance of the schemes. However he concluded that there
is no any direct relationship between these two factors as the performance of
the selected schemes was below average and fund possessed high risk as well.

 Sondhi (2011) has examined the financial results of the selected equity
oriented mutual fund schemes. He has concentrated on the size of the mutual
fund scheme vis-a-vis its financial result. The method and technique used in
the study are very much systematic and the results of the study are also
displayed very logically and in a systematic manner.

 Jayadev M (2016) carried on the study for comparison of the performance

of the selected mutual fund schemes. He selected around 62 mutual fund
schemes from different AMCs and he studied the performance of the funds for
the period from the year 1987 to the year 1995. He concluded that very few
funds were able to outperform the market index for the period of the study. He
has also pointed out that the schemes which are labeled as the diversified
schemes are not always diversified in real sense. He has concluded that the
mutual fund industry should develop a better transparent product for the retail
investors.
 CHAPTER-3
RESEARCH METHODOLOGY
1. Need of the study:

2. Research design:

3. Sampling technique:

4. Sample size:

5. Population: Vadodara (selected people)

6. Data collection: Primary data

7. Data collection tools: Questionnaire

8. Data analysis tool: Charts, graphs, tables

9. Limitation of the study:

Less time dimension and less respondents
 CHAPTER-4
DATA ANALYSIS AND INTERPRETATION
NFO process:
When a mutual fund Assets Management Company (AMC) announces a public issue
of units of & new fund/scheme, it is called a new fund offer (NFO). The new fund is
planned and sources from where it should be collected and where the amount should
be invested is planned by the AMC. According to the SEBI rules any new fund
launched should be approved by SEBI. Once the AMC get the approval of SEBI for
the fund it does the marketing of the fund by it self or through brokers. The investors
who are willing to invest in a particular fund deposit the amount they plan to invest in
the bank as directed by the AMC. These banks collect the application and amount and
direct it towards the registrar specified by the AMC. From this point India info line
came into the picture as the registrar. The role, responsibilities, activities, forms and
reports involved in this process of NFO is general, are AMC, fund manager, SIP I/c,
Switches I/c., NFO Coordinator. Internal auditor, Systems(S/W) dept. IPO Centre
coordinator, IPO-RTI, IPO-EDP, Scanning and Printing & Dispatching.

Teams involved in the NFO process-

 Mutual fund unit
 Technology team
 Data entry team
 Verification team
 External audit team
 Scanning team
 Franking and dispatching team

NFO PROCESS
Description of NFO process:

Bank wise segregation:

The India info line branches collect the applications of the investors across India and
abroad for all the branches of the bank that is involved in this NFO. These
applications are sent to India info line processing center, Hyderabad. After receiving,
these applications are segregated bank wise and branch wise.

IH Numbering:
IH numbering is also called as in house Numbering. India info line gives this IH
numbering to those applications. This is done for their convenience in doing back
office functions easily. All the data on the application is entered into systems through
software developed by India info line technology team called K-Bolt. Later on, we
can get any information of a particular application or investor that we require by
entering this IH number.

Binding:
All the applications that are received are given for binding. Binding of
application is done by segregating them according to the bank and branch
from which they are received. India info line does this Binding because to keep
all these applications safe, out of any damage and miss-place.

First Entry:
After finishing binding of applications they are sent to Date Entry team.
Here the first time entry is done. All the information or date of an investor that is
available on the application like name of the applicant, age, Address,
PAN, Bank details, broker code, sub broker code, email addresses, guardian
name, amount invested, name of the scheme or plan invested in, etc., are
entered into the systems of India info line.
Second Entry:
After first entry the data is again sent for the second entry. Here in second
entry, the data that is entered in first entry is checked and the information
whatever is missing is entered.
Online Matching:
After entering the data like applicant, age, Address, PAN, Bank details,
broker code, sub broker code, email addresses, guardian name, amount
invested, name of the scheme or plan invested in, etc., in the first entry and
once again in the second entry it is sent to the online matching. Here in
online matching the physical form of application are kept side by an checking
of data that was entered in the first entry and second entry is done.

First time verification:

Data from online matching is sent to the verification team. This team verifies
mistakes that are left in online matching. Mistakes like blank address, PAN
blank for amount greater than or equal to 50000 RS. Name blank, bank
details blank, invalid or blank broker code etc., are rectified in the first time
verification.

First time CCL:

First time check clearing list is in short is called as first time CCL. First Time
CCL is prepared based on the data that is provided after first time
verification.

External Audit:
First time check-clearing list is sent to an external audit team. India info line
appoints this team before the NFO processes. They are nowhere related to
the organization. This external audit team will mainly check name of the
investor, amount invested, bank details PAN number, name of the
scheme/plan and mode of holding (MOH). But in total they will check more
than 30 characters

Second time verification:

If the external auditing is not satisfied and if they find any mistakes or
missing information they will send the first time CCL for second time
verification. Here they verify the check list once again and mistakes like
invalid mode of folding (MOH), invalid email address, status minor without
guardian name, invalid date of birth for minor, invalid existing account
number, blank/null application number, NRI with blank account type, saving
or current, investor signature missing are rectified.

Second time CCL:

Second check the verification team prepares clearing after verifying the
mistakes that are pointed out by the external audit team. After preparing
second time CCL it is again sent to external audit team.

Integrity Check (NFO team):

Check clearing list will be given by the external audit team to the NFO team
in India info line This NFO team in India info line will once again check
further mistakes like spelling mistakes in the name of the applicant etc., and
rectify them.

Integrity Check (by Audit):

After integrity check by the NFO team it is once checked by the internal
audit team of India info line.
Scanning Default Values, Verification of Mismatch cases: Entire data is filtered at
each and every step and finally it is given to the scanning team for scanning here
scanning team will detect and rectify any further default values and mismatch cases.

Reconciliation, Rejections and Cheque returns:

Cheques of the investors are sent are sent by the balk to India info line
Reconciliation team. Here this team will verify bank details of the investor
like PAN number, bank a/c number, comparing the amount invested with that
of the minimum amount that has to be invested cheques without hue
signature of the investor bounced cheques etc., and they are rejected. These
rejected cheques are dispatched to the investors. A sample statement of
accounts (SOA) is prepared by this reconciliation team.

Handling over the data to MFS:

Entire data after getting filtered at each and every step will be handing over to mutual
fund services team. This MFS team will once again verify the data and the final data
will come out any mistakes and default values.

Porting in Task MF:

Task MF is the software developed by India info line Technology team. It is prepared
according to the suggestion given by AMC. This Task MF will resemble the style or
Performa or outlook of the statement of accounts. Final data that they got after
filtering the mistakes and default values is ported in the task MF.

Allotment of units:
Allotment of units is done as per the amount that is invested by investors. They will
avail the units taking the Net Asset Value (NAV) of that particular scheme as base.
Sample SOA verification by audit:
Statement of accounts (SOA) is picked up randomly from a huge lot and the audit
team does verification. This verification will result in preparing a statement of
accounts which in cent percent correct and exact.

 Name of the investor

 Address
 Bank details
 Pan Number
 Guardian name
 Broker code
 Sub broker code
 Nominee name
 Nominee addresses
 2nd and 3rd applicant name
 Amount invested
 No. Of units allotted
 Fund name, Scheme Name, Plan Name & A/c no
 Transaction type details
 Mode of redemption payment
 Mode of dividend payment
 Mode of dispatch
 Status, occupation
 Current balance, average price, current cost, current NAV etc.

Dispatch of SOA:
Statement of accounts (SOA) once prepared is dispatched to the investor. SOA’s are
neatly packed in an envelope and dispatched to the investors by the dispatch team
through courier.

New Fund Report:

India info line will finally prepare New Fund Report. This new fund report has to be
submitted to the AMC. Then AMC will submit a copy of the same to the SEBI, which
is mandatory. The new fund report details like

1) Scheme details
* Scheme name
* Scheme type
* Date of opening
* Date of closing the scheme / initial subscription period
* Target amount
* Minimum amount to be raised

2) Subscription / Allotment details

* Number of applications received with in the country
* Number of NRI applications received
* Subscription amount received with in the country
* Subscription amount received form NRI
* Date of allotment of units

3) Initial issue expenses

4) Date of dispatch of refund of refund orders

5) Unit holding pattern

6) Distribution schedule

7) Geographical Dispersion list

Holding profile of applicant:

Single Joint Anyone Total

particulars
No. of 89 0 31 120
applicants
% of 74 0 26 100
applications
 140

120

100

80

60

40

20

0
no. of applicants % of applicants

Single Joint Anyone Total

Interpretation:
It can be seen that majority of the applicants prefer to hold the allotted units
individually and 26% prefer to hold anyone/survivors. This corroborates with the age
profile of the applicants.

Occupation profile of applicants:

Particul Busine Servic Stude Profession Retire Hous Othe tota

ar ss e nt al d e rs l
wife
No. of 34 46 2 4 7 23 5 120
applican
ts
% of 28 38 2 3 6 19 4 100
applican
ts
 140

120

100

80

60

40

20

0
No. of applicants % of applicatns

Business Setvice Students Professional Retired House wife Others Total

Interpretation:
Majority of the applicants are from services personnel at 38%, next comes business
People are 28%. The housewife occupy 3rd highest at 19%. It is found that
professionals and retired are at the lowest.

STATUS:
a) Residential status of individual applicants:

Particular Resident NRI Total

No. of applicants 104 4 108

% of applicants 96 4 100
 120

100

80

60

40

20

0
no. of applicants % of applicantts

Resident NRI Total

Interpretation:
It can be observed from the table and the chart that the majority of applicants are
resident individuals constituting 96% the applicants and remaining 4% are the Non-
resident Indians.

b) Status of non-individuals:

Particular Company Society FI SME Others Total

No. of 1 0 0 10 0 11
applicants
% of 10 0 0 80 0 90
applicants
 90

80

70

60

50

40

30

20

10

0
no. of applicants % of applicants

comapany society FI SME others total

Interpretation:
In the non-individuals category HUF occupied the highest at 80% and next 10% is for
partnerships. In others category 10% is found and all other nonindividual entities have
recorded zero applications.

Age profile of the applicants:

Particular Below 18 18-30 31-60 Above60 Total

No. of 0 30 72 18 120
applicants
% of 0 25 60 15 100
applicants
 140

120

100

80

60

40

20

0
no. of applicants % of applicants

below 18 18-30 31-60 above 60 total

Interpretation:
The age profile of the applicants shows that the majority of the applicants
fall into the age Group 31-60 years and the percentage of them being 60.
This is followed by the age Group 18-30 years and 15% of the applicants
are above 60 years.

Investment profile of the applicants:

Particular 5000- 25001- 50001- Above Total

25000 50000 100000 100000
No. of 78 32 4 6 120
applicants
% of 65 27 3 5 100
applicants
 140

120

100

80

60

40

20

0
no. of applicants %of applicants

5000-25000 25001-50000 50001-100000 above 100000 total

Interpretation:
Amount of investment is high at 65% in the range 5000-25000 and it is very low at
3% in 50001-100000, but the next slab. Above 100000 has registered 5%.

Scheme profile of applicants:

Particular Growth Bonus Dividend Dividend Total

option option reinvestment payout

No. of 59 4 37 20 120
applicants

% of 49 3 31 17 100
applicants
 Chart Title
140

120

100

80

60

40

20

0
no. of applicants % of applicants

growth option bonus option dividend reinvestment dividend payout total

Interpretation:
Majority of the applicants Opted the growth option and the option of dividend
reinvestment is 31%. This means that 80% of the applicants are not investing for income sake
rather they look at the accumulation of profits.

Analysis of mode of payment:

Particular Cheque DD Total

No. of applicants 119 1 120

% of applicants 99 1 100
 Analysis of mode of payment
140

120

100

80

60

40

20

0
no. of applicants % of applicants

cheque DD Total

Interpretation:
The mode of payment reflects upon the quality of applicants. On an average 99%
have paid through cheques and therefore the NFO is able to attract good quality retail
investors.

Analysis of type of account:

particular SB Current NRO NRE FCNR Total

No. of 119 1 0 0 0 120

applicants

% of 99 1 0 0 0 100
applicants
 140

120

100

80

60

40

20

0
no. of applicants % of applicants

SB Current NRO NRE FCNR Total

Interpretation:
Majority of the payments have been made from Savings Bank account (SB). No
payments have been found from NRO, NRE, and FCNR even though 4% of the applicants
are NRI s

Gender profile of the applicants:

Particular Male Female Total

No. of applicants 89 31 120

% of applicants 74 26 100
 Gender profile of the applicants
140

120

100

80

60

40

20

0
n0. of applicants % of applicants

male female total

Interpretation:
The female participation in the NFO is low at 26%. The male applicants are very
high at 76% as is not normally found in found in institutional investments.

Geographical distribution of applicants:

Particular Andhra Bihar Chandigarh Delhi Gujrat Karnataka
pradesh

No. of 4 1 1 17 11 5
applicants

% of 3 1 1 14 9 4
applicants

Particular Madhya Maharastra Rajasthan Punjab Uttar Tamilnadu

pradesh pradesh

No. of 1 48 2 2 5 6
applicants

% of 1 40 2 2 4 5
applicants
 Particular West Bengal Others Total

No. of applicants 10 6 120

% of applicants 8 5 100

Geographical disrtibution of appliucants:

140

120

100

80

60

40

20

0
no. of applicants % of applicants

andhra pradesh bihar chandighar delhi gujrat

karnataka madhya pradesh maharashtra rajasthan punjab
uttar pradesh tamilnadu west bengal others total

Interpretation:
A predominant feature is that 40% of the applications are from Maharastra and next
highest 14% is registered for Delhi. Lowest numbers of applications are from Bihar and
Chandīgarh.
QUESTIONNAIR
 QUESTIONNAIR

1. Are you interested in mutual funds?

(A)YES

(B)NO

2. What is your age group?

(A)20-30

(B)30-40

(C)40-50

(D)50-60

3. What is your occupation?

(A)Private employee

(B)Government employee

(C)Business person

(D)Retired

4. In which type of mutual fund do you like to invest?

(A)Close ended

(B) Open ended

5. What percent of return do you expect?

(A) 5%

(B) 8%
(C) 10%

(D)20%

6. Which type of fund allocation do you like?

(A) 100 percent equity

(B) 80 percent equity & 20 percent debt

(C) 70 percent equity 20 percent debt & 10 percent money market

(D) 100 percent debt

7. In which of the UTI scheme you have invested?

(A)UTI wealth builder fund

(B)UTI infrastructure advantage fund

(C)UTI long term advantage fund

(D)Other

8. Are you satisfied with the returns of which UTI is giving?

(A)YES

(B)NO

(C)CANNOT SAY

9. Had you invested in any other mutual funds?

(A)Reliance mutual funds

(B)J M financial

(C)FEDILITY MUTUAL FUNDS

(D)HSBC
10. Do you advice people to invest in mutual funds?

(A)YES

(B)NO

(C)CANNOT SAY
 CHAPTER- 5
SUMMARY AND CONCLUSIONS
SUMMARY AND CONCLUSIONS

* The NFO is found to be a complex activity calling for creating an organization polling the
knowledge and expertise of people in different areas.

* The NFO process is simple and well structured as long as it is to

investor to investor, but thereafter the process is lengthy time

consuming and found to be overlapping at some stages.

* The SEBI regulations governing NFO are comprehensive and

protect investor's interest at each level.

* Different funds have been designing different forms of applications

for NFO.

* An analysis of sample of applications revealed the following

 Majority applicants prefer to hold the units individually.

 Majority of the applicants are in service.
 NRI s share is about 4% of the total. O More than 2/3rd of the
applicants are HUF s.
 The model age group is 31-60.
 The most common investment amount is 5000-25000.
 About half of the applicants prefer Growth option.
 Almost all applicants make the payments by cheques.
 There were no NRO, NRE and FCNR accounts.
 Majority the applicants are male, and.
 Majority applications are from state of Maharastra
 SUGGESTIONS
7
BIBLIOGRAPHY
Bibliography

* www.Indiainfoline.com

* www.sebi.com

* www.amfiindia.com

* NFO propeller of India info line.

* NFO records of Reliance Mutual Fund.

* Mutual Funds in India by H SADHAK.