1

CHAPTER:1

INTRODUCTIO
N TO THE
TOPIC
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WHAT IS MUTUAL FUND?

MUTUAL FUNDS INDUSTRY UNITHOLING PATTERN

From the data collected from the mutual funds, the following has been observed

i. As on March 31, 2003 there was total number of 1.6 crore investors accounts (it is likely that there
may be more than one folio of an investor which might have been counted more than once and actual
number of investors would be less) holding units of Rs. 79,601 crore. Out of this total number of
investors accounts, 1.56 crore was individual investors accounts, accounting for 97.42% of the total
number of investors accounts and contribute Rs.32,691 crore which is 41.07% of the total net assets.
The total number of investors account is lower in comparison with the total number of investors
accounts as on March 31, 2002 as the above data includes information only of AXIS Mutual Fund
(which is registered with SEBI on January 14, 2003). The data of the Specified Undertaking of AXIS
(not registered with SEBI) is not available with us.

ii. Corporates and institutions who form only 2.04% of the total number of investors accounts in the
mutual funds industry, contribute a sizeable amount of Rs.45,470 crore which is 57.12% of the total
net assets in the mutual funds industry.

iii. The NRIs/OCBs and FIIs constitute a very small percentage of investors accounts (0.54%) and
contribute Rs.1440.18crore (1.81%) of net assets.

UNITHOLDING PATTERN – PRIVATE/PUBLIC SECTOR

MUTUAL FUNDS

From the analysis of data on unitholding pattern of Private Sector Mutual Funds and Public
Sector Mutual Funds, the following observations are made:-

1. Out of a total of 1.6 crore investors accounts in the mutual funds industry, (it is likely
that there may be more than one folio of an investor which might have been counted more
than once and therefore actual number of investors may be less) 42.93 lakh investors
accounts i.e 27% of the total investors accounts are in private sector mutual funds whereas
the 1.17 crore investors accounts ie.73% are with the public sector mutual funds which
includes AXIS Mutual Fund. However, the private sector mutual funds manage 71.2% of
1

RISK FACTORS

Mutual Funds and securities investments are subject to market risks and there can be no
assurance or guarantee that the Schemes objectives will be achieved. As with any
investment in securities, the Net Asset Value of Units issued under the Schemes may go up
or down depending on the various factors and forces affecting the capital market. Past
performance of the Sponsors/ AMC/ Mutual Fund/ Schemes and its affiliates do not indicate
the future performance of the Schemes of the Mutual Fund. The Sponsors are not
responsible or liable for any loss or shortfall resulting from the operations of the Schemes
beyond their contribution of Rs.10,000/- each made by them towards setting of the Mutual
Fund The Names of the Schemes do not in any manner indicate either the quality of the
Schemes or their future prospects and returns. Investors in the Schemes are not being
offered any guarantee / assured returns. Please read the Offer Documents carefully before
investing.

SEBI OKAYS FIDELITY PLANS

Fidelity Investments has received permission from SEBI to launch equity funds in India.
Fidelity has already filed a draft prospectus with SEBI for its maiden equity fund, Fidelity
Equity. The proposed fund will invest across sectors. The portfolio will comprise 60-80
stocks. The fund will ordinarily invest up to 95 per cent of its assets in equities, but may
invest up to 20 per cent in money market instruments.

 SBI Mutual Fund has launched a mid-cap fund, Magnum MidCap Fund. It will
invest in stocks with a market capitalisation of Rs 200-2,000 crore. The minimum investment
amount is Rs 5,000. The fund offers dividend and growth options. The offer closes on March
17.

 Principal Mutual has declared dividend of 100 per cent on Principal Resurgent India
Equity Fund. The record date is February 24.

 Sundaram Mutual has declared dividends of 20 per cent each on Sundaram Select
Focus and Sundaram Growth. The record dates are March 4 and March 11 respectively.

 AXIS Mutual Fund has declared a maiden dividend of 12 per cent for AXIS Basic
Industries Fund and a dividend of 25 per cent for AXIS Growth and Value Fund. The record
date for both the dividend payments is March 10. The fund house has also declared a
dividend of 18 per cent for AXIS Balanced Fund. The record date is March 17.
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 HDFC Mutual proposes to declare dividend on HDFC Prudence and HDFC

Balanced Fund. The record date for the dividend will be March 18.

 Franklin Templeton Mutual has mopped up Rs 1,950 crore from the initial offering
of Franklin Flexicap. This is the largest amount mobilised by any open-end fund IPO. The
fund will be open for an ongoing basis from March 7.

SEBI'S NEW CHECKS AND BALANCES

Alliance Capital Advisor: Alliance Capital Management Holding LLP has appointed
Blackstone Group LP to advise it on its Indian operations. The latter will look at strategic
options for the mutual fund business. There have been indications that Alliance may want to
wind up its mutual fund operations in India.

AXIS BANK IS NEW NAME FOR UTI BANK

Axis Bank is the new name for UTI Bank. Axis Bank is born out of the pressure on UTI
Bank to shed its brand name after the split of the erstwhile UTI. Though UTI was a
government institution, its subsidiary UTI Bank has been categorized as a private sector
bank, according to RBI guidelines. The name change to Axis Bank means that UTI Bank
will have to undergo a re-branding exercise soon. The re-branding process was completed
by September 2007.

After the split of UTI, entities like UTI Securities, UTI MF and UTI Bank were all allowed
to retain the UTI brand name for a while. Now that it is time for UTI Bank to shed the brand
name, it has opted to go for the more modern-sounding Axis Bank. Axis Bank chairman will
be PJ Nayak, who is currently chairman and managing director of UTI Bank. Axis Bank,
this means, had to split the top post into two, as required by new corporate governance
regulations.

The recommendation for name change to Axis Bank had arisen from the existence of several
shareholder-unrelated entities using the UTI brand, and the consequent brand confusion that
this generates. The name took effect consequent to the approval of shareholders, Reserve
Bank of India and the Central Government (Registrar of Companies).
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AXIS Crisis & After How the Crisis Originated

What was the Crisis that Overtook AXIS during 1999 to 2002 ?

Mr.Yogi Aggarwal, columnist of "india-syndicate.com/" further points out in his

illuminating articles published online-

"The facts as revealed by the government appointed Tarapore Committee and the other
committees which preceded it show a trail of bungling, structural flaws and AXIS officials
using public money in an "imprudent" manner to help various controversial and powerful
companies in stock exchange dealings that cost the AXIS several thousands of crores and
severely eroded investor wealth. What they reveal is not just incompetence but a flouting of
all prudential norms to favour certain individuals and companies.

"While the Tarapore Committee saw no reason to believe in any "breach of confidentiality"
leading to the large scale redemptions in Unit-64 during April and May 2001 when around
Rs 5,000 crore was taken out by big corporates and banks from Unit-64, it severely
criticized the way the scheme worked. A fundamental flaw was that Unit-64 lived beyond its
means, rewarding unitholders with dividends beyond its capabilities and propping up the
price of Units well beyond their real worth.

MUTUAL FUNDS TO BE MORE TRANSPARENT

Finance Minister Yashwant Sinha called upon the mutual funds to focus on product
innovation, equity research, risk management and market reach, and endeavour to instil
greater confidence among investors. He was addressing the sixth annual seminar of the
mutual fund industry in Bombay on Thursday.

Citing RBI data and the SEBI NCAER survey, Sinha said out that less than 8 per cent of
households channelise their savings into capital markets and that just 1 per cent of
household investment is in equity markets.

Sinha felt that higher transparency and good corporate governance by mutual funds could
attract greater quantity of household savings, which they could cost effectively deploy in the
capital markets.

Sinha said that inadequate institutional mechanisms may be the reason for households
shying away from the market. He said all that the retail investor looked for was to maximise
return on investments, while the market volatility had placed some constraints. He opined
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that mutual funds should spread their findings of equity research, educate the investors and
raise their level of awareness. This would have an impact and then capital market
investment can become a reasonable proposition for retail investors.

Referring to the stock market, Sinha said that the popular perception of bulls and bears
impacting the market has undergone a sea change. He felt that a better way to correct short-
term volatility is to place more emphasis on investments that could be governed by medium-
and long-term views based on scientific research. He asserted these developments will
enable mutual funds to create greater confidence in the mind of investors.

Among the issues under active consideration are:

 Reduction in the processing of investor applications in the initial offer period to 42 days
from 90 days;

 Use of unclaimed funds lying with mutual funds for investor education;

 Creation of level playing field between mutual funds and FIIs in the context of
international investing

 Formulation a code of conduct and development of best practices in the industry;

 Standardisation of portfolio disclosures;

 Modification in the structure of mutual funds to company form of organisation; and

 Publication of the annual reports of asset management companies.

He said that the Indian markets are very safe, despite the growing volatility that has been
seen in the recent period.

AXIS chairman, P S Subramanyam said that the quality of investor services in the industry
has grown over the years. He said there is a scope to increase the penetration and volumes in
the mutual fund industry by reaching out to more investors. He noted that technology has
significantly altered the manner in which mutual funds conduct their business.

In the context of globalisation of capital markets, he pointed out that risk management has
become critical for mutual funds. He also indicated that corporations will have to adopt best
practices in information disclosure and dissemination.

He said that as stakeholders in companies in which they invest, mutual funds have the
responsibility to ensure acceptable standards of disclosures. They have a constructive role to
play in creating an environment that help in adoption of best practices and good governance.
This will go a long way in enhancing shareholder value leading to enhancement of unit-
1
holder value.

A P Kurien, chairman, Association of Mutual Funds of India, mentioned that it is for the
first time that the finance minister, the RBI governor and the SEBI chairman came together
on a common platform to address mutual funds. This is indicative of high growth prospects,
he opined. He suggested that the pension fund segment be opened to the mutual fund
industry.

As it went about its inquiries, the JPC asked the Director-General of Income Tax, Mumbai,
to examine afresh the possibility of collusion between the broker lobby and big business
houses.

The reply was perfunctory: there was no reason in the prevalent circumstances, said the
official concerned, to believe that there was any such nexus. "No cases were found," the JPC
records, "where funds were placed by industrial houses directly with the brokers enabling
them to play... (the market) with a view to create artificial booms or depressions so as to
book abnormal profits to the detriment of the common investor."

As a body with wide-ranging powers of summoning evidence, the JPC could not obviously
remain content with this evasion of reality. But its own inquiries were, by all accounts,
clouded by a wilful desire to mystify rather than illuminate. After identifying no fewer than
727 scrips which witnessed rapid and unexplained rises in values in the months preceding
March 2001, and 199 which witnessed a rapid fall in prices following the discovery of the
scam, the JPC asked SEBI for detailed explanations. The outcome was inconclusive: the
JPC has identified no fewer than 15 companies where there is evidence to believe that the
collusive nexus between brokers and promoters could have had a serious impact on market
behaviour. These include well-known companies like Zee Telefilms, Ranbaxy and Lupin
Laboratories, as well as companies that have deservedly entered the annals of infamy, like
Cyberspace Infosys, Himachal Futuristic and DSQ Software.
1

MOST revealingly, the JPC has virtually disowned its responsibility to ascertain the true
picture, offering an alibi that must seem rather lame. As the JPC explains in the rather
tortured syntax that its report is suffused with: "SEBI furnished four sets of interim reports
inclusive of its investigation regarding scrips of certain corporate bodies. The Committee's
insistence for SEBI's final findings regarding the role of promoters/ corporate bodies in the
price manipulation of the scrips yielded yet another set of reports, most of which were again
of interim nature and were received as late as November 2002. Due to non-availability of
final report from SEBI, the Committee could not have the opportunity to take oral evidence
of these corporate bodies. The Committee urge SEBI, the Department of Company Affairs
and other investigative agencies to expedite and complete their investigations..."
1

This must seem a rather disappointing abdication of responsibility by the JPC, especially
since it is followed by the definitive finding that "there are valid reasons to believe that the
corporate house-broker-bank-FIIs (foreign institutional investor) nexus played havoc in the
Indian capital market quite sometime (sic) now through fraudulent manipulations of prices
at the cost of the small investors". But there is also a telling admission thrown in that the
abdication of responsibility is a direct consequence of the JPC's failure to exercise its
powers appropriately: "This Committee were severely handicapped in the matter of making
any purposeful recommendations because of non-availability of required support from
concerned regulatory and other bodies with necessary material."

By any criterion, this admission of helplessness by a committee of Parliament, which has

endowed the regulatory authorities with all their powers, must seem extraordinary. And by
any reasonable evaluation, the material that the JPC had to draw its inferences from was
nowhere near as meagre as it has made out. SEBI had submitted a series of voluminous
reports early in 2002, which went into a microscopic examination of the many dubious
transactions that culminated in the short-lived bull run in the markets after the Union Budget
was presented in February 2001. The picture it drew was fairly clear: though the Budget in
itself provided rather a scant basis for a broad-based investment fervour, a small cartel of
bull operators sought to utilise the momentary euphoria it had engendered to drive up prices
and liquidate the long exposures they had taken. It was a self-defeating exercise since a rival
cartel of bear operators knew from prolonged observation, just where the vulnerabilities of
the bulls lay. Shrewd short-selling in the expectation of profits to be made on the downside
of the markets, rapidly pushed prices down.

Parekh created "various layers" in his transactions, making it "difficult to link the source of
1
fund (sic) with the actual user of fund". He admitted during testimony before the JPC, "that
his entities did build huge positions in the market in select scrips (and) grossly over
committed themselves to the market".

The estimated loss suffered by Parekh was underwritten entirely by banks and the corporate
bodies that he had mulcted for funds. And even if the corporate bodies were party to his
wrongdoing and have no entitlement to compensation on this account, the JPC urged that
"expeditious action" be taken to recover the money owed to the banks. The task will not be
easy by any reckoning. Inquiries by the CBI have revealed the wide dispersal of Parekh's
illicitly earned monies, from Switzerland to the Bahamas. The whole process of issuing
letters rogatory through the Indian judiciary has only just begun.

Putting the entire burden of blame on one person would obviously do little for the credibility
of the JPC. Yet its understanding of the role of the regulatory authorities and the Finance
Ministry is almost laughably naive. SEBI for instance has been faulted for being blind to
rampant price-rigging in the markets, but this is an offence of little else than negligence in
the JPC's estimation. The figures here are revealing. Resource mobilisation in domestic
capital markets through public issues of shares peaked in 1994-95 at Rs.30,800 crores. The
figure has since been falling rapidly, registering no more than Rs.7,111 crores in 2001-02. In
the same period, the funds raised through private placement of shares in the primary market
have surged, from a modest Rs.11,174 crores in 1994-95, to Rs.64,950 crores in 2001-02.
Secondary market turnover however, has been the real growth area, from Rs.162,905 crores
in 1994-95 to an astounding Rs.2,880,990 crores in 2000-01. Once the scam was discovered
the figure plummeted rapidly, to Rs.895,826 crores in 2001-02.

In this context, SEBI's actions have been perfunctory or worse. The number of cases it has
taken up for investigation in any one year has remained broadly the same — 60 in 1995-96
and 68 in 2000-01, though there was an unexplained increase in 1996-97 to 122. The
number of cases it has completed investigations in, has fluctuated between 18 and 60 in
these years. And the number of cases in which it has imposed sanctions has cumulatively
been 181, with a mere 18 being registered in 2000-01, when the abuses were rising to a
crescendo.

The JPC passes over this record of default or even possible complicity with a formulaic
stricture: "The track record of SEBI in punishing the wrongdoers in stock market (sic) has
been unsatisfactory. During the last ten years, SEBI could initiate prosecution proceedings
1

on insider trading in only one case and on fradulent and unfair trade practices in just seven
cases. Its record of taking action against violators has been equally unimpressive Though
SEBI's plea for more powers to strengthen its effectiveness cannot be faulted, the
Committee got an impression that SEBI was not fully enforcing the powers already vested
with it."

ALL this, in the context of the magnitude of the crisis that the stock markets went through,
must seem rather ritualistic. There has obviously been a strong urge at work to protect the
regulators whose actions presumably are conditioned by signals sent by the political
establishment. When the country's largest mutual fund, the Unit Trust of India, has abused
its trusteeship function for public savings and partaken in an unwholesome fashion in the
stock market scam, the costs of this political evasion would inevitably be a loss of
credibility and legitimacy.

Since July 2001, when the AXIS suspended redemptions under its flagship US 64 scheme,
the Finance Ministry has announced a major overhaul of the mutual fund and infused fresh
funds in an effort to restore its financial health. But these schemes, which are essentially
being enforced with tax-payers' money, remain partial in their scope and halting in their
effect. And the stakes involved here are substantial. As the Deepak Parekh committee,
which went into the AXIS's functioning in less turbulent times, observed: "With over two
crore unit holders, public confidence in US 64 is a virtual proxy of public confidence in the
Indian financial system."

funds for short-term speculative gain, it glosses over the fact that many of them have put
themselves at a safe distance from the reach of the Indian judicial process. The small
investor and the senior citizen whose entire sustenance was dependent on AXIS schemes,
could well ask what the purpose of the entire JPC exercise was. It has not enforced
accountability, it has failed to evolve new norms for those charged with the custody of
public funds, and quietly acquiesced in placing the burden for the revival of AXIS on the
tax-payer.

An exercise to safeguard public funds against future depredators has ended up as another
waste of public money.
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MARKET PRESENCE

MONEY MARKET DEVELOPMENTS

Resource mobilisation by Mutual Funds improved during 1997-98. The number of offer
documents of mutual funds filed with SEBI increased substantially from 32 in 1996-97 to 60
in 1997-98. The amount mobilised through new schemes and subscriptions to open ended
schemes including Unit 64 of AXIS also increased. Indeed the gross mobilisation of
resources by all mutual fund schemes during the year was around Rs. 13,000 crores which
was for the first time higher than the resources mobilised by the primary market. Even net of
redemptions in open ended schemes the resources mobilised by the mutual funds during the
year was higher than the resources raised through primary market. These improvements
were partly in response to the regulatory changes brought about by SEBI following the
publication of the Mutual Funds 2000 Report and the notification of new regulations. The
emphasis of these new regulations is on empowerment of investors, greater compliance of
regulations by mutual funds, obligations of trustees as frontline regulators, improved
disclosure standards in offer documents through the introduction of standard offer
document, standardisation of valuation norms for investments and computation of NVA.
The regulations also sought to address the areas of misuse of funds by introducing
prohibitions and restrictions on affiliate transactions and investment exposures to companies
belonging to the group of sponsors of mutual fun
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CHAPTER:2
COMPANY PROFILE
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COMPANY PROFILE

Axis Bank is the third largest private sector bank in India. The bank offers the entire
spectrum of financial services to customer segments covering Large and Mid-
Corporates, MSMEs, Agriculture and retail businesses. The Bank operates in four
segments, namely treasury, retail banking, corporate/ wholesale banking and other
banking business. The treasury operations include investments in sovereign and
corporate debt, equity and mutual funds, trading operations, derivative trading and
foreign exchange operations on the account, and for customers and central funding.
Retail banking includes lending to individuals/small businesses subject to the
orientation, product and granularity criterion. It also includes liability products, card
services, Internet banking, automated teller machines (ATM) services, depository,
financial advisory services and NRI services.

The corporate/wholesale banking segment includes corporate relationships not

included under retail banking, corporate advisory services, placements and
syndication, management of publics issue, project appraisals, capital market related
services, and cash management

The Bank's registered office is located at Ahmedabad and their Central Office is
located at Mumbai. With 4528 domestic branches (including extension counters) and
12044 ATMs and 5433 cash recyclers across the country as on 31 March 2020, the
network of Axis Bank spreads across 2,033 cities and towns, enabling the bank to
reach out to a large cross-section of customers with an array of products and services.
The bank also has nine overseas offices with branches at Singapore, Hong Kong,
Dubai (at the DIFC), Shanghai and Colombo; representative offices at Dubai, Abu
Dhabi and Dhaka and an overseas subsidiary at London, UK. The Bank has five
wholly-owned subsidiaries namely Axis Securities and Sales Ltd, Axis Private Equity
Ltd, Axis Trustee Services Ltd, Axis Asset Management Company Ltd and Axis
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Mutual Fund Trustee Ltd. Axis Bank was incorporated in the year 1993 with the
name UTI Bank Ltd. Axis Bank is one of the first new generation private sector banks
to have begun operations in 1994. The bank was promoted in 1993, jointly by
Specified Undertaking of Unit Trust of India (SUUTI) (then known as Unit Trust of
India), Life Insurance Corporation of India (LIC),

General Insurance Corporation of India (GIC), National Insurance Company Ltd., The New
India Assurance Company Ltd., The Oriental Insurance Company Ltd. and United India
Insurance Company Ltd. The shareholding of Unit Trust of India was subsequently transferred to
SUUTI, an entity established in 2003. In the year 2001, the bank along with Global Trust Bank
(GTB) had a merger proposal to create the largest private sector bank, but due to media's issues
both the banks withdraw the merger proposal. In the year 2003, the Bank was given the
authorized to handle Government transactions such as collection of Government taxes, to handle
the expenditure related payments of Central Government Ministries and Departments and
pension payments on behalf of Civil and Non-civil Ministries such as defense, posts, telecom and
railways. In December 20003, the Bank launched their merchant acquiring business. In the year
2005, the Bank raised $239.3 million through Global Depositary Receipts. They won the award
'Outstanding Achievement Award' for the year 2005 from Indian Banks Association for IT
Infrastructure, delivery capabilities and innovative solutions.

In December 2005, the Bank set up Axis Securities and Sales Ltd (originally incorporated as
UBL Sales Ltd) to market credit cards and retail asset products. In October 2006, they set up
Axis Private Equity Ltd, primarily to carry on the activities of managing equity investments and
provide venture capital support to businesses. In the year of 2007, the bank again raised $218.67
million through Global Depository Receipts. They opened 153 new branches during the year,
which includes 43 extension counters that have been upgraded to branches and 8 Service
branches/ CPCs. They also opened new overseas offices at Singapore, Dubai and Hong Kong
and a representative office in Shanghai. During the year 2007-08, the Bank opened 143 new
branches, taking the number of branches to 651 which included 33 extension counters that have
been upgraded to branches. Also, they expanded overseas with the opening of a branch at the
Dubai International Finance Centre. The Bank changed their name from UTI Bank Ltd to Axis
Bank Ltd with effect from July 30, 2007 to avoid confusion with other unrelated entities with
 1

similar name.

During the year 2008-09, the Bank opened 176 new branches that include 12 extension counters
that have been upgraded to branches taking the total number of branches and ECs to 835. During
the year, they opened 831 ATMs, thereby taking the ATM network of the Bank from 2,764 to
3,595. Also, they opened a Representative Office in Dubai. In May 2008, the Bank established

Axis Trustee Services Company Ltd as a wholly owned subsidiary company, which is engaged
in trusteeship activities. In December 2008, they launched their new investment advisory service
exclusively for High Net Worth clients. In January 2009, the Bank set up Axis Asset
Management Company Ltd to carry on the activities of managing a mutual fund business. Also,
they incorporated Axis Mutual Fund Trustee Ltd to act as the trustee for the mutual fund
business.

During the year 2009-10, the Bank opened 200 branches taking the total number of branches
Extension Counters (ECs) to 1,035. In March 209, 2010, they opened their 1000 branch at
Bandra West, Mumbai. In September 2009, Axis Bank launched the private banking business in
the domestic market, christened 'Privee' to cater to highly affluent individuals and families
offering them unique investment opportunities During the year, the Capital Markets SBU was
restructured with the debt capital market business (hitherto a part of the capital markets) carved
into a separate vertical.
 1

As a result, the Bank's Capital Markets SBU comprises equity capital markets (ECM) business,
mergers and acquisitions and private equity syndication. In February 24, 2010, the Bank
launched the 'AXIS CALL & PAY on atom', a unique mobile payments solution using Axis
Bank debit cards. Axis Bank is the first bank in the country to provide a secure debit card-based
payment service over IVR. During the year 2010-11, 407 new branches were added to the Bank's
network taking the total number of branches and extension counters (ECs) to 1,390. Of these,
564 branches/ ECs are in semi-urban and rural areas and 826 branches/ECs are in metropolitan
and urban areas. The Bank is present in all states and Union Territories (except Lakshadweep)
covering 921 centers.

The ATM network of the Bank increased from 4,293 to 6,270. During the year, the Bank also
opened a Representative Office in Abu Dhabi. This was in addition to the existing branches at
Singapore, Hong Kong and DIFC (Dubai International Financial Centre) and representative
offices at Shanghai and Dubai. In March 7, 2011, the Bank incorporated a new subsidiary
namely Axis U.K. Ltd. as a private limited company registered in the United Kingdom (UK)
with the main purpose of filing an application with Financial Services Authority (FSA), UK for a
banking license in the UK and for the creation of necessary infrastructure for the subsidiary to
commence banking business in the UK. On 8 January 2014, Axis Bank announced the opening
of its Shanghai Branch, thus becoming the first Indian private sector bank to set up a branch in

China. On 4 December 2014, Axis Bank announced that it had closed its Senior Unsecured
Redeemable Non-Convertible Debenture issue of amount Rs 5705 crore and priced at 8.85% p.a.
payable annually maturing on 5 December 2024. On 9 December 2014, Axis Bank announced
the launch of limited period offer of 20 year fixed rate home loan for affordable housing at
10.40%. On 27 July 2015, Axis Bank announced that it had signed a $200 million 7 year bilateral
loan deal with the Asian Development Bank (ADB) for extending affordable agriculture credit to
farmers in India.
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On 22 November 2015, Axis Bank announced the opening of its Representative Office in Dhaka, Bangladesh in a bid
to strengthen its international presence. On 9 March 2016, Axis Bank announced the launch of the world's first Forex
prepaid card issued in conjunction with Diners Club International, a business unit of Discover Financial Services.
On 30 March 2017, Axis Bank announced a strategic partnership with Wells Fargo & Company to offer seamless
remittance facility to their NRI customers from The United States of America (USA). On 17 June 2017, Axis
Bank in association with Kochi Metro Rail Corporation (KMRL) launched India's first single-wallet contactless, open
loop metro card to allow cashless commuting for commuters in Kochi. On 5 July 2017, Axis Bank announced its foray
into the luxury bikes loans segment for 500cc & above bikes. On 11 July 2017, Axis Bank announced its collaboration
with Inter-American Investment Corporation (IIC) to facilitate trade with Latin America and the Caribbean. Axis Bank
on 27 July 2017 announced that it has entered into an agreement with Jasper Infotech Private Limited to acquire 100%
stake in its subsidiaries viz. FreeCharge Payment Technologies Private Limited and Accelyst Solutions Private
Limited, which together constitute the digital payments business under the 'FreeCharge' brand. The deal marked the
first such acquisition of a digital payments company by a bank in India. The bank had a network of 3703 branches and
13814 ATMs & cash deposit machines as at 31 March 2018 across the country. The bank has raised Rs 8680 crore of
capital from a consortium of investors (Bain Capital, Life Insurance Corporation of India and other marquee investors).

During the fiscal 2019, the bank has won the Excellence Certificate in Corporate Social Responsibility (CSR) category
at the prestigious CII ITC Sustainability Awards 2018. The bank has partnered with SignCatch to launch the first-of-
its-kind Smart Bill Pay initiative for New

Delhi Municipal Corporation. As on 31 March 2019, the bank had a network of 4050 branches, 11801 ATMs and 4917
cash deposit machines across the country. During the FY 2019-20, the bank has opened 478 new branches, taking the
total network of branches as at 31 March 2020 to 4528 and 17477 ATMs & cash deposit machines across the country.
During the year, the bank has won the award for Excellence in Operations at the IDC Insights Awards 2019. Axis Bank
is one of the three entities allowed by RBI to set up the Trade Receivables Discounting System (TReDS which is an
electronic platform for facilitating cash flows for MSMEs.
1
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BUSINESS PROCESS OF THE INDUSTRY

Today’s retail and wholesale banks face unprecedented operational pressures that test the
efficiency, effectiveness, and agility of their business processes. The typical banking business
process often fails the test, struggling to adapt to shifting marketplace demands and regulatory
requirements. Lending institutions of all stripes are looking to build a better banking business
process, intelligent enough to successfully balance business objectives with customers’ desires,
and agile enough to keep pace with a dynamic operational environment.

Business Process Automation (BPA) or digital transformation is referred to the procedure of

handling and managing business process by using automated processes that are innovative and
technologically driven. Process automation replaces and reduces the effort, time and costs that
are required to perform the task manually. It also provides enhanced accuracy and remove
potential human errors. Automate business processes are especially designed to increase the
overall productivity of business process with the help of modern technologies and computer
software.
BPA has become the emerging trend in all the industries due to its remarkable abilities to
simplify redundant and complex tasks, improve efficiency, enhance service quality, achieve
target quickly, and reduce operational costs and accomplishing digital transformation. BPA also
helps improving business workflows and achieving higher levels of efficiency. All the major
industries including banking and finance sector are widely implementing BPA as an integral part
of their business strategy in order to adopt the changing needs of the industry, while redefining
job responsibilities and roles and reducing human errors.

Machine learning, artificial intelligence and robotic processes automation (RPA) are some of the
significant automation technologies that are leading the smooth digital transformation within the
finance and banking sector. Biometrics and Blockchain are some other technologies that are
turned out to be transformative within the banking industry. Some of the major breakthroughs
that are introduced to the industry are because of these automated processes. Below we have
discussed few that we found most important.
 1

1. KYC (Know-Your-Customer)

In the banking and financial sectors, the information related to the customers is of utmost
importance. Financial and banking services require customer data not only for account opening
but also for other banking processes. This information is required to be passed through the
internal banking process, to ensure its regulatory compliance with other regulatory agencies.
And, to ensure that, multiple checks such as ID Verification, Background Checks, Reference
Checks etc. are imposed. Applying the entire process step-by-step every time for every single
customer, whenever they open an account or request a loan, become a very heft task for banks.
This is where the efficient automated processing comes into play within the banking sector.
Modern banks are now using automated systems to create a centralized information network
which allow quick and easy access and push and pull of the information. These systems are using
machine learning to extract information from disparate data sources.

2. Risk Analysis & Compliance

Audits are inevitable in banking operations, and this is why financial institutions and banks are
significantly investing in process automation technologies, in order to automate and improve
their operation that are potential to risk and compliance issues. These automation technologies
not only improve the overall performance and efficiency, but also reflect amazing adaptability in
relation to other IT platforms. This helps banks to better check the frauds, report risk, and check
quality etc.

3. Core Banking & Finance Operations

There are numerous automation technologies available now that are being efficiently used in
blend with BPA to modify and improve the back-office banking and financial operations such as
ID verifications, data updates, accounts reconciliation, documentation and much more.
 1

4. Mortgage Loan & Credit Processing

Mortgage loan systems have been amplified by the technological transformations, but especially
by the process automation. The loan approval process used to take more than 60 days before the
process was automated. But now, as soon as the ID checks and employment status are checked
and verified, you get your loan approval. BPA has made the process a lot easier and simpler. The
entire loan approval procedure has been accelerated by BPA with reduced processing time and
quicker response.

5. Customer Request & Support Services

Customer service is amongst the top most priorities for banks. With scorching competition
within the banking industry, banks are continuously striving hard to provide exceptional
customer service to their customers. BPA has enabled banks to provide remarkable service and
customer experience. For example, with automated processes, banks are now capable of
responding thousands of queries everyday while offering the best possible solutions at the
earliest.

6. Fraud Detection

Terrorist activities and fraud concerns have been significantly increased along with the
digitization. However, RPA (Robotic Process Automation) is amongst one of the process
automation technology which offer great fraud prevention by using predictive analysis and steps
any data breach.

2.1 MARKET DEMAND AND SUPPLY – CONTRIBUTION TO GDP- REVENUE

GENERATION.

As per the Reserve Bank of India (RBI), India’s banking sector is sufficiently capitalized and
well-regulated. The financial and economic conditions in the country are far superior to any
other country in the world. Credit, market and liquidity risk studies suggest that Indian banks are
generally resilient and have withstood the global downturn well. Indian banking industry has
recently witnessed the roll out of innovative banking models like payments and small finance
 1

banks. RBI’s new measures may go a long way in helping the restructuring of the domestic
 1

banking industry. The digital payments system in India has evolved the most among 25 countries
with India’s Immediate Payment Service (IMPS) being the only system at level five in the Faster
Payments Innovation Index (FPII).

2.1.1 MARKET SIZE

The Indian banking system consists of 12 public sector banks, 22 private sector banks, 44 foreign
banks, 43 regional rural banks, 1,484 urban cooperative banks and 96,000 rural cooperative
banks in addition to cooperative credit institutions. As of November 2020, the total number of
ATMs in India increased to 209,282.

According to RBI, India’s foreign exchange reserves reached US$ 590.18 billion, as of February
5, 2021. According to RBI, bank credit and deposits stood at Rs. 106.40 trillion (US$ 1.45
trillion) and Rs. 146.24 trillion (US$ 2.00 trillion), respectively, as of January 15, 2021. Credit to
non-food industries stood at Rs. 105.53 trillion (US$ 1.44 trillion), as of January 15, 2021. Asset
of public sector banks stood at Rs. 107.83 lakh crore (US$ 1.52 trillion) in FY20. Total assets
across the banking sector (including public, private sector and foreign banks) increased to US$
2.52 trillion in FY20.

Indian banks are increasingly focusing on adopting integrated approach to risk management. The
NPAs (Non-Performing Assets) of commercial banks has recorded a recovery of Rs. 400,000
crore (US$ 57.23 billion) in FY19, which is highest in the last four years.

RBI has decided to set up Public Credit Registry (PCR), an extensive database of credit
information, accessible to all stakeholders. The Insolvency and Bankruptcy Code (Amendment)
Ordinance, 2017 Bill has been passed and is expected to strengthen the banking sector. Total
equity funding of microfinance sector grew 42% y-o-y to Rs. 14,206 crore (US$ 2.03 billion) in
2018-19.
As of January 27, 2021, the number of bank accounts opened under the Government’s flagship
financial inclusion drive Pradhan Mantri Jan Dhan Yojana (PMJDY) reached 41.75 crore and
deposits in Jan Dhan bank accounts stood at more than Rs. 1.37 lakh crore (US$ 18.89 billion).
 1

Rising income is expected to enhance the need for banking services in rural areas, and therefore,
drive the growth of the sector.

The digital payments revolution will trigger massive changes in the way credit is disbursed in
India. Debit cards have radically replaced credit cards as the preferred payment mode in India
after demonetization. In January 2021, Unified Payments Interface (UPI) recorded 2.30 billion
transactions worth Rs. 4.31 lakh crore (US$ 59.16 billion).

2.1.2 Government Initiatives

As per Union Budget 2019-20, the government has proposed fully automated GST refund
module and an electronic invoice system that will eliminate the need for a separate e- way bill.
Under the Budget 2019-20, government has proposed Rs 70,000 crore (US$ 10.2 billion) to the
public sector bank. Government has smoothly carried out consolidation, reducing the number of
Public Sector Banks by eight. As of September 2018, the Government of India has made the
Pradhan Mantri Jan Dhan Yojana (PMJDY) scheme an open-ended scheme and has also added
more incentives. The Government of India is planning to inject Rs 42,000 crore (US$ 5.99
billion) in the public sector banks by March 2019 and will infuse the next tranche of
recapitalization by mid-December 2018.

2.1.3 Bank Marketing In the Indian Perspective:

In banking sector marketing plays a very important role. Competitive pressure is pushing the
banks to adopt new marketing initiatives. Marketing is going to play very important role in this
changing scenario. Employees have to realize the importance of marketing. The old methods of
banking where walk-in customers were the source of business is not applicable in present
scenario. The customer’s expectations are changing. Now customers want the banks to visit them
instead of them visiting the bank. Competition has set the reversal of roles. Customers are also
expecting better services. Bank has to identify the financial needs of the customers and offer
services, which can satisfy those needs. Marketing is about understanding, creating and retaining
customers. All strategies are formulated to ensure that customers ultimately deal with us.
Marketing is an important tool, which helps us in achieving organizational objective of the bank.
 1

2.1.4 Marketing mix in banking sector

Service

Recently, banks are in a period that they earn money in servicing beyond selling money. The prestige is get as they
offer their services to the masses. Like other services, banking services are also intangible. Banking services are
about the money in different types and attributes like lending, depositing and transferring procedures. These
intangible services are shaped in contracts. The structure of banking services affects the success of institution in
long term. Besides the basic attributes like speed, security and ease in banking services, the rights like consultancy
for services to be compounded are also preferred.

Price

The price which is an important component of marketing mix is named differently in the base of transaction
exchange that it takes place. Banks have to estimate the prices of their services offered. By performing this, they
keep their relations with extant customers and take new ones. The prices in banking have names like interest,
commission and expenses. Price is the sole element of marketing variables that create earnings, while others cause
expenditure. While marketing mix elements other than price affect sales volume, price affect both profit and sales
volume directly. Banks should be very careful in determining their prices and price policies. Because mistakes in
pricing cause customers’ shift toward the rivals offering likewise services. Traditionally, banks use three methods
called “cost-plus”, “transaction volume base” and “challenging leader” in pricing of their services.

Distribution

The complexities of banking services are resulted from different kinds of them. The most important feature of
banking is the persuasion of customers benefiting from services. Most banks’ services are complex in attribute and
when this feature joins the intangibility characteristics, offerings take also mental intangibility in addition to
physical intangibility.
 1
the other hand, value of service and benefits taken from it mostly depend on knowledge,
capability and participation of customers besides features of offerings. This is resulted from
the fact that production and consumption have non separable characteristics in those
services. Most authors argue that those features of banking services makes personal
interaction between customer and bank obligatory and the direct distribution is the sole
alternative. Due to this reason, like preceding applications in recent years, branch offices use
traditional method in distribution of banking services.

Promotion

One of the most important element of marketing mix of services is promotion which is consist
of personal selling, advertising, public relations, and selling promotional tools.

Personal Selling

Due to the characteristics of banking services, personal selling is the way that most banks
prefer in expanding selling and use of them. Personal selling occurs in two ways. First occurs
in a way that customer and banker perform interaction face to face at branch office. In this
case, whole personnel, bank employees, chief and office manager, takes part in selling.
Second occurs in a way that customer representatives go to customers’ place. Customer
representatives are specialist in banks’ services to be offered and they shape the relationship
between bank and customer.
1

CHAPTER:3
REVIEW OF
LITERATURE
1

Alkadamani Khaled (2015)

The author in this paper has observed the importance of impact of capital requirement on
bank risk taking during the period-of financial crisis. He also tries to connect it on the
impact of economic instability. 46 banks were selected from four Middle East countries
and the period-of study was 2004 to 2014. In a brief introduction the author focused on
implementation minimum capital standards under the norms of Basel-1 and Basel-2
standards. The main objectives of Basel-1 & 2 were to promote the adoption of strong risk
management and sound and stable international banking system. In the process of review
of literature by several authors the author observed that in case of standard capital base that
can be other techniques to research portfolios having similar risk without regulatory capital
requirements. Even some of the researchers observed that banks adjust their capital level
each year by more than the difference between current level and target level. It means the
banks are hitting the goals. It is evident that regulatory pressure has a significant and
meaningful effect on banks ' risk. The finding in the Indian sense was the connection
between transition and danger and money. In the case of Germany, the adjustment of
capital and risk depends on the capital that banks hold in excess of regulatory requirements.
The research is based on a balanced panel data. Data was collected from central banks of
four middle-east countries. The author concluded that there is a strong positive affect of
regulation on the level of capital and final conclusion was to improve capital adequacy and
decrease the risk taking.

Michael et.al (2018)

The authors in this paper have focused upon the impact of correlation between capital
adequacy and value of bank in Nigeria. It is a rule that any organization must meet
minimum requirement set by the regulatory agencies and one amongst them is minimum
capital. The Central Bank of Nigeria set this standard for all banks in Nigeria. The safety
and security of a bank is assessed by capital. An adequate capital
1

base serves as safety against different types of risks. Capital adequacy also helps in
winning the confidence of depositors. It is important the capital not only absorb stability
but also the losses. There are two sources of capital i.e. Equity and debt the choice between
the two guided by regulations. In the review of literature the author observed the
regulation regarding the capital position in banks is longer than any other financial
firms. Further, the observation was that the banks are exposed to various types of risk
factors. But the most important one is credit risk. Credit risk arises due to failure of the
borrower to pay back the principal amount and interest amount due. The authors also
focused on conceptual literature, Basel agreement, sources of capital i.e., tier-1 and tier-2.
The theoretical frame work by the researcheris based on buffer theory of capital adequacy.
The authors also examined other theory in the due course of research. The research period
is confined from 2006 to 2016 and data was collected from CBN statistical bulletin, 2016
edition. The selection of the period was due to post consolidation of banking reforms in
Nigeria. Digenetic test was conducted to ascertain the stationary level of variables used in
the studies. The test conducted was variance inflation factors (VIF) to complete multi-core
linearity test. Finally the suggestion made was to prevent capital erosion and asset
diminution.

Mahmoud Abdul Jalloh (2017)

The author in this paper touched on the essence of equity to absorb any unexpected shocks
by the banks. In the introductory part of the paper the author highlighted onthe basic
functions of banks in Nigeria. The banks in Nigeria had very good growth after post the
post consolidation of 2005 this was a reason why the banks in Nigeria were insulated from
the Global financial crisis during the most of the economies were hit. The basic idea of
minimum capital requirement is to safe guard the banks from risk exposure. As it has been
discussed earlier regarding the concept of capital adequacy by the banks. The banks which
were more exposed to risks need to maintain strong capital base. Even the review of
literature focused on importance of Basel – I and Basel – II accord and also tyre-1 and tyre-
2 capital. The methodology used was panel data which secondary source of data from 11
deposits money banks listed in Nigerian stock exchange as on December 2015. The period-
of study was 2009 to 2015. The data was collected from the annual reports of the banks.
This study based on descriptive analysis of validating the data in the model. Finally, the
author
1

concluded on the norms of maintaining the capital adequacy depending upon the level of
risk they are facing.

Narasimhan V.K. patel: (2013)

The authors concern in this paper was to focus upon non-recovery of financial crisisin the
United States, China and Eurozone. The author focused upon the performance of Indian
banks from 2008 to 2012. During the period Indian banks exhibited stability due to capital
structure and regulatory environment. The banking sector in India is very competitive with
lots of bearers for entry. The focus by the Indian banking system was on manufacturing
industries rather than agriculture and service industries. The focused was on Debt and equity
which decides the proportion between the two. The whole idea was generated from MM
theory which clearly indicates level of debt may not always affect the performance of banks.
The focus was on the cash flows where there is a continuity of inflow from the shareholders
and outflow in the form of debt and equity. Three Private Sector Banks namely ICICI Bank,
AXIS Bank and HDFC bank were selected and one Public Sector Bank SBI was selected.
Some ratios were used for study like debt to equity, earnings per share and interest spread to
know the strength of each bank.

Silaban Pasaman (2017)

The author focused on determination of bank health consisting of Capital Adequacy Ratio
(CAR), Net Interest Margin (NIM) and Non-Performing Loans partially or totally on the
profitability of banks in Indonesia only 40 listed banks were taken for the study from a
period-of 2012 to 2016. Out of the three capital adequacy and net interest margin have no
effect on profitability but non- performing loan have negative impact on banks
profitability. In a brief introduction the author examines that both micro and macro-
economic factors affect the financial system. Further, Debt to Equity ratio was used to
measure-the ability of the banks to cover the part of their debt to the Government and the
investors. Two prominent ratios were used to measureprofitability i.e., ROE and ROA. One
ratio reflects the internal contribution and the other ratio reflects return on investment.
Further, the author observed capital is closely associated with the positive profitability.
Individual ratios were discussed to reflectthe importance of the ratios. Non- probabilistic
sampling method was used for the selection of samples. Descriptive statistics was used to
find out mean, median,
1

standard deviation, Skewness and Kurtosis. Multiple linear regression models were used
along with partial t-test to validate the data calculation. As discussed earlier that only non-
performing loans have direct impact on the profitability of the banks.

Valipour Pasha Mohammad et.al (2017)

The authors examine the relationship between profitability and capital-adequacy-ratio of

Iranian banks. The authors undertook sample selection model estimation because banks
which do not comply with minimum capital requirement do not disclose their actual profits
or profitability. Though this information is reflected in their annual reports but the same do
not appear in the profit and Loss account statement. Based on the Accounting and Economic
rules and with the outcome of the Basel accords it was observed loss of banks result in
sudden decrease in banks equity. The observation in the review of literature was on Micro
and Macro economic factors effecting the banking operations. There is no global standard to
define non-performing loans at the practical level. 29 banks of Iranian banking industry
were selected to prove the relationship between capital-adequacy-ratio and profitability of
the banks. Regression analysis technique was used andperiod-of study was 2007 to 2012.
The authors assume that a good profitability leads to quality asset liability management.

I Eyo et.al (2015)

The researchers found that capital is very important for efficiency and effective
performance of any business including banks. Banks generally receive more attention
because of the important role played by the banks to support the growth development of
the economy. The central bank of Nigeria Regulates the minimum paid up capital required
by the banks. The capital requirement is raised from the internal and external sources. The
internal source is earnings and the external source is debt and equity. Banks undertake
three different types of risks like capital risk, market risk and operational risk. In a country
like a Nigeria banks play crucial role in improving the economy of the country. It is also
observed that a good cushion against the risk is highly essential for efficient banking
operations. Regulations are mandatory for guiding the banks. The theoretical frame work is
based from the idea of rearranging the existing capital structure of banks in order to
restructure the banking industry against the widespread distress. The period-of the study
was from 1999 to 2012. The data was collected from the secondary source from CBN
statistical bulletin and annual
1

reports of the banks. Multiple regression analysis was used to test and validate thedata
and result.

Datta Chandan Kumer et.al (2018)

The authors in this study tried to analyze the effect of the different variables of several
banks in Bangladesh on the profitability of coded commercial banking firms, including
capital adequacy. Profitability determinants, including ROA and ROE, were measured on
the basis of panel outcomes for eight years, including the two, of 29 listed banks over the
period 2007-2014. Capital adequacy is defined as the minimum level of capital that can
support a bank from loan losses. It was recognized that the global banking sector has
become extremely risky owing to globalization of international finance, commodity and
technological financial disruption and, above all, the convergence of the financial market.
These adjustments were used as a baseline to assess the risk level. The principle actually
comes from the Basel Accord and according to the accord, banks will retain a minimum
level of capital. The writers have cited the international problem of safeguarding capital
adequacy encountered by many nations. Some earlier studies have also identified the same
criteria for rendering banks more competitive in their literature review. It is also critical
that the risk is moderated when authorizing the loans and advances. Capital adequacy and
competitiveness are closely connected. Data have been obtained from the Bangladesh
Central Bank and Dhaka Stock Exchange websites. It is concluded that for sustainable
economic growth a strong and robust banking system is necessary. Since a decade, banks
in Bangladesh have faced key problems in the vibrant operating climate.

Emeka Ezike John et.al (2013)

Capital appropriateness requirements for international banks are a major concern for bank
regulators according to the writer. The International Settlement Bank (BIS) established a
capital adequacy assessment system within the 10 (G10) communities of industrialized
nations worldwide. The norm is implemented under the Basel Convention, and since
December 2005 this convention has applied in Nigeria. The study aims to examine the
impact on the performance of Nigerian banks of the implementation of capital adequacy
criteria. The authors found in the literature review that the notion of recapitalization was a
step taken by the authorities during the time under finance, in order to reorder the existing
structure of capital to meet the losses
1

produced during the scheme for those operations. There is no question that the shortage of
funding for loans and deposits has directly affected adequacy. Bank resources serve as a
defensive shield against losses caused by certain forms of instability. The liquidity should
also rise as depositors grow. The reviewers further study, for comparison and substance of
the deal, the Basel Deal–I, II and III. The secondary source data is collected from the
Nigerian central bank website and the financial statements of selected banks. For
estimating the effects, methods such as ordinary least square OLS and multiple regressions
are used.

Jheng Tan Jia et.al (2018)

The authors in their research tried to establish the relationship between capital adequacy
ratio and stock prices of banks in Malaysia. The Central bank of Malaysia known as Bank
Negara instructed the banks in the country to follow international banking regulations. The
authors observed the global financial crisis of 2007 & 2008 had a significant role in human
history. The devastation was so high that many leading financial institutions collapsed and
many were prevented by ball outs by respective Governments by respective countries. The
reasons for failure of regulationswere vulnerable and unmonitored. The failure was due to
mostly altered unaccounted risk exposure of the financial system. There are many unknown
risks that threaten stability of the financial markets of the world. After the entry of Basel-
III capital adequacy frame work was set-up to decide minimum capital requirement by the
banking industry. There were many bodies which came into existence to find out the
reasons of the failures and strengthen the capital structure. Some of the observations in the
process of review of literature the authors observed some of the parameters like capital
adequacy ratio, financial distress indicators, stock prices etc., are very important for
establishing the relationship between capital adequacy and other variables. The data for the
study was obtained for banks license to operate in Malaysia. The stock price data was
obtained from Kula Lumpur stock exchange. Eventhe foreign banks operating in Malaysia
though their stock was not traded in the KLSE (Kula Lumpur stock exchange) were
obtained from the web site of banks. The period study was from 2005 to 2014. Regression
analysis was used along with other statistical tools to validate the hypothesis of the study.
Finally the findings were that the capital adequacy framework helps to establish a line of
defense for the banking institutions sectors during the economic turbulence.
1

Zuk-Butkuviene Aleksandra et.al (2014)

The authors before undertaking this research paper took international financial crisis as
major problem in the financial sector, its management and operations and revealed the gap
that of insufficient handling of regulations and to systematized the banking system. To
create a base of a study Base-III taken as to understand the need for capital adequacy, to
enhance capital adequacy, risk management and strong assessment procedure at credit
institutions. Basel-III focuses upon supervisor systems reforms particularly in banks at
Lithuania. The banks in Lithuania strongly comply with the prudential requirement with
considerable reserve so that to maintain the level of risk and focus liquidity and solvency.
The authors also expressed opinion that high capital adequacy and sound liquidity norms do
not reflect the actual quality of managementof assets or liabilities. In the process of review
of literature the authors have taken the idea of earlier researchers on different components of
Basel accord, supervisory system, capital adequacy norms and liquidity position. The
observationperiod was from 2005 to 2013 of commercial banks in Lithuania. The authors
concluded that strong base of parameters must be practiced regularly by the banks.

Kumar Rakesh et.al (2017)

The authors have examined the need for capital adequacy ratio to measure bankcapital the
author in this paper also focused upon Basel committee on banking supervision and level
of capital adequacy. Capital adequacy is in proportion to capital to risk weightage assets
ratio. The objective is to protect the deposits and promote stability and efficiency of the
financial system around the world. One of the reasons for increase the quantum of non-
performing assets and risk of insolvency due to improper capital adequacy. Since, the
banks are operating at a high degree of leverage the banks may suffer capital adequacy
reserve is insufficient. Capital adequacy ratio speaks of the extent percentage of banks
capital set aside to need future contingencies. The solvency of a bank is not a matter of
concern to make banking industry responsible but in the absence of it the economy of the
country will collapse. Thereare regulatory bodies which are involved in the creation and
enforcement of capital ratios. In countries like UK and CANADA there is no reserve
requirement at al. but it does not mean that banks are empower to create unlimited money.
Before financing a loan the banks can keep certain amount of deposits before sanctioning
of loan. Basel-Inorms is that capital to risk weighted asset ratio should be at least 8%.
Base-I was
1

introduced in 1998 and Basel-II 2005 and Basel- III between 2013 to 2015. The authors
feel that review of literature is a prerequisite to substantiate the research. Five banks were
selected from public, foreign and private. The period- of study was 15 years from 2001-02
to 2014-15. Capital adequacy was analyzed and compared on the basis of standards of all
the norms of Basel-I, Basel-II and Basel-III. The data was collected from RBI web site and
annual reports of banks. One way ANOVA was used to calculate the variance of the result.
The findings of the author both in case of Public and Private Sector Banks there is
statistically significance change seen in the level of CAR but in case of foreign banks non
such changes were seen.

Ikpefan Ochei A (2013)

The objective of the paper is to determine to what extent bank capital adequacy ratio has
impact on banks performance in the Nigerian commercial banks. Two important variables
were taken namely ROA and ROC. Both of these variables were tag with loans and
advances of the bank, operating expenses by total assets, LA/BD, BL/BD, BL/BA, EOM,
SHF/TA which will clearly indicate the impact of the following equations to calculate
ROA and ROC to strengthen the capital adequacy. Absence of corporate governance may
result in distress as it has been indicated in the past. The Government needs to take
appropriate steps towards strengthening of capital and sanctioning of loans and advances to
the sectors which are strong enough to prevent loss. In the review of literature the authors
have taken the help of buffer theory, portfolio regulation theory and expense theory. All the
theories have been focusing on the establishment of relationship between the factors and
variables which will have direct impact on the maintenance of capital adequacy. In the
analysis part the author have focused on bank capitalization and performance. To justify
the relationship between these two the outcome will be assessed by examining ROI and
ROC. The population taken was from the Nigerian banking industry who are conventional
banks because they are more deposits taken institutions. The size of the sample was
reduced from 89 to 14 after taking into accounts certain parameters for the study.

The panel data method was used for the calculation of results the findings of the paperwas
an attempt to find the relationship between bank capital adequacy and performance of the
industry.
1

CHAPTER:4
RESEARCH METHODOLOGY
1

The AXIS Mutual funds seek to earn extraordinary return from their investments. For this,
generally they employ innovative methods of fund management and at the same time they try
to keep their strategies a closely guarded secret. In India, an additional point to keep in mind
is the limited number of AXIS Mutual funds in operation of AXIS Mutual funds in operation.
The research methodology for the present study has been adopted to reflect these realties and
help reach the logical conclusion in an objective and scientific manner.

The important component of research methodology such as formulation of hypothesis,

method of data collection, tools for processing of the data and reporting format of the study,
are enumerated as follows:

RESEARCH OBJECTIVE :

The present study has been undertaken with the following objectives:-
 To analysis the conceptual issues pertaining to AXIS Mutual funds with their
implications for a developing country like India.

 To examine the theoretical framework of AXIS Mutual fund in India to provide clues for
growth strategies of AXIS Mutual industry in India.

 To study the role of AXIS Mutual in the economic development of the country, so as to
bring out the biases and inadequacy of the government policy related to the Mutual funds in
the country.

 To study the legal and regulatory frame work of AXIS Mutual fund in India;

 To study the working of AXIS Mutual fund industry in India in terms of its practices,
procedures and constraints within which, it has been operating;

SCOPE OF THE STUDY

AXIS Mutual fund is related to such divers topic as corporate finance, leverage buyouts,
merchant banking financing of start-ups, small business management, entrepreneurship
development, business incubators, technology transfers, and economic development. The
present study is confined to a specific aspect of AXIS Mutual. Appraisal of working of AXIS
Mutual in developing country like India for proper perspective; the scope of the study has
been widened to include the practices and experiences of the developed and some developing
1

countries. The AXIS Mutual is relatively small and emerging activity. The number of players
in the industry is limited. It also indicates that geographical coverage is at all India bases as
AXIS Mutual funds are spread in different parts of the country. As far as the time period
covered under the study is concerned, all possible efforts are made to find out data from
different authentic sources.

DATA COLLECTION

The present study contemplated an exploratory research. Secondary data has been used
which is collected through venture activity reports, journals, magazines, newspapers reports
prepared by research scholars, universities and internet.

IMPORTANCE OF THE STUDY

The concept of AXIS Mutual was introduced in India with the objective of commercialization
of the indigenously developed technologies. It is an important objective in itself and there is
nothing wrong to pursue it vigorously. In the developed countries particularly in the U.S.A.,
there has been a close linkage between AXIS Mutual financing and commercial exploitation
of new invariably high technology related industries. The origin of the concept of AXIS
Mutual has been associated with the funding of untried technology in the USDA in 1940's by
American Research & Development Corporation. (ARDC) the first formal AXIS Mutual fund
in the world. With the success of ARDC experiment the concept of AXIS Mutual gained
popularity first in the U.S.A. and then gradually across the developed world. The point
missed in this connection is that the evolution of the AXIS Mutual market has been country
specific to repeat the differences in conditions prevailing in different countries.
The rules announced by SEBI in 1996 to regulate the AXIS Mutual funds in India have
relaxed the eligibility criteria for investment by AXIS Mutual funds. And the condition of
financing for untried technology by AXIS Mutual funds has been done away with. Still in
mindset in concerned quarters remain bounded to the same old concept.
The relevant issues to explore in this context are – what modifications are required in the
policy regime? And what are the other factors holding the progress of the industry? The
answer to these questions requires a through analysis of the role the AXIS Mutual can play in
an economy like India and specific issues related to the venture fund in India, there in lies the
importance of the study.
1

RESEARCH DESIGN AND SAMPLING

Type of Research: - Descriptive research

Descriptive research includes Surveys and fact-finding enquiries of different kinds. 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.
RESEARCH INSTRUMENTS

Selected instrument for Data Collection for Survey is Questionnaire.

1

LIMITATIONS OF THE RESEARCH

As far as limitations are concerned present research work has been completed in the face of
following major constraints.
The date used in my research study is secondary data.

Latest data and information about AXIS Mutual is very less. The data is available till the year
2003 in most of the cases.
Limited analytical techniques have been used due to the nature of data available on the
subject.
1

MUTUAL FUNDS - INVESTMENT OBJECTIVES AND VALUATION

POLICIES

What are Mutual Funds?

A Mutual fund is an organization that invests in a diversified portfolio of financial securities

on behalf of a pool of subscribers to its schemes. These securities can be in the form of
equity, debt instruments, money market instruments etc., or a mix of these securities,
depending on the scheme objectives.

Why is it such a good idea to invest in Mutual Funds?

Diversification: Mutual Funds invest their corpus in diversified portfolio’s which reduces the
risk contained in the investment. This also means that you can invest a small sum of
Rs.5000/- and still be a part of a portfolio where the market value of single scrip might be
much more than the total investment.

Research: These mutual funds perform an extensive research of the company before making
an investment decision giving you the benefit of expert advice.

Liquidity: These funds are extremely liquid, some of them even have features like across-
the-counter redemption. This feature is especially useful at times when the market is rising or
falling.

Professionally Managed: These funds are managed by professionals who have the required
expertise in buying and selling stocks. As a result they make better decisions on entering and
exiting a particular stock, which is very crucial for the overall performance of a portfolio.
Moreover, mutual fund investment also rids the investor of maintaining records, eliminates
hassles with the broker for payment, delivery and other arduous back office tasks.

Savings on transaction costs: As purchases and sales are done in bigger quantities, the funds
also get the advantages of lesser brokerage and other reduced transaction costs.

Advantages: In India these funds become even more attractive because of the tax
advantages, like indexation benefits , long term capital gains tax , tax free dividends and
much more.
1

INVESTMENT OBJECTIVE (REGULATION:

The moneys collected under any scheme of a mutual fund shall be invested only in
transferable securities in the money market or in the capital market or in privately placed
debentures or securities debts.

Provided that moneys collected under any money market scheme of a mutual fund shall be
invested only in money market instruments in accordance with directions issued by the
Reserve Bank of India;

Provided further that in case of securities debts such fund may invest in asset backed
securities and mortgaged backed securities.

Mutual Funds - Scope for Growth and Development in India

Mutual Fund Industry in its true spirit rooted in a free market and oriented towards
competitive functioning with the dedicated goal of service to the investors can be said to have
settled in India only in 1993. However the industry took its roots much earlier with the setting
up of the Unit Trust In India (AXIS) in 1964 by the Government of India. During the last 36
years, AXIS has grown to be a dominant player in the industry with assets of over
Rs.72,333.43 Crores as of March 31, 2000. The AXIS is governed by a special legislation,
the Unit Trust of India Act, 1963. In 1987 public sector banks and insurance companies were
permitted to set up mutual funds and accordingly since 1987, 6 public sector banks have set
up mutual funds. Also the two Insurance companies LIC and GIC established mutual funds.
Securities Exchange Board of India (SEBI) formulated the Mutual Fund (Regulation) 1993,
which for the first time established a comprehensive regulatory framework for the mutual
fund industry. Since then several mutual funds have been set up by the private and joint
sectors.

The Unit Trust of India Chairman M. Damodaran today ruled out the possibility of dumping
equities in its flagship scheme US-64 as it might have an adverse effect on the market, but
threatened to sell non-performing shares to competitor companies at a higher price.

“AXIS will not dump the shares it is holding just to achieve that objective (increasing the
debt exposure in US-64), but was working out schemes to get maximum returns from both
non-performing and performing assets,” Damodaran told NRI investors here.
1

“One of the factors holding the market down now may be the feeling that AXIS may
download shares to meet redemptions once it accepts NAV-based listing next month. But we
are not going to sell to meet fund demands,” he said.

The AXIS chief, however, threatened to sell unattractive shares to their competitors at
attractive prices.

AXIS will offer its stake in companies yielding nothing, to their rivals if these companies
themselves did not buy back the shares, he said, adding that “we are concerned only with
investors’ interests.”

GROWTH OF MUTUAL FUND BUSINESS IN INDIA

The Indian Mutual fund business has passed through three phases. The first phase was
between 1964 and 1987, when the only player was the Unit Trust of India, which had a total
asset of Rs. 6,700/- crores at the end of 1988. The second phase is between 1987 and 1993
during which period 8 funds were established (6 by banks and one each by LIC and GIC).
The total assets under management had grown to Rs. 61,028/- crores at the end of 1994 and
the number of schemes were 167. The third phase began with the entry of private and foreign
sectors in the Mutual fund industry in 1993. Kothari Pioneer Mutual fund was the first fund
to be established by the private sector in association with a foreign fund. The share of the
private players has risen rapidly since then.

Within a short period of seven years after 1993 the growth statistics of the business of Mutual
Funds in India is given in the table below:
1

NET ASSETS OF MUTUAL FUNDS AS AT 31.03.2000

The net assets of all domestic schemes of mutual funds were Rs.1,07,946.10 crores as on
March 31, 2000 as against Rs. 68,193.08 crores as on March 31, 1999. The details are given
below:

Amount Percentage
(Rs Crs) (%)

AXIS 72,333.43 67.00

Public Sector 10,444.78 9.68

Private Sector 25,167.89 23.32

Total 1,07,946.10 100.00

During the year 1999-2000, the share of AXIS in the total assets of the mutual funds industry
has declined to 67% from 77.9% in 1998-99. Net assets of other public sector mutual funds
have also shown a decline from 12.09% in 1998-99 to 9.68% in 1999-2000. However, net
assets of private sector mutual funds have increased from 9.97% in 1998-99 to 23.32% in the
year 1999-2000.

There are 34 private Mutual Funds in the fray and they have seized about 25% of the market
share in the brief period of 7 years, mobilising above Rs.25000 Crores from the public

SCOPE FOR DEVELOPMENT OF MUTUAL FUND BUSINESS IN

INDIA
A Mutual Fund is the most suitable investment for the common man as it offers an
opportunity to invest in a diversified, professionally managed basket of securities at a
relatively low cost. India has a burgeoning population of middle class now estimated around
300 million. A typical Indian middle class family can have liquid savings ranging from Rs.2
to Rs.10 Lacs today. Investments in Banks are liquid and safe, but with the falling rate of
interest offered by Banks on Deposits, it is no longer attractive. At best a part can be saved in
bank deposits, but what is the other sources of investment for the common man? Mutual
Fund
1

is the ready answer. Viewed in this sense globally India is one of the best markets for Mutual
Fund Business, so also for Insurance business.

This is the reason that foreign companies compete with one another in setting up insurance
and mutual fund business units in India. The sheer magnitude of the population of educated
white collar employees provides unlimited scope for development of Mutual Fund Business
in India.

The alternative to mutual fund is direct investment by the investor in equities and bonds or
corporate deposits. All investments whether in shares, debentures or deposits involve risk:
share value may go down depending upon the performance of the company, the industry,
state of capital markets and the economy; generally, however, longer the term, lesser the risk;
companies may default in payment of interest/ principal on their debentures/bonds/deposits;
the rate of interest on an investment may fall short of the rate of inflation reducing the
purchasing power. While risk cannot be eliminated, skillful management can minimise risk.
Mutual Funds help to reduce risk through diversification and professional management. The
experience and expertise of Mutual Fund managers in selecting fundamentally sound
securities and timing their purchases and sales, help them to build a diversified portfolio that
minimises risk and maximises returns.

THE ADVANTAGES OF INVESTING IN A MUTUAL FUND

The advantages of investing in a Mutual Fund are:

1. Professional Management

The investor avails of the services of experienced and skilled professionals who are backed
by a dedicated investment research team which analyses the performance and prospects of
companies and selects suitable investments to achieve the objectives of the scheme.

2. Diversification

Mutual Funds invest in a number of companies across a broad cross-section of

industries and sectors. This diversification reduces the risk because seldom do all
stocks decline at the same time and in the same proportion. You achieve this
diversification through a Mutual Fund with far less money than you can do on your
own.

3. Convenient Administration
1

Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such as
bad deliveries, delayed payments and unnecessary follow up with brokers and companies.
Mutual Funds save your time and make investing easy and convenient.

4. Return Potential

Over a medium to long-term, Mutual Funds have the potential to provide a higher return as
they invest in a diversified basket of selected securities.

5. Low Costs

Mutual Funds are a relatively less expensive way to invest compared to directly investing in
the capital markets because the benefits of scale in brokerage, custodial and other fees
translate into lower costs for investors.

6. Liquidity

In open-ended schemes, you can get your money back promptly at net asset value related
prices from the Mutual Fund itself. With close-ended schemes, you can sell your units on a
stock exchange at the prevailing market price or avail of the facility of direct repurchase at
NAV related prices which some close-ended and interval schemes offer you periodically.

7. Transparency

You get regular information on the value of your investment in addition to disclosure on the
specific investments made by your scheme, the proportion invested in each class of assets and
the fund manager's investment strategy and outlook.

8. Flexibility

Through features such as regular investment plans, regular withdrawal plans and dividend
reinvestment plans, you can systematically invest or withdraw funds according to your needs
and convenience.

9. Choice of Schemes

Mutual Funds offer a family of schemes to suit your varying needs over a lifetime.

10. Well Regulated

All Mutual Funds are registered with SEBI and they function within the provisions of strict
regulations designed to protect the interests of investors. The operations of Mutual Funds are
regularly monitored by SEBI.
1

In the following chapters we propose to discuss all relevant information about Mutual Funds
in India, the regulatory and legal structure governing them that a common investor ought to
know. The literature is mostly drawn from the website of SEB, but suitably tabulated to
provide ready information.

BRIEF HISTORY:

FIRST PHASE - 1964-87

Unit Trust of India (AXIS) was established on 1963 by an Act of Parliament. It was set up by
the Reserve Bank of India and functioned under the Regulatory and administrative control of
the Reserve Bank of India. In 1978 AXIS was de-linked from the RBI and the Industrial
Development Bank of India (IDBI) took over the regulatory and administrative control in
place of RBI. The first scheme launched by AXIS was Unit Scheme 1964. At the end of 1988
AXIS had Rs.6,700 crores of assets under management.

SECOND PHASE - 1987-1993 (ENTRY OF PUBLIC SECTOR FUNDS)

Entry of non-AXIS mutual funds. SBI Mutual Fund was the first followed by Canbank
Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual
Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC in 1989
and GIC in 1990. The end of 1993 marked Rs.47,004 as assets under management.

THIRD PHASE - 1993-2003 (ENTRY OF PRIVATE SECTOR FUNDS)

With the entry of private sector funds in 1993, a new era started in the Indian mutual fund
industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year
in which the first Mutual Fund Regulations came into being, under which all mutual funds,
except AXIS were to be registered and governed. The erstwhile Kothari Pioneer (now merged
with Franklin Templeton) was the first private sector mutual fund registered in July 1993.

The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and
revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI
(Mutual Fund) Regulations 1996.

The number of mutual fund houses went on increasing, with many foreign mutual funds
setting up funds in India and also the industry has witnessed several mergers and acquisitions.
As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805
1

crores. The Unit Trust of India with Rs.44,541 crores of assets under management was way
ahead of other mutual funds.

FOURTH PHASE - SINCE FEBRUARY 2003

The second is the AXIS Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is
registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation
of the erstwhile AXIS which had in March 2000 more than Rs.76,000 crores of AUM and
with the setting up of a AXIS Mutual Fund, conforming to the SEBI Mutual Fund
Regulations, and with recent mergers taking place among different private sector funds, the
mutual fund industry has entered its current phase of consolidation and growth. As at the end
of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under
421 schemes

CONCEPT:

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

Organization of a Mutal Fund

1

OBJECTIVES OF THE STUDY:

 To know about the Axis mutual fund schemes.

 To measure and evaluate the performance of Axis mutual funds in terms

 of returns (Net Asset value).

 To know the potential risk involved in each Axis mutual fund scheme.

 To find out the best Axis mutual fund scheme among the selected

 schemes in terms of risk and return

 The investments objectives of the scheme are to generate capital

 appreciation from a portfolio of predominantly equity r related securities.

 To compare performance of Selected Diversified Equity Mutual Funds in India

1

CHAPTER:5
DATA ANALYSIS
AND
INTERPRETATION
1

TABLE 5.1 RETURN ON EQUITY

YEAR %
2016 15.46
2017 6.59
2018 0.43
2019 7.01
2020 1.91

INTERPRETATION:

ROE is the most important indicator of a bank’s profitability and growth

potential. It is the rate of return to shareholders or the percentage return on
each of equity invested in the bank. Usually, there is higher ROE for high
growth companies. Axis Bank has higher ROE of 15.46% in the year 2016

DIAGRAM 5.1.1 RETURN ON EQUITY

20
18
16 15.46

14
12
10
8 6.59 7.01
6
4
1.91
2 0.43
0
2016 2017 2018 2019 2020
1

TABLE 5.2 RETURN ON ASSETS

YEAR %
2016 1.56
2017 0.61
2018 0.03
2019 0.58
2020 0.17

INTERPRETATION:

This ratio indicates how much net income is generated of assets. ROA can
be increased by Banks either by increasing profit margins or asset turnover
but they can’t do it simultaneously because of competition and trade-off
between turnover and margin. So bank maintain higher ROA will make
more the profit. Axis Bank has the highest ROA of 1.56% in year 2016.

DIAGRAM 5.2.1 RETURN ON ASSETS

1.56
1.5

0.61 0.58
0.5
0.17
0.03
0
2016 2017 2018 2019 2020
1

TABLE 5.3 NET INTEREST MARGIN

YEAR %
2016 3.20
2017 3.00
2018 2.69
2019 2.71
2020 2.75

INTERPRETATION:

A positive net margin indicates a bank invests efficiently, while a negative return implies
investment efficiencies. Axis Bank has a higher Net Margin of 3.20 in the year 2016.

DIAGRAM 5.3.1 NET INTEREST MARGIN

3.5 3.2
3
3 2.69 2.71 2.75

2.5

1.5

0.5

0
2016 2017 2018 2019 2020
1

RISK RATIO

TABLE 5.4 LEVERAGERATIO

YEAR %
2016 0.76
2017 0.78
2018 0.74
2019 0.76
2020 0.79

INTERPRETATION:

Leverage ratio is any one of several financial measurement that assesses the ability of a company
to meet its financial obligations. A high leverage ratio also increases the risk of insolvency. A
figure of 0.5 or less is ideal. The most ideal is 0.74% in year 2018.

0.78 0.79
0.76 0.74 0.76

0.5

0
2016 2017 2018 2019 2020

DIAGRAM 5.4.1 LEVERAGE RATIO

1

TABLE 5.5 TOTAL CAPITAL RATIO

YEAR %
2016 0.96
2017 0.95
2018 0.96
2019 0.96
2020 0.95

INTERPRETATION:

It indicates the relationship between shareholders fund, long term debt, and reserve to total
assets. It shows the long term solvency. Axis Bank has the highest Capital ratio of 0.96% in the
years 2016, 2018 & 2019.

1 0.96 0.95 0.96 0.96 0.95

0.5

0
2016 2017 2018 2019 2020

DIAGRAM 5.5.1 TOTAL CAPITAL RATIO

1

TABLE 5.6 LOAN RATIO

YEAR %
2016 0.20
2017 0.17
2018 0.21
2019 0.19
2020 0.16

INTERPRETATION:

It measures the percentage of assets that is tied up in loans. Net loan to total assets ratio (NLTA)
is also another important ratio that measures the liquidity condition of the bank. The higher the
ratio, the less liquid the bank is.

0.5

0.2 0.21
0.19
0.17 0.16

0
2016 2017 2018 2019 2020

DIAGRAM 5.6.1 LOAN RATIO

 1

CAPTIAL ADEQUACY

TABLE 5.7 CAR RATIO

YEAR %
2016 15.67
2017 18.00
2018 16.57
2019 15.84
2020 17.53

INTERPRETATION:

This capital gives lesser shield to depositors. The highest CAR ratio is preferred and will be rated
at 1.the Bank has highest CAR ratio of 18% in the year 2017.

20
18 17.53
18 16.57
15.67 15.84
16
14
12
10
8
6
4
2
0
2016 2017 2018 2019 2020

DIAGRAM 5.7.1 CAR RATIO

1

TABLE 5.8 DEBT- EQUITY RATIO

YEAR %
2016 8.60

2017 9.31

2018 9.48

2019 10.52

2020 9.28

INTERPRETATION:

This ratio shows how much debt is taken up by the company to fund its assets. If the ratio is
more then it means creditor financing is more than the investor financing. This contributes to
greater financial distress if earnings do not surpass the borrowing cost. Lower debt to equity ratio
is preferred and will be ranked as 1. Lowest of 9.28% is achieved in year 2020.

DIAGRAM 5.8.1 DEBT – EQUITY RATIO

12
10.52
10 9.31 9.48 9.28
8.6
8

0
2016 2017 2018 2019 2020
1

TABLE 5.9 ADVANCE/TOTAL ASSET RATIO

YEAR %
2016 62.75

2017 62.00

2018 63.59

2019 61.77

2020 62.82

INTERPRETATION:

This ratio helps in identifying how violent a bank is, in lending, which results in improved
profitability. The larger the ratio, the better the profit and is ranked 1.the highest ratio is
achieved is 63.59% in the year 2018.

DIAGRAM 5.9.1 ADVANCE/ TOTAL ASSET RATIO

70
62.75 62 63.59 61.77 62.82
60

50

40

30

20

10

0
2016 2017 2018 2019 2020
1

ASSET QUALITY

5.10 NET NPA TO NET ADVANCE

YEAR %
2016 0.70

2017 2.11

2018 3.40

2019 2.06

2020 1.56

INTERPRETATION:

Net Non-Performing Assets are measured as a percentage of net advances. Lower ratio will
be preferred. Lowest ratio of 0.70% is achieved in the year 2016.

DIAGRAM 5.10.1 NET NPA TO NET ADVANCE

4
3.4
3.5

2.5
2.11 2.06
2
1.56
1.5

1 0.7
0.5

0
2016 2017 2018 2019 2020
1

CHAPTER:6
CONCLUSION
AND
SUGGESTION
 1

CONCLUSION

The study provided a great opportunity to study about one of the leading Banks in India. It also help to
understand the how much a banking sector is influencing a developing country like India.

The banking sector has shown a remarkable responsiveness to the needs of the planned economy. It
has brought about a considerable progress in its efforts at deposit mobilization and has taken a number
of measures in the recent past for accelerating the rate of growth of deposits. The activities of
commercial banking have growth in multi-directional ways as well as multi-dimensional manner.. In
a way, commercial banks have emerged as key financial agencies for rapid economic development. By
pooling the savings together, banks can make available funds to specialized institutions which finance
different sectors of the economy, needing capital for various purposes, risks and durations.

The overall financial performance of Axis Bank for the period of 2016-2020 is discussed here. On the
basis of the findings of the study it can be concluded that financial ratios can help institutions to
determine their financial strength. It can also help present shareholders and prospective shareholders
or investors to make sound decisions to hold shares, buy additional shares or to sell the shares.
Addition to this, it also shows how the management are performing base on the shareholders or
investors inputs. It also help to forecasting the future performance.
 1

SUGGESTION

Initial contributors to AXIS should infuse permanent funds of atleast Rs.500 crores.

The PSU portfolio should be transferred at book value to a Special Unit Scheme (SUS 99) to be
subscribed for by GOI by the issue of dated GOI securities.

US-64 should make a strategic sale of its significant equity holdings by negotiation to the highest
bidder to ensure fetching the best value for the unit holder. The investment sub-limit of Rs.10,000 for
tax benefit on Equity Linked Savings Schemes should be removed and benefit should be extended to
US-64 and all schemes investing more than 50% in equity. Income distributed by US-64 and schemes
investing more than 50% in equity should be exempt from tax. New schemes for investing in growth
stocks in IT, Pharma and FMCG sectors should be launched, to be subscribed for by banks. The size
of the AXIS Board should

be increased to 15, with additional five members being co-opted by the Board. Trustees should assume
higher degree of responsibility and exercise greater authority.

The remuneration of Trustees should be increased and their attendance record be published in the
Annual Report. There should be a separate Asset Management Company for US-64 with an
independent Board of Directors. Chinese walls should be created by appointing separate and
independent fund managers for each scheme.

Inter-scheme transfers must be based on independent decisions and requirements of concerned fund
managers and at market determined prices. There should be an independent fund manager for US-64
with full responsibility and accountability.

The fund manager should be helped by a strong research team and the research capability should be
strengthened. Investment/dis-investment decisions should be based on research analysts'
recommendations who should have the authority and responsibility of making the recommendations.
The fund manager should have the final authority and responsibility in decision making based on his
perception of the market and research inputs. The focus on small investors should be strengthened
1

 Debt-Equity Ratio Can Be Improved By Effectively Managing The Loan

Payments And Also Restructuring Debt When The Current Market Rates
Are Low Helps To Lower The Debt – Equity Ratio.

 Profitability can be attained by balancing the three major drivers –

profit, growth and risk.

 Banks can increase their capital ratios by either increasing the regulatory
capital or by decreasing the weighted assets.

 Bank’s efficiency can be increased by streamlining workforce,

improving technology integration and containing compliance costs.
1

CHAPTER:7
ANNEXURE
1

QUESTIONNAIRE

CREDIT CARD SURVEY

Q1) Please tick against your sex

MALE
FEMALE

Q2) Which card do you use?

MASTER CARD
VISA

Q3) Which bank’s credit card do you use?

S Standard Chartered
Citibank
HSBC

Other

Q4) Do you think a credit card makes you spend more than you ordinarily would

(Tick the box under the option that you think is appropriate)

Strongly Agree Neutral Disagree Strongly

Agree Disagree

Q5) Do you think that the interest on your card is an added financial burden for you?

(Tick the box under the option that you think is appropriate)

Strongly Agree Neutral Disagree Strongly

1

Agree Disagree

Q6) Does your card cover a satisfactory number of merchant outlets?

(Tick the box under the option that you think is appropriate)

Strongly Agree Neutral Disagree Strongly

Agree Disagree

Q7) Your choice of credit card was affected by the reputation of the bank, which
issues the card.
(Tick the box under the option that you think is appropriate)

Strongly Agree Neutral Disagree Strongly

Agree Disagree

Q8) Your card application decision was affected by the interest charged on the card.

(Tick the box under the option that you think is appropriate)

Strongly Agree Neutral Disagree Strongly

Agree Disagree
1

Q9) Are you satisfied with your card on the following aspects?

Aspect Very Somewhat Neutral Somewhat Very

satisfied satisfied dissatisfied dissatisfied

Available
modes of
Payment
Schemes
Time allowed

for payment
Customer

Service
Annual

Charge
Discount

Offered
Coverage of

merchant

outlets

Q10) If you have never taken a credit card by choice, please rank your reason for that.
Rank between 1 to 5, with 5 being the lowest and 1 being the highest

Reason Rank
Prefer Cash
Fear of getting into Debt
Not Interested
Never thought about it
Prefer a Debit Card
1

BIBLIOGRAPHY

BOOKS

PHILIP KOTLER, MARKETING MANAGEMENT, Volume -6th

MONEY, BANKING AND FINANCE – RC SHARMA, BSC PUBLICATION
JOURNALS

ICFAI UNIVERSITY PRESS JOURNALS

WEB SITES

 www.axisbank.com

 www.mutualfundsindia.com

 www.google.com

 www.gemoney.in
 1

REFERENCE

HAVE I INVESTED IN THE RIGHT FUNDS?

1. Get in touch with the Asset Management Company

The first step is to track the AMC -- as fund houses are known -- online.

Once you get onto their Web site, you will get their office addresses, phone numbers and a
contact e-mail address. You will even be able to transact online with some of them mutual
fund Web sites allow you to invest online. However, you must check if you have an account
with the banks they have partnered with.

For example, Prudential ICICI Mutual Fund allows you to buy funds online if you have a
banking account with any of the following banks: Centurion Bank, HDFC Bank, ICICI Bank,
IDBI Bank and AXIS Bank.

You can buy units of SBI Mutual Fund's schemes only if you have an account with the State
Bank of India or HDFC Bank.

Under the heading Investors Zone, you will find another one called ARN Search. This refers
to the AMFI Registration Number.

Click on it and you will arrive at a search page. You can locate an agent in your vicinity by
just putting in your PIN code or name of your city.

Do you have an online trading account? Then you could check if they also sell mutual funds
online.

If you do not have an online trading account and are considering opening one, you could look
for a player that offers both.

Some like ICICI Direct sell funds online. But you must have a trading account with them.
Others, like India Bulls and Motilal Oswal, do not have this facility online but if you call and
leave your contact details, they will send an agent ov
1