INTRODUCTION 

Classification of financial markets: the financial market may be classified as government securities
market and corporate securities market. The government securities market in india has two segments the
primary market and secondary market. The primary market consists of the issuers of securities. The
central and state government in situations and insurance companies . The secondary market includes
commercial banks, financial institutions, insurance companies, provident funds, trusts, mutual funds and
the Reserve bank of India.

On the basis of the type of instruments traded, the financial market corporate securities may be classified
as capital market and money market. The capital market is a market for long term funds and the securities
traded in the capital market are equity shares, preference shares, debenture and bonds. Capital markets
play an important role in the transfer and allocation of resources to various investment units. They can
facilitate changes in corporate ownership structure.

Financial instruments: if the securities traded in a financial market are short-term securities is called
capital market. The traditional cut-off* rule for the short term and the long term is one year. The call
money market and commercial bill market are examples of money market. Corporate financial
instruments traded in the money market are commercial bills. The main participants in the money market
are the Reserve Bank of India, commercial banks, mutual funds, the discount and Finance House of India,
and NBFCs.

The financial markets for corporate securities can also be classified as debt and stock markets. A debt
market is as financial market for debt securities such as debentures, bonds and commercial paper. The
debt instruments may be traded either is a money market or in a capital market depending on whether
they are short-term or long-term.

The financial market that provides a mechanism or a system for trading long-term securities such as
equity shares which have been already issued is called the stock market. In india, there are 23 recognized
stock exchanges that operate under government-approved rules, bylaws and regulations. The indian stock
market is almost wholly dominated by two major stock exchanges—the national stock exchange of india
Ltd. (NSE) and Bombay Stock Exchange (BSE). The benchmark indices of the two exchange—Nifty of
NSE and sensex of BSE – are closely followed. The two exchanges also have an F&O (futures and
options) segment for trading in equity derivatives including the indicies. The major players in the Indian
stock market are mutual funds, financial institutions and foreign institutional investors (FIIs) responding
mainly venture capital funds and private equity funds. Under the process of demutilization, stock

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exchanges have been converted into companies, in which brokers hold only minority shareholding. The
financial market that facilities the fresh issue of financial securities is known as primary market or the
new issues market. In other words, the primary market is a market for new capital issues, whether they are
equity or debt securities, or short-term or long-term securities. Although organizationally the primary
market is distinct from the stock markets are susceptible to common influence and are also cause and
effect of each other. Price movement on the stock market and the volume of activity in the primary
market are directly and closely related. The new capital issues tend to increase when stock prices are
rising and decrease when stock prices and raising and decrease when stock prices are declining. The stock
markets are usually the first to absorb the changes in the economic environment, but the effect is quickly
transmitted to the primary market. So the market sets the tone and tenor of he financial market as a whole.
Thus the flow of savings into real investment is profoundly influenced by stock behavior.

1.THE REGULATORY AUTHORITY.

The Indian financial system has independent regulators in the sectors no banking, insurance and capital
markets. The role of the regulatory authority is to ensure that the participants in the financial system
conduct their activities according to the guidelines and directives of the government. In the financial
sector, the government plays the role of regulator through statutory bodies such as the RBI and SEBI. The
RBI was established in 1935 as the central bank and a regulator for the financial and banking system. It
formulates the monetary policy and prescribes exchange control norms. The banking Regulation Act,
1949, and the Reserve Bank of India Act, 1934, authorize the RBI to regulate the banking sector in india.
The Insurance Regulatory and Development Authority (IRDA) is the regulatory authority in the insurance
sector under the Insurance Regulatory and Development Authority ACT, 1999.

SEBI, established under the securities and exchange board of india Act. 1992 is the regulatory authority
for capital markets in india. The main objectives of SEBI are to protect the interests of investors on
securities trading and promote the development and regulation of the securities market. The trading of
securities trading and promote the development and regulation of the securities market. The trading of
securities and other operations of stock exchanges are governed by the provisions of the securities
contacts (regulation) Act, 1965, band the companies Act, 1956. Besides, each stock exchange has its own
rules and by-laws to govern trading of securities on the stock exchanges.

2.REGULATORY FRAMEWORK
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[legislations governing the securities market]

(A) Four governing legislations: The four main legislations governing the securities market are:

(1) The SEBI Act, 1922 which establishes SEBI to protect investors and develop and regulate
securities market;

(2) The companies Act, 1956, Which sets out the code of conduct for the corporate sector in relation
to issue, allotment and transfer of securities, and disclosures to be made in public issues;

(3) The securities contracts (Regulation) Act, 1956 which provides for regulation of transactions in
securities through control over stock exchanges; and

(4) The depositories Act, 1996 which provides for electronic maintenance and transfer of ownership
of demat securities.

(B) The objectives of SEBI Act 1992: The SEBI Act, 1992 establishes SEBI with statutory powers
for

(1) Protecting the interests of investors in securities,

(2) Promoting the development of the securities market,

(3) Regulating the securities market.

(4) Promotion of fair dealing in securities by the issuer and ensuring a market place where they can
raise funds at a relatively low cost.

(5) Regulating and developing a code of conduct and few practices by intermediaries, and

(6) Monitoring the activities of intermediaries

(C) Securities contracts (Regulation) Act, 1956:

(1) It provides for direct and in direct control of virtually all aspects of securities trading and the
running of stock exchanges and aims to prevent undesirable transactions in securities.

(2) It gives central government/SEBI regulatory jurisdiction over

 Stock exchanges through a process of recognition and continued supervision,

 Contracts in securities, and

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  Listing of securities on stock exchanges.

(D) Depositories Act, 1996:

(1) The depositories Act, 1996 provides for the establishment of depositories in securities the
objective of ensuring free transferability of securities with speed, accuracy and security by

 Making securities of public limited companies freely transferable subject to certain

exceptions;

 Dematerializing the securities in the depository mode; and

 Providing for maintenance of ownership records in a book entry form.

(2) In order to streamline the settlement process, the Act envisages transfer of ownership of securities
electronically by book without making the securities move from person to person.

(3) The Act has made the securities of all public limited companies freely transferable, restricting the
companies right to use discretion in effecting the transfer of securities, and the transfer deed and
other procedural requirements under the companies Act have been dispended with

(E) Companies Act, 1956:

(1) It deals with issue, allotment and transfer of securities and various aspects relating to company
management.

3.FINANCIAL INSTITUTIONS

Financial institutions are the main constituent of a financial system. Financial institutions are also known
as financial intermediaries because they intermediate between savers and the investors, particularly real
investors. Real investors are those entities that create and use productive assets to produce goods and
services for the ultimate consumers. The financial intermediaries mobilize the savings –surplus units by
issuing claims against themselves and lend those funds to those who are in need of them. The financial
intermediaries issue different kinds of claims, which may be called securities, to the savers in order to
satisfy their requirements. On the other hand, they accept the claims or the securities of a different nature
issued by the users of the funds. The claims or securities issued by the financial institutions are more
liquid than the claims or securities these financial institutions buy from the investors, whom are the
ultimate users of the funds. In other words, financial institutions, particularly banks, provide liquidity,
maturity and size intermediation. Thus, financial institutions can be termed asset transformers.

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It may be noted that the financial intermediaries do not directly add to the real capital formation in a
country. But they are a necessary link between the savers and the real investors. By providing safety,
profitability liquidity for the funds saved by the savers, the financial intermediaries facilitate or encourage
saving in the economy. Most of the savers in a country like india are small and geographically scattered.
These small savings are effectively mobilize and made available to the industrial units in bigger lots by
the financial institutions.

If the industrial units have to mobilize funds directly from the small savers, it would become burdensome.
Moreover, it is not cost effective. The presence of financial institutions is also an assurance to the
entrepreneurs that the funds will, be made available at a reasonable price. Therefore, the entrepreneurs do
not have to bother about the funds and can concentrate on productive activities. In this way , the financial
institutions facilitate the process of investment in a country. Another notable aspect is that financial
institutions follow directives from the Reserve bank of india, Which is the regulatory authority, and
accordingly ensure the allocation of scarce resources in the country among various sectors in consonance
with national priorities.

4.TYPES OF FINANCIAL INSTITUTIONS

Financial institutions are of different kinds, such as commercial banks, cooperative banks, and non-
banking finance institutions. Different institutions provide specialized services to the economy. For
example: banks, as the providers of banking services, are the mechanism through which the monetary
policy of the government is implemented. Similarly, mutual funds provide a mechanism for collecting
small savings and poling them into large capital meant for users of the funds. Thus , each kind of financial
institution has a special role to play in the economy.

The Indian financial system has a two-tier structure of development finance institutions: all india financial
institutions and institutions at the state level. The all india financial institutions such as the industrial
development bank of india (IDBI), the industrial finance corporation of india (IFCI) and the industrial
credit and industrial corporation of india (ICICI) were in the post-independence ere to finance the
industrial development of the country along the desired direction. They are also known as term-lending
institutions or development banks.

When availability of finance from normal channels to certain types of industries which deserve special
attention on economic and social grounds is deficient, the development banks step in to fill the gap.
Hence, development banks are known as gap fillers. At the state level, the state financial institutions and
state industrial development corporations were created to provide project finance, equipment leasing,

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corporate loans short-term loans and bill discounting facilities to business organization. The government
holds the majority of shareholdings in these financial institutions. Thus, development finance institutions
direct their efforts the specific development objectives, which include growth I OF BROAD-based
entrepreneurship.

Specialized finance institutions like the Export-Import bank of india (Exim bank), the infrastructure
development finance company, small industries development bank of india (SIDBI), national housing
bank, national bank for agriculture and rural development (NABARD), mutual funds and a host of
insurance companies including the life insurance corporation of india and general insurance corporation
of india are also part of the Indian financial system. As key players in the Indian financial market, they
too foster the development of the economy.

The insurance sector in india has traditionally been dominated by the state –owned life insurance
corporation of india and the General Insurance Corporation and its four subsidiaries. But with a new
government po0licy, a number of new joint venture private companies have entered the life and general
insurance sectors. A new set of financial institutions such merchant banks, hedge funds and private equity
have once come on the scene in a big way. They have also become an integral part of the financial system
of the country.

5.FINANCIAL MARKETS & FINANCIAL INSTRUMENTS : It is financial markets provide

a mechanism for the trading of industrial securities. The interaction of buyers and sellers in the financial
markets also leads to price discovery. Financial markets also provide liquidity. In the absence of liquidity
in the markets, the owners of financial instruments should hold their

Financial markets are another significant component of the Indian financial system . They act as a conduit
through which funds are transferred from the savers to the users Financial markets facilitate the buying
and selling of financial instruments, also called financial assets or financial securities. T securities till
their maturity or till they are liquidity by the issuer(S).The functions of financial markets also include
separation, distribution, diversification and reduction of risk.

A financial market is said to be perfect when it has a large number of participants, there is a free flow of
information and the participants are rational and have homogeneous expectations. In reality, financial
market are characterized by many imperfections. A financial markets attains equilibrium when the
expected demand for funds matches the planned supply of funds. The supply of funds is generated from
saving and credit creation. Banks can create credit subject to statutory reserve requirements.

6.THE FINANCIAL SYSTEM

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To meet growing needs of the economy, there must be an institutional mechanism or a system to mobilize
savings and transfer them from those who save to those who are prepared to invest or take up productive
activities. But the savers and investors may require certain safeguards before transferring savings to other
or investing them in productive activities. They may require and institutions and instrument to facilitate
the transfer of rights and interests along with adequate laws and enforcement agencies. Thus there is a
need for an effective financial system which can mobilize and channelize savings for capital formation.
The efficiency of a financial system depends primarily on its ability to facilitate the flow of savings into
the most productive investment. Although there are arguments and counter arguments on whether
financial development spurs economic growth generates demand for financial products, many research
studies support the view that the development of the financial system contributes to economic growth.

A well-developed financial system could channelize financial resources to the most productive use. A
vibrant and efficiency financial system encourages a higher level of savings and investment and
ultimately a higher rate of economic growth.

7.WHAT IS A FINANCIAL SYSTEM

A system is defined as a set of elements that are interrelated and interactive. The elements operate
together to accomplish a stated purpose, goal or objective. It is the common purpose, goal or objective
which makes the elements belong together. A financial system consists broadly of financial institutions,
financial markets and financial instruments or securities as elements, as shown in figure 1.1. The common
goal of all these elements is to transform financial savings into real investment. Thus, a financial system
is a set of financial institutions, financial instruments and financial markets which facilitate the transfer of
savings from savers (surplus units) to those who can put the savings into use (deficit units) with the
objective of achieving economic development. Regulatory and development agencies such as the RBI and
SEBI can also be considered an integral part of financial system.

The financial system has the following functions:

1. Establishes a bridge between savers and investor in order to transform entrepreneurial ideas into
reality.

2. Increases the saving as well as the investment rate.

3. Makes the allocation and utilization of savings optimal and efficient.

4. Influences directly as well as indirectly the volume of funds to be made available for productive
activities.

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(a) New York stock exchanges (NYSE): The NYSE registered as a national securities exchanges
with the U.S. securities and exchange commission on October 1, 1934. He governing
committee was the primary governing body until 1938, at whicers from new York and out-of-
town firms, as well as public representatives.

(b) Nasdaq: Nasdaq is known for its growth, liquidity, depth of market and the world’s most
powerful, forward-looking technologies. All these make nasdaq choice of the leading
companies worldwide. Since its introduction as the world’s first electronic stock market,
nasdaq has been at the forefront of innovation. Now nasdaq is the fastest growing major stock
market in the world and home to over haIf of the companies traded on the primary U.S
markets

(c) London stock exchange: its history goes back to 1760 when 150 brokers kicked out of the
royal exchange for rowdiness formed a club at jonathan’s coffee house to buy and sell shares.
In 1773,members voted to change the name to stock exchange and 2000 shareholders voted it
to become a public limited company and thus London stock exchange plc was formed.
Dealing in shares is conducted via an off-market trading facility operated by cazenove and co.

.Functions of stock exchanges

Functions of the stock exchanges can be summarized as follows:

(a) Liquidity and marketability of securities

(b) Fair price determination

(c) Source for long term funds

(d) Helps in capital formation

(e) Reflects the generals state of economy

Basic of stock market indices

(1) What is a stock market indices

Following are main features of stock market doing?

It is an answer to the question “how is the market index?”

It is representative of the entire stock market.

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 Movement of the index represent the average returns obtained by investors in the stock
market.

A base year is set along with a basket of base shares.

The change in the market price of these shares is calculated on a daily basis.

The share included in the index are those shares which are traded regularly in high volume.

In case the trading in any share stops or comes then it gets excluded and another company’s
shares replace it.

AIM 

To study the impact of factors affecting the stock prices of Banking sector companies.

 METHODOLOGY:

Methodology is the way in which we find out the information. It describes how the project is
done. The methodology includes the methods, procedures and techniques used to collect and
analyze information.

          The data needed for the project was collected from both primary & secondary sources.

PRIMARY DATA 

Primary data will be collected by interviewing the various sectors of people. The daily
experience, observation and knowledge gained out of full work time at Kotak Mahindra was
recorded separately. 

The theoretical knowledge gained out of the primary and secondary sources of data, and the
practical knowledge gained out of working at  Kotak Mahindra  was then be integrated to prepare
an in-depth and comprehensive report , which would address the topic from both theoretical and
practical point of view.

SECONDERY DATA

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       Secondary data was including review of literature, information secured from web sites,
magazines and journals and a study of guidelines and regulations issued by the company law
board and the securities and exchange board of India.

Research Design

  Research is a structured enquiry that utilizes acceptable scientific methodology to solve

problems and create new knowledge that is generally applicable. Scientific methods consist of systematic
observation, classification and interpretation of data.

Although we engage in such process in our daily life, the difference between our casual
day- to-day generalization and the conclusions usually recognized as scientific method lies in the degree
of formality, rigorousness, verifiability and general validity of latter.

Research is a process of collecting, analyzing and interpreting information to answer

questions. But to qualify as research, the process must have certain characteristics: it must, as far as
possible, be controlled, rigorous, systematic, valid and verifiable, empirical and critical.

Type of Research

The study was object oriented so the type of research was Descriptive research.

Descriptive research, also known as statistical research, describes data and characteristics about the
population or phenomenon being studied. Descriptive research answers the questions who, what, where,
when and how.

Although the data description is factual, accurate and systematic, the research cannot describe
what caused a situation. Thus, Descriptive research cannot be used to create a causal relationship, where
one variable affects another. In other words, descriptive research can be said to have a low requirement
for internal validity.

Descriptive research is used to obtain information concerning the current status of the phenomena to
describe "what exists" with respect to variables or conditions in a situation. The methods involved range
from the survey which describes the status quo, the correlation study which investigates the relationship
between variables, to developmental studies which seek to
determine changes over time. Statement of the problem

 Identification of information needed to solve the problem

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  Selection or development of instruments for gathering the information
 Identification of target population and determination of sampling procedure
 Design of procedure for information collection
 Collection of information
 Analysis of information
 Generalizations and/or predictions
This research is the most commonly used and the basic reason for carrying out
descriptive research is to identify the cause of something that is happening.

Types of Data

 Primary Data: The data which is collected for the first time, So in this research method of  primary data
collection is survey method. Questionnaire tools has been used for this research.

 Secondary Data: The data which have already been collected and analyzed by someone
else. So, in this research, books, newspapers, magazines, websites and journals have been
used to collect the secondary data

 Sample Design

 Sample Unit: Respondents of various sector of people.

Sample Area: Hyderabad

Sample Size: 30 respondents

Sampling Method:  Non-Probability Sampling

The quality and reliability of research study is dependent on the information collected in a scientific and
methodological manner. Selection of methodology for a project is made easy by sorting out a number of
alternative approaches, each of them having its own advantage and disadvantages. Efficient design is that
which ensure that the relevant data are collected accurately.

RESEARCH DESIGN:

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Research design is the first and foremost step in methodology adopted and undertaking research study. It
is overall plan for the collection and analysis of data in the research project. Thus it is an organized,
systematic approach to be the formulation, implementation and control of research project.

In fact a well-planned and well balanced research design guards against collection of irrelevant data and
achieves the result in the best possible way.

SAMPLE DESIGN

The universe of study being large, researcher has to resort to sampling method of data collection. On the
basis of a section of the universe selected in a prescribed manner one is able to deduce for the universe.
For the sample results to be applicable on the universe, sample should be adequately chosen so to make it
representative and reliable.

SAMPLE SIZE

The sample size of a survey most typically refers to the number of units that were chosen from which data
were gathered. However, sample size can be defined in various ways. There is the designated sample size,
which is the number of sample units selected for contact or data collection. There is also the final sample
size, which is the number of completed interviews or units for which data are actually collected.

SAMPLE METHOD

Sampling method is used to select a sample from within a general population. Proper sampling method is
important for eliminating bias in the selection process. They can also allow for the reduction of cost or
effort in gathering samples. Common methods of sampling include simple random sampling (completely
random selection from the population), systematic sampling (ordering the population and selecting at
stratified sampling (splitting the population into categories and randomly selecting from within each
category), matched random sampling (population is divided into pairs based on a criterion and then
randomly assigned to groups), and panel sampling (applying the same test over time to randomly selected
groups).

Quantitative vs. Qualitative: Quantitative research is based on the measurement of quantity or amount.
It is applicable to phenomena that can be expressed in terms of quantity.

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Qualitative research, on the other hand, is concerned with qualitative phenomenon, i.e., Phenomena
relating to or involving quality or kind.

OBJECTIVES:

Objectives of the study:

 To study the factors affecting the stock prices of banking sector of Kotak.

 To analyze the factors affecting the stock prices of banking sector of Kotak..

SCOPE OF THE STUDY:

 The scope of study for a research paper is usually one of the first sections to the project. It sets
out the scope of your work and limitations. You should add in as much detail as possible when
describing what you are researching, why you are researching it and how you are going to
research this. This chapter presents an overview of the strengths and weaknesses of these
different approaches based on the perspectives of two different broad classes of users:

 The assumption was made that the primary requirement of such a user is to find information
related to validity of patent claims. In particular, this user should be able to find, for any patent
application.

 The entirety of prior art that should require modification of claims such that no claim reads on
any available prior art.

 The needs of this user are very important to the credibility and quality of a national patent system.
Patents issued may be respected more widely if the metes and bounds of claims are clear and non-
overlapping, and the presumption of validity following examination is well supported.

DATA COLLECTION:

Data collection should be conducted at intervals sufficiently frequent for the management purpose.

Limited scope census or sample-based pilot surveys;

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All of these can be used for cross-checking landings data as well as providing production and socio-
cultural information.

In almost all cases, many different variables can be collected simultaneously.

PRIMARY DATA

Primary data are always collected from the source. It is collected either by the investigator himself or
through his agents. There are different methods of collecting primary data. Each method has its relative
merits and demerits. The investigator has to choose a particular method to collect the information. The
choice to a large extent depends on the preliminaries to data collection some of the commonly used
methods are discussed below.

1. Direct Personal observation:

This is a very general method of collecting primary data. Here the investigator directly contacts the
informants, solicits their cooperation and enumerates the data. The information are collected by direct
personal interviews. The novelty of this method is its simplicity. It is neither difficult for the enumerator
nor the informants. Because both are present at the spot of data collection. This method provides most
accurate information as the investigator collects them personally.

2. Indirect Oral Interviews:

This is an indirect method of collecting primary data. Here information are not collected directly from the
source but by interviewing persons closely related with the problem. This method is applied to apprehend
culprits in case of theft, murder etc. This method is time saving and involves relatively less cost. The
accuracy of the information largely depends upon the integrity of the investigator.

3. Mailed Questionnaire method:

This is a very commonly used method of collecting primary data. Here information are collected through
a set of questionnaire. A questionnaire is a document prepared by the investigator containing a set of
questions.

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4. Schedule Method:

In case the informants are largely uneducated and non-responsive data cannot be collected by the mailed
questionnaire method.

5. From Local Agents:

Sometimes primary data are collected from local agents or correspondents. These agents are
appointed by the sponsoring authorities. They are well conversant with the local conditions like
language, communication, food habits, traditions etc. Being on the spot and well acquainted with the
nature of the enquiry they are capable of furnishing reliable information.

SECONDARY DATA

Secondary data in research consists of several sources. Sometimes primary data cannot be obtained or it
becomes difficult to obtain primary data, in such cases the researcher is bound to use secondary data. The
reliability, authenticity and generalizability of secondary data is less as compared to primary data as it has
been already manipulated and used by other people.

The majority of published records can be obtained from libraries and archives.

Public Sector Records are available in NGOs as well as some other public sector organization keeps
records. These records can be published or unpublished but they carry information that cannot be
obtained from other sources.

The information can be obtained faster than you can obtain from any other source. On the internet you
can get e-books, e-journals, e-periodicals and e-magazines. The internet is a multiple source of
information as all of the above mentioned sources can be obtained from the internet. Most recent and
most up to date information can be obtained from the internet as it won’t be available in books and other
forms.

LIMITATIONS OF THE STUDY:

1. This study covers those employees who are working at .

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2. The understand and knowledge may vary from person to person. The replied gives by
the respondents are taken for granted, though they are not uniform.

3. Since names are mentioned in most of questionnaires, most of the employees

answered favorable to the company. This might have led to wrong finding in the
study.

4. The interpretation being based on percentage method is not definite.

5. The report is subjects to changes with fast changing scenario.

6. Information relating to the internal aspects regarding various items is not provided.

7. Study is limited to Kotak Bank Ltd.

8. Most of the information is from secondary data.

LITERATUTRE REVIEW

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AN OVERVIEW OF INDIAN BANKING SECTOR

The Historical Background

The origin and growth of commercial banking in India makes interesting reading, it began in
India in 1770 with the establishment of the first joint stock bank, namely the Bank of Hindustan,
by an English agency in Calcutta. But the bank failed in 1832. In fact, the real beginning of the
modern commercial banking may be traced to the establishment of bank of Bengal in 1806. Later
on, the Bank of Bombay and bank of Madras were set up in 1840 and 1843 respectively. These
three banks were called the Presidency banks, the predecessors of the Imperial Bank of India
(1921). The Presidency banks were partly financed by the East India Company.

In 1881, the first indigenous bank, i.e. Oudh commercial Bank was started. This was followed by
setting up of the Punjab nation bank in 1894 and the people bank in 1901. The swadeshi
movement of 1905 gave a fillip to the growth of number of banks. Then came the period of
banking crisis. During 1913-48 about 1100 banks failed. Thus, in the preindependence period
Indian commercial banking had a chequered growth. Although, the Reserve Bank of India, the
Central bank of our country, came into existence in 1935 the pitiable state continued. Many
banks came into being in number of cities and ports relying on local patronage. The capital base
of them was inadequate. With growing competition, many of them could not survive. The birth
and death rates quite high, until the banking Regulation Act, 1949 was passed. It weeded out
large number of unviable banking companies. The RBI acquired a supervisory and development
role, with the establishment of the Department of Banking Operations and Development
(DBOD).

RBI was instrumental in preventing the liquidation of many small banks by formulating schemes
of amalgamation. Small banks were merged with bigger and stronger banks. The period of two
decades 1947 to 1969 was the period of consolidation. the number of banking companies came
down drastically from 648 in 1949 to 89 in 1969.

Another major development in the history of India baking was the establishment of state bank of
India in July 1955 by nationalizing the imperial Bank of India. This was a part of the integrated
scheme of rural credit which intended to provide institutional credit in rural.

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The period of multi-dimensional expansion of the banking sector began with the nationalization
of the major banks in 1969. Procedural and institutional innovations were introduced to
accelerate the flow of bank credit to certain sectors indentified as priority sectors. The Regional
Rural Banks (RRBs) appeared on the banking seine in 1975, specially designed to cater to the
credit needs of the rural sector. Their number swelled to 196 by 1987.

The financial sector reforms in 1990s opened up the sector to private banks in 1993. Nine new
riveted sector banks were started. But with the merger of one, their number came down to eight.
Some of the terms lending institutions (ICICI and IDBI) which have sponsored the bank have
become universal. With a view to provide credit in rural and semi-urban areas, Local area banks
(LABs) were permitted to be established. The related guidelines were announced by the RBI in
1997. Licenses were issued to five LABs.

These developments have resulted in a rapid increase in the total number of banks during the
three decades since 1969. Their number swelled from 85 in 1969 to 299 by May 2003(Excluding
42 foreign banks operating in India).

Definition of Bank

According to Prof. Kinsley - “A bank is establishment which makes to individuals such

advances of money as may be required and safely made, and to which individuals entrust money
when not required by them for use”.

The banking companies Act-1949 of India defines Bank as- “A Bank is financial institution
which accepts money from the public for the purpose of lending or investment repayable on
demand or otherwise withdrawal by cherubs, drafts or order or otherwise.”

Functions of a Bank: These are –

(1) Receiving deposits from the public.

(2) Making loans and advances.

(3) The most distinctive function of commercial banks is creation and destruction of
money because demand deposits serve as money in the community.

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 (4) A bank performs certain functions as an agent for and on behalf of its customers,
either artificial person or natural person.

(5) Other function – (a) Issuing of letters of credit of its customers.

(b) Issuing of bank drafts and

Traveler’s cheques etc.

Importance of a Bank

The business significance of banks to a developing economy may be as follows-

 Capital formation is the basic requirement of economic development.

 For implementation of effective monetary policy.

Structure of Indian Banking System

The banking sector in India comprises of banks, big and small, public and private, old and new,
viable and non- viable. There are wide diversities in their sizes, organizational patterns,
geographical presence and functional specializing. Indian commercial banks operate both in
urban and rural areas. There are regional banks operating only in rural areas. The local area
banks function only in the rural and semi-urban areas. The foreign banks function in cities and
ports.

In terms of size, there are Goliaths and David’s among the banks. In the one extreme the state
bank of India, the omnipresent big bank with more than 9000 branches functions. In the other
extreme, there is the small private sector bank.

(1) Public Sector’s Banks

(2) Objective Of Bank nationalization in India

(3) The government of India nationalized 14 major banks each with deposit of more than Rs.
50 corers with effect from July 19, 1969 by passing the banking companies(Acquisition
and Transfer of Undertakings) Act, 1969.

19
The statement of the objects and reasons of the Act says, “that the banking system touches the
lives of millions and has to be inspired by a larger social purpose and has to sub serve national
priorities and objectives such as rapid growth of agriculture, small industries, exports, raising
employment levels, encouragement of new entrepreneurs and development of backward areas.”

The objectives outlined are:

(1) Removal of control of a few ;

(2) Provision of adequate credit for agriculture, small industry and exports;

(3) Giving professional bent to bank management;

(4) Encouragement of new class of entrepreneurs;

(5) Provision of adequate training as well as responsible service for bank staff.

The bank that were nationalized on July 19, 1969 are :

 Central bank of India.

 Punjab national Bank.

 United Commercial Bank.

 United Bank.

 Union Bank.

 Syndicate Bank.

 Indian Bank.

 Bank of India.

 Bank of Baroda. Etc.

In April 1980, six more banks were nationalized. They are:

1. Andhra Bank

20
2. Corporation Bank.

3. Vijay Bank

4. Punjab and Sind Bank

5. Oriental Bank of Commerce

6. New Bank of India (merged with Punjab National Bank)

Achievements of Public Sector (Nationalized) Banks

1. Branch Expansion.

2. Developmental Role of Bank.

3. Expansion of Bank Deposit.

4. Change in the Composition of Deposits.

5. Credit Expansion.

6. Investment in Government Securities.

7. Lesser importance to Big Industries.

8. Advances to priority Sector.

(2) Private Sector’s Banks

Narasimham Committee had recommended granting permission for new private banks. On Nov
19, 2000 the Government decided to reduce govt. holding in nationalized banks from 51% to
33% for this necessary legislation is to be passed. The RBI released new directions to establish
new banks in the private sector on Jan. 3, 2001.

These are as follows-

(1) ICICI Bank Ltd.

(2) HDFC Bank Ltd.

21
 (3) Axis Bank Ltd.

(4) Federal Bank Ltd.

(5) Karuk Vysya Bank Ltd.

(6) ING Vysya Bank Ltd.

(7) Bank of Rajasthan Ltd. Etc…..

(3)Regional Rural Banks

The Government of India had constituted working group on July 1, 1975 to study, in depth the
problem of devising alternative agencies to provide institutional credit to rural people. Regional
rural Banks have been set-up following the recommendation of the study Group. the president
issued an ordinance on September 26, 1975 to enable the Government to make arrangements for
the establishments RRBs. The Ordinance was subsequently replaced by the regional Rural Banks
Act, 1976. The first five Rural Banks were set-y-up on October 2, 1975. With a view to
consolidating and strengthening RRBs, the Government of India initiated, in September 2005,
the process of amalgamation of RRBs, in a phased manner. Till 31 August, 2006, 134 RRBs,
have been.

Regional Rural Banks

 Andhra Pragmatic Grameena Bank

 Kerala Garmin Bank

 North Malabar Garmin Bank

 Uttar Bihar Garmin Bank

 SIRVA UP Garmin Bank

 Vananchal Garmin Bank

22
  Bangiya Garmin Vikash Bank

Amalgamated to form 42 new RRBs, sponsored by 18 banks in 16 states, bringing down the total
number of RRBs to 104 from 196. The amalgamation process still continuing.

The credit outstanding of all the 196 RRBs stood at Rs. 60159.74 corer as at the end of March
2009 and deposit of Rs.105568.13 corer had been mobilized by the RRBs by that date.

Objectives

The main objectives of setting the Regional Rural Banks is to provide credit and other facilities
especially to the small and marginal farmers agricultural labors, artisans, small entrepreneurs and
persons of small means engaged in productive activities in rural areas.

(4) Foreign Banks

Those banks are foreign banks, which are in origin and have their head office outside of India
called foreign Banks.

Foreign Banks

 ABN AMRO

 Abu Dhabi commercial Bank

 Bank of America

 The Bank of Tokyo-Mitsubishi UFJ

 Citibank India

 HSBC

 Standard charterer

Functions of foreign Banks

These are

23
  They accept long term and short term deposit from outside of India.

 Such Bank meets the credit requirements of exporter and importer by extending long
and short term loans.

 These banks attract deposit of all kinds.

 Such banks discount bills of exchange and make advance to trade and industry.

 Issue and accept foreign bills, checks, treasury challis and drafts.

 To exchange foreign currency in to domestic currency.

 To issue accredit card/ certificate for foreign transaction.

 To issue a guarantee in far our of the domestic traders.

Reserve Bank of India and Economic Development

The Reserve Bank commenced functioning in 1935 as a private shareholder’s bank. In 1949 it
was nationalized. Its role for a long time reminds only a regulatory one. But with economic
planning in India, the nationalized Reserved Bank has been called upon to play key role in
developmental programmers.

(1) Reserve Bank and Commercial Bank

In developing Commercial Banks in India on sound lines the R.B.I is wasted with great
responsibility .The banking regulation act 1949 vests it with great powers.

In creating and expanding banking facilities to rural areas R.B.I has shown great initiative. The
deposit Insurance Scheme operated in India is initiated by the R.B.I.

(2) Reserve Bank and Monetary Stability.

24
Since 1956 as volume of investment has increased rapidly and prices have been rising
continuously in India. As deficit financing is resorted to by our planners, inflation has set in. The
R.B.I has been making frequent use of Bank Rate policy and other quantitative weapons.

In addition, after 1956 selective credit controls have also being very much used. True, in India
inflation is not effectively checked. But the blame cannot lie with the R.B.I.

(3) Reserve Bank and Agricultural Credit.

From its very in inception the R.B.I. has been attending to agricultural finance .It does not
directly lend to agriculturists. Its operations are through state Co-operative banks and the State
Government. Since 1950 the Reserve Bank has been operating two funds- The national
agriculture credit ( Long term operations ) Fund, and The National Agricultural Credit
(Stabilization) Fund. From the former the R.B.I granted long and medium term loans to state
Government, State Co-operative Banks and to land Development Banks.

(4).Reserve Bank and Industrial Finance

The R.B.I together with the government has taken initiative in setting up some institutions for
term financing of industries. It owns part of the capital of the Industrial Finance Corporation and
that of State Financial Corporation. It lends them funds. In 1957 it opened a Department of
Industrial Finance to look after the bank’s activities in industrial field.

BANKING SECTOR REFORMS

Banking Sector Reforms 1992-2008

The narasimham Committee recommended measures to restore the health of the commercial
banking system in India. The object of these measures was to Improve efficiency, productivity,
and profitability. The Committee identified (a) directed investment, (b) directed credit, (c)
mounting operating expenditure and (d) non-performing assets as the principal causes for the
decline in productivity and efficiency, and erosion of profitability. To remedy the situation, the
Committee recommended the following reform measures.

(1) Directed Investment

25
 (a) Statutory Liquidity Ratio(SLR)

The banking regulation Act made a stipulation that all scheduled banks have to
maintain minimum of 25 per cent of their net total demand and time liabilities
(NDTL) in the form of cash, gold and approved securities.

(b) Cash Reserve Ratio (CRR)

The scheduled banks in India had to maintain a minimum of 3percent of their total
demand and time deposits under the RBI Act 1934. The RBI was given the power to
vary the CRR between 3 and 15 percent. This is a Quantitative credit control measure

(2) Directed Credit Programmers

(a) Decline in quality of loans, growth of overdoes, bad etc. which affected profitability.

(b) Shift of lending from security oriented to purpose oriented.

(3) Structure of Interest Rates

The interest rate of banks on both deposits and advances were administered by RBI.

These rates were unrelated to market rates of interest.

The committee recommended that all regulations of interest rates should be removed.
This recommendation was also accepted.

(4) Prudential Norms

If the balance sheets of banks are to reflect the actual financial health, there has to be proper
recognition of income, classification of assets and provisioning for bad debts on prudential basis.

(5) Asset Reconstruction Fund

To take over bad debts from commercial bank, the Narasimham committee –I
recommended setting of an Assets Reconstruction fund. All bad doubtful debts of banks
were to be transferred in a phased manner to the ARF

(6) Capital Adequacy

26
Inadequacy of capital in the banking system is cause for concern. The Committee recommended
that Basle norms on capital adequacy should be achieved. The committee recommended that the
banks should achieve a minimum of 4% capital adequacy ratio in relation to risk weighted assets
by March 1993. If this tier-I capital should not be less than 2 percent. The Basel standard of 8
percent should be achieved by March 1996. For the bank with the international presence it would
be necessary to achieve the figures earlier.

(7) Establishment of Private Sector Banks

The Committee recommended opening of banking sector for private banks. This will ensure
Greater competition among banks.

The RBI announced guidelines for setting up of private banks as public limited companies.
These banks should be financially viable.

(8) Structural Reorganization of Banking Sector

The Narasimham Committee (1991) recommended a substantial reduction in the number of

Public sector banks through mergers and acquisitions.

According to the committee, the broad pattern should be

(i) 3 or 4 large banks including state bank of India which will be of international in
characters.

(ii) 8 to 16 national banks with the network of branches throughout the country engaged
in general and universal banking.

(iii) Local banks whose operations would be generally confined to a specific region.

(iv) Rural bank including RRBs whose operations are to be confined to the rural areas.
Their predominant business is to finance agriculture and allied activities.

(9) Foreign Banks

27
The Committee recommended liberal approach in permitting foreign to open either branches or
subsidiaries. Joint ventures between foreign banks and local banks could also be permitted. The
RBI allowed the entry of foreign banks as branches subject to reciprocity and other prudential
considerations. Since 1992, 19 new foreign banks have been allowed.

(10) Branch Licensing

The Committee recommended the licensing be abolished. Opening or closing of branches should
be left to he discretion of the individual banks.

Banks have also been permitted to rationalize their existing branches, spinning off business at
other centers, opening of specialized branches, convert the existing non-variable rural branches
in to satellite offices. Banks have also been permitted to close down branches other then in rural
areas. Banks attaining capital adequacy norms and prudential accounting standards can set up
branches without prior approval of RBI.

RBI’S-Credit Control Measures

RBI has various weapons of credit control. By using them, it tries to maintain monetary stability.
The weapons of credit control are broadly divided into (a) quantitative controls and (b)
qualitative/ selective credit controls. Quantitative controls regulate the volume of total credit.
Qualitative or selective controls regulate the flow of credit for various uses and purposes.

The quantitative credit-control instruments are bank rate, Open market operations and variation
of cash reserve ratio (CRR)

1. Bank Rate: Bank rate is the rate at which the Reserve Bank is prepared to buy or
rediscount bills of exchange or other commercial papers eligible for purchases under the
Act. Due to absence of commercial bill market, such rate is hardly operative in India. It is
the rate at which the Reserve Bank provides accommodation to the member banks on
collateral securities.

Limitations:

28
 (i) Absence of bill market,

(ii) Unorganized nature of our money market;

(iii) Absence of close relationship between bank rate and other rates in the money
market;

(iv) Existence of wide disparity in interest rates and

(v) Excess liquidity of the bank system together with the

Reluctance of banks to approach the central bank.

2. Open Market Operations: This is another weapon of Quantitative Control available to the
Reserve Bank of India. The term Open market Operations refers to the purchase or sale of any
kind of paper by the central bank. But the term is restricted to purchase or sale of government
securities. This instrument is also used to control credit situation. The purchase or sale of
securities tends to increase or decrease the quantity of money in circulation as well as the cash
reserves of the commercial banks directly and immediately.

3. Cash Reserve Ratio (CRR): Commercial banks in all the countries maintain with the central
banks some cash reserves. In India there is a legal compulsion that banks shall maintain with the
Reserve Bank cash reserves of not less than 3% of their total time and demand Liabilities
(formerly 2% of time and 5% of demand deposits).

The significance of these cash ratios is that the central bank can control credit by varying them
within certain limits.

4. Statutory Liquidity Ratio (SLR): Scheduled banks will have to maintain in addition to CRR,
25 per cent of their net total demand and time liabilities in the form of cash, gold, and
unencumbed approved securities. This is the stipulation of the banking regulations Act 1949 it is
called statutory liquidity ratio. The RBI has the power to vary the SLR.

5. Repo Rate The RBI introduced repurchase auctions (Repos) since December 1992 in respect
of dated central Government securities. If the banking system experiences liquidity shortage and
consequently the rate of interest is rising, RBI purchase Govt. securities from banks. Since

29
payment is made to banks, it improves the liquidity and enables them to expand credit. Repos
have become a useful instrument to even out sharp fluctuations in liquidity and rate of interest in
money market.

1. Reverse Repo Rate: Reverse repo rate is the rate at which the central bank of a country
(Reserve Bank of India in case of India) borrows money from commercial banks within the
country. It is a monetary policy instrument which can be used to control the money supply
in the country.

Factors affecting stock prices which includes systematic and unsystematic factors of fundamental
and technical factor analysis.

FUNDAMENTAL FACTORS:

1. INFLATION DATA

2. IIP DATA

3. POLITICAL FACTORS

4. ENVIRONMENTAL FACTORS

5. CORPORATE DEVELOPMENT ACTIVITIES

6. CRUDE OIL PRICES IN THE INTERNATIONAL MARKET

7. QUARTER RESULTS OF THE COMPANIES

8. PERFORMANCE OF FINANCIAL STATEMENTS

9. ANNOUNCEMENT OF DIVIDEND AND BONUS

10. ANNOUNCEMENT OF BUY BACK OF SHARES RIGHTS ISSUE FOLLOW ON PUBLICE

OFFER ETC

11. INVESTMENT OF FII’S

12. BULK DEAL AND BLOCK DEAL OF COMPANIES

13. INVESTOR SENTIMENT WITH RESPECTIVE MARKETS

30
14 IMPACK OF EARNING PER SHARE OF THE COMPANY

TECHNICAL FACTORS:

1. CORRECTION IN THE SCRIP

2. RALLY IN SCRIP

3. PROFIT BOOKING IN THE SCRIP

4. HEDGING IN THE SCRIP

Primary market

A market where new securities are bought and sold for the first time is called the New Issues
market or the IPO market.

Secondary

A market in which an investor purchase a security from another rather than the issuer,
subsequent to the original issuance in the primary market.

Differences between primary and secondary markets

(a) Nature of securities: The primary market deals with new securities, that is securities,
which were not previously available and are, therefore, offered to the investing public for
the first time.
(b) Nature of financing: in contest to primary market, the secondary markets can in no
circumstance supply additional funds since the company is not involved in the
transaction.
(c) Organizational Differences: The stock exchanges have physical existence and are located
in a particular geographical area. The primary market is not rooted in any particular spot
and has no geographical existence.
(d) Nature of securities: The primary market deals with new securities, that is securities,
which were not previously available and are, therefore, offered to the investing public for
the first time.
(e) The capital market is the indicator of the inherent strength of the economy.

31
(f) It is the largest sources of funds with long and indefinite maturity for companies and
thereby enhances the capital formation in the country.
(g) It offers number of investment avenues to investors.
It helps in channeling the savings pool in the economy towards optimal allocation of the
capital in the country Nature of financing: in contest to primary market, the secondary
markets can in no circumstance supply additional funds since the company is not involved in
the transaction.

(h) Organizational Differences: The stock exchanges have physical existence and are located
in a particular geographical area. The primary market is not rooted in any particular spot
and has no geographical existence.

32
 COMPANY PROFILE

Established in 1985, the Kotak Mahindra group has been one of India's most reputed financial
conglomerates. In February 2003, Kotak Mahindra Finance Ltd, the group's flagship company
was given the license to carry on banking business by the Reserve Bank of India (RBI). This
approval created banking history since Kotak Mahindra Finance Ltd. is the first non–banking
finance company in India to convert itself in to a bank as Kotak Mahindra Bank Ltd. Today, the
bank is one of the fastest growing bank and among the most admired financial institutions in
India.

The bank has over 323 branches and a customer account base of over 2.7 million. Spread all over
India, not just in the metros but in Tier II cities and rural India as well, it is redefining the reach
and power of banking. Presently it is engaged in commercial banking, stock broking, mutual
funds, life insurance and investment banking. It caters to the financial needs of individuals and
corporates. The bank has an international presence through its subsidiaries with offices in
London, New York, Dubai, Mauritius, San Francisco and Singapore that specialize in providing
services to overseas investors seeking to invest into India. 

Products and Services

 The bank offers complete financial solutions for infinite needs of all individual and non–
individual customers depending on the customer's need – delivered through a state of the
art technology platform. Investment products like Mutual Funds, Life Insurance, retailing
of gold coins and bars etc are also offered. The bank follows a mix of both open and

33
 closed architecture for distribution of the investment products. All this is backed by
strong, in–house research on Mutual Funds.
 The bank’s savings account goes beyond the traditional role of savings, and allows us to
put aside a lot more than just money. The worry–free feature of Savings Account
provides a range of services from funds transfer, bill payments, 2–way sweep through our
ActivMoney feature and much more. We can place standing instructions for investment
options that can be booked through Internet or through Phone banking services. The
Savings Account thus provides for attractive returns earned through a comprehensive
suite products and services that offer investment options, all delivered seamlessly to the
customer by well integrated technology platforms.
 Apart from Phone banking and Internet banking, the Bank offers convenient banking
facility through Mobile banking, SMS services, Netc@rd, Home banking and BillPay
facility among others.
 The Depository services offered by the Bank allows the customers to hold equity shares,
government securities, bonds and other securities in electronic or Demat forms.
 The Salary 2 Wealth offering provides comprehensive administrative solutions for
Corporates with features such as easy and automated web based salary upload process
thereby eliminating the paper work involved in the process, a dedicated relationship
manager to service the corporate account, customized promotions and tie – ups and many
such unique features. The whole gamut of investment products and investment advisory
services is available to the salary account holders as well.
 For the business community, the bank offer comprehensive business solutions that
include the Current Account, Trade Services, Cash Management Service and Credit
Facilities. The bank’s wholesale banking products offer business banking solutions for
long–term investments and working capital needs, advice on mergers and acquisitions
and equipment financing. To meet special needs of the rural market, the bank has
dedicated business offerings for agricultural financing and infrastructure. Its Agriculture
Finance division delivers customized products for capital financing and equipment
financing needs of our rural customers.
 For financial liquidity the bank offers loans that meet personal requirements with quick
approval and flexible payment options. To complete the personal financial offerings

34
 space, the bank now offers Kotak Credit Card which is a hassle–free, transparent product
that also happens to be the first vertical credit card in the industry.
 Kotak Mahindra Bank addresses the entire spectrum of financial needs of Non–Resident
Indians. The bank has tie–up with the Overseas Indian Facilitation Centre (OIFC) as a
strategic partner, which gives them a platform to share their comprehensive range of
banking and investment products and services for Non Resident Indians (NRIs) and
Persons of Indian Origin (PIOs). Their Online Account Opening facility and Live Chat
service helps to get in touch at the comfort of homes and at the convenience. These
offerings are specifically designed to suit the overseas Indian's personal financial needs
and give the global Indians a near to home feel.

 Our Vision

 To be the most trusted Global Indian Financial Services brand and the most preferred
financial services employer with focus on creating value.

 Our customers will enjoy the benefits of dealing with a global Indian brand
that best understands their needs and delivers customized pragmatic
solutions across multiple platforms.
  We will be a world class Indian financial services group. Our technology
and best practices will be bench-marked along international lines while our
understanding of customers will be uniquely Indian.
 We will be more than a repository of our customers' savings. We, the group,
will be single window to every financial service in a customer's universe.
 Our Businesses

 Kotak Mahindra is one of India's leading banking and financial services group, offering a
wide range of financial services that encompass every sphere of life.

 Kotak Mahindra Bank Ltd is a one stop shop for all banking needs. The bank offers
personal finance solutions of every kind from savings accounts to credit cards,
distribution of mutual funds to life insurance products. Kotak Mahindra Bank offers

35
 transaction banking, operates lending verticals, manages IPOs and provides working
capital loans. Kotak has one of the largest and most respected Wealth Management teams
in India, providing the widest range of solutions to high net worth individuals,
entrepreneurs, business families and employed professionals.

 Get acquainted with the Board of Directors at the Kotak Mahindra Group and meet some
of the most knowledgeable and recognised names in the financial world.

Uday S. Kotak

Uday KotakExecutive Vice Chairman and Managing Director

Kotak Mahindra Bank Limited

 As a young 26-year old entrepreneur in 1985, Uday Kotak started Kotak Capital
Management Finance Ltd. (which later became Kotak Mahindra Finance Ltd). The vision
was to eventually become a banking company. Private Indian banks were not even a
speck on the horizon at that time. On 22nd March 2003, Kotak Mahindra Finance Ltd.
became the first non-banking financial company (NBFC) in India's corporate history to
be converted into a bank.

 Kotak Mahindra Bank Ltd. (KMBL) is regarded as one of the most efficient and high
performing banks in India, built on the principles of simplicity and prudence. Uday
remains unfazed by market euphoria and his 'basics of banking' approach has ensured that
the loan book is of high quality and the bank is well-capitalised. In a journey spanning

36
 nearly three decades, Uday has not only helped the company grow to this scale but also
earn respect.

 Today, Kotak Mahindra Group, a first generation enterprise, with networth of Rs. 33,361
crore (approx. US$ 5 billion), has a global presence, employs over 46,500 people and is
recognised as one of the topmost employers in India. The group has the distinction of
providing a 40% CAGR to its shareholders over a 30 year period. The core of the
business model is 'concentrated India, diversified financial services'.

 Uday has a strong focus on community development and inclusive growth which is
reflected by the Group's initiatives to provide low cost services to rural customers and its
welfare programmes. Uday feels strongly that education is key to the alleviation of the
social malaise afflicting India's under-privileged. In a bid to address this issue, he has
established the Kotak Education Foundation that focuses on the educational needs of
underprivileged children.

 Uday holds a Bachelor's degree in Commerce and an MBA from Jamnalal Bajaj Institute
of Management Studies, Mumbai. Co-Chair of Indo-UK Financial Services Partnership
(IUKFP) by Ministry of Finance (MoF), Government of India (GoI)

 Member of the Primary Market Advisory Committee of the Securities & Exchange
Board of India (SEBI)

 Member of the Board of Governors of the National Institute of Securities Markets and
ICRIER

 Governing Member of the Mahindra United World College of India

 Member of National Council of CII

 Served as member of Government of India's High Level Committee on Financing

Infrastructure, which was set up by Government of India in 2010

 Achievements

37
 Sole Indian Financier to feature in Money Masters: The Most Powerful People in The
Financial World, by Forbes magazine, USA (May 2016)

 Received the 'AIMA-JRD Tata Corporate Leadership Award' for the year 2015 at
AIMA's 2nd National Leadership Conclave

 Received 'Best Transformational Leader Award 2015' by Asian Centre for Corporate
Governance & Sustainability in 2016

 Recognised as 'ET Business Leader of the Year' at ET Awards 2015 for Corporate
Excellence

 Recognised as 'Entrepreneur of the Year' at Forbes India Leadership Awards 2015

 Recognised as 'Entrepreneur of the Decade' by Bombay Management Association

(BMA) in 2015

 Recognised as Banker of the Year 2014 by Businessworld

 Won 'Transformational Business Leader Award' at the AIMA Managing India Award
2014

 Won Ernst & Young World Entrepreneur of the Year 2014 Award

 Won Ernst & Young Entrepreneur of the Year 2013 Award (India)

 Felicitated with 'Financial Leadership Award' at NDTV Profit's Business Leadership

Award 2011

 Recognised as CNBC Asia's Business Leader of the Year in 2008

 Featured as 'Global leaders for tomorrow' at the World Economic Forum's annual meet
at Davos in 1996

38
Dipak Gupta

Mr. Dipak GuptaJoint Managing Director

Kotak Mahindra Bank Limited

Dipak Gupta, Joint Managing Director, Kotak Mahindra Bank has been with Kotak Mahindra
Group since 1992. He was appointed as Executive Director of Kotak Mahindra Finance
Limited (now Kotak Mahindra Bank Limited) on 1st October 1999.

Effective May 2016, Dipak heads the Group Treasury, Wealth Management and Asset
Reconstruction business of the Bank, and has oversight over the Alternative Investments
business of Kotak Mahindra Group.

 Dipak is part of the Bank's Management Committee (MANCOM) and Bank's Operating
Management Committee (OMANCOM) that drives and oversees the Kotak Group's
growth charter.

 With over 30 years' experience, he has played a key role in building various businesses
for Kotak Mahindra Group. Dipak was instrumental in the collaboration of Kotak
Mahindra with Ford Credit International to form Kotak Mahindra Primus Limited
(KMPL), of which he was the first CEO. He was also responsible for setting up the retail
businesses post the conversion of KMFL into a Bank.

 Prior to joining Kotak, Dipak had worked in the consultancy division of A.F. Fergusson.

 Dipak is a graduate in Electronics Engineering from IIT, Varanasi and a postgraduate in

Management from the Indian Institute of Management, Ahmedabad (IIMA).

39
Awards
At Kotak Mahindra Group we take a client-centric view and constantly innovate to provide you
with the best of services and infrastructure. We have regularly received accolades that stand
testimony to our success in this endeavour. Some of our recent achievements are:

FY2016-17

Kotak Mahindra Bank Ltd. (KMBL)

Uday Kotak recognised as Businessman of the Year 2016 by Business India

Shanti Ekambaram recognised as one of the 50 Most Powerful Women in the country by
Fortune India

CFO India magazine recognised the following Kotakites as CFONEXT 100:

Paresh Goraksha, Executive Vice President - Bank Finance, Kotak Mahindra Bank

Anil Lohidakshan, Vice President - Business Enabling Team, International Business,

Kotak Mahindra Bank

Pradeep Mahapatro, Vice President - Treasury & Investments, Kotak Mahindra Old
Mutual Life Insurance

Bombay Stock Exchange recognised Kotak Mahindra Bank on the occasion of Muhurat
Trading as:

One of the top 3 Performers in Primary Market Segment (Debt Public Issue Bids - Banks)
(FY 15-16)

VMWare IT Excellence Award

Dell EMC Transformation Award

Uday Kotak recognised as Banker of the Year 2013-14 at FE Best Bank's Awards

40
 Shanti Ekambaram recognised as one of the Most Powerful Women 2016 by Business
Today

Company of the Year 2016 at the Economic Times Awards for Corporate Excellence

Best Local Cash Management Bank in India in the mid-cap space at Asiamoney Cash
Management Poll 2016

Company with Great Managers at the Great Managers Award 2016 by People Business and
Times of India

Runner-up in the New Private Sector Bank 2014-15 category at FE Best Bank's Awards

Best Cash Management Bank in India at the Asian Banker Transaction Banking Awards
2016

Kotak Mahindra Bank's Custody Business adjudged Market Outperformer (as a

consequence of becoming Category Outperformer in all 10 categories) in the Domestic Market
Survey 2015-16

Kotak Wealth Management (KWM)

Best Private Bank, India at FinanceAsia Country Awards 2016

Best Private Bank in India at Global Private Banking Awards 2016

Kotak Institutional Equities (KIE)

Institutional Investor's 2016 All-India Rankings

Ranked #1 in Institutional Investor's 2016 All-India Research Team across foreign and
domestic brokerages, based on an annual survey of leading institutional investors investing into
India

41
 Ranked #1 in Institutional Investor's 2016 All-India Sales Team across foreign and
domestic brokerages

Asiamoney Brokers Poll 2016

Ranked #1 in Overall Country Research

Ranked #2 in Execution

Ranked #3 in Most Independent Research Brokerage

India's Best Local Brokerage - for the 11th year in a row

Kotak Mahindra Capital Company (KMCC)

Best Equity House, India in The Asset Triple A Country Awards 2016

Best IPO (India), Best QIP (India), Best M&A Deal (India) in The Asset Triple A Country
Awards 2016

Securities Advisory Firm of the Year in India, Corporate INTL Global Awards, 2016

Best Domestic Investment Bank and Best Domestic Equity House over the last 20 years,
FinanceAsia Platinum Awards - 20 Years of Excellence

Best Domestic Equity House by Asiamoney, 2016

IPO Dealmaker of the Year in the Businessworld PwC I-Banking Survey 2016

Kotak Securities (KSec)

Top Performer in New Accounts opened category (Non-Bank Category) - 1st Position at the
NSDL Star Performer Awards, 2016

Bombay Stock Exchange recognised Kotak Securities on the occasion of Muhurat Trading
as:

42
 One of the top 5 performers in Equity Retail Segment (FY 15-16)

One of the top 5 performers in Equity Institutional Segment (FY 15-16)

One of the top 3 Performers in OFS Segment (FY 15-16)

Agar Magar Campaign recognised at Asia Pacific Customer Engagement Award 2016:

Silver for the Best use of Branded Content in the Marketing Capability category

Gold for Best Use of Data & Research in the Marketing Capability category

Gold for Effective Use of Market research

Bronze for Effectiveness in Radio

Bronze for Innovation in Cupshup campaign

DMA Asia (India Edition) 2016:

Bronze for Media Effectiveness was awarded to Agar Magar campaign

Leader certificate for best use of Digital Search for Acquisition campaign

Bronze for Acquisition campaign in the category of Best Use of Data for New Business &
for PPC (HCGBB) in the search category awarded by Campaign India's Digital Crest Awards,
2016

Bronze for Best Single Radio Commercial in Insurance, Banking & Financial services at
Golden Mikes Awards 2016 by Exchange4media

Kotak Mahindra Asset Management Company (KMAMC)

Pankaj Tibrewal featured in "ET-Wealth Morningstar Ranking: Top 10 Mutual Fund

Managers 2016"

ETFI Asia and Asset Management ETF & Indexing Awards

43
 ETF Manager Of The Year award (2016 & 2015)

Best New ETF of the year award (2016)

I-Invest International UK (2016)

Best Open-Ended Gold ETF (Since Inception): Kotak Gold ETF

Best Asia-Focused ETF Manager

Kotak Life Insurance (KLI)

Business World Award for Excellence in L&D for 2016

HR Excellence Award 2016 for Learning & Development by Businessworld

Chief Learning Officer of the Year 2016 by TISS Leap Vault CLO

Milestones

 1986 – Kotak Mahindra Finance Ltd started the activity of Bill Discounting
 1987 – Kotak Mahindra Finance Ltd entered the Lease and Hire Purchase market
 2003 – Kotak Mahindra Finance Ltd. converted into a commercial bank – the first Indian
company to do so.
 2009 – Kotak Mahindra Bank Ltd. opened a representative office in Dubai. Entered
Ahmedabad Commodity Exchange as anchor investor.

44
 Balance Sheet of Kotak ------------------- in Rs. Cr. -------------------
Mahindra Bank
Mar '17 Mar '16 Mar '15 Mar '14 Mar '13

12 mths 12 mths 12 mths 12 mths 12 mths

Capital and Liabilities:

Total Share Capital 917.19 386.18 385.16 373.30 370.34
Equity Share Capital 917.19 386.18 385.16 373.30 370.34
Share Application Money 3.41 3.00 8.53 17.53 34.82
Reserves 23,041.87 13,754.91 11,889.93 9,073.65 7,575.59
Net Worth 23,962.47 14,144.09 12,283.62 9,464.48 7,980.75
Deposits 138,643.02 74,860.31 59,072.33 51,028.77 38,536.52
Borrowings 20,975.34 12,149.71 12,895.58 20,410.62 16,595.52
Total Debt 159,618.36 87,010.02 71,967.91 71,439.39 55,132.04
Other Liabilities & Provisions 8,678.96 4,857.97 3,333.82 2,789.81 2,553.99
Total Liabilities 192,259.79 106,012.08 87,585.35 83,693.68 65,666.78
Mar '16 Mar '15 Mar '14 Mar '13 Mar '12

12 mths 12 mths 12 mths 12 mths 12 mths

Assets
Cash & Balances with RBI 6,903.43 3,928.30 2,948.23 2,207.90 2,016.49
Balance with Banks, Money at
3,976.28 2,334.06 3,031.66 1,481.26 618.06
Call
Advances 118,665.30 66,160.71 53,027.63 48,468.98 39,079.23
Investments 51,260.22 30,421.09 25,484.55 28,873.43 21,566.81
Gross Block 1,551.59 1,206.71 1,106.94 464.42 449.97
Net Block 1,551.59 1,206.71 1,106.94 464.42 449.97
Other Assets 9,902.97 1,961.21 1,986.33 2,197.69 1,936.23
Total Assets 192,259.79 106,012.08 87,585.34 83,693.68 65,666.79

Contingent Liabilities 257,574.33 68,092.15 46,903.54 42,117.47 40,052.52

Book Value (Rs) 130.61 183.09 159.35 126.53 107.28

Source : Dion Global Solutions Limited

45
Profit & Loss account of ------------------- in Rs. Cr. -------------------
Kotak Mahindra Bank
Mar '17 Mar '16 Mar '15 Mar '14 Mar '13

12 mths 12 mths 12 mths 12 mths 12 mths

INCOME

Interest / Discount on Advances / Bills 12,470.37 7,468.67 6,674.82 6,146.09 4,867.44

Income from Investments 3,456.01 2,215.85 2,050.04 1,869.83 1,306.35

Interest on Balance with RBI and Other
92.91 24.06 27.17 24.33 4.07
Inter-Bank funds
Others 364.90 11.29 15.08 2.24 2.37

Total Interest Earned 16,384.18 9,719.87 8,767.12 8,042.49 6,180.24

Other Income 2,612.23 2,028.45 1,399.71 1,160.66 977.35

Total Income 18,996.42 11,748.32 10,166.83 9,203.15 7,157.58

EXPENDITURE

Interest Expended 9,483.81 5,496.13 5,047.07 4,836.82 3,667.75

Payments to and Provisions for
2,816.97 1,466.68 1,172.16 1,075.14 902.36
Employees
Depreciation 287.38 193.00 165.18 132.53 116.76
Operating Expenses (excludes
2,367.17 1,595.05 1,205.27 1,002.06 815.71
Employee Cost & Depreciation)
Total Operating Expenses 5,471.52 3,254.73 2,542.61 2,209.73 1,834.83

Provision Towards Income Tax 1,036.12 895.97 741.78 632.89 493.15

46
Provision Towards Deferred Tax -2.32 70.95 28.11 -21.58 21.69

Provision Towards Other Taxes 0.14 0.06 0.04 0.03 0.03

Other Provisions and Contingencies 917.37 164.50 304.70 184.55 55.08

Total Provisions and Contingencies 1,951.31 1,131.48 1,074.63 795.89 569.95

Total Expenditure 16,906.64 9,882.34 8,664.31 7,842.44 6,072.53

Net Profit / Loss for The Year 2,089.78 1,865.98 1,502.52 1,360.72 1,085.05
Net Profit / Loss After EI & Prior Year
2,089.78 1,865.98 1,502.52 1,360.72 1,085.05
Items
Profit / Loss Brought Forward 5,095.26 4,005.29 3,016.60 2,162.79 1,494.52

Transferred on Amalgamation 1,674.71 0.00 0.00 0.00 0.00

Total Profit / Loss available for
8,859.75 5,871.27 4,519.12 3,523.51 2,579.57
Appropriations
APPROPRIATIONS

Transfer To / From Statutory Reserve 522.45 466.50 375.63 340.18 271.27

Transfer To / From Special Reserve 45.00 28.00 32.00 28.50 25.00

Transfer To / From Capital Reserve 9.17 5.91 0.40 0.00 0.02

Transfer To / From General Reserve 0.00 93.30 75.13 68.04 54.26

Transfer To / From Investment Reserve -41.52 86.65 -41.10 10.52 14.52

Equity Share Dividend 91.84 82.07 63.08 52.38 44.49

Tax On Dividend 18.70 13.58 8.69 7.29 7.22

Balance Carried Over To Balance Sheet 8,214.12 5,095.26 4,005.29 3,016.60 2,162.79

Total Appropriations 8,859.75 5,871.27 4,519.12 3,523.51 2,579.57

OTHER INFORMATION

EARNINGS PER SHARE

Basic EPS (Rs.) 11.42 24.20 19.62 18.31 14.69

Diluted EPS (Rs.) 11.40 24.14 19.59 18.24 14.61

DIVIDEND PERCENTAGE

47
Equity Dividend Rate (%) 10.00 18.00 16.00 14.00 12.00

Source : Dion Global Solutions Limited

DATA ANALYSIS

48
1. In my Analysis it is revealed that majority percentage of respondents is having
awareness of the stock markets which gave 83% of positive response.

1.Are you aware of stock market ?

17%

yes
no
neutral

83%

2. In my analysis it is revealed that very less percentage respondents are having

investment in the stock markets.

49
 2.Are you having investment in stock market ?

13%

yes
no
neutral

87%

3. In my analysis it is revealed that majority of the respondents are aware of banking

sector which gave 90% positive response.

50
 3.Are you aware of banking sector ?

10%

yes
no
neutral

90%

4. In my analysis it revealed that increased inflation impact negatively on stock

market which will give a mixed result from the respondents.

51
 4.Inflation incresed impacts negatively on stock
markets ?

27% yes
no
neutral
53%

20%

5. In my analysis it is revealed that fundamental factor on impact in the stock prices

gave a mixed percentage from the respondents.

52
5.Are you aware of fundamental factors impact -
ing the stock prices ?

33% yes
no
43%
neutral

24%

6. In my analysis it is revealed that technical factors impact the stock prices gave a
mixed percentage from the respondents.

53
6.Are you aware of technical factors which are
impacting stock prices ?

26%
yes
37% no
neutral

37%

7. In my analysis it is revealed that banking sector is a balanced sector in both

positive and negative markets gave a positive results from the respondents.

54
7.Bank sector is a balanced sector in both pos-
itive and negative market ?

30% yes
no
neutral
50%

20%

8. In my analysis it revealed that to get good returns we have to minimize the risk
and maximize the profits it gave a positive response of 80% from the respondents.

55
 8.To get good returns you have to minimize and
maximize the profits ?

17%
3% yes
no
neutral

80%

9. In my analysis it is revealed that impact stock prices is important to get good

returns gave a mixed trend result from the respondents.

56
 9.Analysis of factors impacting stock prices is
important to get good returns ?

yes
37%
no
49% neutral

14%

10. In my analysis it is revealed that companies in stock market generally will have
volatile in nature gave a mixed results.

57
 10.Companies in stock market generally will
have volatile in nature ?

yes
40% no
50% neutral

10%

FINDINGS, SUGGESTION AND CONCLUSION

58
  The company if possible should investment all types of banking sector methods so
that it can better co-operate awareness about its functioning and performance.
 Kotak. should also go joint venture with other existing Banking companies
 Customer friendly documentation should be made easier and faster.
 Kotak. should provide additional funds to its offices and workers in increase in the
banking operations.
 Banking operations should be made fast and must not involve lengthy decision
making process.
 Easy access to development in the advanced market provide further opportunity to
upgrade their working.

SUGGESTION

 Kotak. dominates Indian banking sector industry in today’s competitive world

customer satisfaction as become an important aspect to retain the customer not only
to grow but also serve.
 Increased competition wide range of power generation and multiple distribution
channels cause companies to value satisfied and highly profitable customers.
 Customer success and services is the critical success factor in a company and
providing top notch customer service differentiates great customer service from
indifferent customer service.

CONCLUSION

59
  The entry of private sector banks in to the Indian banking sector trigged off a series
of changes in the industry.
 Even with the stiff competition in the market place it is evident from the study that
power generation offered by the Kotak.is qualitative and of the linking of the
customers moreover they are satisfied by true knowledge provided by the company
officials and it is easy to accessible which shows a great faith and positive perception
of the customers towards Kotak. of banking of India.

BIBLIOGRAPHY  

60
1. Financial Management   : I.M. Pandey
2. Financial Financial Management   : Khan & Jain
3. Management   : Prasanna Chandra
4. Financial Management   : R.P. Rastogi
5. Strategic Management   : John .A. Pierce
6. News Papers     : Financial Express  
     
7. Websites     : www.google.com

Appendix-Questionnaire

61
1. Are you aware of stock market?

(a) Yes (b) No (c) Neutral

2. Are you having investments in stock markets?

(a) Yes (b) No (c) Neutral

3. Are you aware of banking sector?

(a) Yes (b) No (c) Neutral

4. Inflation increased impacts negatively on stock market?

(a) Yes (b) No (c) Neutral

5. Are you aware of fundamental factors impacting the stock prices?

(a) Yes (b) No (c) Neutral

6. Are you aware of technical factors which are impacting stock prices?

(a) Yes (b) No (c) Neutral

7. Banking sector is a balanced sector in both positive & negative market?

(a) Yes (b) No (c) Neutral

8. To get returns you have to minimize the risk and maximize the profits?

(a) Yes (b) No (c) Neutral

9. Analysis of factors impacting stock prices is important to get good returns?

(a) Yes (b) No (c) Neutral

10. Companies in stock market generally will have volatile in nature?

(a) Yes (b) No (c) Neutral

62
Name :

Qualification :

Profession :

63