1

BankAi
saDostJai
sa

2
 APr
ojectRepor
t

On

“
TheRol
eOfFi
nanci
alI
nst
it
uti
onI
n

I
ndust
ri
alDev
eopment

Mast
eri
nCommer
ce

Submi
tt
edby
:

Aar
tiSi
ddappaKot
noor

Rol
lNo:
1962016

UNDERTHEGUI
DENCEOF

PROF:
MADHUTI
RTHANI

SHRISI
DHTHAKHURNATHCOLLEGEOFARTS&

COMMERCEULHASNAGAR421004.

UNI
VERSI
TYOFMUMBAI
2019-
2020

3
 APr
ojectRepor
t

On

Apr
ojectst
udyon“
TheRol
eOfFi
nanci
alI
nst
it
uti
onI
n

I
ndust
ri
alDev
eopment
”

APr
ojectSubmi
tt
edt
o

Uni
ver
sit
yofMumbai
forPar
ti
alCompl
eti
onoft
hedegr
ee

of

Mast
eri
nCommer
ce

Undert
heFacul
tyofCommer
ce

BY:

Ms.AARTISI
DDAPPAKOTNOOR

ROLLNO:
1962016

UNDERTHEGUI
DENCEOF

PROF:
MADHUTI
RTHANI

SHRISI
DHTHAKHURNATHCOLLEGEOFARTS&

COMMERCEULHASNAGAR421004.

UNI
VERSI
TYOFMUMBAI
2019-
2020

4
 DATE:
23t
hNOVEMBER,
2019.

Thi
si stocerti
fythatMs./Mr.AARTISIDDAPPAKOTNOOR, Roll
no.
1962016asst udentofMast er
sofCommer ce(M.Com)ofS. S.T.
Coll
egeofAr t
s&Commer ce,
Ulhasnagar–421004,has
Approachedusf orherproj
ecton“ ROLEOFFI NANCI ALINSTITUTIONSIN
I
NDUSTRI ALDEVELOPMENT” .
Tocol l
ectthepri
mar ydata.Wehav eprovi
dedt hei
nformationat
Ourbest.Wewi shher/hisallt
hesuccess.

(
INVESTMENTMANAGER)

MR.

5
 DECLARATI
ON

Itheunder signedMiss.Aart
i Si
ddappaKot noorher eby, decl
arethatthe
wor k embodi edinthi
sprojectworktit
led“RoleOfFi nancialI
nsti
tut
ionsIn
Industri
alDev el
opment”for
msmyowncont r
ibuti
ontot heresearchwor k
carri
edoutundert heguidanceofPr of.MadhuTi rt
hani i
sar esul
tt omyown
researchwor kandhasnotbeenpr eviouslysubmittedtoanyot herUniversi
ty
foranyot herDegree/Dipl
omat othi
soranyot herUniversi
ty.

Wher
everr
eferencehasbeenmadetopr
evi
ousworksofother
s,i
thasbeen
cl
ear
lyi
ndi
catedassuchandincl
udedi
nthebi
bli
ography
.

(
Aar
tiSi
ddappa
Kot
noor
)

6
 ACKNOWLEDGEMENT

Tol
i
stwhoal
l
hav
ehel
pedmei
sdi
ff
icul
tbecauset
hey
aresoNumer
ous

andt
hedept
hissoenor
mous.

Iwoul
dli
ket
oacknowl
edget
hef
oll
owi
ngasbei
ngi
deal
i
sti
cchannel
s

Andf
reshdi
mensi
onsi
nthecompl
eti
onoft
hispr
oject
.

I
ttaket
hisoppor
tuni
tyt
othankt
heUni
ver
sit
yofMumbai
forgi
vi
ngMe

chancet
odot
hispr
oject
.

Iwoul
dli
ket
othankmyPr
inci
pal
,Dr
.J.
C.Pur
swani
forpr
ovi
dingt
he

Necessar
yfaci
l
iti
esr
equi
redf
orcompl
eti
onoft
hispr
oject
.

It
aket
hisoppor
tuni
tyt
othankourCo-
ordi
nat
or–Ms.
Var
shaThi
rt
hani

f
orhermor
alsuppor
tandgui
dance.

Iwoul
dal
sol
i
ket
oexpr
essmysi
ncer
egr
ati
tudet
owar
dsmyPr
oject

Gui
dePr
of.
Var
shaThi
rt
hani
Fri
endswhosegui
danceandcar
emade

t
hepr
ojectsuccessf
ul.Iwoul
dli
ket
othankmyCol
l
egeLi
brar
y,f
or

hav
ingpr
ovi
dedv
ari
ousRef
erencebooksandmagazi
nesr
elat
edt
omy

pr
oject
.

Last
ly,
Iwoul
dli
ket
othankeachandev
eryper
sonwhodi
rect
lyor

I
ndi
rect
lyhel
pedmei
nthecompl
eti
onoft
hepr
ojectespeci
all
yMy

Par
ent
sandPeer
swhosuppor
tedmet
hroughoutmypr
oject
.

7
 OBJECTI
VS

1.Thepr
inci
pal
obj
ect
iveoft
heI
ndust
ri
alDev
elopmentBankofI
ndi
aist
o

gi
vel
oans

bot
htot
hepr
ivat
easwel
laspubl
i
csect
orunder
taki
ngi
nthef
iel
dof

commodi
ty.

2.I
tal
sodi
rect
lyi
nvest
sini
ndust
ri
alshar
esandunder
wri
test
hesecur
it
ies.

3.Thebankhasest
abl
i
shedDev
elopmentAssi
stanceFund.Thi
sisf
ort
he

benef
itoft
hosei
ndust
ri
eswhi
chf
ail
togetl
oansany
wher
e.Thi
sfundi
sthe

chi
eff
eat
ureoft
hisbank.Howev
er,
bef
oreof
fer
inganyassi
stanceoutoft
his

f
und,
thebankhast
oseek.

4.bank.Howev
er,
bef
oreof
fer
inganyassi
stanceoutoft
hisf
und,
thebank

hast
oseek.

5.Thi
sbankpr
ovi
desl
oanst
othei
ndust
ri
esdi
rect
ly.

8
 Execut
ivesummar
y

Asweknowt
hatt
ost
artanewcompanyori
ndust
ryt
hatmost

i
mpor
tantt
hingi
scapi
tal
becausewhenaper
sonst
art
sacompanyi
t

doesntmeant
hatshe/
hemustbel
ongt
oar
ichf
ami
l
yev
eryst
artup

needaf
inanci
alassi
stanceorf
inanci
alsuppor
tsot
hiski
ndofser
vice

pr
ovi
dedbyv
eri
ousf
inanci
ali
nst
it
uti
onwhi
chgi
vesawi
ngt
othei
r

i
deas notonl
yforst
art
upsandnewcompani
esbutt
hsesf
inanci
al

i
nst
iut
ionshel
psf
orex
ict
ingi
ndust
ri
est
ogr
owt
echni
cal
l
yand

f
inaci
all
y.asmyt
opi
cis“
ROLEOFFI
NANCI
ALI
NSTI
TUI
ONSI
N

I
NDUSTRI
ALDEVELOPMENT.
”

9
 TABLEOFCONTENT

1.CERTI
FICATE

2.DECLARATI
ON

3.ACKNOWLEDGEMENT

4.OBJECTI
VES

5.EXECUTI
VESUMMARY

10
 I
NDEX

PAGE
SRNO PARTI
CULARS NO

1 CHAPTER01
1.
1INDUSTRIALDEVELOPMENTBANKOF
I
NDIA
1.
2ESTABLISHMENT
1.
3OBJECTIVE
1.
4FUNCTIONSOFI DBI

2 CHAPTER02
STATEFI
NANCI
ALCORPORATI
ONOFI
NDI
A
2.
1INTRODUCTI
ON
2.
2FEATURESOFTHESFCsACT,
1951
2.
3FINANCI
ALRESOURSESOFTHESFCs
2.
4LISTOF18SFCsI
NINDIA
2.
5BROADFUNCTIONSOFSFCs
2.
6WHOCANAVAI LTHESERVI
CESOFSFCs?
3 CHAPTER03
LI
FEI
NSURANCECORPORATI
ONOFI
NDI
A
3.1DEFINI
ATIONANDBASICFEATURESOF
I
NSURANCE
3.2BASICPRINCI
PALSOFINSURANCE
3.3HISTORYOFINSURANCE
3.4POWERSOFLI C
3.5WORKI NGOFMUTUALFUNDS
3.6CHALLENGESFACEDBYMUTUALFUNDS
3.7EXPORTCREDITS
7.1FORINDIANCO.EXECUTINGCONTRACT
OVERSEASE
7.2FORCOMMERCI ALBANKS
7.3OTHERFACILITI
ESFORINDIAN
COMPANY
7.4FOROVERSEASEENTITING
7.5FINANCEFOREXPORTORI ENTEDUNI
TS
7.6OVERSEASEINVESTMENTFINANCE

CHAPTER04
RESEARCHMETHODOLOY

1OBJECTI
VEOFSTUDY
2SCOPEOFSTUDY
3COMPETITORS
4TOOLSANDTECHNIQUES
11
 5TECHNOLOGI
CALTOOLS

I
NDUSTRI
ALDEVELOPMENTBANKOFI
NDI
A

Est
abl
i
shment

I
ndust
ri
alDev
elopmentBankofI
ndi
a(I
DBI
)wasest
abl
i
shedonJul
y1,1964.

Thi
sbankwasst
art
edbyt
hegov
ernmentofI
ndi
aasasubsi
diar
yofReser
ve

BankofI
ndi
a.OnFebr
uar
y16,1976i
tbecamei
ndependentoft
heReser
ve

BankofI
ndi
a.

Ty
pe Pr
ivat
eSect
orBank(
Regul
ator
ypur
pose
onl
y)

Tr
aded 
as :
-
 BSE:
 
500116

 NSE:
 
IDBI

I
ndust
ry :
- Banki
ng

Founded :
- 1 
Jul
y1964;
55y
ear
sago[1]

Founder :
- GOIbyActofPar
li
ament

Headquar
ter
s :
- I
DBITower
, 
WTCCompl
ex,
 
Cuf
fe
Par
ade,
 
Col
aba,
 
Mumbai
,
 Mahar
asht
ra
,
 
Indi
a[2]

Keypeopl
e
 HemantBhar
gav
a 
[3]
(
Non-
ExeChai
rman)

 RakeshShar
ma

12
 [4]
(
MD&CEO)

 Samuel
Joseph 
[5]
(
Deput
yMD)

Pr
oduct
s
 I
nvest
mentBanki
ng

 ConsumerBanki
ng

 Commer
cial
Banki
ng

 Ret
ail
Banki
ng

 Banki
ng

 AssetManagement

 Pensi
ons

 Mor
tgages

 Cr
edi
tCar
ds

Owner :
- LI
CofI
ndi
a.

Numberof :
-18000 
(Mar2019)
empl
oyees

Par
ent :
-IDBI

Subsi
diar
ies
 I
DBICapi
tal
Mar
ket
s&Secur
it
ies

 I
DBII
ntech

 I
DBIAssetManagement

 I
DBIMFTr
ust
eeCompany

 ;
I
DBITr
ust
eeshi
pSer
vices

 I
DBIFeder
alLi
feI
nsur
ance
Company
[6]

Websi
te :
-www.
idbi
bank.
in

13
OBJECTI
VE

 Thi
sbankpr
ovi
desl
oanst
othei
ndust
ri
esdi
rect
ly.

 I
tal
so di
rect
lyi
nvest
sini
ndust
ri
alshar
es and under
wri
tes t
he

secur
it
ies.

 I
tguar
ant
eesl
oansobt
ainedbyt
hei
ndust
ri
esi
ntheopenmar
ket
.

 I
tof
fer
sfaci
l
ityofr
ebat
eint
het
radi
ngbi
l
ls.

 Thi
sbankor
gani
sesi
nvest
mentsur
vey
s.

FUNCTI
ONSOFI
DBI

Themai
nfunct
ionoft
heI
ndust
ri
alDev
elopmentBankofI
ndi
a,asi
tsname

i
tsel
fsuggesti
stof
inanceI
ndust
ri
alent
erpr
isesi
nbot
hpr
ivat
eandpubl
i
c

sect
or.Fi
nanci
alassi
stancei
spr
ovi
dedei
therdi
rect
lyort
hroughspeci
al

f
inanci
ali
nst
it
uti
ons.

(
a)Di
rectAssi
stance:
IDBIassi
stsI
ndust
ri
aluni
tdi
rect
lybywaypr
oject

l
under
wri
ti
ngofanddi
rectsubscr
ipt
iont
oindust
ri
essecur
it
ies(
Shar
e&

Debent
ures)sof
tloans,
techni
cal
dev
elopmentf
undl
oansandequi
pment

f
inancel
oan.I
DBIpr
ovi
desdi
rectassi
stancef
orpr
ojectcost
ingmor
ethanRs.

14
3Cr
oreundert
hePr
ojectf
inancescheme.

(
b)I
ndi
rectFi
nance:
IDBII
ndi
rectassi
stancei
spr
ovi
dedbasi
cal
l
ytot
iny
,smal
l

andmedi
um ent
erpr
isesmai
nly
.(i
)Bywayofr
efi
nanceofI
ndust
ri
all
oan

gr
ant
edbySFCs,
SIDCs,
andcommer
cial
banks,
co-
oper
ati
vebanksanRRB.(
ii
)

Redi
scount
ingofbi
l
lsar
isi
ngoutofsaf
eofI
ndi
genesmachi
ner
yadef
err
ed

pay
mentbasi
s.(
ii
i)SeedCapi
tal
assi
stancet
onewent
erpr
isenev
ergener
all
y

t
hroughSFCs&SI
DCs.

(
c)Speci
alAssi
stance:
IDBIAct1964,
prov
ideDev
elopmentAssi
stancef
und.

Thi
sfi
i
ndt
obeusedbyt
heI
DBIt
oassi
stt
hoseI
ndust
ri
alconcemswhi
char
e

notabl
etosecur
efundsi
nthenor
mal
cour
seei
therbecauseofheav
y

i
nvest
mentorl
owr
ateofr
etur
nbot
h.(
d)Di
rectAssi
stancet
oIndust
ri
es:
The

I
DBIhasbeenempower
edt
ofi
nancei
ndust
ri
alconcer
nsdi
rect
lyundert
he

f
oll
owi
ngst
ruct
ural
arr
angement
s:

(
i)Togr
antf
inanci
alaccommodat
ionupt
oa16y
earper
iodf
orexpor
tof

capi
tal
goodsandot
hercommodi
ti
es,

(
ii
)Togr
antl
oansort
osubscr
ibet
otheshar
esanddebent
uresofi
ndust
ri
al

concer
ns.Suchl
oans,
adv
ances,
anddebent
urescanbeconv
enedi
ntoequi
ty

shar
esatt
heopt
ionoft
heBank,

(
ii
i)Tounder
wri
tenewi
ssuesofI
ndust
ri
al60concer
nsandaccept
,di
scount

orr
edi
scountbonaf
idecommer
cial
bil
l
sorpr
omi
ssor
ynot
esofi
ndust
ri
al

concer
ns,

(
iv)Toguar
ant
eedef
err
edpay
mentduef
rom i
ndust
ri
alconcer
nsf
orl
oan

r
aisedbyt
hem i
nthemar
ketorf
rom schedul
edbankset
c.

(
e)Assi
stancet
oot
herf
inanci
ali
nst
it
uti
ons:
IDBIhascar
ri
edoutt
hef
oll
owi
ng

r
efi
nanci
ngf
unct
ions:
IDBIcanr
efi
nancet
erm adv
ancesof3t
o25y
ear
s

mat
uri
tymadet
oindust
ri
alconcer
nsbyI
FCI
,SFCsandot
herf
inanci
al

15
i
nst
it
uti
onswhi
chmaybenot
if
iedbyt
heGov
ernment
.Itcansi
mil
arl
y

r
efi
nancet
erml
oansof3t
o10y
ear
smat
uri
tymadebyschedul
edbanksand

St
ateCo-
oper
ati
veBanks.I
tcanal
sor
efi
nanceexpor
tcr
edi
tof15y
ear
s'

mat
uri
tywher
epr
imar
ylendi
ngi
nst
it
uti
onsgr
antl
oanst
oper
soni
nIndi
aand

t
opar
sonsout
sideI
ndi
arepay
abl
ewi
thi
naper
iodof12y
ear
s.

(
f)Cr
eat
ionofDev
elopmentofAssi
stancef
unds:
TheBankcr
eat
eda

dev
elopmentassi
stancef
undi
n1965wi
thani
nit
ial
cont
ri
but
ionf
rom Cent
ral

Gov
ernment
.Thi
sfundi
sint
endedt
opr
ovi
deassi
stancef
ori
ndust
ri
eswhi
ch

f
orv
ari
ousr
easonsl
i
ke,
heav
yinv
est
menti
nvol
vedorl
owant
ici
pat
edr
etur
n

oncapi
tal
,maynotbeabl
etoobt
ainf
undsi
nthenor
mal
cour
se.Thepr
ior

appr
oval
oft
heCent
ral
Gov
ernmenti
snecessar
yforanyassi
stancef
rom t
he

Fund.

(
g)Sof
tloanscheme:
Thesof
tloanschemecamei
ntoexi
stencei
n

Nov
ember1976f
orf
inanci
ngt
hemoder
nisat
ionpr
ogr
ammeoff
ivesel
ect
ed

i
ndust
ri
es,
namel
y,cot
ton,
text
il
es,
jut
e,cement
,sugarandspeci
fi
ed

engi
neer
ingi
ndust
ri
es.Theschemeai
msatmoder
nisat
ion,
repl
acementand

r
enov
ati
onofi
ndust
rywhi
chhasbecomenecessar
ytoachi
eveamor
e

economi
clev
elofpr
oduct
ioni
nor
dert
oenhancet
hei
rcompef
it
ivenessi
n

domest
icandi
nter
nat
ional
mar
ket
s.

(
h)Techni
cal
Dev
elopmentFundScheme:
Techni
cal
Dev
elopmentFund

Schemewasi
ntr
oducedi
nMar
ch1979wi
tht
heobj
ectofpr
omot
ingf
ull
er

capaci
tyut
il
izat
ion,
technol
ogi
esupgr
adat
ion,
andexpor
tdev
elopment
.The

61f
undcanpr
ovi
def
orei
gnexchangef
orsmal
lval
uei
mpor
tswi
tht
heobj
ect

ofpr
ocur
ingt
echni
cal
know-how,
for
eignconsul
tancyser
vice,
drawi
ngsand

desi
gns.

(
i)Aut
omat
icRef
inanci
ngSci
i
eme:
Themai
nfeat
uresofAut
omat
ic

16
r
efi
nanci
ngschemear
easf
oll
ows:

(
a)Sanct
ionanddi
sbur
sementofr
efi
nancei
nrespectofl
oansupt
oRs.5

l
akhsf
rom t
heel
i
gibl
einst
it
uti
onst
osmal
lscal
eindust
ri
esi
ncl
udi
ngt
hosei
n

t
het
inysect
orwhi
char
enor
mal
l
ycov
eredundert
heI
DBICr
edi
tGuar
ant
ee

Scheme,

(
b)TheI
DBIwi
l
lnotl
evycommi
tmentchar
gesoncr
edi
tinst
it
uti
onsi
n

r
espectofr
efi
nancesundert
heARS

(
c)Onl
yonegener
alagr
eementwi
l
lbet
akenf
rom t
heel
i
gibl
einst
it
uti
on

cov
eri
ngdr
awal
sofr
efi
nanceunderdi
ff
erentschemesoft
heI
DBT

(
j)Redi
scount
ing:
IDBIhasi
ntr
oducedaschemef
orr
edi
scount
ingofbi
l
ls

agai
nstt
hesal
eofmachi
ner
ytoenabl
ethei
ndi
genousmachi
ne

manuf
act
uri
ngi
ndust
ryt
opur
chaseequi
pmentondef
err
edpay
mentbasi
s.

CHAPTER-
2

STATEFI
NANCI
ALCORPORATI
ONOFI
NDI
A

2.
1Int
roduct
ion

A cent
rali
ndust
ri
alf
inance cor
por
ati
on was setup undert
he I
ndust
ri
al

Fi
nanceCor
por
ati
onAct
,1948i
nor
dert
opr
ovi
del
ongandmedi
um t
erm

cr
edi
ttoi
ndust
ri
alunder
taki
ngs.The st
ate gov
ernment
s expr
essed t
hei
r

desi
ret
hatsi
mil
arcor
por
ati
onsbesetupi
nst
atest
osuppl
ementt
hewor
kof

t
hei
ndust
ri
alf
inanci
alcor
por
ati
on.Asar
esul
ttheSFCBi
l
lwasi
ntr
oducedi
n

t
hePar
li
ament
.

Themai
nint
ent
ionofset
ti
ngt
heSFCsi
stopr
ovi
def
inancet
omedi
um and

smal
lscal
e
17
i
ndust
ri
aluni
ts.

2.
2Feat
uresoft
heSFCsAct
,1951

Themai
nfeat
uresoft
heSFCAct
,1951ar
easf
oll
ows:

•I
tpr
ovi
dest
hatt
hest
ategov
t.shoul
dest
abl
i
shaf
inanci
alcor
por
ati
onf
or

t
hest
ate.

•Theshar
ecapi
talshal
lbef
ixedbyt
hest
ategov
t.butshal
lnotexceed|
2

cr
ore

•Thei
ssueoft
heshar
est
othepubl
i
cwi
l
lbel
i
mit
edt
o25% oft
heshar
e

capi
tal
andt
he

r
estwi
l
lbehel
dbyt
hest
ategov
t.,t
heRBI
,schedul
edbanks,i
nsur
ance

compani
es,

i
nvest
mentt
rust
s,cooper
ati
vebanksandot
herf
inanci
ali
nst
it
uti
ons.

Thecor
por
ati
onmayacceptpubl
i
cdeposi
tsr
epay
abl
eaf
teraper
iodnotl
ess

t
han5

y
ear
s,subj
ectt
othemax
imum notexceedi
ngt
hepai
dupcapi
tal
.

Thecor
por
ati
onmayi
ssuebondsanddebent
uresf
oramount
swhi
cht
oget
her

wi
th

t
hecont
ingentl
i
abi
l
iti
esoft
hecor
por
ati
onsshal
lnotexceed5t
imest
he

amountof

pai
dupshar
ecapi
tal
andr
eser
vef
undsoft
hecor
por
ati
on.

 Thecor
por
ati
onwi
l
lbemanagedbyaboar
dconsi
sti
ngofamaj
ori
tyof

di
rect
ors

nomi
nat
edbyt
hest
ategov
t.,RBIandt
heI
ndust
ri
alFi
nanceCor
por
ati
onof

I
ndi
a.

 The cor
por
ati
on wi
l
lbe aut
hor
ised t
o make l
ong t
erm l
oans t
o

i
ndust
ri
alconcer
ns

18
whi
char
erepay
abl
ewi
thi
naper
iodnotexceedi
ng25y
ear
s.

•Thecor
por
ati
onwi
l
lhav
especi
alpr
ivi
l
egesi
nmat
ter
sofenf
orcementofi
ts

cl
aims

agai
nstt
hebor
rower
s.

2.
3Fi
nanci
alResour
cesoft
heSFCs

SFCsmobi
l
iset
hef
inanci
alr
esour
cesf
rom t
hef
oll
owi
ngsour
ces:

•Thei
rowncapi
tal
shar
e

•I
ncomef
rom i
nvest
mentandr
epay
mentofl
oans

•Sal
eofbonds

•Loansf
rom I
DBI

•Deposi
tsf
rom publ
i
c

•Bor
rowi
ngsf
rom RBI

•Loansf
rom st
ategov
t.

2.
4Li
stof18SFCsi
nIndi
a

•Assam FC

•Andhr
aPr
adeshSt
ateFC

•Bi
harSFC

•Del
hiFi
nanci
alCor
por
ati
on

•Guj
aratSFC

•TheEconomi
cDev
elopmentCor
por
ati
onofGoa

•Har
yanaFC

•Hi
machal
PradeshFC

•Jammu&Kashmi
rSFC

•Kar
nat
akaSFC

19
•Ker
alaFC

•Madhy
aPr
adeshFC

•Mahar
asht
raSFC

•Or
issaSFC

•Punj
abFC

•Raj
ast
hanFC

•Tami
l
naduI
ndust
ri
alDev
elopmentCor
por
ati
onLt
d.

•Ut
tarPr
adeshFC

•WestBengal
FC.

2.
5Br
oadFunct
ionsofSFCs

•Thebasi
cfunct
ionofanSFCi
stof
inancet
hepr
oject
sandt
opr
ovi
depr
oject

adv
isor
y

ser
vices.

•Pr
ojectconcept
ual
i
sat
ionandr
elat
edser
vices,
incl
udi
nggui
dancei
nrel
ati
on

t
osel
ect
ionofpr
oject
s,pr
epar
ati
onoff
easi
bil
i
tyst
udi
es,capi
talst
ruct
uri
ng,

t
echno-
economi
c

f
easi
bil
i
ty,
financi
alengi
neer
ing,
proj
ectmanagementdesi
gnet
c.

•Document
ati
onofv
ari
ouspr
ojectdocument
s

•Pl
acementofdebt
-equi
tyi
ncl
udi
ngdesi
gnsoft
hest
ruct
ureofi
nst
rument
s,

pl
acement

ofi
nst
rument
swi
thf
inanci
ali
nst
it
uti
ons,
bankset
c.

•I
ndust
ryr
esear
ch/
inf
ormat
ionser
vice

•Legal
adv
isor
yser
vice

•Assi
sti
nor
gani
zat
ionst
ruct
ural
changel
i
ke:

–Anal
ysi
sofoper
ati
onal
per
for
mance

20
–St
udyofexi
sti
ngor
gani
sat
ional
str
uct
ure

–St
udyofexi
sti
ngr
ulesandr
egul
ati
ons

–Mar
ketanal
ysi
swi
thr
espectt
opr
oduct
s

AsSFCsi
nvesti
nsmal
lscal
eindust
ri
es,t
her
etur
nwi
l
lbel
owerasgest
ati
on

per
iodf
orsmal
lscal
eindust
ri
esi
sver
ylong.Asl
ossesar
eboundt
ooccur
,

t
hest
ategov
t.mustf
indway
stomi
nimi
set
hel
ossesandear
namoder
ate

pr
ofi
twhi
chcanber
eusedt
opr
omot
eSFCs.

2.
6WhoCanAv
ail
theSer
vicesofSFCs?

St
ateFi
nanci
alCor
por
ati
onActof1951,speci
fi
est
hebel
ow l
i
steduni
tscan

av
ail
theser
vices

ofSFCs:
Uni
tsorconcer
nsengagedi
n:

•t
hemanuf
act
uri
ng,
preser
vat
ionorpr
ocessi
ngofgoods.

•t
hemi
ningordev
elopmentofmi
nes.

•t
hehot
eli
ndust
ry.

•t
het
ranspor
tofpassenger
sandgoodsbyr
oadorbywat
erorbyai
r(or

r
opewayor

l
i
ft)
.

•t
hegener
ati
onordi
str
ibut
ionofel
ect
ri
cit
yoranyot
herf
orm ofpower
.

•t
hemai
ntenance,
repai
r,t
est
ingorser
vici
ngofmachi
ner
yofanydescr
ipt
ion

orv
ehi
clesorv
essel
sormot
orboat
sort
rai
l
ersort
ract
ors.

•assembl
i
ng,
repai
ri
ngandpackagi
ngandar
ti
cl
ewi
tht
heai
dofmachi
ner
yor

power
.

•t
heset
ti
ngupordev
elopmentofani
ndust
ri
alar
ea/
indust
ri
alest
ate.

•f
ishi
ngorpr
ovi
dingshar
efaci
l
iti
esf
orf
ishi
ngormai
ntenance.

•pr
ovi
dingwei
ghtbr
idgef
aci
l
iti
es.

21
•pr
ovi
dingengi
neer
ing,t
echni
cal
,fi
nanci
al,management
,mar
ket
ingorot
her

ser
vices

orf
aci
l
iti
esf
ori
ndust
ry.

•pr
ovi
dingsof
twar
eandhar
dwar
eser
vicesr
elat
ingt
oinf
ormat
iont
echnol
ogy
,

t
elecommuni
cat
ionsorel
ect
roni
csi
ncl
udi
ngsat
ell
i
tel
i
nkage.

•set
ti
ngupordev
elopmentoft
our
ism andr
elat
edf
aci
l
iti
es.

•const
ruct
ion.

•dev
elopment
,mai
ntenanceandconst
ruct
ionofr
oads.

•pr
ovi
dingcommer
cialcompl
exf
aci
l
iti
esandcommuni
tycent
resi
ncl
udi
ng

conf
erencehal
l
s.

•f
lor
icul
tur
e.

•t
issuecul
tur
e,f
ishcul
tur
e,poul
tr
yfar
ming,
breedi
ngandhat
cher
ies.

•ser
vicei
ndust
rysuchasal
ter
ing,or
nament
ati
on,pol
i
shi
ng,f
ini
shi
ng,oi
l
ing,

washi
ng,cl
eani
ngorot
her
wiset
reat
ingoradapt
inganar
ti
cleorsubst
ance

wi
thav
iewt
oit
suse,
sal
etr
anspor
t,del
i
ver
yordi
sposal
.

•r
esear
chanddev
elopmentofanyconcept
,technol
ogy
,desi
gnpr
ocessor

pr
oduct
,

whet
heri
nrel
ati
ont
oanyoft
hemat
ter
saf
oresai
dincl
udi
nganyact
ivi
ti
es

appr
oved

byt
heSmal
lIndust
ri
esBank.

22
 CHAPTER-
3

LI
FEI
NSURANCECORPORATI
ONOFI
NDI
A

3.
1Def
ini
ti
onandBasi
cChar
act
eri
sti
csofI
nsur
ance:

I
nsur
ance i
s a met
hod ofr
isk t
ransf
er.I
ninsur
ance t
he l
osses oft
he

unf
ort
unat
efew

ar
eshar
edbyf
ort
unat
emany
.Thel
ossofani
ndi
vi
duali
sshar
edbyal
lthose

whoar
e

l
i
kel
ytof
acet
hesamesi
tuat
ionofl
oss.I
not
herwor
ds,i
nsur
ancei
sthe

pool
i
ngoff
utur
eunexpect
edl
ossesbyt
ransf
erofsuchr
iskst
othei
nsur
ers

who agr
ee t
oindemni
fyt
he i
nsur
ed f
orsuch l
osses,t
o pr
ovi
de ot
her

pr
eli
minar
ybenef
it
sont
hei
roccur
renceort
orenderser
vicesconnect
edwi
th

t
her
isk.Thi
sdef
ini
ti
oni
ndi
cat
est
hebasi
cchar
act
eri
sti
csofi
nsur
ance,
viz
.

Ri
sk pool
i
ng:I
nsur
ers poolt
he r
isk i
.e.t
he spr
eadi
ng ofl
osses of

unf
ort
unat
efewov
ert
heent
ir
egr
oup.I
npr
ocessact
uall
ossi
ssubst
it
utedby

av
eragel
oss.

Ri
skTr
ansf
er:Ri
skt
ransf
ert
akespl
acewhenani
nsur
eragr
eest
opayl
oss

t
hatmayoccurandt
heuncer
tai
ntyoff
inanci
alr
esul
thasbeent
ransf
err
edt
o

i
nsur
erf
rom i
nsur
ed.Fort
hisi
nsur
edpay
spr
emi
um t
othei
nsur
er.

I
ndemni
fi
cat
ion:I
nsur
edi
sre-
est
abl
i
shedt
ohi
sorherappr
oxi
mat
efi
nanci
al

posi
ti
on

pr
iort
otheoccur
renceoft
hel
oss.Ani
ndi
vi
dualpay
sapr
emi
um whi
l
e

pur
chasi
ngapol
i
cyandcanmakeacl
aimi
finsur
edev
entoccur
s.Themai
n

f
unct
ionsofi
nsur
ancear
eri
skt
ransf
erbycr
eat
ionofcommonpoolwher
eby

l
osses oft
he f
ew ar
e metbyt
he cont
ri
but
ions ofmany
.And char
ging

equi
tabl
epr
emi
umsi
.e.t
hepr
emi
um char
gedt
oeachr
iskmustr
efl
ectt
he

sev
eri
tyofr
iskbr
oughtt
othepool
.Ifi
tissett
ool
owl
osseswi
l
lbemadeand

23
i
ftoo hi
gh,busi
ness wi
l
llose compet
it
ive edge.I
nsur
ance pol
i
cies ar
e

cont
ract
swher
ebyi
nsur
ancecompani
es(
insur
ers)pr
omi
set
hei
nsur
edt
hat

t
heywi
l
lpayt
he f
inanci
all
oss suf
fer
ed byt
he i
nsur
ed i
nthe ev
entof

occur
rence oft
he i
nsur
ed ev
entand t
o gett
his pr
omi
se i
nsur
ed pay
s

pr
emi
um (
consi
der
ati
on)t
othei
nsur
ed.

3.
2Basi
cPr
inci
plesofI
nsur
ance:

Acont
racti
sanagr
eement
.Iti
ncl
udesasetofpr
omi
sest
hatar
eimposedby

l
aw and f
orbr
each ofpr
omi
sest
hel
aw pr
ovi
desa r
emedy
.Hence,t
he

i
nsur
ancei
sundert
hepur
viewofCont
ractAct
.

Non-
li
fei
nsur
ancepol
i
ciesar
econt
ract
sofi
ndemni
tyandi
nvol
vei
nsur
abl
e

i
nter
estoft
hei
nsur
ed.Basi
cpr
inci
plesofi
nsur
ancear
eut
mostgoodf
ait
h,

i
nsur
abl
eint
erest
,indemni
ty,
subr
ogat
ionandcont
ri
but
ion.Bef
orepr
oceedi
ng

t
othecl
assi
fi
cat
ionofi
nsur
ance,
let
’sr
evi
ewt
hepr
inci
plesofi
nsur
ance

Pr
inci
pleofI
nsur
abl
eInt
erest
:

I
nsur
abl
eint
erestexi
stsonl
yift
hei
nsur
edwoul
dsuf
fereconomi
clossi
nthe

ev
entofdamageordest
ruct
ionoft
hei
nsur
edobj
ect
.Forexampl
e,i
nsur
ance

ofhouseorshop;damaget
othehousewi
l
lresul
tint
ofi
nanci
all
osst
othe

owner
.Iti
sal
sonecessar
ythati
nsur
abl
eint
erest
mustexi
statt
het
imeof

l
oss.Secur
edcr
edi
tor
shav
einsur
abl
eint
eresti
nthepr
oper
tyf
orwhi
cht
hey

hav
egi
venl
oan.Toi
l
lust
rat
e,Mr
.Iy
ercannotpur
chasei
nsur
anceofMr
.

Shah’
shouseandcol
l
ectt
hei
nsur
ancecl
aimi
fthehousei
sdamaged.By

doi
ngt
hisMr
.Iy
erwi
l
lbepr
ofi
ti
ngf
rom t
hei
nsur
ance.

Pr
inci
pleofI
ndemni
ty:

Thi
spr
inci
plear
guest
hati
ndi
vi
dual
sshoul
dnotbeper
mit
tedt
omakepr
ofi
t

24
f
rom t
he

cont
ractbutshoul
dber
e-est
abl
i
shedt
othesamef
inanci
alcondi
ti
onst
hat

exi
stedpr
iort
o

t
heoccur
renceofl
oss.I
not
herwor
ds,t
hei
nsur
ancecompanyagr
eest
opay

notmor
ethant
heact
ualamountofl
osssuf
fer
edbyt
hei
nsur
ed.Ther
ear
e

t
wo f
undament
alpur
posesi
nvol
ved;f
ir
sti
sto pr
eventt
he i
nsur
ed f
rom

maki
ngpr
ofi
tsf
rom occur
renceofl
ossandsecondi
stor
educemor
alhazar
d.

Subr
ogat
ion:

Anot
herpr
ovi
sionundert
hei
nsur
ancecont
ractwhi
chpr
event
sthei
nsur
ed

f
rom maki
ng

pr
ofi
tsi
ssubr
ogat
ion.Subr
ogat
ionmeanssubst
it
uti
onoft
hei
nsur
eri
npl
ace

oft
hei
nsur
edf
ort
hepur
poseofcl
aimi
ngi
ndemni
tyf
rom t
het
hir
dpar
tyf
ora

l
osscov
eredbyLi
feI
nsur
ance/
insur
ed,e.
g.anegl
i
gentcardr
iverf
ail
stost
op

atr
edsi
gnalandsmashesi
ntot
hecarcausi
ngdamagewor
th|
10000.I
fhe

has compr
ehensi
ve cari
nsur
ance t
hen t
he i
nsur
ancecompany wi
l
lpay

phy
sicaldamage expensesand t
hen make an ef
for
tto col
l
ectt
he cost

of
damagef
rom negl
i
gentdr
iverwhocausedt
heacci
dent
.

Cont
ri
but
ion:

I
tist
her
ightoft
hei
nsur
erwhohaspai
dal
ossunderapol
i
cyt
orecov
era

pr
opor
ti
onat
eamountf
rom ot
heri
nsur
erswhohav
ecov
eredt
hel
i
abi
l
ityf
or

t
hesamel
oss,
e.g.ahousei
s

3.
3Hi
stor
yofI
nsur
ance:

Thest
oryofi
nsur
ancei
spr
obabl
yasol
dast
hest
oryof

manki
nd.Thesamei
nst
inctt
hat
prompt
smoder
nbusi
nessment
odayt
o

secur
ethemsel
vesagai
nstl
ossanddi
sast
erexi
stedi
npr
imi
ti
vemen

25
al
so.Theyt
oosoughtt
oav
ertt
heev
ilconsequencesoff
ir
eandf
lood

andl
ossofl
i
feandwer
ewi
l
li
ngt
omakesomesor
tofsacr
if
icei
nor
der

t
o achi
eve secur
it
y.Though t
he conceptofi
nsur
ance i
slar
gel
ya

dev
elopmentoft
her
ecentpast
,par
ti
cul
arl
yaf
tert
hei
ndust
ri
aler
a–

pastf
ew cent
uri
es – y
eti
ts begi
nni
ngs dat
e back al
most6000

y
ear
s.Li
fei
nsur
ancei
nit
smoder
nfor
m camet
oIndi
afr
om Engl
andi
n

t
hey
ear1818.Or
ient
alLi
feI
nsur
anceCompanyst
art
edbyEur
opeansi
n

Cal
cut
tawast
hef
ir
stl
i
fei
nsur
ancecompanyonI
ndi
ansoi
l
.Al
lthe

i
nsur
ancecompani
esest
abl
i
sheddur
ingt
hatper
iodwer
ebr
oughtup

wi
tht
hepur
poseofl
ooki
ngaf
tert
heneedsofEur
opeancommuni
tyand

I
ndi
annat
iveswer
enotbei
ngi
nsur
edbyt
hesecompani
es.
Howev
er,

l
aterwi
tht
heef
for
tsofemi
nentpeopl
eli
keBabuMut
tyl
alSeal
,the

f
orei
gnl
i
fei
nsur
ancecompani
esst
art
edi
nsur
ingI
ndi
ans.ButI
ndi
an

l
i
ves wer
e bei
ng t
reat
ed as sub-
standar
dli
ves and heav
y ext
ra

pr
emi
umswer
ebei
ngchar
gedont
hem.BombayMut
ualLi
feAssur
ance

Soci
etyher
aldedt
hebi
rt
hoft
hef
ir
stI
ndi
anl
i
fei
nsur
ancecompanyi
n

t
hey
ear1870,andcov
eredI
ndi
anl
i
vesatnor
malr
ates.St
art
ingas

I
ndi
anent
erpr
isewi
thhi
ghl
ypat
ri
oti
cmot
ives,i
nsur
ancecompani
es

camei
nto exi
stencet
o car
ryt
hemessageofi
nsur
anceand soci
al

secur
it
ythr
ough i
nsur
ance t
ovar
ious sect
ors ofsoci
ety
.Bhar
at

I
nsur
anceCompany(
1896)wasal
sooneofsuchcompani
esi
nspi
redby

nat
ional
i
sm.
TheSwadeshimov
ementof1905–1907gav
eri
set
omor
e

i
nsur
ancecompani
es.TheUni
tedI
ndi
ainMadr
as,Nat
ionalI
ndi
anand

Nat
ionalI
nsur
ance i
n Cal
cut
ta and t
he Co-
oper
ati
ve Assur
ance at

26
Lahor
e wer
e est
abl
i
shed i
n 1906.I
n 1907,Hi
ndust
an Cooper
ati
ve

I
nsur
anceCompanyt
ooki
tsbi
rt
hinoneoft
her
oomsoft
heJor
asanko,

houseoft
hegr
eatpoetRabi
ndr
anat
hTagor
einCal
cut
ta.TheI
ndi
an

Mer
cant
il
e,Gener
alAssur
anceandSwadeshiLi
fe(
lat
erBombayLi
fe)

wer
esomeoft
hecompani
esest
abl
i
sheddur
ingt
hesameper
iod.Pr
ior

t
o1912I
ndi
ahadnol
egi
sl
ati
ont
oregul
atei
nsur
ancebusi
ness.I
nthe

y
ear1912,t
heLi
feI
nsur
anceCompani
esAct
,andt
hePr
ovi
dentFund

Actwer
epassed.TheLi
feI
nsur
anceCompani
esAct
,1912madei
t

necessar
ythatt
hepr
emi
um r
atet
abl
esandper
iodi
calv
aluat
ionsof

compani
esshoul
dbecer
ti
fi
edbyanact
uar
y.Butt
heActdi
scr
imi
nat
ed

bet
weenf
orei
gnandI
ndi
ancompani
esonmanyaccount
s,put
ti
ngt
he

I
ndi
an compani
es ata di
sadv
ant
age.
The f
ir
stt
wo decades oft
he

t
went
iet
hcent
urysaw l
otofgr
owt
hini
nsur
ancebusi
ness.Fr
om 44

compani
eswi
tht
otalbusi
ness-
in-
for
ceas|22.
44cr
ore,i
troset
o176

compani
eswi
tht
otalbusi
ness-
in-
for
ceas|298cr
orei
n1938.Dur
ing

t
hemushr
oomi
ngofi
nsur
ancecompani
esmanyf
inanci
all
yunsound

concer
nswer
eal
sof
loat
edwhi
chf
ail
edmi
ser
abl
y.TheI
nsur
anceAct

1938wast
hef
ir
stl
egi
sl
ati
ongov
erni
ngnotonl
yli
fei
nsur
ancebutal
so

non-
li
fei
nsur
ance t
o pr
ovi
de st
ri
ct st
ate cont
rolov
er i
nsur
ance

busi
ness.Thedemandf
ornat
ional
i
sat
ionofl
i
fei
nsur
ancei
ndust
rywas

mader
epeat
edl
yint
hepastbuti
tgat
her
edmoment
um i
n1944whena

bi
l
ltoamendt
heLi
feI
nsur
anceAct1938wasi
ntr
oducedi
n

•Meett
hev
ari
ousl
i
fei
nsur
anceneedsoft
hecommuni
tyt
hatwoul
d

ar
isei
nthe

27
changi
ngsoci
alandeconomi
cenv
ironment
.

•I
nvol
veal
lpeopl
ewor
kingi
ntheCor
por
ati
ont
othebestoft
hei
r

capabi
l
ityi
nfur
ther
ingt
hei
nter
est
soft
hei
nsur
edpubl
i
cbypr
ovi
ding

ef
fi
cientser
vicewi
thcour
tesy
.

•Pr
omot
eamongstal
lagent
sandempl
oyeesoft
heCor
por
ati
ona

senseofpar
ti
cipat
ion,
pri
deandj
obsat
isf
act
iont
hroughdi
schar
geof

t
hei
rdut
ies wi
th dedi
cat
ion t
owar
ds t
he achi
evementofcor
por
ate

obj
ect
ive.

Mi
ssi
on:

“
Expl
oreandenhancet
hequal
i
tyofl
i
feofpeopl
ethr
oughf
inanci
al

secur
it
ybypr
ovi
dingpr
oduct
sandser
vicesofaspi
redat
tri
but
eswi
th

compet
it
ive r
etur
ns, and by r
ender
ing r
esour
ces f
or economi
c

dev
elopment
.”

Vi
sion:

“
Atr
ans-
nat
ional
l
ycompet
it
ivef
inanci
alcongl
omer
ateofsi
gni
fi
cancet
o

soci
eti
esandPr
ideofI
ndi
a.”

Oper
ati
ons:

LI
Cst
art
edwi
th5zonalof
fi
ces,33di
vi
si
onalof
fi
cesand212br
anch

of
fi
ces,apar
tfr
om i
tscor
por
ateof
fi
cei
nthey
ear1956.Atpr
esenti
ts

cor
por
ateof
fi
cei
sinMumbai
.Ithas8zonalof
fi
cesand109di
vi
sional

of
fi
ces,2048f
ull
ycomput
eri
sedbr
anchof
fi
ces,992sat
ell
i
teof
fi
ces

and10,
02,
149agent
sal
lov
erI
ndi
a.Wi
deAr
eaNet
wor
kcov
ers109

di
vi
sionalof
fi
cesandconnect
sal
lthebr
anchest
hroughaMet
roAr
ea

Net
wor
k.LI
Chast
iedupwi
thsomebanksandser
vicepr
ovi
der
stoof
fer

28
on-
li
nepr
emi
um col
l
ect
ionf
aci
l
ityi
nsel
ect
edci
ti
es.LI
C’sECSandATM

pr
emi
um pay
mentf
aci
l
ityi
sanaddi
ti
ont
ocust
omerconv
eni
ence.Apar
t

f
rom on-
li
neki
osksandI
VRS,i
nfocent
reshav
ebeencommi
ssi
onedat

Mumbai
,Ahmedabad,Bangal
ore,Chennai
,Hy
der
abad,Kol
kat
a,New

Del
hi,
Puneandmanyot
herci
ti
es.Wi
thav
isi
onofpr
ovi
dingeasyaccess

t
oit
spol
i
cyhol
der
s,LI
Chasl
aunchedi
tsSATELLI
TESAMPARKof
fi
ces.

Thesat
ell
i
teof
fi
cesar
esmal
l
er,l
eaner
andcl
osert
othecust
omer
.The

di
git
ali
sed r
ecor
ds oft
he sat
ell
i
te of
fi
ces wi
l
lfaci
l
itat
e any
wher
e

ser
vici
ngandmanyot
herconv
eni
encesi
nthef
utur
e.LI
Ccont
inuest
o

bet
hedomi
nantl
i
fei
nsur
erev
eni
nthel
i
ber
ali
sedscenar
ioofI
ndi
an

i
nsur
anceandi
smov
ingf
astonanewgr
owt
htr
aject
orysur
passi
ngi
ts

ownpastr
ecor
ds.LI
C hasi
ssuedov
eronecr
orepol
i
ciesdur
ingt
he

cur
renty
ear
.Ithascr
ossedt
hemi
l
est
oneofi
ssui
ng1,
01,
32,
955new

pol
i
ciesby15t
hOct
,2005,
post
ingaheal
thygr
owt
hrat
eof16.
67%ov
er

t
hecor
respondi
ngper
iodoft
hepr
evi
ousy
ear
.

3.
4Power
sofLI
C

Thef
unct
ionsoft
heCor
por
ati
onshal
lbet
ocar
ryonanddev
elopl
i
fe

i
nsur
ancebusi
nesst
othebestadv
ant
ageoft
hecommuni
ty.

TheCor
por
ati
onshal
lhav
ethepower

(
a)Tocar
ryoncapi
talr
edempt
ionbusi
ness,
annui
tycer
tai
nbusi
nessor

r
einsur
ancebusi
nessi
nsof
arassuchr
einsur
ancebusi
nessr
elat
ingt
o

l
i
fei
nsur
ancebusi
ness;

(
b)To i
nvestt
hef
undsoft
heCor
por
ati
oni
nsuchmannerast
he

29
Cor
por
ati
on may t
hink f
itand t
otake al
lsuch st
eps as may be

necessar
y or expedi
ent f
or t
he pr
otect
ion or r
eal
i
sat
ion of any

i
nvest
ment
;incl
udi
ngt
het
aki
ngov
erofandadmi
nist
eri
nganypr
oper
ty

of
fer
edassecur
it
yfort
hei
nvest
mentunt
ilasui
tabl
eoppor
tuni
tyar
ises

f
ori
tsdi
sposal
;

(
c)Toacqui
re,hol
danddi
sposeofanypr
oper
tyf
ort
hepur
poseofi
ts

busi
ness;

(
d)Tot
ransf
ert
hewhol
eoranypar
toft
hel
i
fei
nsur
ancebusi
ness

car
ri
edonout
sideI
ndi
atoanyot
herper
sonorper
sons,
ifi
nthei
nter
est

oft
heCor
por
ati
oni
tisexpedi
entsot
odo;

(
e)Toadv
anceorl
endmoneyupont
hesecur
it
yofanymov
abl
eor

i
mmov
abl
epr
oper
tyorot
her
wise;

(
f)To bor
row orr
aiseanymoneyi
n such mannerand upon such

secur
it
yast
heCor
por
ati
onmayt
hinkf
it
;

(
g)Tocar
ryonei
therbyi
tsel
fort
hroughanysubsi
diar
yanyot
her

busi
nessi
nanycasewher
esuchot
herbusi
nesswasbei
ngcar
ri
edon

bya subsi
diar
yofan i
nsur
erwhosecont
rol
l
ed busi
nesshasbeen

t
ransf
err
edt
oandv
est
edi
ntheCor
por
ati
onbyt
hisact
;

(
h)Tocar
ryonanyot
herbusi
nesswhi
chmayseem t
otheCor
por
ati
on

t
obecapabl
eofbei
ngconv
eni
ent
lycar
ri
edoni
nconnect
ionwi
thi
ts

busi
nessandcal
cul
ateddi
rect
lyori
ndi
rect
lyt
orenderpr
ofi
tabl
ethe

busi
nessoft
heCor
por
ati
on;
and

(
i)Todoal
lsucht
hingsasmaybei
nci
dent
alorconduci
vet
othepr
oper

ex
erci
seofanyoft
hepower
soft
heCor
por
ati
on.

30
(
j)I
nthedi
schar
geofanyofi
tsf
unct
ionst
heCor
por
ati
onshal
lactso

f
arasmaybeonbusi
nesspr
inci
ples.

MUTUALFUNDS

Meani
ng:

Amut
ual
fundi
sapr
ofessi
onal
l
ymanagedt
ypeofcol
l
ect
ivei
nvest
ment

schemet
hat
pool
smoneyf
rom manyi
nvest
orsandi
nvest
sty
pical
l
yin

i
nvest
ment secur
it
ies (
stocks,
bonds, shor
t-
ter
m money mar
ket

i
nst
rument
s,ot
hermut
ualf
unds,ot
hersecur
it
ies,and/
orcommodi
ti
es

suchaspr
eci
ousmet
als)
.

3.
5Wor
kingofMut
ual
Funds:

Theseassetmanagementori
nvest
mentmanagementcompani
escol
l
ect

moneyf
rom t
hei
nvest
orsandi
nvestmoneyi
ndi
ff
erentst
ocks,bondsand

ot
herf
inanci
alsecur
it
iesi
nadi
ver
sif
iedmanner
.Bef
orei
nvest
ingt
heycar
ry

outt
hor
oughr
esear
chanddet
ail
edanal
ysi
sont
hemar
ketcondi
ti
onsand

mar
kett
rendsofst
ockandbondpr
ices.Themut
ualf
undwi
l
lhav
eaf
und

managert
hatt
rades(
buy
sandsel
l
s)t
hef
und’
sinv
est
ment
sinaccor
dance

wi
tht
hef
und’
sinv
est
mentobj
ect
ive.Ther
esear
chhel
pst
hef
undmanager

specul
atepr
oper
lyi
nther
ightdi
rect
ion.

The i
nvest
ors,who i
nvestt
hei
rmoney i
nthe mut
ualf
und ofany

i
nvest
ment management company
,recei
ve an equi
ty posi
ti
on i
nthat

par
ti
cul
armut
ualf
und.Whenaf
teracer
tai
nper
iodoft
ime,
whet
herl
ongt
erm

orshor
tter
m,t
hei
nvest
orssel
ltheshar
esoft
hemut
ual
fund,
theyr
ecei
vet
he

r
etur
naccor
dingt
othemar
ketcondi
ti
ons.Thei
nvest
mentcompani
esr
ecei
ve

pr
ofi
tbyal
l
ocat
ingpeopl
e’
smoneyi
ndi
ff
erentst
ocksandbondsaccor
dingt
o
31
t
hei
rspecul
ati
onaboutt
hemar
kett
rend.Ot
hert
hansomespeci
fi
cmut
ual

f
undswhi
ch car
rycer
tai
n mat
uri
tyt
erm,i
nvest
orscan gener
all
ysel
lthe

shar
esoft
hei
rmut
ualf
undsatanyt
imet
heywant
.But
,ther
etur
nwi
l
lvar
y

accor
dingt
omar
ketv
alueoft
hest
ocksandbondsi
nwhi
cht
hatpar
ti
cul
ar

mut
ualf
undhadi
nvest
ed.But
,gener
all
ytheshar
ehol
der
sofmut
ualf
undcan

sel
lthei
rshar
ewhent
hepr
icesar
eupandt
hecapi
tal
gai
nissur
etohappen.

3.
6CHALLENGESFACEDBYMUTUALFUNDS:

Ther
ear
emanychal
l
engesf
aci
ngmut
ual
fundswhi
char
eofpr
imeconcer
nto

t
hepeopl
ewhohav
eani
nvest
mentspr
ee.Peopl
efi
ndmut
ual
fund

i
nvest
mentsomuchi
nter
est
ingbecauset
heyt
hinkt
heycangai
nhi
ghr
ateof

r
etur
nbydi
ver
sif
yingt
hei
rinv
est
mentandr
isk.But
,inr
eal
i
tyt
hisscopeof

hi
ghr
ateofr
etur
nsi
sjustonesi
deoft
hecoi
n.Ont
heot
hersi
de,
ther
eist
he

har
shr
eal
i
tyofhi
ghl
yfl
uct
uat
ingr
ateofr
etur
ns.Thought
her
ear
e

ot
herdi
sadv
ant
agesal
so,
thi
sconcer
noff
luct
uat
ingr
etur
nsi
smostpossi
bly

t
hegr
eat
estchal
l
engef
acedbyt
hemut
ual
fund.

I
nspi
teofbei
ngadi
ver
sif
iedi
nvest
mentsol
uti
on,
mut
ual
fundsi
nvest
menti
n

nowayguar
ant
eesanyr
etur
n.I
fthemar
ketpr
icesofmaj
orshar
esandbonds

f
all
,thent
hev
alueofmut
ual
fundshar
esar
esur
etogodown,
nomat
terhow

di
ver
sif
iedt
hemut
ual
fundpor
tfol
i
obe.I
tcanbesai
dthatmut
ual
fund

i
nvest
menti
ssomewhatl
essr
iskyt
handi
recti
nvest
menti
nst
ocks.But
,ev
ery

t
imeaper
soni
nvest
sinmut
ual
fund,
heunav
oidabl
y

car
ri
est
her
iskofl
osi
ngmoney
.

Ot
herChal
l
enges:

1.Di
ver
sif
icat
ionorOv
er-
Div
ersi
fi
cat
ion:
Inor
dert
odi
ver
sif
ythei
nvest
ment
,

manyt
imest
hemut
ual
fundcompani
esgeti
nvol
vedi
nov
er-
div
ersi
fi
cat
ion.

32
Ther
iskofhol
dingasi
ngl
efi
nanci
alsecur
it
yisr
emov
edbydi
ver
sif
icat
ion.But
,

i
ncaseofov
er-
div
ersi
fi
cat
ion,
inv
est
orsdi
ver
sif
ysomucht
hatmanyt
imes

t
heyendupwi
thi
nvest
ingi
nfundst
hatar
ehi
ghl
yrel
atedandt
hust
hebenef
it

ofr
iskdi
ver
sif
icat
ioni
srul
edout
.

2.Taxes:
Ever
yyear
,mostoft
hemut
ual
fundssel
lsubst
ant
ial
amountoft
hei
r

hol
dings.I
ftheyear
npr
ofi
tbyt
his,
thent
hei
nvest
orsr
ecei
vet
hePr
ofi
t

I
ncome.Formostoft
hemut
ual
funds,
thei
nvest
orsar
eboundt
opayt
axes

ont
hesei
ncomes,
eveni
ftheyr
einv
estt
hei
ncome.

3.Cost
s:Mostoft
hemut
ual
fundschar
geShar
ehol
derFeesandFund

Oper
ati
ngFeesf
rom t
hei
nvest
ors.I
nthey
ear
,inwhi
chmut
ual
fundf
ail
sto

makepr
ofi
tandt
hei
nvest
orsgetnor
etur
n,t
hesef
eesonl
ybl
owupt
he

l
osses.t
heReser
veBankofI
ndi
a,Chai
rmenofI
ndust
ri
alDev
elopmentBank

ofI
ndi
a,Expor
tCr
edi
tGuar
ant
eeCor
por
ati
onofI
ndi
a,St
ateBankofI
ndi
a,

Punj
abNat
ional
BankandBankofBar
odaandt
heDi
rect
orGener
alof

Resear
chandI
nfor
mat
ionSy
stem f
orDev
elopi
ngCount
ri
es.

I
nit
iat
ives:

•Exi
m BankofI
ndi
ahasbeent
hepr
imemov
eri
nencour
agi
ngpr
ojectexpor
ts

f
rom I
ndi
a.TheBankpr
ovi
desI
ndi
anpr
ojectexpor
ter
swi
thacompr
ehensi
ve

r
angeofser
vicest
oenhancet
hepr
ospect
soft
hei
rsecur
ingexpor
tcont
ract
s,

par
ti
cul
arl
ythosef
undedbymul
ti
lat
eral
fundi
ngagenci
esl
i
ket
heWor
ldBank,

Asi
anDev
elopmentBank,
Afr
icanDev
elopmentBankandEur
opeanBankf
or

Reconst
ruct
ionandDev
elopment
.

•TheBankext
endsl
i
nesofcr
edi
ttoov
erseasf
inanci
ali
nst
it
uti
ons,
for
eign

gov
ernment
sandt
hei
ragenci
es,
enabl
i
ngt
hem t
ofi
nancei
mpor
tsofgoods

andser
vicesf
rom I
ndi
aondef
err
edcr
edi
tter
ms.Exi
m Bank’
sli
nesofCr
edi
t

obv
iat
ecr
edi
tri
sksf
orI
ndi
anexpor
ter
sandar
eofpar
ti
cul
arr
elev
ancet
oSME

33
expor
ter
s.

•TheBank’
sOv
erseasI
nvest
mentFi
nancepr
ogr
ammeof
fer
sav
ari
etyof

f
aci
l
iti
esf
orI
ndi
ani
nvest
ment
sandacqui
sit
ionsov
erseas.Thef
aci
l
iti
es

i
ncl
udel
oant
oIndi
ancompani
esf
orequi
typar
ti
cipat
ioni
nov
erseasv
ent
ures,

di
rectequi
typar
ti
ci
pat
ionbyExi
m Banki
ntheov
erseasv
ent
ureandnon-

f
undedf
aci
l
iti
essuchasl
ett
ersofcr
edi
tandguar
ant
eest
ofaci
l
itat
elocal

bor
rowi
ngsbyt
heov
erseasv
ent
ure.

•TheBankpr
ovi
desf
inanci
alassi
stancebywayoft
erml
oansi
nIndi
an

r
upees/
for
eigncur
renci
esf
orset
ti
ngupnew pr
oduct
ionf
aci
l
iti
es,
expansi
on

/
moder
nizat
ion/
upgr
adat
ionofexi
sti
ngf
aci
l
iti
esandf
oracqui
sit
ionof

pr
oduct
ionequi
pment
/technol
ogy
.SuchFaci
l
iti
espar
ti
cul
arl
yhel
pexpor
t

or
ient
edsmal
landmedi
um ent
erpr
isesf
orcr
eat
ingexpor
tcapabi
l
iti
esand

enhancementofi
nter
nat
ional
compet
it
iveness.

•Underi
tsExpor
tMar
ket
ingFi
nancePr
ogr
amme,
Exi
m Banksuppor
tssmal
l

andmedi
um ent
erpr
isesi
nthei
rexpor
tmar
ket
ingef
for
tsi
ncl
udi
ngf
inanci
ng

t
hesof
texpendi
tur
erel
ati
ngt
oimpl
ement
ati
onofst
rat
egi
candsy
stemat
ic

expor
tmar
ketdev
elopmentpl
ans.

•TheBankhasl
aunchedt
heRur
alI
nit
iat
ivesPr
ogr
ammewi
tht
heobj
ect
iveof

l
i
nki
ngI
ndi
anr
ural
indust
ryt
othegl
obal
mar
ket
.Thepr
ogr
ammei
sint
ended

t
obenef
itr
ural
poort
hroughcr
eat
ionofexpor
tcapabi
l
ityi
nrur
alent
erpr
ises.

•I
nor
dert
oassi
stt
hesmal
landmedi
um ent
erpr
ises,
theBankhasputi
n

pl
acet
heExpor
tMar
ket
ingSer
vices(
EMS)Pr
ogr
amme.Thr
oughEMS,
the

Bankseekst
oest
abl
i
sh,
onbestef
for
tsbasi
s,SMEsect
orpr
oduct
sin

ov
erseasmar
ket
s,st
art
ingf
rom i
dent
if
icat
ionofpr
ospect
ivebusi
ness

par
tner
stof
aci
l
itat
ingpl
acementoff
inal
order
s.Theser
vicei
spr
ovi
dedon

successf
eebasi
s.

34
•Exi
m Banksuppl
ement
sit
sfi
nanci
ngpr
ogr
ammeswi
thawi
der
angeof

v
alue-
added.

3.
7Expor
tCr
edi
ts

Exi
m Bankof
fer
sthef
oll
owi
ngexpor
tcr
edi
tfaci
l
iti
es,
whi
chcanbe

av
ail
edofbyI
ndi
ancompani
es,
commer
cial
banksandov
erseas

ent
it
ies.

3.
7.1ForI
ndi
ancompani
esexecut
ingcont
ract
sov
erseas

1.Pr
e-shi
pmentcr
edi
t:Exi
m Bank’
spr
e-shi
pmentcr
edi
tfaci
l
ity
,inI
ndi
an

r
upeesandf
orei
gncur
rency
,pr
ovi
desaccesst
ofi
nanceatt
he

manuf
act
uri
ngst
age-
enabl
i
ngexpor
ter
stopur
chaser
awmat
eri
alsand

ot
heri
nput
s.

2.Suppl
i
er’
sCr
edi
t:Thi
sfaci
l
ityenabl
esI
ndi
anexpor
ter
stoext
endt
erm

cr
edi
ttoi
mpor
ter
s(ov
erseas)ofel
i
gibl
egoodsatt
hepost
-shi
pment

st
age.

3.ForPr
ojectExpor
ter
s:I
ndi
anpr
ojectexpor
ter
sincurr
upee

ex
pendi
tur
ewhi
l
e

ex
ecut
ingov
erseaspr
ojectexpor
tcont
ract
s,i
.e.
,cost
sof

mobi
l
isat
ion/
acqui
sit
ionofmat
eri
als,
per
sonnel
,equi
pment
,et
c.Exi
m

Bank’
sfaci
l
ityhel
pst
hem meett
heseexpenses.

4.ForExpor
ter
sofConsul
tancyandTechnol
ogi
cal
Ser
vices:
Exi
m Bank

of
fer
s

aspeci
alcr
edi
tfaci
l
ityt
oIndi
anexpor
ter
sofconsul
tancyand

t
echnol
ogyser
vices,
sot
hatt
heycan,
int
urn,
ext
endt
erm cr
edi
tto
35
ov
erseasi
mpor
ter
s.

5.Guar
ant
eeFaci
l
iti
es:
Indi
ancompani
escanav
ail
oft
heset
ofur
nish

r
equi
sit
e

guar
ant
eest
ofaci
l
itat
eexecut
ionofexpor
tcont
ract
sandi
mpor
t

t
ransact
ions.

3.
7.2Forcommer
cial
banks

Exi
m Bankof
fer
sredi
scount
ingf
aci
l
ityt
ocommer
cial
banks,
enabl
i
ngt
hem t
o

r
edi
scountexpor
tbi
l
lsofSSIcust
omer
s,wi
thnotexceedi
ng90day
s.The

Bankal
soof
ferr
efi
nanceofsuppl
i
er’
scr
edi
t,enabl
i
ngcommer
cialbankst
o

of
fercr
edi
ttoI
ndi
anexpor
ter
sofel
i
gibl
egoods,whoi
ntur
next
endt
hem

cr
edi
tov
er180day
stoi
mpor
ter
sov
erseas.

3.
7.3Ot
herf
aci
l
iti
esf
orI
ndi
ancompani
es

I
ndi
an compani
es ex
ecut
ing cont
ract
s wi
thi
nIndi
a,butwhi
ch ar
e

cat
egor
isedasDeemedExpor
tsi
ntheFor
eignTr
adePol
i
cyofI
ndi
aor

cont
ract
ssecur
edunderi
nter
nat
ionalcompet
it
ivebi
ddi
ngorcont
ract
s

underwhi
chpay
ment
sar
erecei
vedi
nfor
eigncur
rency,
canav
ailof

cr
edi
tunderourf
inancef
ordeemedexpor
tsf
aci
l
ity
,ai
medathel
ping

t
hem meetcashf
lowdef
ici
ts.

3.
7.4Forov
erseasent
it
ies

1.Buy
er’
sCr
edi
t:Ov
erseasbuy
erscanav
ailofbuy
er’
scr
edi
tfr
om Exi
m

Bank,
fori
mpor
tofel
i
gibl
egoodsf
rom I
ndi
aondef
err
edpay
mentt
erms.

2.El
i
gibl
e Goods:Capi
talgoods,pl
antand machi
ner
y,i
ndust
ri
al
36
manuf
act
ures,
consumerdur
abl
esandanyot
heri
temsel
i
gibl
eforbei
ng

ex
por
tedundert
he‘
Exi
m Pol
i
cy’
oft
heGov
ernmentofI
ndi
a

3.
7.5Fi
nancef
orExpor
tOr
ient
edUni
ts

1.Ter
m Fi
nance(
forexpor
ti
ngcompani
es)

 Pr
ojectFi
nance

 Equi
pmentFi
nance

 I
mpor
tofTechnol
ogy&Rel
atedSer
vices

 Domest
icAcqui
sit
ionsofbusi
nesses/
compani
es/
brands

 Expor
tPr
oductDev
elopment
/Resear
ch&Dev
elopment

 (
f)Gener
alCor
por
ateFi
nance

2.Wor
kingCapi
tal
Finance(
forexpor
ti
ngcompani
es)

(
a)Funded

 Wor
kingCapi
tal
Ter
m Loans[
<2y
ear
s]

 LongTer
m Wor
kingCapi
tal
[upt
o5y
ear
s]

 Expor
tBi
l
lsDi
scount
ing

 Expor
tPacki
ngCr
edi
t

 CashFl
owf
inanci
ng

(
b)Non-
Funded

 Let
terofCr
edi
tLi
mit
s

 Guar
ant
eeLi
mit
s

3.Wor
kingCapi
tal
Finance(
fornon-
expor
ti
ngcompani
es)

(
a)Bul
kImpor
tofRawMat
eri
al

4.Ter
m Fi
nance(
fornon-
expor
ti
ngcompani
es)
37
(
a)I
mpor
tofEqui
pment

5.Expor
tFi
nance

 Pr
e-shi
pmentCr
edi
t

 Post
-shi
pmentCr
edi
t

 Buy
ers’
Credi
t

 Suppl
i
ers’
Credi
t[i
ncl
udi
ngdef
err
edpay
mentcr
edi
t]

 Bi
l
lsDi
scount
ing

 Expor
tRecei
vabl
esFi
nanci
ng

 War
ehousi
ngFi
nance

 h)Expor
tLi
nesofCr
edi
t(Non-
recour
sef
inance)

6.Equi
tyPar
ti
cipat
ion(
inI
ndi
anexpor
ti
ngcompani
es)
:

pr
oject expendi
tur
e (
proj
ect
, i
nter al
i
a, i
ncl
udes new

pr
oject
/expansi
on/
acqui
sit
ion of busi
ness/ company
/br
ands/
resear
ch &

dev
elopment
).

3.
7.6Ov
erseasI
nvest
mentFi
nance

 Fi
nancef
orI
ndi
ancompani
es’
equi
typar
ti
ci
pat
ioni
ntheov
erseasJoi
nt

Vent
ure(
JV)
/Whol
l
yOwnedSubsi
diar
y(WOS)
.

 Di
rectFi
nance(
Ter
m &Wor
kingCapi
tal
)tot
heov
erseasJV/
WOS.

 Fi
nance (
forequi
ty/
debtcomponent
)foracqui
sit
ion ofov
erseas

busi
nesses/
compani
es.

 i
ncl
udi
ngl
ever
agedbuy
-out
sincl
udi
ngst
ruct
uredf
inanci
ngopt
ions.

 Di
rectEqui
tybyExi
m Banki
ntheov
erseasJV/
WOS ofan I
ndi
an

.
company

38
3.
7.7Smal
landMedi
um Ent
erpr
ises(
SME)Fi
nance

Thei
mpor
tanceofSMEsect
ori
swel
l
-recogni
sedwor
ldov
erowi
ngt
o

i
ts si
gni
fi
cant cont
ri
but
ion i
n achi
evi
ng v
ari
ous soci
o-economi
c

obj
ect
ives,such as empl
oymentgener
ati
on,
cont
ri
but
ion t
o nat
ional

out
putand expor
ts,f
ost
eri
ng new ent
repr
eneur
shi
p and t
o pr
ovi
de

dept
htot
hei
ndust
ri
albaseoft
heeconomy
.Indi
ahasav
ibr
antSME

sect
ort
hatpl
aysani
mpor
tantr
olei
nsust
aini
ng economi
cgr
owt
h,

i
ncr
easi
ng t
rade, gener
ati
ng empl
oyment and cr
eat
ing new

ent
repr
eneur
shi
pinI
ndi
a.I
ndi
an SMEs r
equi
re busi
ness adv
isor
y

ser
vices t
o enhance t
hei
rint
ernat
ionalcompet
it
iveness i
n a hi
ghl
y

compet
it
ivegl
obal
i
zingwor
ld.TheSMEsf
indt
heser
vicesofr
eput
ed

nat
ionalandi
nter
nat
ionalconsul
tant
sasnotcostef
fect
iveandof
ten,

notadequat
elyf
ocused.Recogni
si
ngt
hisknowl
edgegap,
Exi
m Bankof

I
ndi
ahasbeenendeav
our
ingt
opr
ovi
deasui
teofser
vicest
oit
sSME

cl
i
ent
s.Thesei
ncl
udepr
ovi
dingbusi
nessl
eads,handhol
dingdur
ingt
he

pr
ocessofwi
nni
nganexpor
tcont
ractandt
husassi
sti
ngt
hegener
ati
on

ofexpor
tbusi
nessonsuccessf
eebasi
s,count
ri
es/
sect
ori
nfor
mat
ion

di
ssemi
nat
ion,capaci
tybui
l
dingi
nni
chear
eassuchasqual
i
ty,saf
ety
,

ex
por
tmar
ket
ing,et
c.and f
inanci
aladv
isor
yser
vicessuchasl
oan

sy
ndi
cat
ion,
etc.

3.
7.8Agr
iFaci
l
ity

The gl
obal
i
sat
ion and post
-WTO scenar
io of
fer
s consi
der
abl
e scope f
or

expor
tsofI
ndi
an agr
icul
tur
alpr
oduct
s.Exi
m Bankhasa dedi
cat
ed Agr
i

Busi
nessGr
oupt
ocat
ert
othef
inanci
ngneedsofexpor
tor
ient
edcompani
es

deal
i
ngi
nagr
icul
tur
alpr
oduct
s.Fi
nanci
alassi
stancei
spr
ovi
dedbywayof
39
t
erml
oans,pr
e-shi
pment
/post
-shi
pmentcr
edi
t,ov
erseasbuy
ers’cr
edi
t,bul
k

i
mpor
tfi
nance,guar
ant
ees et
c.Ter
m l
oans wi
thv
ary
ing mat
uri
ti
es ar
e

pr
ovi
ded f
orset
ti
ng up pr
ocessi
ng f
aci
l
iti
es,expansi
on,moder
nisat
ion,

pur
chaseofequi
pment
,impor
tofequi
pment
/technol
ogy
,fi
nanci
ngov
erseas

j
ointv
ent
uresandacqui
sit
ionset
c.TheBankhasst
rongl
i
nkageswi
thot
her

st
akehol
der
sin agr
icul
tur
e sect
orsuch as Mi
nist
ryofFood Pr
ocessi
ng

I
ndust
ri
es,NABARD,APEDA,Smal
lFar
mer
s’Agr
i-
Busi
ness Consor
ti
um

(
SFAC)
,Nat
ionalHor
ti
cul
tur
alBoar
det
c.Apar
tfr
om f
inanci
ng,t
heBankal
so

pr
ovi
desar
angeofadv
isor
yser
vicest
oagr
icul
tur
alexpor
ter
s.

40
 CHAPTERNO4

Resear
chMet
hodol
ogy

Obj
ect
iveoft
hest
udy

Pr
ojectst
udywhi
chi
sbei
ngconduct
edbymef
ort
hel
astt
womont
hisnot

onl
yaf
ormal
i
tyf
ort
hef
ulf
il
lmentoft
het
woy
earf
ullt
imePostGr
aduat
e

Di
plomai
nBusi
nessManagement
.Butbei
ngamanagementst
udentanda

goodempl
oyeeIt
ri
edmybestt
oext
ractbestoft
hei
nfor
mat
ionav
ail
abl
ein

t
hemar
ketf
ort
heuseofsoci
etyandpeopl
e.Theobj
ect
iveshav
ebeen

cl
assi
fi
edbymei
nthi
spr
ojectf
orm per
sonalt
opr
ofessi
onal
,buther
eIam

notdi
scl
osi
ngmyper
sonalobj
ect
ivewhi
chhav
ebeenachi
evedbymewhi
l
e

doi
ngt
hepr
oject
.Onl
ypr
ofessi
onalobj
ect
iveswhi
char
ebei
ngcov
eredbyme

i
nthi
spr
ojectar
easf
oll
owi
ng-

 To know about env

ironment
al f
act
ors af
fect
ing I
DBI Bank’
s

per
for
mance.

 Toanal
yzet
her
oleofadv
ert
isementf
orbankper
for
mance.

 Toknowt
heper
cept
ionandconcept
ionofcust
omer
stowar
dsbanki
ng

pr
oduct
sandspeci
all
yfocusedf
orI
DBIBank’
spr
oduct
.

 Toexpl
oret
hepot
ent
ialar
easf
ort
henew bankbr
ancheswhi
chwi
l
l

pr
ovi
debot
hpr
iceandpeopl
etot
hebankwi
thconst
antpr
omot
ionand

pl
aci
ngst
rat
egy
.

41
Scopeoft
heSt
udy

Eachandev
erypr
ojectst
udyal
ongwi
thi
tscer
tai
nobj
ect
ivesal
sohav
escope

f
orf
utur
e.Andt
hisscopei
nfut
uregi
vest
onew r
esear
chesanew needt
o

r
esear
chanewpr
ojectwi
thanewscope.Scopeoft
hest
udynotonl
yconsi
st

oneort
wof
utur
ebusi
nesspl
anbutsomet
imei
tal
sogi
vesi
deaaboutanew

busi
nesswhi
chbecomesmuchmor
epr
ofi
tabl
efort
her
esear
chest
hent
he

ol
derone.

Scope oft
he st
udycoul
d gi
vet
he pr
oject
ed scenar
iof
ora new

successf
ulst
rat
egywi
thapr
operi
mpl
ement
ati
onpl
an.What
everscopeI

obser
vedi
nmypr
ojectar
enotexact
lyhav
ingal
lthef
eat
uresoft
hescope

whi
chIdescr
ibedabov
ebutal
sonotl
acki
ngal
lthef
eat
ures.

 Resear
chst
udycoul
dgi
veani
deaofnet
wor
kexpansi
onf
orcapt
uri
ng

mor
emar
ketandcust
omerwi
thbet
terser
vicesandl
owercost
,wi
th

outcompr
omi
singwi
thqual
i
ty.

 I
nfut
urecust
omerr
equi
rement
scoul
dbeaddedwi
tht
hepr
oductand

ser
vicesf
orget
ti
nganedgeov
ercompet
it
ors.

 Consumerbehav
iorcoul
dal
sobeusedf
ort
hepur
poseofl
aunchi
nga

new pr
oductwi
thext
rabenef
it
swhi
char
erequi
redbycust
omer
sfor

t
hei
raccount(
sav
ingorcur
rent)and/
orf
ort
hei
rinv
est
ment
s.

 Fact
orswhi
char
eresponsi
blef
ort
heper
for
mancef
orbankcanal
so

beusedf
ort
hemodi
fi
cat
ionoft
hest
rat
egyandpr
oductf
orbei
ngmor
e

pr
ofi
tabl
e.

42
  Fact
orswhi
chIobser
vedwhi
l
edoi
ngpr
ojectst
udyar
efol
l
owi
ng

Compet
it
ors

A.Cust
omerBehav
iour

B.Adv
ert
isement
/pr
omot
ionalact
ivi
ti
es

C.At
ti
tudeofmanpowerand

D.Economi
ccondi
ti
ons

Theseal
lcoul
dal
sobei
nter
changedwi
theachot
herf
oreachot
heri
n

banksst
rat
egi
esf
ormaki
ngaf
inalbusi
nesspl
ant
oef
fectt
hemar
ket

wi
thaposi
ti
vewaywi
thoutdi
stur
bingal
ott
omar
ket
,cust
omer
sand

compet
it
orswi
thdi
stur
bancei
nmar
ketshar
es.

Tool
sandTechni
ques

As no st
udycoul
d be successf
ull
ycompl
eted wi
thoutpr
opert
ool
s and

t
echni
ques,same wi
th mypr
oject
.Fort
he bet
terpr
esent
ati
on and r
ight

expl
anat
ionIusedt
ool
sofst
ati
sti
csandcomput
erv
eryf
requent
ly.AndIam

v
eryt
hankf
ult
oal
lthoset
ool
sforhel
pingmeal
ot.Basi
ctool
swhi
chIused

f
orpr
ojectf
rom st
ati
sti
csar
e-

-BarChar
ts

-Pi
echar
ts

-Tabl
es

barchar
tsandpi
echar
tsar
ereal
l
yusef
ult
ool
sforev
eryr
esear
cht
oshowt
he

43
r
esul
tinawel
lcl
ear
,easeandsi
mpl
eway
.BecauseIusedbarchar
tsandpi
e

cahr
tsi
n pr
ojectf
orshowi
ng dat
ain a sy
stemat
icway
,so i
tneed not

necessar
yforanyobser
vert
oreadal
lthet
heor
eti
caldet
ail
,si
mpl
eonseei
ng

t
hechar
tsanybodycoul
dknowt
hatwhati
sbei
ngsai
d.

Technol
ogi
cal
Tool
s

1.Ms-Excel

2.Ms-
Access

3.Ms-
Wor
d

Abov
eappl
i
cat
ionsof
twar
eofMi
crosof
thel
pedmeal
oti
nmaki
ngpr
oject

mor
eint
eract
iveandpr
oduct
ive.

Mi
crosof
t-
Excelhadagr
eatr
olei
nmypr
oject
,itcr
eat
edf
ormeasi
tuat
ionof

“
yousi
tandget
”.Ipr
ovi
dedi
tsi
mpl
yal
lthedet
ailofdat
aandi
nret
urni
tgi
ven

meal
lther
elev
anti
nfor
mat
ion.
.

Mi
crosof
t-
Access di
dthe per
for
mance of my per
sonalassi
stant who

or
gani
zesmyal
lthedet
ail
sofdocumentwi
thoutdi
stur
bingt
hem ev
ena

si
ngl
eti
mei
nal
lthepr
ojectdur
ati
on.

Andi
nlastMi
crosof
t-
Wor
ddi
dhel
pmef
ort
hedocument
ati
onoft
hepr
oject

i
napr
esent
abl
efor
m.

Appl
i
edPr
inci
plesandConcept
s

Whi
l
eIst
art
edt
odot
hepr
ojectt
hemai
nthi
ngwhi
chwast
hemat
terof

concer
n was t
hatar
ound whatpr
inci
ples Ihav
etor
evol
ve mypr
oject
.

Becausewi
thouthav
inganyhy
pot
hesi
sandobj
ect
ivewecannotdet
ermi
ne

t
hatwhatout
putorr
esul
twear
eexpect
ingf
ormt
hepr
oject
.

Andsecondt
hingi
sthathav
ingonl
ytool
sandt
echni
quesf
ort
hepur
poseof

pr
ojecti
snotr
elev
antunt
ilunl
esswehav
ethepr
inci
pal
sforwhi
chwehav
eto

44
uset
hoset
ool
sandt
echni
ques.

A.Mat
hemat
ical
Aver
ages

B.St
andar
dDev
iat
ion

C.Cor
rel
ati
on

Sour
cesofPr
imar
yandSecondar
ydat
a:

Fort
hepur
poseofpr
ojectdat
aisv
erymuchr
equi
red whi
chwor
ksasaf
ood

f
orpr
ocesswhi
chwi
l
lul
ti
mat
elygi
veout
puti
nthef
orm ofi
nfor
mat
ion.So

bef
orement
ioni
ngt
hesour
ceofdat
afort
hepr
ojectIwoul
dli
ket
oment
ion

t
hatwhatt
ypeofdat
aIhav
ecol
l
ect
edf
ort
hepur
poseofpr
ojectandwhati
t

i
sexact
ly.

1.Pr
imar
yDat
a:

Pr
imar
ydat
aisbasi
cal
l
ythel
i
vedat
awhi
chIcol
l
ect
edonf
iel
dwhi
l
e

doi
ngcol
dcal
l
swi
tht
hecust
omer
sandIshownt
hem l
i
stofquest
ionf
or

whi
chIhadr
equi
redt
hei
rresponses.I
nsomecasesIgotnor
esponse

f
ormt
hei
rsi
deandt
hanont
hebasi
sofmypr
evi
ousexper
iencesIf
il
led

t
hosef
iel
ds.

Sour
ce: Mai
n sour
ce f
or t
he pr
imar
y dat
a f
or t
he pr
oject was

quest
ionnai
reswhi
chIgotf
il
ledbyt
hecust
omer
sorsomet
imesf
il
led

my
sel
font
hebasi
sofdi
scussi
onwi
tht
hecust
omer
s.

2.Secondar
yDat
a:

Secondar
ydat
afort
hebaseoft
hepr
ojectIcol
l
ect
edf
rom i
ntr
anetoft
he

Bankandf
rom i
nter
net
,RBIBul
l
eti
n,Jour
nal
byI
CFAIUni
ver
sit
y.

45
St
ati
sti
calAnal
ysi
s

I
nthi
ssegmentIwi
l
lshowmyf
indi
ngsi
nthef
orm ofgr
aphsandchar
ts.Al
l

t
hedat
awhi
chIgotf
orm t
hemar
ketwi
l
lnotbedi
scl
osedov
erher
ebut

ext
ractoft
hati
nthef
orm ofi
nfor
mat
ionwi
l
ldef
ini
tel
ybeher
e.

Det
ail
:

Si
zeofDat
a :250

Ar
ea :Mumbai

Ty
peofDat
a:1.Pr
imar
y 2.Secondar
y

I
ndust
ry :Banki
ng

Respondent :Cust
omer
s

Tabl
e1:Cor
rel
ati
onbet
weenawar
enessofcust
omer
saboutI
DBIbank&t
hei
r

Age

AGE NO.OFRESPONSE
20-25 25
25-30 46
30-35 34
35-40 23
40-45 21
45-50 22
50-60 24
60-ABOVE 55

46
 60
R 50
E
S 40
P 30 NO.OFRESPONSE
O 20
N
S 10
E 0
20-
2525-
3030-
3535-
4040-
4545-
5050-60
60-ABOVE

AGEGROUP

TABLE2:PERCEPTI
ONOFI
DBIASABANK

TYPEOFBANK RESPONSES
PRI
VATE 50
PUBLIC 45
PRIVATE/PUBLI
C 100
DON'TKNOW 55

47
TABLE3:
RATI
NGOFCUSTOMERSFORI
DBIBANKASAGOODBANK

PARAMETER RESPONSES
EFFICI
ENCY 75%
I
NTERNETBANKING/ATMs 25%
PRODUCTRANGE 95%
NETWORK 33%
PHONEBANKING 22%

22%
33% EFFI
CIENCY
75% I
NTERNET
BANKI
NG/ATMs
PRODUCTRANGE

NETWORK
95% PHONEBANKI
NG
25%

TABLE4:
MARKETSHARESI
NMUMBAII
NCOMPARI
SIONTOCOMPETI
TORS

BANKNAME %OFSHARE
SBI 30%
IDBI 15%
I
CICI 25%
PNB 10%
HDFC 5%
HSBC 5%
OTHERS 10%

48
TABLE5:FACTORSRESPONSI
BLEFOR PERFORMANCEOFI
DBIBANK I
N

MUMBAI

PARAMETERS %OFSHARE
PRODUCT 50%
ADVERTISMENT 5%
MANPOWER 25%
NET-BANKI
NG 2%
PHONEBANKING 5%
I
NVESTMENTSCHEME 10%
NETWORK 3%

49
TABLE6:COMPARATI
VESTUDYWI
TH MAJORCOMPETI
TORSON BASI
C

PARAMETERS

CANARA
PARAMETERS/
BANKS I
DBI I
CICI SBI PNB HSBC
BANK
PRODUCT 20% 15% 30% 15% 10% 10%
ADVERTISMENT 3% 45% 15% 20% 7% 10%
MANPOWER 10% 50% 2% 3% 25% 10%
NET-
BANKI NG 3% 50% 10% 12% 8% 17%
PHONEBANKI NG 10% 40% 5% 5% 30% 10%
I
NVESTMENTSCHEME 5% 25% 50% 10% 5% 5%
NETWORK 2% 40% 40% 5% 3% 10%
CREDI
BILITY 20% 10% 40% 20% 5% 5%

50
TABLE7:
THEEFFECTI
VENESSOFCOMMERCI
ALSOFI
DBIBANK

DAYSAFTERTHEADI S
SEEN POSI
TIVERESPONSE
0-5days 100
6-10days 67
11- 15days 43
mor
et han15days 40

51
52
 Fi
ndi
ngs

 Thecr
edi
bil
i
tyofI
DBIbanki
sgoodi
ncompar
isont
oit
scompet
it
ors

asGOI(
Gov
ernmentOfI
ndi
a)i
samaj
orshar
ehol
deri
nthecompany
.

 I
DBIbankhaspot
ent
ial
atappedmar
keti
nMumbai
inr
egi
onandhence

hasanoppor
tuni
ti
esf
orgr
owt
h.

 Thepr
oduct
sofI
DBIbankhasgoodcr
edi
bil
i
tyi
nther
egi
oncompar
eto

i
tscompet
it
ors.

 Theadv
ert
isementoft
hebankwasv
eryef
fect
ivef
rom t
hef
ir
stdayof

i
tsai
ri
ngt
il
lthef
if
thdayandt
her
eaf
teri
tst
art
sdecl
i
ning.

 Thei
nit
ialbal
ancef
orA/
C openi
ng i
sRs,5000/
- andt
hat
’swhy

peopl
ear
erel
uct
anti
nopeni
ngt
hesame.

53
 Concl
usi
ons:
-

 Consumer
sofMumbaihav
egoodawar
enessl
evelaboutI
DBIbankas

wel
lasabouti
tsser
vicesandpr
oduct
s.

 Theadv
ert
isi
ngcampai
gnhassuccessf
ull
ybeenabl
etoi
ncr
easet
he

mar
ketshar
eofI
DBIi
nMumbai
.

 Themoder
nday
stechnol
ogyl
i
kei
nter
netbanki
ng,
phonebanki
ng,
used

byI
DBIbankf
orpr
ovi
dingbanki
ngser
viceshassentposi
ti
vesi
gnal
sin

t
hemi
ndofconsumes.

 Thenet
wor
kofI
DBIi
nMumbaii
slaggi
ngbehi
ndal
i
ttl
ethani
ts

compet
it
orsl
i
keI
CICIbankandHDFCbank.

 I
tcanbedi
sti
l
ledf
rom dat
athatI
DBIbankhasgoodmar
ketshar
eas

compar
edt
oit
scompet
it
orsconsi
der
ingt
heamountofr
esour
ces

depl
oyedbyt
hem i
nthemar
ket
.

54
Recommendat
ions:
-

 Si
ncet
her
eisonl
ytwobr
anchofI
DBIbankandonl
ythr
eeat
msi
n

Mumbai
,soi
tisnecessar
yforI
DBIbankt
oopenmor
ebr
anchesand

i
nst
allmor
eat
mst
oser
vet
hev
astmar
ketofMumbaiespeci
all
y.

 Mor
eresour
cesshoul
dbeal
l
ocat
edi
nthemar
ketofMumbaiast
her
e

i
sbi
gunt
appedmar
keti
nMumbai
,soi
tbecomesnecessar
yforI
DBI

bankf
ort
aki
nganedgeov
ert
hecompet
it
ors.

 Ashor
tadv
ert
isi
ngcampai
gni
nMumbaihaspr
oducedgoodr
esul
tsi
n

ashor
tspanoft
imes,sot
ogai
nlongt
erm benef
it
sisv
erynecessar
y

f
orI
DBIbankt
ocar
ryont
hiscampai
gnwi
thmor
eint
ensi
ty.

 Besi
desopeni
ngmor
ebr
anchesi
tshoul
dal
sol
ookf
oropeni
ngsome

ext
ensi
oncount
eri
nKut
ubnearmeher
aul
iandonei
nKhanpur
.

 AsGov
ernmenti
sthemaj
ori
tyshar
ehol
deri
ntheshar
esofI
DBIbank,

whi
chmakest
hisbankmor
erel
i
abl
ethanot
herpr
ivat
ebanks,t
his

t
hingcanbeusedi
nthef
avourofI
DBIbankbymaki
ngpeopl
eawar
e

aboutt
hisf
actandwi
nni
ngt
hei
rfai
th.

Quest
ionnai
re

Quest
ionnai
re
55
 Appendi
x1:

NAME………………………………………………………………………………

AGE……………………………………. SEX:
MALE/
FEMALE

ADDRESS:
…………………………………………………………………………….
..
…

……………………………………………………………………………………………CI
TY…………………………………

……PI
NCODE……………………………….
..
.

CONTACTNO.…………………………………………………………………………

QUESTI
ONNAI
RE

56
1.DOYOUKNOW ABOUTI
DBIBANKLTD.
?

YES NO

2.I
DBIBANKI
SA–

PRI
VATEBANK PRI
VATE/
PUBLI
CBANK

PUBLI
CBANK DON’
TKNOW

3.RANKTHEI
DBIBANKON THEFOLLOWEI
NG FEATURES–(
RANK1FOR

BEST AND5FORWORSEON1TO5SCALE)

EFFI
CENCY MANPOWER

I
NTERNETBANKI
NG/
ATMs NETWORK

PRODUCTRANGE PHONEBANKI
NG

4.YOUWOULDLI
KETOBEACUSTOMEROFBANKBECAUSE–

…………………………………………………………………………………………………………

5.YOUWOULDNOTLI
KETOBEACUSTOMERBANKBECAUSE-

6.NAMETHEBANKWHI
CH COMESI
N YOURMI
ND ATVERYFI
RSTAND

WHY?
………………………………………………………………………………………………………….

7.DOYOUTHI
NKI
DBI
BANKI
SASAFEPLACEFORYOURMONEY?

YES NO

8.DOYOUTHI
NKI
DBIBANKNEEDMOREADVERTI
SMENT?

YES NO

57
9.YOURLEVELOFSATI
SFACTI
ONWI
THI
DBIBANK-

o VERYSATI
SFI
ED

o SATI
SFI
ED NORMAL

o DI
SSATI
SFI
ED

o VERYDI
SAT.

10.I
FYOUWI
LLHAVEOPTI
ONAGAI
NESTI
DBIBANKYOUWI
LLGOFOR–

SBI PNB

I
CICI OTHER

11.DOYOUREMEMBERTHECOMMERCI
ALOFI
DBIBANK?

YES NO

12.WHENDI
DYOULASTSEETHEADVERTI
SEMENTOFI
DBIBANK?

0-
5DAYSBACK 6-
10DAYSBACK

11-
15DAYSBACK MORETHAN15DAYS

BACK

13.DOYOUKNOW WHEREI
STHEBRANCHOFI
DBILOCATEDI
NMUMBAI
?

………………………………………………………………………………………

14.I
DBIBANKLTD.I
NMUMBAII
SEFFECTI
VEBECAUSE-

…………………………………………………………………………………………….

15.I
DBIBANKLTD.I
NMUMBAII
SNOTEFFECTI
VEBECAUSE-

…………………………………………………………………………………….

58
Ref
erenceMat
eri
al

BI
BLOGRAPHY

Websi
tes

i
. www.
idbi
bank.
com

i
i
. www2.
idbi
bank.
com

i
i
i. www.
googl
e.com

i
v. I
CFAIJour
nalofBanki
ng

59
v
. TheEconomi
cst
imes

v
i. TheTi
mesofI
ndi
a

60
THANKYOU

61