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(With Special Reference to ING Vysya Bank)

Rudrapur, (Uttarakhand)

In partial fulfillment of requirement for MBA Degree

Submitted To Submitted By
Preeti Dixit Zulfikar Ali
Faculty (Mgt. Deptt.) Roll. No. 061579

Saraswati Institute of Management &Technology,

Rudrapur Gadarpur main road, Rudrapur (Uttrakhand)
(Affiliated to Kumaun University, Nainital
“A study on Mutual Funds Industry in India in the
competitive market of financial products in
Rudrapur city.”



Under Guidance of- Prepared by-

Mrs. Preeti Dixit Zulfokar Ali

Faculty (Mgt. Deptt.) (V- Semester)

Towards the partial Fulfillment of

BBA Program


List of Tables


Chapter-1 (Introduction)
Objective of Management Thesis
Research Design
Hypothesis Testing
Practical Utility of the Study

Chapter-2 (Industry Profile)

Financial industry profile
Capital market
Venture capital
Changing paradigm of financial services

Chapter-3 (Mutual fund industry)

Mutual funds industry in India

Concept of mutual funds

Chapter-4 Reliance mutual fund)

Chapter-5 (SBI mutual fund)

Chapter-6 (Analysis & interpretation)
Awareness about mutual funds
Investment plans
Earning capacity of an individual
Objective of investment
Features of mutual fund
Mutual fund companies
Why Reliance and SBI mutual fund?
Mutual funds are popular instrument for investment
Investment allocation
Frequency in mutual fund investment
Government vs. private company

Chapter-7 (Findings)


Appendices (Questionnaire)


It is essential to acknowledge the help received from the people from various
areas. I find myself at loss how to thank them.

These words are not a formality but a sincere voice of my heart and I owe
gratitude to them all. I express my deep feelings of gratitude, profound
respect to Mrs. Preeti Dixit for cooperating with me to complete my project
in proper manner, with adequate knowledge provided by them.
I feel great pleasure in rendering my deep sense of gratitude to my family
members and entire friend group for their helping attitude and cooperation
during course of this project.

(Zulfikar Ali)

Table & Graph-1 Awareness about mutual funds

Table & Graph-2 Investment plans

Table & Graph-3 Earning capacity of an individual

Table & Graph-4 Objective of investment

Table & Graph-5 Features of mutual fund

Table & Graph-6 Mutual fund companies

Table & Graph-7 Why Reliance and SBI mutual fund?

Table & Graph-8 Mutual funds are popular instrument for investment

Table & Graph-9 Investment allocation

Table & Graph-10 Frequency in mutual fund investment

Table & Graph-11 Government vs. private company

Table & Graph-12 Market share of various financial instruments


AMC Assets Management Company

BOB Bank of Baroda

FD’s Fixed deposits

MF Mutual funds

PPF Public provident fund

SBI State Bank of India

SEBI Security exchange board of India

UTI Unit Trust of India

VC Venture capital

VCF Venture capital funds



The primary objective of this study is to identify the share of mutual funds in
overall basket of financial products and how mutual funds industry is trying to
increase its market share.

The secondary objective is to find out whether a mutual fund is a popular

investment instrument for an individual. Though there are number of mutual
funds are available in the market with distinct features so how each and every
company is able to hold its position in the competitive market.
The term "research" literally means to search diligently, investigate or
experiment to discover facts, revise accepted theories on laws in light of
new facts, or to discover a practical application of new facts, theories or laws.
One uses research to get information to make decisions or implement a
plan. Research gives you insight and eliminates risk.
Thus stated in a "simple language" a research design is a plan of
action, for collecting and analyzing data in an economic, efficient and
relevant manner. A research design could be constructed either to test a
hypothesis or to give cause and effect relation to a problem. The word research
is derived from a Latin word and is composed of two syllables, a prefix re
and a verb search. Re means again. Search means to examine closely and
carefully, to test and to try, to probe.

Research is an active, diligent, systematic, scientific and analytical process of
inquiry in order to discover, interpret, or revise facts, events, issues, concepts,
behaviors or theories and to make practical applications with the help of such
facts, laws, theories or concepts. Research is a systematic approach towards
purposeful investigation. This need-

1. Formulation of a hypothesis
2. Collection of a data
3. Analysis and interpretation of the data to find results.
4. Conclusion in the form of a solution.

My research is an applied research. Because applied research is a
research that is designed to find answers to questions that have arisen in
making immediate practical decisions. Applied research basically relies on

Selection of problem
The problem selected for study should be defined clearly in operational
terms so that the researcher knows - positively what factors she is looking for
and what is relevant to the study. Since human behavior, as an interaction
pattern, is the result of various forces it is best to delimit the scope of one's
study which reaps ample benefits during the actual course of data

The problem selected

A study on the market share and preferences of mutual fund in the competitive
market of financial products in Gorakhpur city.

Source of data
Once the problem is selected it is the duty of the researcher to state clearly
the various sources of information such as library, personal documents,
field work, a particular residential group etc.

Sources of research
Survey, Personal Interviews, Books, magazines, internet.

Objective of the research

To find out the market share and preferences of mutual fund in competitive
market of financial products.

Relevant to the study suitable technique has to be adopted for the collection
of required data. The relative merits of ‘observation”, “survey” etc. when
studied together will help in the choice of suitable technique. Once the
collection of data is complete, analysis, findings, suggestion and presentation
of the report naturally follow:

Sample survey
In any discipline, when you need to search findings of fact, to represent
incidence and/distribution, you use a survey method. There are many
survey methods, but what they all share in common is that they do not
do more than collect data and applies to primary and secondary research.
It is method in which the researchers takes a representative sample and
try to judge the attitude and opinion of those people. A survey can be
conducted by two methods:
1. Census method
2. Sampling method
When the whole area of population of persons is contacted the method is
known as census method while when the small group is selected as
representative of the whole mass it is known as sampling method. The
group actually selected for study is known as sample.
Sampling method is becoming more and more popular in all types of
research. The method is quite reliable and valid in process and the results
acquired are very accurate. I have taken the sample size of 200.

Saving of time
In sampling method comparatively small numbers of units are studied and
so generally it requires less time than census method.

Saving of money
Survey of smaller number of cases not only requires less time but also
requires less money. By adopting sampling method, the study can be
financed with much less resources.

Detailed study
When the number of units is large detailed study is not possible. The smaller
number of cases in the sample permits more minute- observations and
detailed study.

Accuracy of results
The most important advantage of sampling method is that the results drawn
by this method are more accurate and reliable than results yielded by census
method. The condition for getting accurate result is only that the sample
should be properly selected.

Administrative control
In sampling methods the cases are generally small hence it is usually more
convenient from administrative point of view. Sampling method is useful
as it is easy to manage and control samples.




Random Sampling
It is the sampling technique which assures that every element is unique in
the universe will get an opportunity to be selected.

Stratified Random Sampling

Elements are selected from each strata (sub groups) sharing one or more
characteristics. In this research I have adopted stratified random
sampling method.
Regarding collection of data I have decided to collect the data
of 200 investors. My project is mainly related to mutual fund.

Cluster Sampling
It is also called multi stage sampling. Generally used to
select samples from a very large area. Under this method the selection
of sample is made in different stages.




Accidental Sampling
In accidental sampling the researcher picks up cases from the population
that happens to be accidentally available to the investigator (no criteria in
selection, there is no guarantee).

Quota Sampling
In this sampling technique the universe is first divided into different strata.
Then the number to be selected from each stratum is decided. This number
is known as quota.

Purposive Sampling
Units are selected from the universe purposively by the researcher. The
choice of selection is supreme. Here you have a clear purpose.
Questionnaires are an inexpensive way to gather data from a potentially large
number of respondents. Often they are the only feasible way to reach a
number of reviewers large enough to allow statistically analysis of the results.
A well-designed questionnaire that is used effectively can gather information
on both the overall performance of the test system as well as information on
specific components of the system. If the questionnaire includes demographic
questions on the participants, they can be used to correlate performance and
satisfaction with the test system among different groups of users.
It is important to remember that a questionnaire should be viewed as a multi-
stage process beginning with interpretation of the results. Every step
needs to be designed carefully because the final results are only as good
as the weakest link in the questionnaire process. Although questionnaires
may be cheap to administer compared to other data collection methods, they
are every bit as expensive in terms of design time and interpretation.

The steps required to design and administer a questionnaire include:

1. Defining the Objectives of the survey

2. Determining the Sampling Group
3. Writing the Questionnaire
4. Administering the Questionnaire
5. Interpretation of the Results
Two types of Questionnaire
Closed or restricted form
Calls for a "yes" or "no" answer, short response, or item checking; is fairly
easy to interpret, tabulate, and summarize. For this study I have opted for
close ended question.

Open or unrestricted form

Calls for free response from the respondent; allows for greater depth of
response; is difficult to interpret, tabulate, and summarize.

Interviews are a far more personal form of research than questionnaires. In
the personal interview, the interviewer works directly with the respondent.
Interviews are generally easier for the respondent, especially if what are
sought are opinions or impressions. I have opted for personal interview.
Personal interview can be classified into two categories:

Customer Interview-This interview is conducted in order to fill up the

questionnaire and to know their view on mutual fund.

Brokers Interview- This interview is conducted with the dealers of various

broking houses of Gorakhpur city like-Angle Broking, Religaire, Asctt.
Mehta and India Infoline in order to know the market share and customer
preferences in mutual fund.

Almost everyone is familiar with the telephone interview. Telephone

interviews enable a researcher to gather information rapidly. Most of the
major public opinion polls that are reported were based on telephone

A hypothesis consists either of a suggested explanation for a phenomena or of a
reasoned proposal suggesting a possible correlation between multiple
Following are the hypothesis created for the better positioning of the thesis:-

• Mutual funds are not a popular instrument for investment as compared to

other financial instruments.

• In today competitive era, mutual funds are not facing tuff competition in
the financial market.

• The Mutual funds market of Government sector is more


Each and every study has some or the other limitations so as this study is having
which is as following:-
• Time constraint is one of the major problem arises at the time of data
collection because the respondents were not having enough time to entertain.

• Geographical constraint is the another limitation of this project as my

topic is required a detailed study so it is possible that being this project
concentrated in Gorakhpur city, it cannot show true and fair picture.

• It is necessary to have the right respondent for the proper study which is
another limitation I have found at the time of data collection.

• Most of the time it happen that consumer are not aware about the
company, its product and the services. Everybody heard the name of mutual
fund but what it is exactly nobody knows.

• Lack of resources for data collection

• Statistical error.

• Rapid fluctuation in the financial status of an individual.

Theoretical concepts are easy to understand but its practical applicability in the
right direction is a tuff task. Most of the time it is found that their is a difference
between theoretical vs. practical. Following are the practical utility of the study:-

• This study will be helpful in multiple areas but its striking feature is the
role of mutual fund though having number of instruments available in the

• It is more about the opportunities available in the market along with the
threat present i.e. other financial products.

• Companies dealing in mutual funds can better understand what the

features are which is attracting the investors the most.


The finance industry encompasses a broad range of organizations that deal

with the management of money. Among these organizations are banks, credit
card companies, insurance companies, consumer finance companies, stock
brokerages, and some government sponsored enterprises.The financial sector
is in a process of rapid transformation. Reforms are continuing as part of the
overall structural reforms aimed at improving the productivity and efficiency
of the economy. The role of an integrated financial infrastructure is to
stimulate and sustain economic growth.

The US$ 28 billion Indian financial sector has grown at around 15 per cent
and has displayed stability for the last several years, even when other markets
in the Asian region were facing a crisis. This stability was ensured through
the resilience that has been built into the system over time. The financial
sector has kept pace with the growing needs of corporate and other
borrowers. Banks, capital market participants and insurers have developed a
wide range of products and services to suit varied customer requirements.
The Reserve Bank of India (RBI) has successfully introduced a regime where
interest rates are more in line with market forces. Financial institutions have
combated the reduction in interest rates and pressure on their margins by
constantly innovating and targeting attractive consumer segments. Banks and
trade financiers have also played an important role in promoting foreign trade
of the country.
The Indian banking system has a large geographic and functional coverage.
Presently the total asset size of the Indian banking sector is US$ 270 billion
while the total deposits amount to US$ 220 billion with a branch network
exceeding 66,000 branches across the country. Revenues of the banking
sector have grown at 6 per cent CAGR over the past few years to reach a size
of US$ 15 billion. While commercial banks cater to short and medium term
financing requirements, national level and state level financial institutions
meet longer-term requirements. This distinction is getting blurred with
commercial banks extending project finance. The total disbursements of the
financial institutions in 2001 were US$ 14 billion.

Banking today has transformed into a technology intensive and customer

friendly model with a focus on convenience. The sector is set to witness the
emergence of financial supermarkets in the form of universal banks providing
a suite of services from retail to corporate banking and industrial lending to
investment banking. While corporate banking is clearly the largest segment,
personal financial services is the highest growth segment.

The recent favorable government policies for enhancing limits of foreign

investments to 49 per cent among other key initiatives have encouraged such
activity. Larger banks will be able to mobilize sufficient capital to finance
asset expansion and fund investments in technology.
Capital Market
The Indian capital markets have witnessed a transformation over the last
decade. India is now placed among the mature markets of the world. Key
progressive initiatives in recent years include:

• The depository and share dematerialization systems that have

enhanced the efficiency of the transaction cycle

• Replacing the flexible, but often exploited, forward trading

mechanism with rolling settlement, to bring about transparency

• The InfoTech-driven National Stock Exchange (NSE) with a national

presence (for the benefit of investors across locations) and other
initiatives to enhance the quality of financial disclosures.

• Corporatisation of stock exchanges.

• The Securities and Exchange Board of India (SEBI) has effectively

been functioning as an independent regulator with statutory powers.

• Indian capital markets have rewarded Foreign Institutional Investors

(FIIs) with attractive valuations and increasing returns.

• The Mumbai Stock Exchange continues to be the premier exchange

in the country with an increase in market capitalization from US$ 40
billion in 1990-1991 to US$ 203 billion in 1999-2000. The stock
exchange has about 6,000 listed companies and an average daily
volume of about a billion dollars

• Many new instruments have been introduced in the markets,

including index futures, index options, derivatives and options and
futures in select stocks.
With the opening of the market, foreign and private Indian players are keen
to convert untapped market potential into opportunities by providing tailor-
made products:

• The presence of a host of new players in the sector has resulted in a

shift in approach and the launch of innovative products, services and
value-added benefits. Foreign majors have entered the country and
announced joint ventures in both life and non-life areas. Major foreign
players include New York Life, Aviva, Tokio Marine, Allianz,
Standard Life, Lombard General, AIG, AMP and Sun Life among

• With competition, the erstwhile state sector companies have become

aggressive in terms of product offerings, marketing and distribution.

• The Insurance Regulatory and Development Authority (IRDA) has

played a proactive role as a regulator and a facilitator in the sector’s

• The size of the market presents immense opportunities to new players

with only 20 per cent of the country’s insurable population currently

• The state sector Life Insurance Corporation (LIC), the largest life
insurer in 2000, sold close to 20 million new policies with a turnover
of US$ 5 billion.

• The gross premia for the insurance sector was US$ 13 billion for

• There are four public sector and nine private sector insurance
companies operating in general/non-life insurance business with a
premium income of over US$ 2.58 billion.
Venture Capital
Technology and knowledge have been and continue to drive the global
economy. Given the inherent strength by way of its human capital, technical
skills, cost competitive workforce, research and entrepreneurship, India is
positioned for rapid economic growth in a sustainable manner. To realize the
potential, there is a need for risk finance and venture capital (VC) funding to
leverage innovation, promote technology and harness knowledge based ideas.

• The Indian venture capital sector has been active despite facing a
challenging external environment in 2001 and a competitive market

• There were 34 VCFs and 2 Foreign VCFs registered with SEBI in

March 2002.

• According to a survey conducted by Thomson Financial and Prime

Database, India ranked as the third most active venture capital market
in Asia Pacific (excluding Japan). It recorded 115 deals in 2001 with
average investment per deal amounting to US$ 7.9 million. 57 VCFs
invested US$ 908 million in 101 Indian companies during 2001.

• Disbursements for 2002 are expected to be US$ 2 billion and are

estimated to reach US$ 10 billion by 2007.

• There is an increased interest in India: 70 VC funds operate in India

with the total assets under management worth about US$ 6 billion.

• The amount has grown nearly twenty fold in the past five years. Most
VCs believe that 2002-03 will be driven by a relatively stable economy
and new initiatives that will boost the e-commerce sector, particularly
on-line trading and e-banking sectors.
Changing paradigms of the financial services

Traditional business models, when businesses were clearly differentiated

(Banks conducted banking, insurance companies offered risk covers and
securities companies offered investment opportunities), have become the
footnotes of the finance literature. Today, insurance companies are exploring
values in the banking and investment products and vice versa. It is no more a
bank competing with another bank and insurance company competing with
another insurance company, but an insurance company competing with banks
and what not. Hence, to my mind, the most precious word today is the
“convergence” of the opportunity zones in financial markets from concept to

It may be observed that the competitive dynamics of market has changed

phenomenally. Today, players in the market compete in one segment and co-
operate in other segment. Strategic alliances of the competing banks on the
ATM infrastructure are a live example of this. Today, Mutual Funds compete
with the Banks on deposits, as they too provide the cheque facility with
certain limitations. Revolutionary waves have gone to the extent of providing
the ATM facility to the Mutual Funds investors. It is very interesting to
observe the competition mounting across the opportunity zones because that
encourages people to improve and deliver better values to the market leading
to growth of overall productivity of the nation.
Another example here is that of the insurance products. You would observe
that the buyer of the insurance products also looks at them as the investment
products. This is an issue of conditioning over the period of time and
therefore, the customers of the insurance products are both the customers of
the risk protection and the investment products. That leads to the insurance
sector competing with the other avenues of the investment including banks,
financial institutions and investment companies. The structure of the players
in different opportunity zones is also changing on continuous basis.
Corporate marriages, exchange’s mergers, clearing corporation’s alliances,
regulator’s integration, globally, bear testimony to it. Convergence of the
financial products is also apparent, everywhere.

As an example, let us look at the securities brokers. They are no more

securities brokers; they are the brokers exploring opportunities across
different dimensions of the economy. Similarly, enterprises in the finance are
talking about one stop shop offering all the products ranging from
commodities to securities to currencies under one roof. This change in
business models are necessitated by the values buried in the interlinkages of
the opportunity zones, emerging from economies of scale and economies of
On exchanges side, more and more products are migrating to the exchanges
for trading. Globally, availability of all sorts of financial products (both
money market and capital market) on the exchanges is driven by the benefits
like transparency, better price discovery, wider dissemination of information
and large investing community.

Imperatives for success

In this era of fierce competition, it has become extremely imperative for all of
us to weave clear cut strategy to deal with these changing dimensions of the
business landscape in financial services. We need to strengthen each link in
the value chain and move with a clear cut vision to deliver values in the
market. Therefore, I would feel we need to be competitive at all the levels -
individual, corporate, economy and regulatory.

Competitiveness at the individual level:

It may be apparent that nothing but the change is stable in the world. It offers
both the opportunities and the challenges to the individuals. It is for the
individuals to choose what do they look at. According to me, change is
nothing but an exciting opportunity to reposition oneself. Understand that the
driving force behind any repositioning is change. This repositioning may be
because of the survival crisis created by the unanticipated change or the
excitement offered by the change in terms of the unlimited opportunities not
visible with the naked eyes.

We all need to appreciate that future is never the extrapolation of the past. It
is absolutely unpredictable, discontinuous and non-linear. That is where the
excitement lies to the leading professionals in the market. They understand
that the future is what they shape up now. That is why they don’t talk about
predicting future, they talk about imagining future and having imagined,
creating it. They create future in the literal sense. Leaders also appreciate that
there is nothing called sustainable leadership in this ever changing world and
they have got to be extraordinarily competitive to sustain and lead the
revolution on the persistent basis.

In this increasingly competitive and complicated business environment, it is

imperative for individuals to primarily focus on value creation through the
continuous improvement in their own competence levels. They also need to
cultivate and nurture leadership and ethical practices. Only an appropriate
mix of the competence, leadership and ethical practices would ensure the
long term growth of individuals, add value to their contribution, keep them
relevant to emerging ethos and save them from getting buried in the debris of

Competitiveness at the corporate level:

I would convey to the corporate to do fewer things but do them better than
the best, globally. Corporate need to appreciate that no one can internalize the
versatility of competencies. Hence, it would be imperative for them to
leverage, outsource, network and create strategic alliances with others.
Further, they need to think without precedents as precedents create risk of
traditional thinking and withhold the imagination from running radical and
development of fundamentally great and different products and services.
They need to be different faster than being better and be better faster than
being smaller. They need to go beyond known paradigms to be the path-
breakers and secure a place at the international platform.

Today, businesses are no more businesses, these are battles of competencies.

Indeed, there is a competition for the competence in the market. Fortunately
or unfortunately, success or failure of a market player in this battle for
competence determines his potential for growth and the competitive
differentiation. Hence, companies need to strategize and re-strategize almost
on the continuous basis. They need to persistently strengthen their existing
knowledge and acquire/create new knowledge, compatible with the existing
one, as quickly and as inexpensively as possible, to continue leading in the
opportunity zones.

Tomorrow, their competitive position in market place would depend on the

speed with which they run on the learning curve, discover the new frontiers
of the knowledge in all dimensions of their operations and then think
creatively and imaginatively on the strategic ways to transform this
accumulated knowledge into the value delivering proposition. It should be
understood that the existence of knowledge does not ensure success;
corporations must also possess the capabilities to leverage on that knowledge
to create values.

Competitiveness at the regulators level:

In this changed business ethos, regulations too demand an in-jaundiced

perspective. Regulators can not deal with the complexities of the 21st century
business environment with the 20th century rules, regulations and the
rudimentary perspective. We can not shoot a moving target with a static gun
position. Therefore, in this era of revolution across the globe, regulations
should be enterprising, forward looking and evolutionary in nature.
Regulators’ focus should shift from the regulations to the development of the
markets. In my view, regulations just happen to be incidental to the
development. This change in the regulators’ focus would bring in the
paradigm shift in their approach, which would facilitate their transition from
being enforcement oriented, reactive, adversarial, incident driven and hard to
compliance, partnership oriented, preventive, problem solving and soft.

What I am suggesting is that the regulations should define the broad

framework/ parameters for the game and within that framework, market
participants should be allowed to operate without any intervention. This
approach is all about having the confidence in the market and systems. Now,
the challenge is to ensure that the people don’t play foul with the game.
Protection of the system’s integrity through architecting proper risk
management system is another challenge before the regulators. This demands
regulators to make tactical choices with regard to the tools, best time
intervention and regulatory style to fit the audience.

Further, the convergences of the financial activities and the emergence of

new age one stop financial institutions have resulted in a titanic challenge to
the regulators, internationally. They need to co-operate at a level more than
ever before. They need to strike an intelligent balance between the safety of
the markets under their regulatory jurisdiction and the creative initiatives of
the market participants. No matter what, market should be given a fair
opportunity to explore the avenues for the expansion and growth because that
would result in the competition in various opportunity domains and thus
emergence of better values to the ultimate customers. The capabilities of the
regulatory infrastructure and competencies of the human resources have
necessarily to keep pace with the regulates.
Competitiveness at the economy level:

We all need to strategize to position “India Incorporation” at the Global level.

According to me, we need to come out of the thinking of being a developing
country because ‘developing’ is a mindset. There are areas where India is
globally competitive. Our biggest strength is the educated, trained and skilled
manpower, the scientific minds. We have proved that by exhibition of
resilience of Indian economy even in the midst of global meltdown stemming
out of collapse of far eastern economies and troubled Latin American
economies. We need to focus on our strengths and identify the weak links in
the economy chain and dent them with determination. We have
entrepreneurial acumen to make India a giant figure at the global canvas. I
strongly believe, we have potential to do so. A perception is steadily growing
about India being a dynamic market among the emerging economies.


Mutual fund industry in India

The mutual fund industry in India started in 1963 with the formation of Unit
Trust of India, at the initiative of the Government of India and Reserve Bank
the. The history of mutual funds in India can be broadly divided into four
distinct phases:

First Phase – 1964-87

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

was set up by the Reserve Bank of India and functioned under the Regulatory
and administrative control of the Reserve Bank of India. In 1978 UTI was de-
linked from the RBI and the Industrial Development Bank of India (IDBI)
took over the regulatory and administrative control in place of RBI. The first
scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had
Rs.6, 700 crores of assets under management

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

1987 marked the entry of non- UTI, public sector mutual funds set up by
public sector banks and Life Insurance Corporation of India (LIC) and
General Insurance Corporation of India (GIC). SBI Mutual Fund was the first
non- UTI Mutual Fund established in June 1987 followed by Canbank
Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian
Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual
Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had
set up its mutual fund in December 1990. At the end of 1993, the mutual fund
industry had assets under management of Rs.47, 004 crores.
Third Phase – 1993-2003 (Entry of Private Sector Funds)

With the entry of private sector funds in 1993, a new era started in the Indian
mutual fund industry, giving the Indian investors a wider choice of fund
families. Also, 1993 was the year in which the first Mutual Fund Regulations
came into being, under which all mutual funds, except UTI were to be
registered and governed. The erstwhile Kothari Pioneer (now merged with
Franklin Templeton) was the first private sector mutual fund registered in
July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more
comprehensive and revised Mutual Fund Regulations in 1996. The industry
now functions under the SEBI (Mutual Fund) Regulations 1996. The number
of mutual fund houses went on increasing, with many foreign mutual funds
setting up funds in India and also the industry has witnessed several mergers
and acquisitions. As at the end of January 2003, there were 33 mutual funds
with total assets of Rs. 1,21,805 crores. The Unit Trust of India with
Rs.44,541 crores of assets under management was way ahead of other mutual

Fourth Phase – since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963
UTI was bifurcated into two separate entities. One is the Specified
Undertaking of the Unit Trust of India with assets under management of
Rs.29,835 crores as at the end of January 2003, representing broadly, the
assets of US 64 scheme, assured return and certain other schemes. The
Specified Undertaking of Unit Trust of India, functioning under an
administrator and under the rules framed by Government of India and does
not come under the purview of the Mutual Fund Regulations.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and
LIC. It is registered with SEBI and functions under the Mutual Fund
Regulations. With the bifurcation of the erstwhile UTI which had in March
2000 more than Rs.76,000 crores of assets under management and with the
setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund
Regulations, and with recent mergers taking place among different private
sector funds, the mutual fund industry has entered its current phase of
consolidation and growth. As at the end of September, 2004, there were 29
funds, which manage assets of Rs.153108 crores under 421 schemes.
A Mutual Fund is a trust that pools the savings of a number of investors who
share a common financial goal. The money thus collected is then invested in
capital market instruments such as shares, debentures and other securities.
The income earned through these investments and the capital appreciations
realized are shared by its unit holders in proportion to the number of units
owned by them. Thus a Mutual Fund is the most suitable investment for the
common man as it offers an opportunity to invest in a diversified,
professionally managed basket of securities at a relatively low cost.

Organization of a mutual fund

There are many entities involved and the diagram below illustrates the
organizational set up of a mutual fund:

Advantages of mutual funds:

The advantages of investing in a Mutual Fund are:

 Professional Management
 Diversification
 Convenient Administration
 Return Potential
 Low Costs
 Liquidity
 Transparency
 Flexibility
 Choice of schemes
 Tax benefits
 Well regulated

Types of mutual fund schemes

Wide variety of Mutual Fund Schemes exists to cater to the needs such as
financial position, risk tolerance and return expectations etc. The table below
gives an overview into the existing types of schemes in the Industry.

By Structure
- Open ended
- Close ended
By investment objective
- Growth Scheme
- Income Scheme
- Balanced Scheme
- Money market Scheme
Other Schemes
- Tax saving Scheme
- Special Scheme
- Index Scheme
- Sector specific Scheme

Major Players

• Reliance Mutual Fund

• SBI Mutual Fund
• ABN AMRO Mutual Fund
• Franklin Templeton Investments
• HDFC Mutual Fund
• HSBC Mutual Fund
• ING Vysya Mutual Fund
• JM Financial Mutual Fund
• Kotak Mahindra Mutual Fund
• LIC Mutual Fund
• Prudential ICICI Mutual Fund
• Standard Chartered Mutual Fund
• Sundaram Mutual Fund
• Tata Mutual Fund.
Numbers of players are available in mutual fund industry. For my study I have
chosen Reliance Mutual Fund and SBI Mutual Fund.



Reliance Mutual Fund (RMF) is one of India’s leading Mutual Funds, with
Assets Under Management (AUM) of Rs. 80,779 crores (AUM as on Dec
31st 2007) and an investor base of over 43.67 Lakhs Reliance Mutual Fund, a
part of the Reliance - Anil Dhirubhai Ambani Group, is one of the fastest
growing mutual funds in the country. RMF offers investors a well-rounded
portfolio of products to meet varying investor requirements and has presence
in 115 cities across the country.

Reliance Mutual Fund constantly endeavors to launch innovative products

and customer service initiatives to increase value to investors. Reliance
Mutual Fund schemes are managed by Reliance Capital Asset Management
Ltd., a wholly owned subsidiary of Reliance Capital Ltd. Reliance Capital
Ltd. is one of India’s leading and fastest growing private sector financial
services companies, and ranks among the top 3 private sector financial
services and banking companies, in terms of net worth.

Reliance Capital Ltd. has interests in asset management, life and general
insurance, private equity and proprietary investments, stock broking and
other financial services. Reliance Capital Asset Management Ltd. has a
vision of being a leading player in the Mutual Fund business and has
achieved significant success and visibility in the market.

However, an imperative part of growth and visibility is adherence to Good

Conduct in the marketplace. At Reliance Capital Asset Management Ltd., the
implementation and observance of ethical processes and policies has helped
us in standing up to the scrutiny of our domestic and international investors.

The management at Reliance Capital Asset Management Ltd. is committed to

good Corporate Governance, which includes transparency and timely
dissemination of information to its investors and unit holders. The Board of
Directors of RCAM is a professional body, including well-experienced and
knowledgeable Independent Members. Regular Audit Committee meetings
are conducted to review the operations and performance of the company.


Reliance Capital Asset Management Ltd. has at present, a code of conduct for
all its officers. It has a clearly defined prohibition on insider trading policy
and regulations. The management believes in the principles of propriety and
utmost care is taken while handling public money, making proper and
adequate disclosures.

All personnel at Reliance Capital Asset Management Ltd are made aware of
their rights, obligations and duties as part of the Dealing Policy laid down in
terms of SEBI guidelines. They are taken through a well-designed HR
program, conducted to impart work ethics, the Code of Conduct, information
security, Internet and e-mail usage and a host of other issues.

One of the core objectives of Reliance Capital Asset Management Ltd. is to

identify issues considered sensitive by global corporate standards, and
implement policies/guidelines in conformity with the best practices as an
ongoing process. Reliance Capital Asset Management Ltd. gives top priority
to compliance in true letter and spirit, fully understanding its fiduciary

Our Schemes
The aim of growth funds is to provide capital appreciation over the medium to
long- term. Such schemes normally invest a major part of their corpus in
equities. Such funds have comparatively high risks. These schemes provide
different options to the investors like dividend option, capital appreciation, etc.
and the investors may choose an option depending on their preferences. The
investors must indicate the option in the application form. The mutual funds also
allow the investors to change the options at a later date. Growth schemes are
good for investors having a long-term outlook seeking appreciation over a period
of time.


The aim of income funds is to provide regular and steady income to investors.
Such schemes generally invest in fixed income securities such as bonds,
corporate debentures, Government securities and money market instruments.
Such funds are less risky compared to equity schemes. These funds are not
affected because of fluctuations in equity markets. However, opportunities of
capital appreciation are also limited in such funds. The NAVs of such funds are
affected because of change in interest rates in the country. If the interest rates
fall, NAVs of such funds are likely to increase in the short run and vice versa.
However, long term investors may not bother about these fluctuations.

Sector Specific

These are the funds/schemes which invest in the securities of only those sectors
or industries as specified in the offer documents. e.g. Pharmaceuticals, Software,
Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in
these funds are dependent on the performance of the respective
sectors/industries. While these funds may give higher returns, they are more
risky compared to diversified funds. Investors need to keep a watch on the
performance of those sectors/industries and must exit at an appropriate time.
They may also seek advice of an expert.



SBI Mutual Fund is India’s largest bank sponsored mutual fund and has
an enviable track record in judicious investments and consistent wealth
creation. The fund traces its lineage to SBI - India’s largest banking
enterprise. The institution has grown immensely since its inception and
today it is India's largest bank, patronized by over 80% of the top
corporate houses of the country.

SBI Mutual Fund is a joint venture between the State Bank of India and
Society General Asset Management, one of the world’s leading
fund management companies that manages over
US$ 330 Billion worldwide. In eighteen years of operation, the fund has
launched thirty-two schemes and successfully redeemed fifteen of them.
In the process it has rewarded it’s investors handsomely with
consistently high returns. A total of over 3.8 million investors have
reposed their faith in the wealth generation expertise of the Mutual
Fund. Schemes of the Mutual fund have consistently outperformed
benchmark indices and have emerged as the preferred investment for
millions of investors and HNI’s.

Today, the fund manages over Rs. 20000 crores of assets and has a
diverse profile of investors actively parking their investments across 40
active schemes. The fund serves this vast family of investors by
reaching out to them through network of over 100 points of acceptance,
26 investor service centers, 33 investor service desks and 52 district
organizers. SBI Mutual is the first bank-sponsored fund to launch an
offshore fund – Resurgent India Opportunities Fund. Growth through
innovation and stable investment policies is the SBI MF credo.

Our schemes
Equity scheme
The investments of these schemes will predominantly be in the stock
markets and endeavor will be to provide investors the opportunity to
benefit from the higher returns which stock markets can provide.
However they are also exposed to the volatility and attendant risks of
stock markets and hence should be chosen only by such investors who
have high risk taking capacities and are willing to think long term.
Equity Funds include diversified Equity Funds, Sectoral Funds and
Index Funds. Diversified Equity Funds invest in various stocks across
different sectors while Sectoral funds which are specialized Equity
Funds restrict their investments only to shares of a particular sector and
hence, are riskier than Diversified Equity Funds. Index Funds invest
passively only in the stocks of a particular index and the performance of
such funds move with the movements of the index.

Debt Scheme
Debt Funds invest only in debt instruments such as Corporate Bonds,
Government Securities and Money Market instruments either
completely avoiding any investments in the stock markets as in Income
Funds or Gilt Funds or having a small exposure to equities as in
Monthly Income Plans or Children's Plan. Hence they are safer than
equity funds. At the same time the expected returns from debt funds
would be lower. Such investments are advisable for the risk-averse
investor and as a part of the investment portfolio for other investors.

Balanced Scheme
Magnum Balanced Fund invests in a mix of equity and debt
investments. Hence they are less risky than equity funds, but at the
same time provide commensurately lower returns. They provide a good
investment opportunity to investors who do not wish to be completely
exposed to equity markets, but is looking for higher returns than those
provided by debt funds.



(Table & Graph-1)

Criteria No. of People

Yes 200
No 0

On the basis of above graph it can be seen that people are 100% aware about
mutual funds.


(Table & Graph-2)

Criteria No. of People

Assets 55
Financial instrument 145
100 Assets
60 Instruments

An asset consists of land, building and bullion whereas financial instruments
consists of FD’s, PPF, Insurance, Mutual funds, Shares. Financial
instruments are more prefered by the people for investment purpose.


(Table & Graph -3)

Criteria No. of People

1-3 Lac 80
3-5 Lac 95
5-7 Lac 50
7 above 5
1-3 lac
3-5 lac
5-7 lac
30 7 above

The average investors fall in the category having earning capacity of Rs. 3-5
Lakh whereas next position is holded by the investors having earning
between 2-3 Lakh. These all investors can be termed as small investors.


(Table & Graph -4)

Criteria No. of People

Increment of wealth 55
Tax saving 115
Security of money 20
Future needs 10

100 Increment of
Tax saving
Secuirty of
40 money
Future use

On the basis of above graph it can be seen that most of the people are having
‘tax saving’ as an investment objective where the second preference is to
increment in wealth.


(Table & Graph -5)

Criteria No. of People

Tax benefits 95
Diversification 20
Liquidity 30
Return potential 55
80 Tax benefits
60 Diversification
Return Potential

On the basis of above graph it can be seen that the features which attract the
investors to invest in mutual fund is “tax benefits”. Secondly the return
potential which attract the customer to invest in MF’s.


(Table & Graph -6)

Criteria No. of People

Reliance MF’s 90
SBI MF’s 60
Franklin MF’s 35
Others 15
60 Reliance
50 SBI
40 Franklin
30 Others

Investors are having lots of investment in Reliance MF’s. The company
which is giving the close competition to Reliance is SBI which is followed by
Franklin and many more.


(Table & Graph -7)

Criteria No. of People

Brand image 60
Company Performance 45
Features 70
Market condition 45

60 Brand image
40 performance
30 Features

10 Condition

On the basis of above graph it can be seen that for opting for any company
people give the preference to the features of the products in comparison to
brand image, company performance and market condition.


(Table & Graph -8)

Criteria No. of people

Yes 160
No 40

On the basis of above graph it can be seen that people are having the
perception that MF’s are the popular instrument for investment. Though there
is population which believes that MF’s are not better option for investment as
compare to other government securities.


“Mutual funds are not a popular instrument for investment as compared to other
financial instruments.”
This is the hypothesis for which I have chosen the method for testing is “Null
Hypothesis testing.”

Null Hypothesis Ho= 50%

Possibility of +ive outcome po= 160/200x100

= 80%

Possibility of –ive outcome qo= 40/200x100

= 20%

Standard error SE= √poxqo/n

= √..5x.5/200
= .034

Z= Observe outcome-Expected outcome/SE

= .80-.50/.034
= 8.82

This Hypothesis has been rejected because it is far from the acceptance
region. So it is proved that mutual fund are the popular instrument fro
investment as compared to other financial instruments.


(Table & Graph -9)

Criteria No. of People

Mutual funds 60
Share 45
Fixed deposit 40
PPF 55


40 Mutual fund
Fixed Deposit
20 PPF


On the basis of above graph it can be seen that maximum people allocate
their investment in mutual funds along with PPF, FD’s and share.


“In today competitive era, mutual funds are not facing tuff competition in the
financial market.”
This is the hypothesis for which I have chosen the method for testing is “Null
Hypothesis testing.”

Null Hypothesis Ho= 50%

Possibility of +ive outcome po= 140/200x100

= 70%

Possibility of –ive outcome qo= 60/200x100

= 30%

Standard error SE= √poxqo/n

= √..5x.5/200
= .034

Z= Observe outcome-Expected outcome/SE

= .70-.50/.034
= 5.9

This Hypothesis has been rejected because it is far from the acceptance
region. So it is proved that in today’s competitive era mutual funds are facing
tuff competition in the financial market.


(Table & Graph -10)

Criteria No. of People

One time investment 105
Periodic investment 95
100 One time
96 Investment

On the basis of above graph it can be seen that most of the investors are
having one time investment in MF’s. They believe in long term investment.


(Table & Graph -11)

Criteria No. of People

Government Co. 95
Private Co. 105
100 Government
96 Company

On the basis of above graph it can be seen that investors prefer private
company in comparison to Government Company for investment purpose.


“The Mutual funds market of Government sector is more

This is the hypothesis for which I have chosen the method for testing is “Null
Hypothesis testing.”

Null Hypothesis Ho= 50%

Possibility of +ive outcome po= 105/200x100
= 52.5%

Possibility of –ive outcome qo= 95/200x100

= 47.5%

Standard error SE= √poxqo/n

= √..5x.5/200
= .034

Z= Observe outcome-Expected outcome/SE

= .525-.50/.034
= 0.74

This Hypothesis has been accepted because it falls in the acceptance region.
So it is proved that the mutual funds market of government sector is more



(Table & Graph -12)

Criteria No. of People

Mutual funds 20
Shares 40
Life insurance 30
Other fixed income instruments 10

40 Mutual funds
Life insurance
Other fixed
5 income
0 instruments

On the basis of above graph it can be seen that mutual funds are holding
market share of 20% only which is less if compared to shares and life


At the finalization of the thesis, I have arrived at the following findings:

• Now a days, people know how to earn along with it they all know
where the investment will be better. Earlier people only invest in FD”s,
PPF and bonds it dos not mean that other financial instrument was not
available. It was available but people were having the perception that
only government securities can be the safer investment option. But in
today’s scenario is completely changed, people are willing to take risk
for getting more and more return. In their investment option sensitive
instrument like mutual funds and shares are taking more space.

• According to the market research I have found that most of the people
are aware about MF’s, their features, their benefits as well as
maximum people were having MF’s in their investment portfolio.
• Most of the people are having financial instrument as their investment
tool but the proportion of investment in assets are less in numbers. As
maximum average investors were having the earning capacity between
3-5 Lakh. They can be said as small investors whereas investors having
annual income between 5-7 Lakh are less in numbers.

• According to the research I have found that the main objective of the
investment is tax saving. Second preference is given to the increment
in wealth.

• The features which attract the investors to invest in mutual funds are
tax benefits; return potential and liquidity whereas less preference is
given to diversification.

• Most of the people prefer private company for investment as

comparison to government one. Now they are not giving importance to
security but investors are now conscious about the return and other sort
of benefits. Recently among private players Reliance mutual funds are
prefered by the customer due to feature of the products they offer. SBI
mutual funds are giving close competition to Reliance mutual funds.

• People are opting for Reliance mutual funds because of the products
features they offer. Second preference they give to brand image for the
purpose of making investment. Whereas equal preference is given to
the company performance and market condition.

• On the basis of research and hypothesis testing it is proved that mutual

funds are the popular instrument for investment as compared to other
financial instruments. People allocate their most of the fund in MF’s as
compared to shares, FD and PPF. .As it involves minimum risk and
maximum return, with a very low cost.

• As per the survey it is found that most of the people are having one
time investment as compare to periodic investment. These investors do
the investment for the long term. Active investors are less in numbers
who believe in periodic investment.

• People like to invest in private companies as compared to government

companies it is proven by the research and hypothesis testing. Now
people do not want to stick to the government company for stable
return and minimum risk but investors are looking for more risk with a
maximum return.

• As per the survey it is found that in Gorakhpur city MF’s are holding
market share of 20% which is less in proportion if we compare it to
other investment instruments. Like share are having market share of
40%, Life insurance 30% and other fixed income instruments are
holding the market share of 10%.

• The investors who are buying the MF’s fall in the earning capacity of
3-5 Lakh. It does not mean that people who fall in other category do
not consider MF’s as their investment portfolio. All the categories are
considering it but differentiation arises on the basis of amount invested
in MF’s. Like an investor having earning capacity between 1-3 Lakh
will invests in MF’s but the amount of investment will be lesser as
compared to the investor having earning capacity above 7 lacs.

• As per the interview with dealers it is found that all the four options
(MF’s, share, life insurance, fixed income instruments) are considered
by the investors in their investment portfolio. Just the proportion of
investment varies and this variation takes place on the basis of their
earning capacity. Like people who are having the income between 7-10
Lakh will investment more in shares and MF’s as compare to other
option because their risk taking capacity is more but if we consider the
average income group all investment option are available in lesser
proportion if compared to high income group. If consider the small
investors having very low income their investment option would be
fixed income instrument , MF’s and life insurance but off course not
the shares.

• Most of the investors opting for MF’s fall into the age group of 30-40.
They are having the capacity to make investment on MF’s as well as
ability to take more risk. They do not have much effect on their
financial health if any loss occurs because they are having number of
sources of income.
• Mutual Funds book of ICFAI National College.
• Security Analysis book of ICFAI National College.
• Book of Financial Management by Ravi M. Kishore.
• Article by David Logan Scott ‘Investment in MF’s’.
• Article by Jordan Goodman ‘everyone money books’.
• Another Puzzle: The Growth in Actively Managed Mutual
Funds. Martin J. Gruber.
• The Persistence of Risk-Adjusted Mutual Fund Performance.
Edwin J. Elton. Martin
• Fact sheet of Reliance Mutual Fund
• Fact sheet of SBI Mutual Fund
• Wall street journal.
• India at the cross road by Tim Callen.
• Mutual fund in India by Amitabh Gupta.
• www.finmin.nic.ins
• www.wikipedia .com


Questionnaire for Customers

Address……………………………………..Phone No………………………….

Q1. Are you aware about mutual funds?

a) Yes b) No

Q2. What are your investment plans?

a) Assets b) Financial Instruments

Q3. What is your earning capacity?

a) 1-3 lac b) 3-5 lac
c) 5-7 lac d) 7-10 above

Q4. What is the objective of your investment?

a) Increase Wealth b) Tax Saving
c) Security of Fund d) Future needs

Q5. What features of mutual fund do you prefer?

a) Tax Benefit b) Liquidity
c) Diversification d) Return Potential

Q6. Which mutual fund company do you prefer?

a) Reliance mutual fund b) SBI mutual fund
c) Franklin Templeton d) Others

Q7. If Reliance or SBI mutual fund, then why?

a) Brand Image b) Company Performance
c) Features d) Market Condition

Q8. Do you think mutual funds are the popular instrument for investments?
a) Yes b) No

Q9. What is the percentage allocation of your investment?

a) Mutual fund b) Share
c) Fixed deposit d) PPF

Q10. What is the frequency of investment in mutual funds?

a) One Time b) Periodic

Q11. Which sector is prefered for mutual funds investment?

a) Government b) Private

Q12. Name four mutual funds company in order of priority, available in the
a)……………………………… b)………………………….
c)……………………………… d)………………………….

Questionnaire for Dealers

Q1. Who are the customers who are buying MF’s as per earning capacity?
a) 1-3 lac b) 3-5 lac
c) 5-7 lac d) 7-10 above

Q2. What is the prefered investment portfolio by your customers?

a) Mutual funds b) Share
c) Life insurance d) Other fixed income instruments

Q3. Investors opting for mutual fund fall into the following age groups?
a) 20-30 b) 30-40
c) 40-50 d) 50-60


• Asset Allocation
Deploying of funds for diversifying portfolio among different types of
assets, such as stocks, bonds, debentures

• Asset Management Company

An MAC means a company formed and registered under the companies
act, 1956 and approved by the SEBI, to manage the funds various schemes
of mutual funds. The AMC plays a key role in running the mutual funds
and it operates under the supervision and guidance of the trustee.
• Capital Growth
An increase in the market value of securities.

• Diversification
A strategy followed by fund manager to reduce risk by investing in
securities, common stock, debentures or bonds of several companies.

• Fund Manager
An individual or an organization which makes the investment decision on
behalf of the fund.

• Mutual Fund
MF’s is a financial intermediary that is established in the form of a trust. It
pools the savings the numerous individuals and invests the money thus
raised in a diversified portfolio of securities.

• Net Asset Value (NAV)

Net Asset Value is the market value of the assets of the scheme minus its
liabilities. The per unit NAV is the net asset value of the scheme divided by the
number of units outstanding on the Valuation Date.

• Repurchase or ‘Back-end’ Load

Is a charge collected by a scheme when it buys back the units from the unit

• Repurchase Price
Is the price at which a close-ended scheme repurchases its units and it
may include a back-end load. This is also called Bid Price.

• Redemption Price
Is the price at which open-ended schemes repurchase their units and
Close-ended schemes redeem their units on maturity. Such prices are
NAV related.

• Sales Load
Is a charge collected by a scheme when it sells the units. Also called,
‘Front-end’ load. Schemes that do not charge a load are called ‘No Load’

• Sale Price
Is the price you pay when you invest in a scheme. Also called Offer Price. It
may include a sales load.

I Rajpreet Kaur, student of MBA 4th semester, of Saraswati Institute of

Management & Technology, Rudrapur hereby declare that dissertation report
intitled “Currency risk management A case study of Superfos” is the outcome of
my own work and the same as not on nbeen submitted to any
University/Institution for the award of any degree or professional diploma.
MBA 4 th


The process of financial sector reforms, economic liberalization and
globalization of Indian business, it generated the interest and income of
the peoples. But on account of inadequate knowledge of the currency
risk and lack of expertise, the common people still hesitant to invest their
hard earned money in the corporate securities.
The study of currency risk management helped in utilizing the fund in a
significant way and provided securities. This report provides the
conceptual knowledge of currency risk and its management. It gives the
vivid picture of the currency risk management .I am greatly thankful to
Miss.Gunjan Shrivastava (faculty of management deptt.) for her co-
operation and guidance.