You are on page 1of 12


my summer project.docx (Size: 568.14 KB / Downloads: 27) This project provides an insight into the financial service industry of which insurance, stocks and mutual funds form an integral part. The project focuses on the dematerialization and stock trading services provided by Religare. The project also includes the services industry in which Religare plays an important role. The organization structure, history of the company, ownership patterns, divisions and branches and different departments in the organization are also mentioned. The project provides an overall view on the financial standing of the company, products offered and services provided the competitors in the industry and the competitive edge of Religare to have a distinctive position in the industry. Lastly the project involves an analysis and comparative study of the product of Religare with two of its competitors and recommendations to provide a horizon of improvement and growth. PROJECT INTRODUCTION The stock broking industry is a service-oriented industry where brokers act as agents for investors when a security is bought or sold and are compensated with a commission. Investors would not hesitate to switch to alternative brokerage houses if they do not obtain satisfaction. Providing quality service and hence customer satisfaction should thus be recognised as a key strategy and a crucial element of long-run success and profitability for stock broking businesses. Little has been done towards understanding the expectations investors hold from their stockbrokers. Since expectations serve as benchmark to gauge the service level of brokers, the delivery of services that exceed customer expectations is one strategy that can give firms a competitive advantage. Therefore, it would seem beneficial for stockbrokerage firms, in a dynamic economic environment like India, to provide service at a good scale of quality. In addition, stockbrokers have much to gain in understanding investors expectations of them, as this would help the stockbrokers to serve their customers better and foster long-lasting relationship with their customers. This study therefore aims to provide a platform for understanding whta the customer needs and what is being provided to bridge the gap between customer expectation and the actual service rendered. This information would be useful for those who would like to control and improve the performance of their service. The project would focus mainly on RELIGARE understanding of the requirements of the customer and its endeavour to provide what the customer expects and hence showing that it is the market leader in the stock broking industry.

STATEMENT OF PROBLEM To provide RELIGARE with meaningful recommendation (if any) to initiate a change in their products (Demat and trading) after questioning prospective investors regarding the fulfilment of their expectation. OBJECTIVE To understand and analyse the expectations of customers of RELIGARE in today market scenario and RELIGAREs efforts to provide the best services at the most competitive prices and provide recommendations of any deviation from that purpose. Stating the objective of the study. Mapping out a questionnaire to understand the expectations of customers. Identifying problems being faced by customers Analysing RELIGAREs product in meeting these expectations. Finding deviations if any. PROBLEM DEFINITION Understanding expectation of investors. Analysing the problems being faced by investors. Understanding RELIGAREs product to meet these problems. Mapping a questionnaire to analyse investors satisfaction of RELIGARE product. Contemplating the information. Providing meaningful analysis of the problem. Why investors choose Religare?? It is a Ranbaxy promoter group company. Diverse portfolio and a lot of products under one roof. Has one of the best brokerage plans. Attractive brand. Relationship managers attached to customers. Equity research team (one of the best in the market). Controlled and low cost service structure. Large volume processing structure. Expertise in coordinating multi-location responses. INVESTORS EXPECTATIONS Providing basic knowledge to investors so as to help them in understanding the stock market and making proper decisions in stocks Providing an averagely priced product so as to appeal to the investors and have a penetration effect in the market. Timely input (tips, entry and exist) to be provided to prospective clients so that they can maximize their wealth by making smart decisions. Updated info about client accounts on amounts outstanding, payment, withdrawals, shortages etc if any. Ancillary services like providing payout facilities, direct transfers, timely payments and receipts, confirmations about order receiptance and delivery of stocks, cheques, dematerialised shares etc. Infrastructure facilities like proper sitting arrangements, water and other refreshments, clean

facility and a clean working environment. Cordial relation with clients should be maintained so as to promote goodwill and business of the broker. Proper availability of RMs to attend to clients requests so as to minimize delays in order reacceptance and minimizing customer dissatisfaction. Reference:


4th sem project.docx (Size: 371.97 KB / Downloads: 10)

OBJECTIVES Following are the objectives of my study To know the flow of investment in India To know benefits & cost to host and home country. To know Straetgies to Invest in India. To Examine the trends and patterns in the FDI across different sectors & from different countries in India. To know which country in investing in which country. To know the reason for investment in India To understand the FII & FDI policy in India.

RESEARCH METHODOLOGY Research is, thus, an original contribution to the existing stock of knowledge making for its advancement. It is the pursuit of truth with the help of study, observation, comparison and experiment. In short, the search of knowledge through objectives and systematic method of finding solution to a problem is research. The systematic approach concerning generalization and the formulation of theory is also research. My Research Type:

Descriptive Research: The major purpose of this research is description of the state of affairs as it exists at present. In social science and business research we quite often use the term Ex post facto research for descriptive research studies. The main characteristic of this method is that the researcher has no control over the variables; he can only report what has happened or what is happening. Data Collection Method: Secondary Data: The secondary data are those which have already been collected by someone else and which have already been passed through statistical problem. The methods of collecting primary and secondary data differ since primary data are to be originally collected while in case of secondary data the nature of data collection work is merely that of compilation. Sources of Data Collection: Internet,Books Statistical Tools to be used: Various test of significance such as Bar Graph, ratio analysis, line graph. INTRODUCTION Foreign investment refers to investments made by the residents of a country in the financial assets and production processes of another country. The effect of foreign investment, however, varies from country to country. It can affect the factor productivity of the recipient country and can also affect the balance of payments. Foreign investment provides a channel through which countries can gain access to foreign capital. It can come in two forms: foreign direct investment (FDI) and foreign institutional investment (FII). Foreign direct investment involves in direct production activities and is also of a medium- to long-term nature. But foreign institutional investment is a short-term investment, mostly in the financial markets. FII, given its short-term nature, can have bidirectional causation with the returns of other domestic financial markets such as money markets, stock markets, and foreign exchange markets. Hence, understanding the determinants of FII is very important for any emerging economy as FII exerts a larger impact on the domestic financial markets in the short run and a real impact in the long run. India, being a capital scarce country, has taken many measures to attract foreign investment since the beginning of reforms in 1991. India is the second largest country in the world, with a population of over 1 billion people. As a developing country, India s economy is characterized by wage rates that are significantly lower than those in most developed countries. These two traits combine to make India a natural destination for foreign direct investment (FDI) and foreign institutional investment (FII). Until recently, however, India has attracted only a small share of global foreign direct investment (FDI) and foreign institutional investment (FII), primarily due to government restrictions on foreign involvement in the economy. But beginning in 1991 and accelerating rapidly since 2000, India has liberalized its investment regulations and actively encouraged new foreign investment, a sharp reversal from decades of discouraging economic integration with the global economy. The world is increasingly becoming interdependent. In fact, the world has become a borderless world. With the globalization of the various markets, international financial flows have so far been in excess for the goods and services among the trading countries of the world. Of the different types of financial inflows, the foreign direct investment (FDI) and foreign institutional investment (FII)) has played an important role in the process of development of many economies. Further many developing countries

consider foreign direct investment (FDI) and foreign institutional investment (FII) as an important element in their development strategy among the various forms of foreign assistance. The Foreign direct investment (FDI) and foreign institutional investment (FII) flows are usually preferred over the other form of external finance, because they are not debt creating, nonvolatile in nature and their returns depend upon the projects financed by the investor. The Foreign direct investment (FDI) and foreign institutional investment (FII) would also facilitate international trade and transfer of knowledge, skills and technology. The Foreign direct investment (FDI) and foreign institutional investment (FII) is the process by which the resident of one country(the source country) acquire the ownership of assets for the purpose of controlling the production, distribution and other productive activities of a firm in another country(the host country). According to the international monetary fund (IMF), foreign direct investment (FDI) and foreign institutional investment (FII) is defined as an investment that is made to acquire a lasting interest in an enterprise operating in an economy other than that of investor . The government of India (GOI) has also recognized the key role of the foreign direct investment (FDI) and foreign institutional investment (FII) in its process of economic development, not only as an addition to its own domestic capital but also as an important source of technology and other global trade practices. In order to attract the required amount of foreign direct investment (FDI) and foreign institutional investment (FII), it has bought about a number of changes in its economic policies and has put in its practice a liberal and more transparent foreign direct investment (FDI) and foreign institutional investment (FII) policy with a view to attract more foreign direct investment (FDI) and foreign institutional investment (FII) inflows into its economy. These changes have heralded the liberalization era of the foreign direct investment (FDI) and foreign institutional investment (FII) policy regime into India and have brought about a structural breakthrough in the volume of foreign direct investment (FDI) and foreign institutional investment (FII) inflows in the economy. About foreign direct investment Is the process whereby residents of one country (the source country) acquire ownership of assets for the purpose of controlling the production, distribution, and other activities of a firm in another country (the host country). The international monetary fund s balance of payment manual defines FDI as an investment that is made to acquire a lasting interest in an enterprise operating in an economy other than that of the investor. The investors purpose being to have an effective voice in the management of the enterprise . The united nations 1999 world investment report defines FDI as an investment involving a long term relationship and reflecting a lasting interest and control of a resident entity in one economy (foreign direct investor or parent enterprise) in an enterprise resident in an economy other than that of the foreign direct investor ( FDI enterprise, affiliate enterprise or foreign affiliate Characteristics of FDI FDI is an activity by which an investor, who is a resident in one country, obtains a lasting interest in, and is a significant influence on, the management of an entity in another country. This may involve either creating an entirely new enterprise, a so-called "Greenfield" investment, or more typically, changing the ownership of existing enterprises via

mergers and acquisitions. Investment Patterns International Product Life Cycle - Reduces costs by 'shifting production to developing countries. For instance, Essel Propack moved to China. Location - Specific advantages make FDI easier than exporting or licensing. Mahindra tractors are manufactured in North America. Contract manufactures - Brings down the cost of manufacturing and also contributes to consolidating competitive sourcing and competing in the world market. Honda Motors manufactures its vehicles in Europe. Assured return on investment - R&D centers and futuristic projects enable the investor to achieve great successes through high revenues. Social effects: Countries with closed economies have started to liberalize their economies through market reforms that are favorable to foreign investors through privatization, property rights, and liberal labor policies.

Benefits of FDI for Host Country Capital: Multinational enterprises invest in long-term projects, taking risks and repatriating profits only when the projects yield returns. Technology: The effects of technology emerge especially when the liberalization of the investment flow drives a more rapid rate of technology development, diffusion, and transfer. Such processes may involve the transfer of physical goods and/or the transfer of knowledge. A vast majority of economic studies dealing with the relationship between FDI and productivity and economic growth have found that the transfer of technology through FDI has contributed positively to productivity and economic growth in host countries. Market access: Investors can provide access to export markets. The growth of exports themselves offers benefits, such as technological learning and competitive stimuli. They can transform normal customers into intellectual customers. Increase in domestic investment: The increase in FDI inflow is associated with a manifold increase in the investment by national investors. Export promotion: It seems that FDI could be related to export trade in goods, and the host country can benefit from an FDI-led export growth. Generating employment: FDI leads to the generation of both direct and indirect employment opportunities in the host country. Infrastructure: In order to facilitate and enable investors to perform well, the host country studies other competitive destinations and enhances the level of infrastructure in selected areas to match the requirements of the investors. India's Silver Valley in Bangalore, Hitech City in Hyderabad, and Tidel Park in Chennai have revolutionized the areas through connectivity. Social effects: Countries with closed economies have started to liberalize their economies through market reforms that are favourable to foreign investors through

privatization, property rights, and liberal labour policies. Society at large benefits as employment, infrastructure, literacy, and health care are bound to improve as an impact of FDI inflow. Formation of Clusters: Groups of similar projects and manufacturing centres are formed in a specific location by way of providing common production, R&D, training, and pollution control systems to a group of competing companies. In Italy, Brazil, and India, such clusters have worked wonders. Spin-offs: Statistical evidence exists across the world to prove that FDIs have a number of spin-offs. Business history is replete with examples where individuals who trained with companies started their own ventures and became successful leaders in their respective fields. Silicon Valley in the U.S. provides many examples of such spin-offs. Intel is a spin-off of Fairchild. The main competitor to Intel today is its own spin-off. Even in India, the machine tool industries of Ludhiana and Bangalore are spin-offs of yesteryears' popular companies, such as SKF, Bosch and MICO.



34305585-Stock-Market-Movement-Its-Relation-to-Economic-Parameters.doc (Size: 450 KB / Downloads: 13) BANK Bank is a financial institution where you can deposit your money. It has influenced economies and politics for centuries. It provides a system for easily transferring money from one person or business to another. Using banks and the many services they offer, saves an incredible amount of time, and ensures that our funds "pass hands" in a legal and structured manner. Many other financial activities were added over time. For example banks are important players in financial markets and offer financial services such as investment funds. The first state deposit bank, Banco di San Giorgio (Bank of St. George), was founded in 1407 at Genoa, Italy. In some countries such as Germany, banks are the primary owners of industrial corporations while in other countries such as the United States banks are prohibited from owning non-

financial companies. In Japan, banks are usually the nexus of a cross-share holding entity known as the zaibatsu. In France, bancassurance is prevalent, as most banks offer insurance services (and now real estate services) to their clients. Origin of the word The name bank derives from the Italian word banco "desk/bench", used during the Renaissance by Florentine bankers, who used to make their transactions above a desk covered by a green tablecloth. However, there are traces of banking activity even in ancient times. GLOBAL OVERVIEW The first banks were probably the religious temples of the ancient world, and were probably established sometime during the third millennium B.C. Deposits initially consisted of grain and later other goods including cattle, agricultural implements, and eventually precious metals such as gold, in the form of easy-to-carry compressed plates. Temples and palaces were the safest places to store gold. Ancient Rome perfected the administrative aspect of banking and saw greater regulation of financial institutions and financial practices. Charging interest on loans and paying interest on deposits became more highly developed and competitive. Beginning around 1100s, the need to transfer large sums of money to finance the Crusades stimulated the re-emergence of banking in Western Europe. In 1156, in Genoa, occurred the earliest known foreign exchange contract. The accompanying growth of Italian banking in France was the start of the Lombard moneychangers in Europe, who moved from city to city along the busy pilgrim routes important for trade. After 1400, political forces turned against the methods of the Italian free enterprise bankers. In 1401, King Martin I of Aragon expelled them. In 1403, Henry IV of England prohibited them from taking profits in any way in his kingdom. In 1409, Flanders imprisoned and then expelled Genoese bankers. In 1410, all Italian merchants were expelled from Paris. In 1401, the Bank of Barcelona was founded. In 1407, the Bank of Saint George was founded in Genoa. Modern Western economic and financial history is usually traced back to the coffee houses of London. The London Royal Exchange was established in 1565. At that time moneychangers were already called bankers, though the term "bank" usually referred to their offices, and did not carry the meaning it does today. There was also a hierarchical order among professionals; at the top were the bankers who did business with heads of state, next were the city exchanges, and at the bottom were the pawn shops or "Lombard's . Some European cities today have a Lombard street where the pawn shop was located. After the siege of Antwerp, trade moved to Amsterdam. In 1609 the Amsterdamsche Wisselband (Amsterdam Exchange Bank) was founded which made Amsterdam the financial centre of the world until the Industrial Revolution. In the 1970s, a number of smaller crashes tied to the policies put in place following the depression, resulted in deregulation and privatization of government-owned enterprises in the 1980s, indicating that governments of industrial countries around the world found private-sector solutions to problems of economic growth and development preferable to state-operated, semi-socialist programs. This spurred a trend that was already prevalent in the business sector, large companies becoming global and dealing with customers, suppliers, manufacturing, and information centers all over the world. Global banking and capital market services proliferated during the 1980s and 1990s as a result of a great increase in demand from companies, governments, and financial institutions, but also because financial market conditions were buoyant. Interest rates in the United States declined from about 15% for two-year U.S. Growth rate would have been lower, in the last

twenty years, were it not for the profound effects of the internationalization of financial markets especially U.S. Foreign investments, particularly from Japan, who not only provided the funds to corporations in the U.S., but also helped finance the federal government; thus, transforming the U.S. stock market by far into the largest in the world. CURRENT SCENARIO: Banking Industry has revolutionized the transaction and financial services system worldwide. Through the development in technology banking services has been availed to the customers at all times, even after the normal banking hours, on a 24x7 basis. Banking Industry services is nothing but the access of most of the banking related services (such as verification of account details, going with the transactions, etc.). In today s world, progress of online services is available to all customers of the concerned bank and can be accessed at any point of time and from anywhere provided the place is equipped with the Internet facility. Now-a-days, almost all the banks all over the world, especially the multinational ones, provide their customers with Online Banking facility. When consumers turn cautious in tough times, entrepreneurs have to think out-of-the-box to get people to loosen their purse strings. Referring to the reluctance of banks to lend despite higher liquidity, this was a global phenomenon and mere monetary policy could not push banks on its strength to lend. Banks are more than willing to lend to companies whose financial position is good. The problem is that banks are reluctant to lend to companies with lower credit worthiness. We need to get banks to finance even middle level companies. The 2008/2009 recession is seeing private consumption fall for the first time in nearly 20 years. This indicates the depth and severity of the current recession. With consumer confidence so low, recovery will take a long time. Consumers in the U.S. have been hard hit by the current recession, with the value of their houses dropping and their pension savings decimated on the stock market. INDIAN SCENARIO For any country (particularly for a growing economy), sound and effective banking system is essential, not only to keep money but to have a healthy economy. Thus banking system of India should not only be hassle free but it should be able to meet new challenges posed by the technology and any other external and internal factors. For the past three decades India's banking system has several outstanding achievements to its credit. The most striking is its extensive reach. It is no longer confined to only metropolitans or cosmopolitans in India. In fact, Indian banking system has reached even to the remote corners of the country. This is one of the main reasons of India's growth process. EARLY DEVELOPMENT: Modern banking in India is said to be developed during the British era. In the first half of the 19th century, the British East India Company established three banks the Bank of Bengal in 1809, the Bank of Bombay in 1840 and the Bank of Madras in 1843. But in the course of time these three banks were amalgamated to a new bank called Imperial Bank, which started as private shareholders banks, with mostly Europeans shareholders. Subsequently, banking in India remained the exclusive domain of Europeans for next several decades until the beginning of the 20th century. Later Imperial bank was taken over by the State Bank of India in 1955. Allahabad Bank was the first fully Indian owned bank. The Reserve Bank of India was established in 1935 followed by other banks like Punjab National Bank, Bank of India, Canara Bank and Indian Bank. Indian merchants in Calcutta established the Union Bank in 1839, but

it failed in 1848 as a consequence of the economic crisis of 1848-49. The Allahabad Bank, established in 1865 and still functioning today, is the oldest Joint Stock bank in India. During the first phase the growth was very slow and banks also experienced periodic failures between 1913 and 1948. There were approximately 1100 banks, mostly small. To streamline the functioning and activities of commercial banks, the Government of India came up with The Banking Companies Act, 1949 which was later changed to Banking Regulation Act 1949 as per amending Act of 1965 (Act No. 23 of 1965). Reserve Bank of India was vested with extensive powers for the supervision of banking in India as the Central Banking Authority. During those day s public has lesser confidence in the banks. As an aftermath deposit mobilization was slow. Abreast of it the savings bank facility provided by the Postal department was comparatively safer. Moreover, funds were largely given to traders. At least 94 banks in India failed between 1913 and 1918 as indicated in the following table: After independence, Government took major steps in the form of Indian Banking Sector Reform. It initiated measures to play an active role in the economic life of the nation, and the Industrial Policy Resolution adopted by the government in 1948 envisaged a mixed economy. This resulted into greater involvement of the state in different segments of the economy including banking and finance. In 1955, it nationalized Imperial Bank of India with extensive banking facilities on a large scale especially in rural and semi-urban areas. It formed State Bank of India to act as the principal agent of RBI and to handle banking transactions of the Union and State Governments all over the country. However, despite these provisions, control and regulations, banks in India except the State Bank of India, continued to be owned and operated by private persons. This changed with the nationalization of major banks in India on 19 July, 1969. At the same time, Indian banking industry has emerged as a large employer, and a debate has ensued about the possibility to nationalize the banking industry. LIBERALIZATION: Like the overall economy, the Indian banking sector had severe structural problems by the end of the 1980s. By international standards, Indian banks were even despite a rapid growth of deposits extremely unprofitable. In the second half of the 1980s, the average return on assets was about 0.15%. The return on equity was considerably higher at 9.5%, but merely reflected the low capitalization of banks. While in India capital and reserves stood at about 1.5% of assets, other Asian countries reached about 4-6%. These figures do not take the differences in income recognition and loss provisioning standards into account, which would further deteriorate the relative performance of Indian banks. The year 1991 marked a decisive changing point in India's economic policy since Independence in 1947. Following the 1991 balance of payments crisis, structural reforms were initiated that fundamentally changed the prevailing economic policy in which the state was supposed to take the "commanding heights" of the economy. After decades of far reaching government involvement in the business world, known as the "mixed economy" approach, the private sector started to play a more prominent role. The enacted reforms not only affected the real sector of the economy, but the banking sector as well. Characteristics of banking in India before 1991 were a significant degree of state ownership and far reaching regulations concerning among others the allocation of credit and the setting of interest rates. The blueprint for banking sector reforms was the 1991 report of the Narasimham Committee. Reform

steps taken since then include a deregulation of interest rates, an easing of directed credit rules under the priority sector lending arrangements, a reduction of statutory preemptions, and a lowering of entry barriers for both domestic and foreign players. There was relaxation in the norms for Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights which could exceed the present cap of 10%, at present it has gone up to 49% with some restrictions. The new policy shook the Banking sector in India completely. Bankers, till this time, were used to the 4-6-4 method (Borrow at 4%; Lend at 6%; Go home at 4) of functioning. The new wave ushered in a modern outlook and tech-savvy methods of working for traditional banks. All this led to the retail boom in India. People not just demanded more from their banks but also received more. Statutory preemptions The degree of financial repression in the Indian banking sector was significantly reduced with the lowering of the CRR and SLR, which were regarded as one of the main causes of the low profitability and high interest rate spreads in the banking system. During the 1960s and 1970s the CRR was around 5%, but until 1991 it increased to its maximum legal limit of 15%. From its peak in 1991, it has declined gradually to a low of 4.5% in June 2003. In October 2004 it was slightly increased to 5% to counter inflationary pressures, but the RBI remains committed to decrease the CRR to its statutory minimum of 3%. The SLR has seen a similar development. The peak rate of the SLR stood at 38.5% in February 1992, just short of the upper legal limit of 40%. Since then, it has been gradually lowered to the statutory minimum of 25% in October 1997. The reduction of the CRR and SLR resulted in increased flexibility for banks in determining both the volume and terms of lending. Interest rate liberalization Prior to the reforms, interest rates were a tool of cross-subsidization between different sectors of the economy. To achieve this objective, the interest rate structure had grown increasingly complex with both lending and deposit rates set by the RBI. The deregulation of interest rates was a major component of the banking sector reforms that aimed at promoting financial savings and growth of the organized financial system. Priority sector lending Besides the high level of statutory preemptions, the priority sector advances were identified as one of the major reasons for the below average profitability of Indian banks. The Narasimham Committee therefore recommended a reduction from 40% to 10%. However, this recommendation has not been implemented and the targets of 40% of net bank credit for domestic banks and 32% for foreign banks have remained the same. While the nominal targets have remained unchanged, the effective burden of priority sector advances has been reduced by expanding the definition of priority sector lending to include for example information technology companies. Entry barriers Before the start of the 1991 reforms, there was little effective competition in the Indian banking system for at least two reasons. First, the detailed prescriptions of the RBI concerning for example the setting of interest rates left the banks with limited degrees of freedom to differentiate themselves in the marketplace. Second, India had strict entry restrictions for new banks, which effectively shielded the incumbents from competition.

Through the lowering of entry barriers, competition has significantly increased since the beginning of the 1990s. Seven new private banks entered the market between 1994 and 2000. In addition, over 20 foreign banks started operations in India since 1994. By March 2004, the new private sector banks and the foreign banks had a combined share of almost 20% of total assets. Prudential norms The report of the Narasimham Committee was the basis for the strengthening of prudential norms and the supervisory framework. Starting with the guidelines on income recognition, asset classification, provisioning and capital adequacy the RBI issued in 1992/93, there have been continuous efforts to enhance the transparency and accountability of the banking sector. The improvements of the prudential and supervisory framework were accompanied by a paradigm shift from micro-regulation of the banking sector to a strategy of macro-management