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Research Topic:

Consumer Behaviour Towards Third Party Products (TPP) In Indian Banking Industry

Problem Statement:
Indian economy was suffering from ongoing recession and very low inflation rate. This had resulted into extreme liquidity crunch in the market. Flow of money in the market had slowed down and as a result people had reduced their investment. So need has arisen to know the consumer behaviour towards their investment in the third party products provided by banks which includes insurance, mutual funds, demat services, etc. in order to study the growth of Indian Banking Industry and the overall economy.

Research Objectives:
Macro Objective:
To study the Consumer Behaviour Towards Third Party Products (TPP) In Indian
Banking Industry

Micro Objectives:
To know the acceptance of third party products in banking industry by the consumers To find out the percentage of income that respondents invest in various third party products To know the preference of investors towards various instruments of third party products To determine the criteria considered by the investors while investing in the third party products To find out the satisfaction level of the customers regarding the services provided by the banks in their third party products investment

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Importance/ Benefit of the study:

Due to bearish trend prevailing in the market since 2 years, the attitude of the investors has changed and they have gone into their shell and such declining market trend has forced them to drop out. Moreover recession and low inflation rate prevailing in the Indian economy has augmented this process. So the main aim of the study is to create awareness among the investors about the bullish trend prevailing in market since few months. The another benefit of the study is by knowing the consumers behaviour towards the third party products investment in Indian Banking Industry, researchers will find out the trends that will affect the market and forecast the problems that will be faced by the economy in the near future.

Research Design:
Population: Respondents of the Ahmedabad city for their survey Sample Size: 300 sampling units Sampling Method: Convenience sampling

Data Sources:
Primary Source:
Questionnaire

Secondary Sources:
Books Websites Reports Research Papers
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Statistical Tools Used:


1) Kruskal Wallis test: Criteria considered for TPP Investment and Occupation Criteria considered for TPP Investment and Age Criteria considered for TPP Investment and Monthly Income 2) Mann-Whitney U test: Criteria considered for TPP Investment and Gender

3) Z-Test: To find out the proportion of investors who prefer balanced type of fund

Limitations of The Study:


The main limitation is that the scope of the researchers study will be Ahmedabad city. So the population considered may not be the actual representative of the population of the nation. Another limitation is the time span available with researchers for conducting the research. The information given by the respondents regarding their income and other personal details can be biased.

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INDIAN BANKING INDUSTRY


Banking in India has its origin as early as the Vedic period. It is believed that the transaction from money lending to banking must have occurred even before the great Hindu jurist, who has devoted a section of his work to deposit his advances and laid down rules relating to rate of interest. During the Mogul period, the indigenous bankers played a very important role in lending money and financing foreign trend commerce. During the day of East India Company, it was the turn of the agency houses to carry on banking business. The general bank of India was the first joint stock bank to be established in the year 1786, the other which followed where the bank of Hindustan and Bengal bank. The bank of Hindustan is reported to have continued till 1906 while the other two failed in mean time. In the first half of the 19 century the East India Company established three banks, the bank of Bengal in 1809, the bank of Bombay in 1840,the bank of Madras in 1843. These three banks also known as residency bank, where independent units and functioned well. These tree banks where amalgamated in 1920 and new bank, the imperial bank of India was established on 27th jan,1921.with passing of the State Bank of India Act in 1955 the undertaking of the imperial bank of India was taken by the newly constituted State Bank of India. The reserve bank which is the central bank was creatsd in 1935 by passing reserve bank of India act 1934.in the wake of the Swadeshi movement, a number of banks with Indian management were established in the country namely, Punjab National Bank Ltd, Bank of India Ltd. Canara Bank Ltd, Indian Bank Ltd, Bank of Baroda Ltd, Central Bank of India Ltd. On July 19,1969,14 major banks of the country were nationalized and 15th April 1980 six more commercial private industry banks were also taken over by the government.

HISTORY OF BANKING IN INDIA


There are three different phases in the history of banking in India. Pre-Nationalization Era Nationalization Stage Post Liberalization Era

1) Pre-Nationalization Era:
In India the business of banking and credit was practiced even in very early times. The remittance of money through Hundies, an indigenous credit instrument, was very popular. The
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Hundies were issued by bankers known as Shroffs, Sahukars, Shahus or Mahajans in different parts of the country. The modern type of banking, however, was developed by the Agency Houses of Calcutta and Bombay after the establishment of Rule by the East India Company in 18th and 19th centuries. During the early part of the 19th Century, the volume of foreign trade was relatively small. Later on as the trade expanded, the need for banks of the European type was felt and the government of the East India Company took interest in having its own bank. The government of Bengal took the initiative and the first presidency bank, the Bank of Calcutta (Bank of Bengal) was established in 1800. In 1840, the Bank of Bombay and in 1843, the Bank of Madras was also set up. These three banks also known as Presidency Bank. The Presidency Banks had their branches in important trading centers but mostly lacked in uniformity in their operational policies. In 1899, the Government proposed to amalgamate these three banks into one so that it could also function as a Central Bank, but the Presidency Banks did not favor the idea. However, the conditions obtaining during world war period (1914-1918) emphasized the need for a unified banking institution, as a result of which the Imperial Bank was set up in 1921. The Imperial Bank of India acted like a Central bank and as a banker for other banks. The RBI (Reserve Bank of India) was established in 1935 as the Central Bank of the Country. In 1949, the Banking Regulation Act was passed and the RBI was nationalized and acquired extensive regulatory powers over the commercial banks. In 1950, the Indian Banking system comprised of the RBI, the Imperial Bank of India, Cooperative banks, Exchange banks and Indian Joint Stock banks.

2) Nationalization Stage:
After Independence, in 1951, the All India Rural Credit survey, committee of Direction with Shri. A. D. Gorwala as Chairman recommended amalgamation of the Imperial Bank of India and ten others banks into a newly established bank called the State Bank of India (SBI). The Government of India accepted the recommendations of the committee and introduced the State Bank of India bill in the Lok Sabha on 16th April 1955 and it was passed by Parliament and

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got the presidents assent on 8th May 1955. The Act came into force on 1st July 1955, and the Imperial Bank of India was nationalized in 1955 as the State Bank of India. The main objective of establishing SBI by nationalizing the Imperial Bank of India was to extend banking facilities on a large scale more particularly in the rural and semi-urban areas and to diverse other public purposes.

3) Post-Liberalization Era:
By the beginning of 1990, the social banking goals set for the banking industry made most of the public industry resulted in the presumption that there was no need to look at the fundamental financial strength of this bank. Consequently they remained undercapitalized. Revamping this structure of the banking industry was of extreme importance, as the health of the financial industry in particular and the economy as a whole would be reflected by its performance. The need for restructuring the banking industry was felt greater with the initiation of the real industry reform process in 1992. the reforms have enhanced the opportunities and challenges for the real industry making them operate in a borderless global market place. However, to harness the benefits of globalization, there should be an efficient financial industry to support the structural reforms taking place in the real economy. Hence, along with the reforms of the real industry, the banking industry reformation was also addressed. The route causes for the lackluster performance of banks, formed the elements of the banking industry reforms. Some of the factors that led to the dismal performance of banks were. Regulated interest rate structure Lack of focus on profitability Lack of transparency in the banks balance sheet Lack of competition Excessive regulation on organization structure and managerial resource

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BANKING IN INDIA
1) Overview of Banking:
Banking Regulation Act of India, 1949 defines Banking as accepting, for the purpose of lending or of investment of deposits of money from the public, repayable on demand or otherwise or withdrawable by cheque, draft order or otherwise. The Reserve Bank of India Act, 1934 and the Banking Regulation Act, 1949, govern the banking operations in India.

2) Organizational Structure of Banks in India:


Reserve Bank of India

Commercial Banks

Co-operative Banks

Development Banks

Nationalized

Private

Short-term credit

Long-term credit

Agricultural Credit

Urban Credit

EXIM

Industrial

Agricultural

3) Broad Classification of Banks in India:


The RBI: The RBI is the supreme monetary and banking authority in the country and has the responsibility to control the banking system in the country. It keeps the reserves of all scheduled banks and hence is known as the Reserve Bank. Public Industry Banks: State Bank of India and its Associates (8) Nationalized Banks (19) Regional Rural Banks Sponsored by Public Industry Banks (196)
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Private Industry Banks: Old Generation Private Banks (22) Foreign New Generation Private Banks (8) Banks in India (40) Co-operative Industry Banks: State Co-operative Banks Central Co-operative Banks Primary Agricultural Credit Societies Land Development Banks State Land Development Banks Development Banks: Development Banks mostly provide long term finance for setting up industries. They also provide short-term finance (for export and import activities) Industrial Finance Co-operation of India (IFCI) Industrial Development of India (IDBI) Industrial Investment Bank of India (IIBI) Small Industries Development Bank of India (SIDBI) National Bank for Agriculture and Rural Development (NABARD)

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Current scenario
The industry is currently in a transition phase. On the one hand, the PSBs, which are the mainstay of the Indian Banking system, are in the process of shedding their flab in terms of excessive manpower, excessive non Performing Assets and excessive governmental equity, while on the other hand the private industry banks are consolidating themselves through M&A. PSBs, which currently account for more than 78 percent of total banking industry assets are saddled with NPAs (a mind-boggling Rs 830 billion in 2000), falling revenues from traditional sources, lack of modern technology and a massive workforce while the new private industry banks are forging ahead and rewriting the traditional banking business model by way of their sheer innovation and service. The PSBs are of course currently working out challenging strategies even as 20 percent of their massive employee strength has dwindled in the wake of the successful Voluntary Retirement Schemes (VRS) schemes. The private players however cannot match the PSBs great reach, great size and access to low cost deposits. Therefore one of the means for them to combat the PSBs has been through the merger and acquisition (M& A) route. Over the last two years, the industry has witnessed several such instances. For instance, HDFC Banks merger with Times Bank ICICI Banks acquisition of ITC Classic, Anagram Finance and Bank of Madura. Centurion Bank, Indusind Bank, Bank of Punjab, Vysya Bank are said to be on the lookout. The UTI bank- Global Trust Bank merger however opened a Pandoras box and brought about the realization that was not in the functioning of many of the private industry banks. Private industry Banks have pioneered internet banking, phone banking, anywhere banking, mobile banking, debit cards, Automatic Teller Machines (ATMs) and combined various other services and integrated them into the mainstream banking arena, while the PSBs are still grappling with disgruntled employees in the aftermath of successful VRS schemes. Also, following Indias commitment to the WTO agreement in respect of the services industry, foreign banks, including both new and the existing ones, have been permitted to open up to 12 branches a year with effect from 1998-99 as against the earlier stipulation of 8 branches.
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A talk of government diluting their equity from 51 percent to 33 percent in November 2000 has also opened up a new opportunity for the takeover of even the PSBs. The FDI rules being more rationalized in Q1FY02 may also pave the way for foreign banks taking the M& A route to acquire willing Indian partners. Meanwhile the economic and corporate industry slowdown has led to an increasing number of banks focusing on the retail segment. Many of them are also entering the new vistas of Insurance. Banks with their phenomenal reach and a regular interface with the retail investor are the best placed to enter into the insurance industry. Banks in India have been allowed to provide fee-based insurance services without risk participation invest in an insurance company for providing infrastructure and services support and set up of a separate joint-venture insurance company with risk participation. In the days to come, banks are expected to play a very useful role in the economic development and the emerging market will provide ample business opportunities to harness. Human Resources Management is assuming to be of greater importance. As banking in India will become more and more knowledge supported, human capital will emerge as the finest assets of the banking system. Ultimately banking is people and not just figures.

FUTURE SCENARIO
Liberalization and de-regulation process started in 1991-92 has made a sea change in the banking system. From a totally regulated environment, we have gradually moved into a market driven competitive system. Our move towards global benchmarks has been, by and large, calibrated and regulator driven. The pace of changes gained momentum in the last few years. Globalization would gain greater speed in the coming years particularly on account of expected opening up of financial services under WTO. Four trends change the banking industry world over, viz. 1) Consolidation of players through mergers and acquisitions, 2) Globalisation of operations, 3) Development of new technology and 4) Universalisation of banking. With technology acting as a catalyst, we expect to see great changes in the banking scene in the coming years. The Committee has attempted to visualize the financial world 5-10 years from now. The picture that emerged is somewhat as discussed below. It entails emergence of an integrated and diversified

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financial system. The move towards universal banking has already begun. This will gather further momentum bringing non-banking financial institutions also, into an integrated financial system. The traditional banking functions would give way to a system geared to meet all the financial needs of the customer. We could see emergence of highly varied financial products, which are tailored to meet specific needs of the customers in the retail as well as corporate segments. The advent of new technologies could see the emergence of new financial players doing financial intermediation. For example, we could see utility service providers offering say, bill payment services or supermarkets or retailers doing basic lending operations. The conventional definition of banking might undergo changes. The competitive environment in the banking industry is likely to result in individual players working out differentiated strategies based on their strengths and market niches. For example, some players might emerge as specialists in mortgage products, credit cards etc. whereas some could choose to concentrate on particular segments of business system, while outsourcing all other functions. Some other banks may concentrate on SME segments or high net worth individuals by providing specially tailored services beyond traditional banking offerings to satisfy the needs of customers they understand better than a more generalist competitor.

Retail lending will receive greater focus. Banks would compete with one another to provide full range of financial services to this segment. Banks would use multiple delivery channels to suit the requirements and tastes of customers. While some customers might value relationship banking (conventional branch banking), others might prefer convenience banking (e-banking). One of the concerns is quality of bank lending. Most significant challenge before banks is the maintenance of rigorous credit standards, especially in an environment of increased competition for new and existing clients. Experience has shown us that the worst loans are often made in the best of times. Compensation through trading gains is not going to support the banks forever. Large-scale efforts are needed to upgrade skills in credit risk measuring, controlling and monitoring as also revamp operating procedures. Credit evaluation may have to shift from cash flow based analysis to borrower account behavior, so that the state of readiness of Indian banks for Basle II regime improves. Corporate lending is already undergoing changes. The emphasis in future would be towards more of fee based services rather than lending operations. Banks will compete with each other to provide value added services to their customers. N.R.Institute of Business Management Page 11

Mergers and acquisitions would gather momentum as managements will strive to meet the expectations of stakeholders. This could see the emergence of 4-5 world class Indian Banks. As Banks seek niche areas, we could see emergence of some national banks of global scale and a number of regional players. Corporate governance in banks and financial institutions would assume greater importance in the coming years and this will be reflected in the composition of the Boards of Banks.. Technology as an enabler is separately discussed in the report. It would not be out of place, however, to state that most of the changes in the landscape of financial industry discussed above would be technology driven. In the ultimate analysis, successful institutions will be those which continue to leverage the advancements in technology in re-engineering processes and delivery modes and offering state-of-the-art products and services providing complete financial solutions for different types of customers.

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Industry Analysis mainly comprises of following three analyses:


Five Force analysis PEST Analysis SWOT Analysis

FIVE FORCE ANALYSIS

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1)

Threat of New Entrants:


The average person can't come along and start up a bank, but there are services, such as internet

bill payment, on which entrepreneurs can capitalize. Banks are fearful of being squeezed out of the payments business, because it is a good source of fee-based revenue. Another trend that poses a threat is companies offering other financial services. What would it take for an insurance company to start offering mortgage and loan services? Not much. Also, when analyzing a regional bank, remember that the possibility of a mega bank entering into the market poses a real threat.

2)

Power of Suppliers:
The suppliers of capital might not pose a big threat, but the threat of suppliers luring away human

capital does. If a talented individual is working in a smaller regional bank, there is the chance that person will be enticed away by bigger banks, investment firms, etc.

3)

Power of Buyers:
The individual doesn't pose much of a threat to the banking industry, but one major factor

affecting the power of buyers is relatively high switching cost. If a person has a mortgage, car loan, credit card, checking account and mutual funds with one particular bank, it can be extremely tough for that person to switch to another bank. In an attempt to lure in customers, banks try to lower the price of switching, but many people would still rather stick with their current bank. On the other hand, large corporate clients have banks wrapped around their little fingers. Financial institutions - by offering better exchange rates, more services, and exposure to foreign capital markets - work extremely hard to get highmargin corporate clients.

4)

Availability of Substitutes:
As you can probably imagine, there are plenty of substitutes in the banking industry. Banks offer

a suite of services over and above taking deposits and lending money, but whether it is insurance, mutual funds or fixed income securities, chances are there is a non-banking financial services company that can offer similar services. On the lending side of the business, banks are seeing competition rise from unconventional companies. Sony (NYSE: SNE), General Motors (NYSE:GM) and Microsoft (NASDAQ:MSFT) all offer preferred financing to customers who buy big ticket items. If car companies are offering 0% financing, why would anyone want to get a car loan from the bank and pay 5-10% interest?

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5)

Competitive Rivalry:
The banking industry is highly competitive. The financial services industry has been around for

hundreds of years and just about everyone who needs banking services already has them. Because of this, banks must attempt to lure clients away from competitor banks. They do this by offering lower financing, preferred rates and investment services. The banking industry is in a race to see who can offer both the best and fastest services, but this also causes banks to experience a lower ROA. They then have an incentive to take on high-risk projects. In the long run, we're likely to see more consolidation in the banking industry. Larger banks would prefer to take over or merge with another bank rather than spend the money to market and advertise to people.

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PEST ANALYSIS
1) Political Environment:
Government and RBI policies affect the banking industry. Sometimes looking into the political advantage of a particular party, the Government declares some measures to their benefits like waiver of short-term agricultural loans, to attract the farmers votes. By doing so the profits of the bank get affected. Various banks in the cooperative industry are open and run by the politicians. They exploit these banks for their benefits. Sometimes the government appoints various chairmen of the banks. Various policies are framed by the RBI looking at the present situation of the country for better control over the banks.

2) Economical Environment:
Banking is as old as authentic history and the modern commercial banking are traceable to ancient times. In India, banking has existed in one form or the other from time to time. The present era in banking may be taken to have commenced with establishment of bank of Bengal in 1809 under the government charter and with government participation in share capital. Allahabad bank was started in the year 1865 and Punjab national bank in 1895, and thus, others followed Every year RBI declares its 6 monthly policy and accordingly the various measures and rates are implemented which has an impact on the banking industry. Also the Union budget affects the banking industry to boost the economy by giving certain concessions or facilities. If in the Budget savings are encouraged, then more deposits will be attracted towards the banks and in turn they can lend more money to the agricultural industry and industrial industry, therefore, booming the economy. If the FDI limits are relaxed, then more FDI are brought in India through banking channels.

3) Social Environment:
Before nationalization of the banks, their control was in the hands of the private parties and only big business houses and the effluent sections of the society were getting benefits of banking in India. In 1969 government nationalized 14 banks. To adopt the social development in the banking industry it was necessary for speedy economic progress, consistent with social justice, in democratic political system, which is free from domination of law, and in which opportunities are open to all. Accordingly, keeping in mind both the national and social objectives, bankers were given direction to help economically weaker section of the society and also provide need-based finance to all the industrys of the economy with flexible and liberal attitude. Now the banks provide various types of loans to farmers, working women,

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professionals, and traders. They also provide education loan to the students and housing loans, consumer loans, etc. Banks having big clients or big companies have to provide services like personalized banking to their clients because these customers do not believe in running about and waiting in queues for getting their work done. The bankers also have to provide these customers with special provisions and at times with benefits like food and parties. But the banks do not mind incurring these costs because of the kind of business these clients bring for the bank. Banks have changed the culture of human life in India and have made life much easier for the people.

4) Technological Environment:
Technology plays a very important role in banks internal control mechanisms as well as services offered by them. It has in fact given new dimensions to the banks as well as services that they cater to and the banks are enthusiastically adopting new technological innovations for devising new products and services. The latest developments in terms of technology in computer and telecommunication have encouraged the bankers to change the concept of branch banking to anywhere banking. The use of ATM and Internet banking has allowed anytime, anywhere banks facilities. Automatic voice recorders now answer simple queries, currency accounting machines makes the job easier and self-service counters are now encouraged. Credit card facility has encouraged an era of cashless society. Today MasterCard and Visa card are the two most popular cards used world over. The banks have now started issuing smartcards or debit cards to be used for making payments. These are also called as electronic purse. Some of the banks have also started home banking through telecommunication facilities and computer technology by using terminals installed at customers home and they can make the balance inquiry, get the statement of accounts, give instructions for fund transfers, etc. Through ECS we can receive the dividends and interest directly to our account avoiding the delay or chance of loosing the post. Today banks are also using SMS and Internet as major tool of promotions and giving great utility to its customers. For example SMS functions through simple text messages sent from your mobile. The messages are then recognized by the bank to provide you with the required information. All these technological changes have forced the bankers to adopt customer-based approach instead of product-based approach.

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SWOT ANALYSIS
1) Strengths:
Indian banks have compared favorably on growth, asset quality and profitability with other regional banks over the last few years. The banking index has grown at a compounded annual rate of over 51 per cent since April 2001 as compared to a 27 per cent growth in the market index for the same period. Policy makers have made some notable changes in policy and regulation to help strengthen the industry. These changes include strengthening prudential norms, enhancing the payments system and integrating regulations between commercial and co-operative banks. Bank lending has been a significant driver of GDP growth and employment. The vast networking & growing number of branches & ATMs. Indian banking system has reached even to the remote corners of the country. The government's regular policy for Indian bank since 1969 has paid rich dividends with the nationalization of 14 major private banks of India. In terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and transparent balance sheets relative to other banks in comparable economies in its region. India has 88 scheduled commercial banks (SCBs) - 27 public industry banks (that is with the Government of India holding a stake)after merger of New Bank of India in Punjab National Bank in 1993, 29 private banks (these do not have government stake; they may be publicly listed and traded on stock exchanges) and 31 foreign banks. They have a combined network of over 53,000 branches and 17,000 ATMs. According to a report by ICRA Limited, a rating agency, the public industry banks hold over 75 percent of total assets of the banking industry, with the private and foreign banks holding 18.2% and 6.5% respectively. Foreign banks will have the opportunity to own up to 74 per cent of Indian private industry banks and 20 per cent of government owned banks.

2) Weaknesses:
PSBs need to fundamentally strengthen institutional skill levels especially in sales and marketing, service operations, risk management and the overall organisational performance ethic & strengthen human capital. Old private industry banks also have the need to fundamentally strengthen skill levels. N.R.Institute of Business Management Page 18

The cost of intermediation remains high and bank penetration is limited to only a few customer segments and geographies. Structural weaknesses such as a fragmented industry structure, restrictions on capital availability and deployment, lack of institutional support infrastructure, restrictive labor laws, weak corporate governance and ineffective regulations beyond Scheduled Commercial Banks (SCBs), unless industry utilities and service bureaus. Refusal to dilute stake in PSU banks: The government has refused to dilute its stake in PSU banks below 51% thus choking the headroom available to these banks for raining equity capital. Impediments in industryal reforms: Opposition from Left and resultant cautious approach from the North Block in terms of approving merger of PSU banks may hamper their growth prospects in the medium term.

3) Opportunity:
The market is seeing discontinuous growth driven by new products and services that include opportunities in credit cards, consumer finance and wealth management on the retail side, and in fee-based income and investment banking on the wholesale banking side. These require new skills in sales & marketing, credit and operations. Banks will no longer enjoy windfall treasury gains that the decade-long secular decline in interest rates provided. This will expose the weaker banks. With increased interest in India, competition from foreign banks will only intensify. Given the demographic shifts resulting from changes in age profile and household income, consumers will increasingly demand enhanced institutional capabilities and service levels from banks. New private banks could reach the next level of their growth in the Indian banking industry by continuing to innovate and develop differentiated business models to profitably serve segments like the rural/low income and affluent/HNI segments; actively adopting acquisitions as a means to grow and reaching the next level of performance in their service platforms. Attracting, developing and retaining more leadership capacity Foreign banks committed to making a play in India will need to adopt alternative approaches to win the race for the customer and build a value-creating customer franchise in advance of regulations potentially opening up post 2009. At the same time, they should stay in the game for potential acquisition opportunities as and when they appear in the near term. Maintaining a fundamentally long-term value-creation mindset. Reach in rural India for the private industry and foreign banks. N.R.Institute of Business Management Page 19

With the growth in the Indian economy expected to be strong for quite some time-especially in its services industry-the demand for banking services, especially retail banking, mortgages and investment services are expected to be strong. The Reserve Bank of India (RBI) has approved a proposal from the government to amend the Banking Regulation Act to permit banks to trade in commodities and commodity derivatives.

Hybrid capital: In an attempt to relieve banks of their capital crunch, the RBI has allowed them to raise perpetual bonds and other hybrid capital securities to shore up their capital. If the new instruments find takers, it would help PSU banks, left with little headroom for raising equity. Significantly, FII and NRI investment limits in these securities have been fixed at 49%, compared to 20% foreign equity holding allowed in PSU banks.

4) Threats:
Threat of stability of the system: failure of some weak banks has often threatened the stability of the system. Rise in inflation figures which would lead to increase in interest rates. Increase in the number of foreign players would pose a threat to the PSB as well as the private players.

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Introduction:
With the interest income coming under pressure, banks are urgently looking for expanding fee-based income activities. Banks are increasingly getting attracted towards activities such as marketing mutual funds and insurance policies, offering credit cards to suit different categories of customers and services such as wealth management and equity trading. These are indeed proving to be more profitable for banks than plain vanilla lending and borrowing. This activities provided to the customers are known as Third Party Products by banks. There are many Third Party products provided by private as well as public Industry banks nowadays. Some of them are as under Insurance Mutual funds Demat Account Services Let us see all this products in detail.

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1) INSURANCE
Today concept of Bancassurance is getting very common, selling Insurance of another company to the Bank customers.

Introduction:
With the opening up of the insurance industry and with so many players entering the Indian insurance industry, it is required by the insurance companies to come up with innovative products, create more consumer awareness about their products and offer them at a competitive price. New entrants in the insurance industry had no difficulty in matching their products with the customers' needs and offering them at a price acceptable to the customer. But, insurance not being an off the shelf product and one which requiring personal counseling and persuasion, distribution posed a major challenge for the insurance companies. Further insurable population of over 1 billion spread all over the country has made the traditional channels of the insurance companies costlier. Also due to heavy competition, insurers do not enjoy the flexibility of incurring heavy distribution expenses and passing them to the customer in the form of high prices. With these developments and increased pressures in combating competition, companies are forced to come up with innovative techniques to market their products and services. At this juncture, banking industry with it's far and wide reach, was thought of as a potential distribution channel, useful for the insurance companies. This union of the two industrys is what is known as Bancassurance.

Meaning of Bancassurance:
Bancassurance is the distribution of insurance products through the bank's distribution channel. It is a phenomenon wherein insurance products are offered through the distribution channels of the banking services along with a complete range of banking and investment products and services. To put it simply, Bancassurance, tries to exploit synergies between both the insurance companies and banks. Bancassurance if taken in right spirit and implemented properly can be win-win situation for the all the participants' viz., banks, insurers and the customers.
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Advantages of Bancassurance: a) Advantages to banks


Productivity of the employees increases. By providing customers with both the services under one roof, they can improve overall customer satisfaction resulting in higher customer retention levels. Increase in return on assets by building fee income through the sale of insurance products. Can leverage on face-to-face contacts and awareness about the financial conditions of customers to sell insurance products. Banks can cross sell insurance products Eg: Term insurance products with loans.

b) Advantages to Insurers
Insurers can exploit the banks' wide network of branches for distribution of products. The penetration of banks' branches into the rural areas can be utilized to sell products in those areas. Customer database like customers' financial standing, spending habits, investment and purchase capability can be used to customize products and sell accordingly. Since banks have already established relationship with customers, conversion ratio of leads to sales is likely to be high. Further service aspect can also be tackled easily.

c) Advantages to consumers
Comprehensive financial advisory services under one roof. i.e., insurance services along with other financial services such as banking, mutual funds, personal loans etc. Enhanced convenience on the part of the insured Easy access for claims, as banks is a regular go. Innovative and better product ranges

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Bancassurance in India:
Bancassurance in India is a very new concept, but is fast gaining ground. In India, the banking and insurance industrys are regulated by two different entities (banking by RBI and insurance by IRDA) and bancassurance being the combinations of two industrys comes under the purview of both the regulators. Each of the regulators has given out detailed guidelines for banks getting into insurance industry. Highlights of the guidelines are reproduced below: a) RBI guideline for banks entering into insurance industry provides three options for banks. They are: Joint ventures will be allowed for financially strong banks wishing to undertake insurance business with risk participation; For banks which are not eligible for this joint-venture option, an investment option of up to 10% of the net worth of the bank or Rs.50 crores, whichever is lower, is available; Finally, any commercial bank will be allowed to undertake insurance business as agent of insurance companies. This will be on a fee basis with no-risk participation. b) The Insurance Regulatory and Development Authority (IRDA) guidelines for the Bancassurance are: Each bank that sells insurance must have a chief insurance executive to handle all the insurance activities. All the people involved in selling should under-go mandatory training at an institute accredited by IRDA and pass the examination conducted by the authority. Commercial banks, including cooperative banks and regional rural banks, may become corporate agents for one insurance company. Banks cannot become insurance brokers.

Issues to be tackled:
Given the roles and diverse skills brought by the banks and insurers to a Bancassurance tie up, it is expected that road to a successful alliance would not be an easy task. Some of the issues that are to be addressed are:
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The tie-ups need to develop innovative products and services rather than depend on the traditional methods. The kinds of products the banks would be allowed to sell are another major issue. For instance, a complex unit-linked life insurance product is better sold through brokers or agents, while a standard term product or simple products like auto insurance, home loan and accident insurance cover can be handled by bank branches There needs to be clarity on the operational activities of the Bancassurance i.e., who will do the branding, will the insurance company prefer to place a person at the bank branch, or will the bank branch train and put up one of its own people, remuneration of these people. Even though the banks are in personal contact with their clients, a high degree of proactive marketing and skill is required to sell the insurance products. This can be addressed through proper training. There are hazards of direct competition to conventional banking products. Bank personnel may become resistant to sell insurance products since they might think they would become redundant if savings were diverted from banks to their insurance subsidiaries.

Critical Success Factors:


Strategies consistent with the bank's vision, knowledge of target customers' needs, defined sales process for introducing insurance services, simple yet complete product offerings, strong service delivery mechanism, quality administration, synchronized planning across all business lines and subsidiaries, complete integration of insurance with other bank products and services, extensive and high-quality training, sales management tracking system for reporting on agents' time and results of bank referrals and relevant and flexible database systems. Another point is the handling of customers. With customer awareness levels increasing, they are demanding greater convenience in financial services. The emergence of remote distribution channels, such as PC-banking and Internetbanking, would hamper the distribution of insurance products through banks. The emergence of newer distribution channels seeking a market share in the network.

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Key Challenges in the Indian context:


Creating an environment of top level involvement of bank management. Bringing relevance, motivation and skill development at the operating level at bank branches. Resolving possible conflicts of interest between the bank and the insurer. Setting up distribution procedures consistent with the manual systems in most banks.

Some of the Bancassurance tie-ups in India:


Insurance Company Bank

Bank of Rajasthan, Andhra Bank, Bank of Muscat, Birla Sun Life Insurance Co. Ltd. Development Credit Bank, Deutsche Bank and Catholic Syrian Bank Dabur CGU Life Company Pvt. Ltd Insurance Canara Bank, Lakshmi Vilas Bank, American Express Bank and ABN AMRO Bank

HDFC Standard Life Insurance Union Bank of India Co. Ltd. Lord Krishna Bank, ICICI Bank, Bank of India, Citibank, ICICI Prudential Life Insurance Allahabad Bank, Federal Bank, South Indian Bank, and Punjab Co Ltd. and Maharashtra Co-operative Bank. Corporation Bank, Indian Overseas Bank, Centurion Bank, Life Insurance Corporation of Satara District Central Co-operative Bank, Janata Urban CoIndia operative Bank, Yeotmal Mahila Sahkari Bank, Vijaya Bank, Oriental Bank of Commerce. Met Life India Insurance Co. Ltd. Karnataka Bank, Dhanalakshmi Bank and J&K Bank SBI Life Insurance Company Ltd. State Bank of India Bajaj Allianz General Insurance Karur Vysya Bank and Lord Krishna Bank Co. Ltd. National Insurance Co. Ltd. Royal Sundaram Insurance Company City Union Bank

General Standard Chartered Bank, ABN AMRO Bank, Citibank, Amex and Repco Bank. South Indian Bank
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United India Insurance Co. Ltd.

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Conclusion:
With huge untapped market, insurance industry is likely to witness a lot of activity - be it product innovation or distribution channel mix. Bancassurance, the emerging distribution channel for the insurers, will have a large impact on Indian financial services industry. Traditional methods of distributing financial services would be challenged and innovative, customized products would emerge. Banks will bring in customer database, leverage their name recognition and reputation at both local and regional levels, make use of the personal contact with their clients, which a new entrant cannot, as they are new to the industry. In customer point of view, a plethora of products would be available to him. More customized products would come into existence and that too all within a hands reach. Finally Success of the bancassurance would mostly depend on how well insurers and banks understand each other's businesses and seize the opportunities presented, weeding out differences that are likely to crop up.

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2) MUTUAL FUNDS
Introduction of Mutual Fund:
Mutual fund is a trust that pools the savings of a number of investors who share a common financial goal. This pool of money is invested in accordance with a stated objective. The joint ownership of the fund is thus Mutual, i.e. the fund belongs to all investors. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciations realized are shared by its unit holders in proportion the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. A Mutual Fund is an investment tool that allows small investors access to a well-diversified portfolio of equities, bonds and other securities. Each shareholder participates in the gain or loss of the fund. Units are issued and can be redeemed as needed. The funds Net Asset value (NAV) is determined each day. Suppose you want to read a book, which costs Rs.1000/-. However, you do not have Rs.1000/- to spare for that book. The best alternative you can resort to, other than obviously borrowing it from somebody, is to make a group of friends who are interested in reading that same book. Then, the group can contribute some amount each and purchase the book, which you can read it in turn. Thus, you are able to get the benefits out of the book and that too by paying only a part of the price. Moreover, the book would always remain with you unlike the case if you had borrowed it from someone. This same logic goes into investing in a mutual fund, where small amounts from large investors are pooled together to create a diversified portfolio of assets for "mutual" benefits of all investors. Investments in securities are spread across a wide cross-section of industries and industrys and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. Mutual fund issues units to the investors in accordance with quantum of money invested by them. Investors of mutual funds are known as unit holders.

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When an investor subscribes for the units of a mutual fund, he becomes part owner of the assets of the fund in the same proportion as his contribution amount put up with the corpus (the total amount of the fund). Mutual Fund investor is also known as a mutual fund shareholder or a unit holder.Any change in the value of the investments made into capital market instruments (such as shares, debentures etc) is reflected in the Net Asset Value (NAV) of the scheme. NAV is defined as the market value of the Mutual Fund scheme's assets net of its liabilities. NAV of a scheme is calculated by dividing the market value of scheme's assets by the total number of units issued to the investors.

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Advantages of Mutual Funds: Professional Management: The basic advantage of funds is that, they are
professional managed, by well qualified professional. Investors purchase funds because they do not have the time or the expertise to manage their own portfolio. A mutual fund is considered to be relatively less expensive way to make and monitor their investments.

Diversification: Purchasing units in a mutual fund instead of buying individual stocks


or bonds, the investors risk is spread out and minimized up to certain extent. The idea behind diversification is to invest in a large number of assets so that a loss in any particular investment is minimized by gains in others.

Economies of Scale: Mutual fund buy and sell large amounts of securities at a time,
thus help to reducing transaction costs, and help to bring down the average cost of the unit for their investors.

Liquidity: Just like an individual stock, mutual fund also allows investors to liquidate
their holdings as and when they want.

Simplicity: Investments in mutual fund is considered to be easy, compare to other


available instruments in the market, and the minimum investment is small. Most AMC also have automatic purchase plans whereby as little as Rs. 2000, where SIP start with just Rs.50 per month basis.

History of the Indian mutual fund industry:


The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank. Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered the Industry. In the past decade, Indian mutual fund industry had seen a dramatic improvement, both qualities wise as well as quantity wise. Before, the monopoly of the market had seen an ending phase; the Assets Under Management (AUM) was Rs67 billion. The private industry entry to the fund family raised the Aum to Rs. 470 billion in March 1993 and till April 2004; it reached the height if Rs. 1540 billion.

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The Mutual Fund Industry is obviously growing at a tremendous space with the mutual fund industry can be broadly put into four phases according to the development of the industry. Each phase is briefly described as under.

First Phase 1964-87:


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

Second Phase 1987-1993 (Entry of Public Industry Funds):


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

Third Phase 1993-2003 (Entry of Private Industry Funds):


1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private industry mutual fund registered in July 1993.

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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. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores.

Fourth Phase since February 2003:


In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs.29,835 crores as at the end of January 2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes.

Types of Mutual Fund:


1) Based on their structure: Open-ended funds: Investors can buy and sell the units from the fund, at any point of time. Close-ended funds: These funds raise money from investors only once. Therefore, after the offer period, fresh investments can not be made into the fund. If the fund is listed on a stocks exchange the units can be traded like stocks (E.g., Morgan Stanley Growth Fund). Recently, most of the New Fund Offers of close-ended funds provided liquidity window on a periodic basis such as monthly or weekly. Redemption of units can be made during specified intervals. Therefore, such funds have relatively low liquidity.

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2) I.

Based on their investment objective: Equity funds: These funds invest in equities and equity related instruments. With fluctuating share prices, such funds show volatile performance, even losses. However, short term fluctuations in the market, generally smoothens out in the long term, thereby offering higher returns at relatively lower volatility. At the same time, such funds can yield great capital appreciation as, historically, equities have outperformed all asset classes in the long term. Hence, investment in equity funds should be considered for a period of at least 3-5 years. It can be further classified as: Index funds- In this case a key stock market index, like BSE Sensex or Nifty is tracked. Their portfolio mirrors the benchmark index both in terms of composition and individual stock weight ages. Equity diversified funds- 100% of the capital is invested in equities spreading across different industrys and stocks. Dividend yield funds- it is similar to the equity diversified funds except that they invest in companies offering high dividend yields. Thematic funds- Invest 100% of the assets in industrys which are related through some theme. e.g. -An infrastructure fund invests in power, construction, cements industrys etc. Industry funds- Invest 100% of the capital in a specific industry. e.g. - A banking industry fund will invest in banking stocks. ELSS- Equity Linked Saving Scheme provides tax benefit to the investors.

II.

Balanced fund: Their investment portfolio includes both debt and equity. As a result, on the risk-return ladder, they fall between equity and debt funds. Balanced funds are the ideal mutual funds vehicle for investors who prefer spreading their risk across various instruments. Following are balanced funds classes: Debt-oriented funds: Investment below 65% in equities. Equity-oriented funds: Invest at least 65% in equities, remaining in debt.

III.

Debt fund: They invest only in debt instruments, and are a good option for investors averse to idea of taking risk associated with equities. Therefore, they invest exclusively in fixed-income instruments like bonds, debentures, Government of India securities; and

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money market instruments such as certificates of deposit (CD), commercial paper (CP) and call money. Put your money into any of these debt funds depending on your investment horizon and needs. Liquid funds: These funds invest 100% in money market instruments, a large portion being invested in call money market. Gilt funds ST: They invest 100% of their portfolio in government securities of and Tbills. Floating rate funds : Invest in short-term debt papers. Floaters invest in debt instruments which have variable coupon rate. Arbitrage fund: They generate income through arbitrage opportunities due to mispricing between cash market and derivatives market. Funds are allocated to equities, derivatives and money markets. Higher proportion (around 75%) is put in money markets, in the absence of arbitrage opportunities. Gilt funds LT: They invest 100% of their portfolio in long-term government securities. Income funds LT: Typically, such funds invest a major portion of the portfolio in longterm debt papers. MIPs: Monthly Income Plans have an exposure of 70%-90% to debt and an exposure of 10%-30% to equities. FMPs: Fixed monthly plans invest in debt papers whose maturity is in line with fund. 3) Other Schemes: Tax Saving Schemes: Tax-saving schemes offer tax rebates to the investors under tax laws prescribed from time to time. Under Sec.88 of the Income Tax Act, contributions made to any Equity Linked Savings Scheme (ELSS) are eligible for rebate. Index Schemes: Index schemes attempt to replicate the performance of a particular index such as the BSE Sensex or the NSE 50. The portfolio of these schemes will consist of only those stocks that constitute the index. The percentage of each stock to the total holding will be identical to the stocks index weightage. And hence, the returns from such schemes would be more or less equivalent to those of the Index. Industry Specific Schemes: These are the funds/schemes which invest in the securities of only those industrys or industries as specified in the offer documents. e.g.
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Pharmaceuticals, Software, Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the performance of the respective industrys/industries. While these funds may give higher returns, they are more risky compared to diversified funds. Investment strategies: Systematic Investment Plan: under this a fixed sum is invested each month on a fixed date of a month. Payment is made through post dated cheques or direct debit facilities. The investor gets fewer units when the NAV is high and more units when the NAV is low. This is called as the benefit of Rupee Cost Averaging (RCA). Systematic Transfer Plan: under this an investor invest in debt oriented fund and give instructions to transfer a fixed sum, at a fixed interval, to an equity scheme of the same mutual fund. Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual fund then he can withdraw a fixed amount each month.

Risk v/s. Return:

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Working of mutual fund:

The entire mutual fund industry operates in a very organized way. The investors, known as unit holders,handover their savings to the AMCs under various schemes. The objective of the investment should match with the objective of the fund to best suit the investors needs. The AMCs further invest the funds into various securities according to the investment objective. The return generated from the investments is passed on to the investors or reinvested as mentioned in the offer document.

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Guidelines of the SEBI for Mutual Fund Companies:


To protect the interest of the investors, SEBI formulates policies and regulates the mutual funds. It has notified regulations in 1993 (fully revised in 1996) and issues guidelines from time to time. SEBI approved Asset Management Company (AMC) manages the funds by making investments in various types of securities. Custodian, registered with SEBI, holds the securities of various schemes of the fund in its custody. According to SEBI Regulations, two thirds of the directors of Trustee Company or board of trustees must be independent. The Association of Mutual Funds in India (AMFI) reassures the investors in units of mutual funds that the mutual funds function within the strict regulatory framework. Its objective is to increase public awareness of the mutual fund industry. AMFI is engaged in upgrading professional standards and in promote industry practices in diverse areas such as valuation, disclosure etc. Documents required (PAN mandatory): 1. Proof of identity: Photo PAN card In case of non-photo PAN card in addition to copy of PAN card any one of the following: driving license/passport copy/ voter id/ bank photo pass book. 2. Proof of address (any of the following): Latest telephone bill, latest electricity bill, Passport, latest bank passbook/bank account statement, latest Demat account statement, voter id, driving license, ration card, rent agreement. Offer document: An offer document is issued when the AMCs make New Fund Offer(NFO). Its advisable to every investor to ask for the offer document and read it before investing. An offer document consists of the following:

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Standard Offer Document for Mutual Funds (SEBI Format) Summary Information Glossary of Defined Terms Risk Disclosures Legal and Regulatory Compliance Expenses Condensed Financial Information of Schemes Constitution of the Mutual Fund Investment Objectives and Policies Management of the Fund Offer Related Information. Key Information Memorandum: A key information memorandum, popularly known as KIM, is attached along with the mutual fund form. And thus every investor get to read it. Its contents are: Name of the fund. Iestment objective Aset allocation pattern of the scheme. Risk profile of the scheme Plans & options Minimum application amount/ no. of units Benchmark index Dividend policy Name of the fund manager(s) Expenses of the scheme: load structure, recurring expenses Performance of the scheme (scheme return v/s. benchmark return) Year- wise return for the last 5 financial year.

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Distribution channels:
Mutual funds posses a very strong distribution channel so that the ultimate customers doesnt face any difficulty in the final procurement. The various parties involved in distribution of mutual funds are: Direct marketing by the AMCs: the forms could be obtained from the AMCs directly. The investors can approach to the AMCs for the forms. some of the top AMCs of India are; Reliance ,Birla Sunlife, Tata, SBI magnum, Kotak Mahindra, HDFC, Sundaram, ICICI, Mirae Assets, Canara Robeco, Lotus India, LIC, UTI etc. whereas foreign AMCs include: Standard Chartered, Franklin Templeton, JP Morgan, HSBC, DSP Merill Lynch, etc. Broker/ sub broker arrangements: the AMCs can simultaneously go for broker/sub-broker to popularize their funds. AMCs can enjoy the advantage of large network of these brokers and sub brokers.eg: SBI being the top financial intermediary of India has the greatest network. So the AMCs dealing through SBI has access to most of the investors. Individual agents, Banks, NBFC: investors can procure the funds through individual agents, independent brokers, banks and several non- banking financial corporations too, whichever he finds convenient for him.

Costs associated:
1. Expenses: AMCs charge an annual fee, or expense ratio that covers administrative expenses, salaries, advertising expenses, brokerage fee, etc. A 1.5% expense ratio means the AMC charges Rs1.50 for every Rs100 in assets under management. A fund's expense ratio is typically to the size of the funds under management and not to the returns earned. Normally, the costs of running a fund grow slower than the growth in the fund size - so, the more assets in the fund, the lower should be its expense ratio. 2. Loads: Entry Load/Front-End Load (0-2.25%)- its the commission charged at the time of buying the fund to cover the cost of selling, processing etc.

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Exit Load/Back- End Load (0.25-2.25%)- it is the commission or charged paid when an investor exits from a mutual fund, it is imposed to discourage withdrawals. It may reduce to zero with increase in holding period.

Performance measures:
Equity funds: the performance of equity funds can be measured on the basis of: NAV Growth, Total Return; Total Return with Reinvestment at NAV, Annualized Returns and Distributions, Computing Total Return (Per Share Income and Expenses, Per Share Capital Changes, Ratios, Shares Outstanding), the Expense Ratio, Portfolio Turnover Rate, Fund Size, Transaction Costs, Cash Flow, Leverage. Debt fund: Likewise the performance of debt funds can be measured on the basis of: Peer Group Comparisons, The Income Ratio, Industry Exposures and Concentrations, NPAs, besides NAV Growth, Total Return and Expense Ratio. Liquid funds: The performance of the highly volatile liquid funds can be measured on the basis of: Fund Yield, besides NAV Growth, Total Return and Expense Ratio.

Concept of benchmarking for performance evaluation:


Every fund sets its benchmark according to its investment objective. The funds performance is measured in comparison with the benchmark. If the fund generates a greater return than the benchmark then it is said that the fund has outperformed benchmark , if it is equal to benchmark then the correlation between them is exactly 1. And if in case the return is lower than the benchmark then the fund is said to be underperformed.Some of the benchmarks are : 1. Equity funds: market indices such as S&P CNX nifty, BSE100, BSE200, BSE-PSU, BSE 500 index, BSE bankex, and other industryal indices. 2. Debt funds: Interest Rates on Alternative Investments as Benchmarks, I-Bex Total Return Index, JPM T-Bill Index Post-Tax Returns on Bank Deposits versus Debt Funds. 3. Liquid funds: Short Term Government Instruments Interest Rates as Benchmarks, JPM TBill Index To measure the funds performance, the comparisons are usually done with: Funds from the same peer group. Other similar products in which investors invest their funds.
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Performance:
Every investor investing in the mutual funds is driven by the motto of either wealth creation or wealth increment or both. Therefore its very necessary to continuously evaluate the funds performance with the help of factsheets and newsletters, websites, newspapers and professional advisors like SBI mutual fund services. If the investors ignore the evaluation of funds performance then he can loose hold of it any time. In this ever-changing industry, he can face any of the following problems: Variation in the funds performance due to change in its management/ objective. The funds performance can slip in comparison to similar funds. There may be an increase in the various costs associated with the fund. Beta, a technical measure of the risk associated may also surge. The funds ratings may go down in the various lists published by independent rating Agencies. It can merge into another fund or could be acquired by another fund house.

Association of Mutual Funds in India (AMFI):


With the increase in mutual fund players in India, a need for mutual fund association in India was generated to function as a non-profit organization. Association of Mutual Funds in India (AMFI) was incorporated on 22nd August, 1995.AMFI is an apex body of all Asset Management Companies (AMC) which has been registered with SEBI. Till date all the AMCs are that have launched mutual fund schemes are its members. It functions under the supervision and guidelines of its Board of Directors. Association of Mutual Funds India has brought down the Indian Mutual Fund Industry to a professional and healthy market with ethical lines enhancing and maintaining standards. It follows the principle of both protecting and promoting the interests of mutual funds as well as their unit holders.

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Objectives: The Association of Mutual Funds of India works with 30 registered AMCs of the country. It has certain defined objectives which juxtaposes the guidelines of its Board of Directors. The objectives are as follows:This mutual fund association of India maintains a high professional and ethical standards in all areas of operation of the industry. It also recommends and promotes the top class business practices and code of conduct which is followed by members and related people engaged in the activities of mutual fund and asset management. The agencies who are by any means connected or involved in the field of capital markets and financial services also involved in this code of conduct of the association. AMFI interacts with SEBI and works according to SEBIs guidelines in the mutual fund industry. Association of Mutual Fund of India do represent the Government of India, the Reserve Bank of India and other related bodies on matters relating to the Mutual Fund Industry. It develops a team of well qualified and trained Agent distributors. It implements a programme of training and certification for all intermediaries and other engaged in the mutual fund industry. AMFI undertakes all India awareness programme for investors in order to promote proper understanding of the concept and working of mutual funds. At last but not the least association of mutual fund of India also disseminate information on Mutual Fund Industry and undertakes studies and research either directly or in association with other bodies. The sponsorers: 1. Bank Sponsored SBI Fund Management Ltd. BOB Asset Management Co. Ltd. Canbank Investment Management Services Ltd. UTI Asset Management Company Pvt. Ltd.

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2.

Institutions GIC Asset Management Co. Ltd. Jeevan Bima Sahayog Asset Management Co. Ltd.

3. Private Industry Indian BenchMark Asset Management Co. Pvt. Ltd. Cholamandalam Asset Management Co. Ltd. Credit Capital Asset Management Co. Ltd. Escorts Asset Management Ltd. JM Financial Mutual Fund Kotak Mahindra Asset Management Co. Ltd. Reliance Capital Asset Management Ltd. Sahara Asset Management Co. Pvt. Ltd Sundaram Asset Management Company Ltd. Tata Asset Management Private Ltd. Predominantly India Joint Ventures:Birla Sun Life Asset Management Co. Ltd. DSP Merrill Lynch Fund Managers Limited HDFC Asset Management Company Ltd. Predominantly Foreign Joint Ventures: ABN AMRO Asset Management (I) Ltd. Alliance Capital Asset Management (India) Pvt. Ltd. Deutsche Asset Management (India) Pvt. Ltd. Fidelity Fund Management Private Limited Franklin Templeton Asset Mgmt. (India) Pvt. Ltd. HSBC Asset Management (India) Private Ltd. ING Investment Management (India) Pvt. Ltd. Morgan Stanley Investment Management Pvt. Ltd. Principal Asset Management Co. Pvt. Ltd.
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Prudential ICICI Asset Management Co. Ltd. Standard Chartered Asset Mgmt Co. Pvt. Ltd.

Mutual fund companies in India:


ABN AMRO Mutual Fund Birla Sun Life Mutual Fund Bank of Baroda Mutual Fund (BOB Mutual Fund) HDFC Mutual Fund HSBC Mutual Fund ING Vysya Mutual Fund Prudential ICICI Mutual Fund Sahara Mutual Fund State Bank of India Mutual Fund TATA Mutual Fund Kotak Mahindra Mutual Fund Unit Trust of India Mutual Fund Reliance Mutual Fund Standard Chartered Mutual Fund Franklin Templeton India Mutual Fund Morgan Stanley Mutual Fund India Alliance Capital Mutual Fund Benchmark Mutual Fund Chola Mutual Fund LIC Mutual Fund GIC Mutual Fund Canbank Mutual Fund

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3) DEMATERIALISATION
Definition:
Dematerialisation is the process of converting physical shares (share certificates) into an electronic form. Shares once converted into dematerialised form are held in a Demat account.

Dematerialisation Process:
An investor having securities in physical form must get them dematerialised, if he intends to sell them. This requires the investor to fill a Demat Request Form (DRF) which is available with every DP and submit the same along with the physical certificates. Every security has an ISIN (International Securities Identification Number). If there is more than one security than the equal number of DRFs has to be filled in. The whole process goes on in the following manner:

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Things investors should know about account opening and dematerialisation:


1) Providing the bank account details at the time of account opening It is mandatory for an investor to provide his bank account details at the time of opening a demat account. This is done to safeguard investor's own interests. There are two major reasons for this: The interest and dividend warrants can't be en-cashed by any unauthorized person, as the bank account number is mentioned on it. It is convenient and time saving, as dividends and interests given by the companies can be directly credited to the investor's bank account (through ECS facility, wherever available). 2) Change in bank account details It is possible for an investor to make changes to the details of his bank account. The investor must inform any change in his bank account details to his DP. This enables him to receive the cash corporate benefits (such as dividends, interests) directly into his account in time and discourages any unauthorized use by any second party. 3) Change in the address of investor as provided to the DP Any change in your address should be immediately informed to DP. This enables DP to make necessary changes in the records and informing the concerned companies about the same. 4) Opening multiple accounts An investor is allowed to open more than one account with existing DP or with different DPs. 5) Minimum balance of securities required in demat account There is no stipulated minimum balance of securities to be kept in a demat account. 6) Account opening and ownership pattern of securities One must make sure to open a demat account in the same ownership pattern in which the physical securities are held. For example: If you have two share certificates, one in your individual name (say 'X') and the other held jointly with some other individual (say 'XY'), then in such a case you will have to open two different accounts in respective ownership patterns (one in your name i.e. 'X' and the other account in the name of 'XY').

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7) Same combination of names on certificates but different sequence of names on the certificates or demat account Regulations provide that the client receives a contract note indicating details like order number, trade number, time, price, brokerge, etc. within 24 hours.of the trade. In case of any doubts about the details of the contract note, you (investor) can avail the facility provided by NSE, wherein you can verify the trades on your website www.nseindia.com/content/equities/eq_trdverify.htm. The Exchange generates and maintains an audit trail of orders/trades for a number of years.and you can counter check detais of order/trade with the Exchange. 8) Holding a joint account on "Either or Survivor" basis like a bank account No investor can open a demat account on "E or S" basis like a bank account. 9) Allowing somebody else to operate your Demat account It is possible for an account holder (Beneficiary Owner) to authorize some other person to operate the demat account on his behalf by executing a power of attorney. After submitting the power of attorney to the DP, that person can operate the account on behalf of the beneficiary owner (BO). 10) Addition/deletion of the names of the account holders after opening the account It is not possible to make changes in the names of the account holders of a BO account. A new account has to be opened in a desired holding/ownership pattern. 11) Closing a demat account and transfer of securities to another account with same or different DP An investor, if he wants, can also close his demat account with one DP and transfer all the securities to another account with existing or a different DP. As per a SEBI circular issued on November 09, 2005, there are no charges for account closure or transfer of securities by an investor from one DP to another 12) Freezing/Locking a demat account The account holder can freeze his demat account for a desired time period. A frozen account prevents securities to be transferred out of (Debit) and transferred into (Credit) the account.

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13) Dematerialised shares do not have any distinctive number Dematerialised securities are fungible assets. Therefore they are interchangeable and identical. 14) Rematerialisation The process of getting the securities in an electronic form, converted back into the physical form is known as Rematerialisation. An investor can rematerialise his shares by filling in a Remat Request Form (RRF). The whole process goes on as follows:

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Note:
Depository - An organization that facilitates holding of securities in the electronic form and enables DPs to provide services to investors relating to transaction in securities. There are two depositories in India, namely NSDL and CDSL. As per a SEBI guideline, the minimum net worth stipulated for a depository is Rs.100 crore. NSDL/CDSL - The securities are held in depository accounts, like the funds are held in bank accounts. There are two depositories in India namely NSDL and CDSL. NSDL (National Securities Depository limited) was established in August 1996 and is the first depository in India. CDSL (Central Depository Securities Limited) is the other depository and was established in 1999. DP (Depository Participant) - A Depository Participant can be a financial organization like banks, brokers, financial institutions, custodians, etc., acting as an agent of the Depository to make its services available to the investors. There are a total of 538 DPs registered with SEBI, as on March 31, 2006 and each DP is assigned a unique identification number known as DP-ID. Demat account is a safe and convenient means of holding securities just like a bank account is for funds. Today, practically 99.9% settlement (of shares) takes place on demat mode only. Thus, it is advisable to have a Beneficiary Owner (BO) account to trade at the exchanges.

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Bank Account Vs Demat Account S. No. 1. Basis Of Differentiation Form of Funds Holdings/Deposits Safekeeping of money Transfer of money (without actually handling money) A bank of choice Not Mandatory Bank Account Demat Account Securities Safekeeping of shares Transfer of shares (without actually handling shares) A DP of choice (can be a bank) Mandatory (effective from April 01, 2006)

2. Used for 3. Facilitates 4. Where to open 5. Requirement of PAN Number

No interest accruals on Interest accrual on Interest income is subject to securities held in demat 6. the applicable rate of interest holdings account 7. AQB* maintainance is Minimum balance specified for certain bank requirement accounts Either or Survivor Available facility No such requirement

8.

Not available

*AQB - Average Quarterly Balance

S. No. 1. 2. 3. 4. 5.

BASIS OF SIMILARITY Security and Convenience Number of accounts Transfer of deposits (funds or securities) Physical transfer of money/securities Nomination Facility

PARTICULARS Both are very safe and convenient means of holding deposits/securities No legal barrier on the number of bank or demat accounts that can be opened Funds/securities are transferred only at the instruction of the account holder Physical transfer of money/securities is not involved Available

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Benefits Of Demat Account:


A safe and convenient way of holding securities (equity and debt instruments both). Transactions involving physical securities are costlier than those involving dematerialised securities (just like the transactions through a bank teller are costlier than ATM transactions). Therefore, charges applicable to an investor are lesser for each transaction. Securities can be transferred at an instruction immediately. Increased liquidity, as securities can be sold at any time during the trading hours (between 9:55 AM to 3:30 PM on all working days), and payment can be received in a very short period of time. No stamp duty charges. Risks like forgery, thefts, bad delivery, delays in transfer etc, associated with physical certificates, are eliminated. Pledging of securities in a short period of time. Reduced paper work and transaction cost. Odd-lot shares can also be traded (can be even 1 share). Nomination facility available. Any change in address or bank account details can be electronically intimated to all companies in which investor holds any securities, without having to inform each of them separately. Securities are transferred by the DP itself, so no need to correspond with the companies. Shares arising out of bonus, split, consolidation, merger etc. are automatically credited into the demat account of the investor. Shares allotted in public issues are directly credited into demat account of the applicants in quick time.

Opening a Demat Account:


To start dealing in securities in electronic form, one needs to open a demat account with a DP of his choice. An investor already having shares in physical form should ensure that he gets the account opened in the same set of names as appearing on the share certificate; otherwise a new account can be opened in any desired pattern by the investor. Choose a DP
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Fill up an account opening form provided by DP, and sign an agreement with DP in a standard format prescribed by the depository. DP provides the investor with a copy of the agreement and schedule of charges for his future reference. DP opens the account and provides the investor with a unique account number, also known as Beneficiary Owner Identification Number (BO ID).

Documents to be attached:
Passport size photographs Proof of residence (POR) - Any one of Photo Ration Card with DOB / Photo Driving License with DOB / Passport copy / Electricity bill / Telephone bill Proof of identity (POI) - Any one of Passport copy / Photo Driving License with DOB / Voters ID Card / PAN Card / Photo Ration Card with DOB PAN card

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Survey Analysis:
Demographic Profile:

Gender
EXHIBIT I

Frequency Male Female Total 228 72 300

Percent 76.0 24.0 100.0

FIGURE I

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Age
EXHIBIT II

Frequency 20 years - 35 Years 36 Years- 50 Years 51 years - 65 Years Above 65 Years Total 133 116 39 12 300

Percent 44.3 38.7 13.0 4.0 100.0

FIGURE II

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Occupation
EXHIBIT III

Frequency Self Employed Government Employee Private Industry Employee Professionals Total 62 55 140 43 300

Percent 20.7 18.3 46.7 14.3 100.0

FIGURE III

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Monthly Income
EXHIBIT IV

Frequency 0 Rs.- 15000 Rs. 15001 Rs.- 30000 Rs. 30001 Rs.- 45000 Rs. Above 45000 Rs. Total 73 136 64 27 300

Percent 24.3 45.3 21.3 9.0 100.0

FIGURE IV

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1.

In which bank you have your account?

EXHIBIT 1

Frequency SBI BOB ICICI HSBC Axis Others 112 71 98 51 63 76

Percent 24 15 21 11 13 16

FIGURE 1.1

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FIGURE 1.2

INTERPRETATION :
From the above table and the column graph we can conclude that if we talk about a public Industry majority of the respondents are having their account in SBI while if we talk about a private Industry maximum number of respondents have preferred ICICI while the other banks are able to serve more or less the same number of customers. The pie-chart indicates that 24% of the share is enjoyed by SBI while with no much difference 21% is enjoyed by ICICI. HSBC is having the least share in the pie of just 11% but is not too far as compared to other banks.

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2.

Are you aware about the Third Party Products?

EXHIBIT 2

Frequency Yes No Total 242 58 300

Percent 80.7 19.3 100

FIGURE 2.1

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FIGURE 2.2

INTERPRETATION :
From the above table and the column graph we can interpret that 242 out of 300 respondents of Ahmedabad city are aware about the third party products while only 58 respondents have no idea regarding the same. The pie-chart clearly indicates that the respondents who know about the third party products consists of 81 % while the respondents having no knowledge of these products are 19 %. Here we can observe that the awareness of the third party products is quite satisfactory as it consists of 81 % of the total respondents under survey but still even the remaining 19 % should be made aware regarding the dealing through third party products as even they play a major role in the investment market.

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If yes, then have you ever invested for the Third Party Products?

EXHIBIT 2.1

Frequency Yes No Total Missing Grand Total 224 18 242 58 300

Percent 92.6 7.4 100

FIGURE 2.1.1

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FIGURE 2.2.1

INTERPRETATION :
The table and the column graph indicate that 224 respondents out of 242 has invested in the third party products while 18 respondents are aware about the products but had not invested yet. The above pie-chart shows that out of the respondents who are aware about the third party products, majority of them had invested in it which consists of 93 % while only 7 % are yet to invest. From this result we can conclude that the investment in the third party products are not so risky as it seems to be as large number of respondents has opted for it.

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3.

Do you think Banks need to deal with the Third Party Products ?

EXHIBIT 3

Frequency Yes No Total Missing Grand Total 177 65 242 58 300

Percent 73.1 26.9 100

FIGURE 3.1

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FIGURE 3.2

INTERPRETATION :
Above column graph interprets that 177 respondents thinks that banks should deal with the third party products while 65 respondents out of 300 respondents thinks that the banks should not deal in this products. The pie-chart shows that 73 % of the respondents are in favour of the banks dealing in the third party products as they think that banks can provide better facilities in this products while only 27 % of respondents thinks that dealing in the third party products is not a job of the banks and so it should concentrate only to its banking services.

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4.

In which products have you invested through banks?

EXHIBIT 4

Frequency Insurance Mutual Funds Demat Account Services Other 150 121 40 7

Percent 47 38 13 2

FIGURE 4.1

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FIGURE 4.2

INTERPRETATION :
The table and graph very clearly show that the respondents are more inclined towards the investment in Insurance as 150 respondents has invested in it as a third party product which includes both life insurance and general insurance while Demat services offered by the banks are not so prevalent in customers as a third party product. But still investment in Mutual Funds is good enough as it comprises of 121 respondents altogether. Above pie-chart infers that insurance is the most preferred investment by the respondents as a third party product investment and after that mutual fund with no much variation in the customer preference has shared about 38% of the pie. While other services including the Demat service comprises of the remaining 15%.

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5.

Through which banks you invested in the Third Party Products (TPP) ?

EXHIBIT 5

Frequency SBI BOB ICICI HSBC Axis Others 102 42 64 33 34 43

Percent 32 13 20 10 11 14

FIGURE 5.1

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FIGURE 5.2

INTERPRETATION :
The column graph interprets that the respondents prefer the banks like SBI and ICICI the most for their third party products investment as 102 and 64 respondents respectively has shown their preference towards these banks. While BOB is preferred by 42 respondents and HSBC and Axis are preferred by almost same number of respondents i.e. 33 and 34 respondents respectively. The pie-chart shows that there is a difference of almost 12% between the most preferred banks i.e. SBI and the least preferred bank i.e. HSBC while the other banks are more or less equal in their customer base for the TPP investments except ICICI which still leads by having a share of 20%.

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6.

What is your sources of information while investing in Third Party Products provided by Banks ?

EXHIBIT 6

Frequency Internet Newspaper Financial Advisor Friends Advertisement 83 81 106 123 49

Percent 19 18 24 28 11

FIGURE 6.1

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FIGURE 6.2

INTERPRETATION :
The table and the column graph depicts that the most preferred source of information for the third party investment are the friends and the financial advisor as 123 and 106 respondents respectively has opted for them while internet and newspapers are preferred by about 83 respondents. Here advertisements are least influential to the customers as a source of information as only 49 respondents as preferred it. The above pie-chart shows that 28% of the respondents like to take the friends help and advice for the investment purpose while 24% prefer the financial advisor for the same. The other sources are having more or less the same share in the pie of around 11% to 19%.

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7. Rank the following criteria you consider before taking the decision of investment through particular bank ?

EXHIBIT 7

Rank 1 Services Credit worthiness Trust Bank Charges Return Management Pattern 52 12 21 66 62 11

Rank 2 29 27 19 64 76 9

Rank 3 66 26 29 37 42 24

Rank 4 40 70 23 32 23 36

Rank 5 20 57 90 14 19 24

Rank 6 17 32 42 11 2 120

FIGURE 7.1

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SERVICES

EXHIBIT 7.1

Frequency Rank 1 Rank 2 Rank 3 Rank 4 Rank 5 Rank 6 Total Missing Grand Total 52 29 66 40 20 17 224 76 300

Percent 23.2 12.9 29.5 17.9 8.9 7.6 100

FIGURE 7.2.1

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CREDIT WORTHINESS

EXHIBIT 7.2

Frequency Rank 1 Rank 2 Rank 3 Rank 4 Rank 5 Rank 6 Total Missing Grand Total 12 27 26 70 57 32 224 76 300

Percent 5.4 12.1 11.6 31.3 25.4 14.3 100

FIGURE 7.2.2

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TRUST

EXHIBIT 7.3

Frequency Rank 1 Rank 2 Rank 3 Rank 4 Rank 5 Rank 6 Total Missing Grand Total 21 19 29 23 90 42 224 76 300

Percent 9.4 8.5 12.9 10.3 40.2 18.8 100

FIGURE 7.2.3

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BANK CHARGES

EXHIBIT 7.4

Frequency Rank 1 Rank 2 Rank 3 Rank 4 Rank 5 Rank 6 Total Missing Grand Total 66 64 37 32 14 11 224 76 300

Percent 29.5 28.6 16.5 14.3 6.3 4.9 100

FIGURE 7.2.4

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RETURN

EXHIBIT 7.5

Frequency Rank 1 Rank 2 Rank 3 Rank 4 Rank 5 Rank 6 Total Missing Grand Total 62 76 42 23 19 2 224 76 300

Percent 27.7 33.9 18.8 10.3 8.5 .9 100

FIGURE 7.2.5

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MANAGEMENT PATTERN

EXHIBIT 7.6

Frequency Rank 1 Rank 2 Rank 3 Rank 4 Rank 5 Rank 6 Total Missing Grand Total 11 9 24 36 24 120 224 76 300

Percent 4.9 4.0 10.7 16.1 10.7 53.6 100

FIGURE 7.2.6

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INTERPRETATION :
The table and the column graph shows that maximum number of respondents i.e. 66 has selected a criterion of bank charges as the most important for taking the decision of TPP investment through banks while return is preferred by 62 respondents. The next best and the important criterion is the services provided by the banks as 52 respondents prefer it. Here the criterion which is least preferred by the respondents is the management pattern as 120 respondents dont consider it to be the important one. Here the different pie-charts for each criteria helps in interpreting that services are ranked as most important by 23% of the respondents while least important by 8% of the respondents. If we talk about trust 9% of the respondents are more favourable to its importance while 19% of respondents are least favourable. In the same way return is considered to be the least important by only 0.9% of the respondents while as most important by 28% of the respondents.

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8. How will you rate the Satisfaction level of the services provided to you by the Banks through which you made your investment ?

EXHIBIT 8

Frequency Highly satisfied Satisfied Moderate Dissatisfied Highly Dissatisfied Total Missing Grand Total 12 101 72 31 8 224 76 300

Percent 5.4 45.1 32.1 13.8 3.6 100.0

FIGURE 8.1

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FIGURE 8.2

INTERPRETATION :
The above table and the column graph clearly indicates the satisfaction level of the respondents regarding the services provided by the banks through which they had made their investment of the third party products. Here we can see that the respondents who are highly satisfied with the services of the banks are only 12 out of 224, the respondents who are satisfied are 101, the respondents who place themselves in between the satisfied and the dissatisfied one i.e. on a moderate level are 72, the dissatisfied respondents are 31 while the respondents who are highly dissatisfied are only 8. From the above pie-chart we can observe that the highly satisfied respondents are 5 % ,highly dissatisfied respondents are 4 %, the respondents who are dissatisfied with the services of the banks regarding the third party products are 14 % while the major share of the pie is enjoyed by the satisfied respondents which is 45 % and the respondents who has shown a kind of diplomacy in their response are 32 % which includes the respondents who are at moderate level.

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9.

Do you invest in Insurance through banks ?

EXHIBIT 9

Frequency Yes No Total Missing Grand Total 150 92 242 58 300

Percent 62 38 100

FIGURE 9.1

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FIGURE 9.2

INTERPRETATION :
We can observe from the above table and the column graph that the respondents who had invested in the third party products through banks and that also particularly in the insurance are 150 out of 242 respondents while 92 respondents had invested in such products through banks but not in insurance. The pie-chart shows that 62 % of the respondents had invested in insurance through banks while 38 % of the respondents are yet not investing in the insurance provided by banks. Here we can notice that still large number of respondents does not think insurance through banks as a better option of investment.

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If yes, then which type of Insurance you generally take from Banks ? General Insurance

EXHIBIT 9.1

Frequency Yes No Total Missing Grand Total 87 63 150 150 300

Percent 58 42 100

FIGURE 9.1.1

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FIGURE 9.2.1

INTERPRETATION :
The above table and the column graph interprets that out the respondents who deal in insurance through banks 87 respondents deal in general insurance while 63 respondents do not prefer investment in general insurance. The above pie-chart indicates that 58 % of the respondents deal in general insurance through banks while 42 % of the respondents do not invest in any kind of insurance which is included in the category of general insurance through banks.

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Life Insurance

EXHIBIT 9.2

Frequency Yes No Total Missing Grand Total 140 10 150 150 300

Percent 93.3 6.7 100

FIGURE 9.1.2

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FIGURE 9.2.2

INTERPRETATION : The table and the column graph shows that 140 respondents out of 150 invest in life insurance provided by banks as a third party product while only 10 respondents do not prefer investment in life insurance through banks. The pie-chart shows that 93 % of the respondents prefer investment in life insurance through banks while just 7 % of the respondents do not find it a feasible option to invest in life insurance through banks as a third party product investment.

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10. What amount of your monthly income you invest in Insurance through Banks ?
EXHIBIT 10

Frequency Less than 10% 10%-20% 20%-30% More than 30% Total Missing Grand Total 52 65 24 9 150 150 300

Percent 34.7 43.3 16 6 100

FIGURE 10.1

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FIGURE 10.2

INTERPRETATION :
The above table and column graph indicates that majority of the respondents prefer an investment of 10 % - 20% of their monthly income in the insurance through banks while the respondents who invest less than 10 % of their monthly income are 52, the other results are like 24 respondents prefer to invest 20 % - 30 % of their monthly income and only 9 respondents invest more than 30 % of their monthly income in insurance through banks as a third party product investment. The pie-chart indicates that 43 % of the respondents invest 10% - 20% of their monthly income in the insurance provided by banks as not in much variation to that about 35% of the respondents invest less than 10% of their monthly income in insurance, now the remaining 22% is shared by the respondents investing 20% - 30% of their monthly income and the respondents investing more than 30% of their monthly income as 16% and 6% respectively.

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11.

Rank the following reasons for taking Insurance from Banks ?


EXHIBIT 11

Rank 1 Security Savings Brand name of the Bank Easy accessibility 71 51 17 11

Rank 2 35 72 20 23

Rank 3 27 21 57 45

Rank 4 17 6 56 71

FIGURE 11.1

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SECURITY
EXHIBIT 11.1

Frequency Rank 1 Rank 2 Rank 3 Rank 4 Total Missing Grand Total 71 35 27 17 150 150 300

Percent 47.3 23.3 18 11.3 100

FIGURE 11.2.1

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SAVINGS
EXHIBIT 11.2

Frequency Rank 1 Rank 2 Rank 3 Rank 4 Total Missing Grand Total 51 72 21 6 150 150 300

Percent 34 48 14 4 100

FIGURE 11.2.2

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BRAND NAME
EXHIBIT 11.3

Frequency Rank 1 Rank 2 Rank 3 Rank 4 Total Missing Grand Total 17 20 57 56 150 150 300

Percent 11.3 13.3 38 37.3 100

FIGURE 11.2.3

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EASY ACCESSIBILITY
EXHIBIT 11.4

Frequency Rank 1 Rank 2 Rank 3 Rank 4 Total Missing Grand Total 11 23 45 71 150 150 300

Percent 7.3 15.3 30 47.3 100

FIGURE 11.2.4

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INTERPRETATION :
The table and the graph very clearly indicates that the reasons for taking insurance through banks are very straight forward as 71 respondents prefer security as a main or most important reason for taking insurance while 51 respondents believe it to be savings. The brand name and the easy accessibility are preferred by only 17 and 11 respondents respectively. The pie-charts also makes it clear that 48% of the respondents has ranked security as the most important reason for taking the insurance while only 7% of the respondents has considered the easy accessibility criteria as the most important one.

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12. What are the benefits you receive from the investment in Insurance through Banks ?
EXHIBIT 12

Frequency Availability of a complete package Good quality product Time saving & convenience Low premium Other 29 54 89 99 15

Percent 10 19 31 35 5

FIGURE 12.1

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FIGURE 12.2

INTERPRETATION :
The column graph indicates that the maximum number of respondents i.e. 99 considered the low premium as the most attractive benefit for the investment in insurance through banks while time saving and convenience are selected by 89 respondents. Above pie-chart shows that 10% of the respondents prefer the benefit of availability of a complete package as the most important benefit but not all the other respondents feel the same way as most of them has opted for low premium which comprises of 35% of the respondents which is a large number as compared to the total result.

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13. Are you satisfied with the services provided by your bank regarding TPP Investment ?
EXHIBIT 13

Frequency Yes No Total Missing Grand Total 126 24 150 150 300

Percent 84 16 100

FIGURE 13.1

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FIGURE 13.2

INTERPRETATION :
The above table and column graph shows that 126 respondents out of 150 respondents who invest in insurance through banks as a third party product investment are satisfied with the services provided by the banks while only 24 respondents are not satisfied with the services of banks in insurance. We can observe from the above pie-chart that majority of the investors are satisfied by the services provided by the banks regarding their third party products investment as only 16% of the respondents has shown their dissatisfied attitude towards the services of banks. Here it can be noticed from the above result that banks are performing well in such products by providing better and on-time services to their customers.

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14. Do you invest in Mutual Funds through Banks ?

EXHIBIT 14

Frequency Yes No Total Missing Grand Total 121 121 242 58 300

Percent 50 50 100

FIGURE 14.1

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FIGURE 14.2

INTERPRETATION :
The table and the graph shows that the respondents who invest in mutual funds through banks and the respondents who do not invest in the mutual funds are almost the same as the number of respondents in both the case are 121. The perfectly semi-circle shape of pie-chart also shows that 50% of the respondents are having their TPP investments through banks as a mutual fund and 50% of the respondents do not prefer mutual fund to be a feasible option for the TPP investments.

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If yes, then are you a regular or new investor in Mutual Funds ?

EXHIBIT 14.1

Frequency Regular New Total Missing Grand Total 82 39 121 179 300

Percent 67.8 32.2 100

FIGURE 14.1.1

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FIGURE 14.2.1

INTERPRETATION :
The above column graph indicates that out of the total investors of mutual fund 82 respondents are the regular players in it while 39 respondents are new in this field of mutual fund investment. The pie-chart also shows very clearly that 68% of the respondents are the regular investors while 32% are the new investors.

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15. What amount of your monthly income you invest in Mutual Funds through Banks ?
EXHIBIT 15

Frequency Less than 10% 10%-20% 20%-30% More than 30% Total Missing Grand Total 57 38 16 10 121 179 300

Percent 47.1 31.4 13.2 8.3 100

FIGURE 15.1

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FIGURE 15.2

INTERPRETATION :
The above table and column graph indicates that majority of the respondents prefer an investment of less than 10 % of their monthly income in the insurance through banks while the respondents who invest 10 % - 20% of their monthly income are 38, the other results are like 16 respondents prefer to invest 20 % - 30 % of their monthly income and only 10 respondents invest more than 30 % of their monthly income in insurance through banks as a third party product investment. The pie-chart indicates that 32 % of the respondents invest 10% - 20% of their monthly income in the insurance provided by banks as not in much variation to that about 47% of the respondents invest less than 10% of their monthly income in insurance, now the remaining 21% is shared by the respondents investing 20% - 30% of their monthly income and the respondents investing more than 30% of their monthly income as 13% and 8% respectively.

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16.

Which type of fund you prefer the most ?

EXHIBIT 16

Frequency Equity Debt Balanced Money Market Others Total Missing Grand Total 31 21 42 21 6 121 179 300

Percent 25.6 17.4 34.7 17.4 5 100

FIGURE 16.1

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FIGURE 16.2

INTERPRETATION :
The column graph and the table clearly shows that the most preferred type of fund is the balance one which comprises of both debt and equity as 42 respondents has shown their inclination towards it, then equity is preferred by 31 respondents, and debt and money market by 21 respondents. The pie-chart interprets that 35% of the respondents prefer the balanced fund which is the highest share while only 5% of the respondents has preferred the other funds which may include thematic funds, sip, etc.

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17. Rank the following factors which influence you to invest in Mutual Funds provided by various Banks?
EXHIBIT 17

Rank 1 Brand Name Trade Convenience Less Risk Trust Services 30 21 34 20 18

Rank 2 25 14 29 23 29

Rank 3 20 20 27 14 41

Rank 4 27 32 19 29 14

Rank 5 19 34 12 35 19

FIGURE 17.1

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BRAND NAME

EXHIBIT 17.1

Frequency Rank 1 Rank 2 Rank 3 Rank 4 Rank 5 Total Missing Grand Total 30 25 20 27 19 121 179 300

Percent 24.8 20.7 16.5 22.3 15.7 100

FIGURE 17.2.1

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TRADE CONVENIENCE

EXHIBIT 17.2

Frequency Rank 1 Rank 2 Rank 3 Rank 4 Rank 5 Total Missing Grand Total 21 14 20 32 34 121 179 300

Percent 17.4 11.6 16.5 26.4 28.1 100

FIGURE 17.2.2

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LESS RISK

EXHIBIT 17.3

Frequency Rank 1 Rank 2 Rank 3 Rank 4 Rank 5 Total Missing Grand Total 34 29 27 19 12 121 179 300

Percent 28.1 24 22.3 15.7 9.9 100

FIGURE 17.2.3

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TRUST

EXHIBIT 17.4

Frequency Rank 1 Rank 2 Rank 3 Rank 4 Rank 5 Total Missing Grand Total 20 23 14 29 35 121 179 300

Percent 16.5 19 11.6 24 28.9 100

FIGURE 17.2.4

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SERVICES

EXHIBIT 17.5

Frequency Rank 1 Rank 2 Rank 3 Rank 4 Rank 5 Total Missing Grand Total 18 29 41 14 19 121 179 300

Percent 14.9 24 33.9 11.6 15.7 100

FIGURE 17.2.5

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INTERPRETATION :

The table and the graph very clearly indicates that the reasons for taking mutual funds through banks are very straight forward as 34 respondents prefer less risk as a main or most important reason for investing in mutual funds while 30 respondents believe it to be the brand name. The trade convenience, trust and services are preferred by only 21,20 and 18 respondents respectively. The pie-charts also makes it clear that 28% of the respondents has ranked less risk as the most important reason for investing in the mutual funds while only 15% of the respondents has considered the service criteria as the most important one.

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18. If you are not investing in the Mutual Funds provided by banks then what are the reasons behind it ?

EXHIBIT 18

Frequency Availability of less brands Lack of awareness Do not prefer investment in Mutual Fund Inappropriate services/ Improper management Bad experience in the past Others 21 32 28 38 42 5

Percent 13 19 17 23 25 3

FIGURE 18.1

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FIGURE 18.2

INTERPRETATION :
The graph and the table indicates that if anybody is not investing in the mutual funds through banks the reasons are like, 42 respondents had a bad experience in the past,38 respondents are not satisfied with the services of the banks in regard to it while 32 respondents are not fully aware of the nitty-gritty of the mutual funds and so they prefer not to invest in that. The pie-chart shows that 25% of the respondents had suffered a bad experience in the past, 17% of the respondents do not prefer investment in the mutual funds while 13% believe that banks do not provide all the brands of mutual funds for their investments.

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19.

Do you have Demat Account with any Bank/Broking Firm?

EXHIBIT 19

Frequency Yes No Total Missing Grand Total 209 33 242 58 300

Percent 86.4 13.6 100

FIGURE 19.1

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FIGURE 19.2

INTERPRETATION :
The column graph and the table shows that out of 242 respondents 209 respondents are having their demat account with any bank or broking firm while only 33 respondents are having no demat account. This can also be observed from the pie-chart that 86% of the respondents have their demat account while only 14% of the respondents still lack the same.

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20. Rank the following reasons for selecting the Demat Account Services provided by Banks?
EXHIBIT 20

Rank 1 Low brokerage Online - offline trading facility Good SMS tips Convenience No Annual Maintenance Charge 13 6 2 7 12

Rank 2 15 9 2 10 7

Rank 3 8 12 4 3 12

Rank 4 3 8 13 11 4

Rank 5 1 5 19 9 5

FIGURE 20.1

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LOW BROKERAGE

EXHIBIT 20.1

Frequency Rank 1 Rank 2 Rank 3 Rank 4 Rank 5 Total Missing Grand Total 13 15 8 3 1 40 260 300

Percent 32.5 37.5 20 7.5 2.5 100

FIGURE 20.2.1

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ONLINE-OFFLINE TRADING FACILITY

EXHIBIT 20.2

Frequency Rank 1 Rank 2 Rank 3 Rank 4 Rank 5 Total Missing Grand Total 6 9 12 8 5 40 260 300

Percent 15 22.5 30 20 12.5 100

FIGURE 20.2.2

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GOOD SMS TIPS

EXHIBIT 20.3

Frequency Rank 1 Rank 2 Rank 3 Rank 4 Rank 5 Total Missing Grand Total 2 2 4 13 19 40 260 300

Percent 5 5 10 32.5 47.5 100

FIGURE 20.2.3

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CONVENIENCE

EXHIBIT 20.4

Frequency Rank 1 Rank 2 Rank 3 Rank 4 Rank 5 Total Missing Grand Total 7 10 3 11 9 40 260 300

Percent 17.5 25 7.5 27.5 22.5 100

FIGURE 20.2.4

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NO ANNUAL MAINTENANCE CHARGE

EXHIBIT 20.5

Frequency Rank 1 Rank 2 Rank 3 Rank 4 Rank 5 Total Missing Grand Total 12 7 12 4 5 40 260 300

Percent 30 17.5 30 10 12.5 100

FIGURE 20.2.5

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INTERPRETATION :
The above table and the column graph shows that the most preferred reasons for having Demat account are the low brokerage and the absence of annual maintenance charges as 13 respondents has opted for the same while all the other reasons are having more or less the same preference. The pie-chart also shows that low brokerage is ranked as most important by 32% of the respondents, online-offline trading facility by 15% of the respondents while good sms tips by only 5% of the respondents.

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21.

Are you satisfied with the Demat Account Services provided by the Banks ?
EXHIBIT 21

Frequency Yes No Total Missing Grand Total 37 3 40 260 300

Percent 92.5 7.5 100

FIGURE 21.1

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FIGURE 21.2

INTERPRETATION :
The column graph indicates that out of 40 respondents receiving their demat services through banks 37 respondents are satisfied by the same while only 3 respondents are not satisfied by the services of the banks. The pie-chart also shows that 92% of the respondents have a satisfactory attitude while only 8% still seeks better services from banks.

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22. If you do not opt for Demat Account Services provided by banks then what is the reason behind it?

EXHIBIT 22

Frequency Lack of awareness Do not prefer investment in Stock Market Inappropriate services/ Improper management Bad experience in the past Others 55 79 67 54 23

Percent 20 28 24 20 8

FIGURE 22.1

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FIGURE 22.2

INTERPRETATION :
The above column graph interprets that out of the respondents who do not prefer Demat services of the banks, 79 respondents do not prefer investment in the stock market,67 respondents are not satisfied with the services while others are either not fully aware of the market or had some other reasons. The pie-chart also shows that 28% of the respondents do not prefer a stock market investment, 20% of the respondents either had bad experience in the past or are not aware about the market.

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Hypothesis Analysis:
1) Kruskal wallis test: Criteria considered for TPP Investment and Occupation
EXHIBIT 1.1

Occupation Services Self Employed Government Employee Private Industry Employee Professionals Total Credit worthiness Self Employed Government Employee Private Industry Employee Professionals Total Trust Self Employed Government Employee Private Industry Employee Professionals Total Bank charges Self Employed Government Employee Private Industry Employee Professionals Total Return Self Employed Government Employee Private Industry Employee Professionals Total Self Employed Management Pattern Government Employee Private Industry Employee Professionals Total

N 44 44 107 29 224 44 44 107 29 224 44 44 107 29 224 44 44 107 29 224 44 44 107 29 224 44 44 107 29 224

Mean Rank 128.26 112.15 116.59 74.02 122.08 105.80 111.79 110.76 108.15 98.02 116.28 127.12 103.90 123.03 108.97 122.60 105.75 116.20 112.00 118.98 103.32 120.26 112.22 115.69

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Test Statisticsa,b Services Chi-Square 13.911 Df Asymp. Sig. 3 .003 Credit worthiness 1.549 3 .671 Trust 4.583 3 .205 Management Bank charges Return Pattern 3.138 3 .371 .985 3 .805 1.890 3 .596

a. Kruskal Wallis Test b. Grouping Variable: Occupation

SERVICES
Ho: There are no differences among the population groups so they have same mean H1: There are differences among the population groups so they do not have same mean

Interpretation:
As observed significance level is below 0.05, there is significant difference in importance that respondents in the occupation groups give to the services while taking investment decision. Thus, Ho is rejected and H1 is accepted. Moreover, analysis of the mean ranks shown in the above table indicates that professionals give the maximum importance to services offered by banks among all the occupation groups while Self-employed give the least importance to services offered by banks in making investment decision.

CREDIT WORTHINESS
Ho: There are no differences among the population groups so they have same mean H1: There are differences among the population groups so they do not have same mean

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Interpretation:
As observed significance level is above 0.05, there is no significant difference in importance that respondents in the occupation groups give to the creditworthiness while taking investment decision. Thus, Ho is accepted and H1 is rejected.

TRUST
Ho: There are no differences among the population groups so they have same mean H1: There are differences among the population groups so they do not have same mean

Interpretation:
As observed significance level is above 0.05, there is no significant difference in importance that respondents in the occupation groups give to the trust while taking investment decision. Thus, Ho is accepted and H1 is rejected.

BANK CHARGES
Ho: There are no differences among the population groups so they have same mean H1: There are differences among the population groups so they do not have same mean

Interpretation:
As observed significance level is above 0.05, there is no significant difference in importance that respondents in the occupation groups give to the bank charges while taking investment decision. Thus, Ho is accepted and H1 is rejected.

RETURN
Ho: There are no differences among the population groups so they have same mean H1: There are differences among the population groups so they do not have same mean

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Interpretation:
As observed significance level is above 0.05, there is no significant difference in importance that respondents in the occupation groups give to the return while taking investment decision. Thus, Ho is accepted and H1 is rejected.

MANAGEMENT PATTERN
Ho: There are no differences among the population groups so they have same mean H1: There are differences among the population groups so they do not have same mean

Interpretation:
As observed significance level is above 0.05, there is no significant difference in importance that respondents in the occupation groups give to the return while taking investment decision. Thus, Ho is accepted and H1 is rejected.

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Criteria considered for TPP Investment and Age


EXHIBIT 1.2

Age Services 20 years - 35 Years 36 Years- 50 Years 51 years - 65 Years Above 65 Years Total Credit worthiness 20 years - 35 Years 36 Years- 50 Years 51 years - 65 Years Above 65 Years Total Trust 20 years - 35 Years 36 Years- 50 Years 51 years - 65 Years Above 65 Years Total Bank charges 20 years - 35 Years 36 Years- 50 Years 51 years - 65 Years Above 65 Years Total Return 20 years - 35 Years 36 Years- 50 Years 51 years - 65 Years Above 65 Years Total Management Pattern 20 years - 35 Years 36 Years- 50 Years 51 years - 65 Years Above 65 Years Total

N 111 78 27 8 224 111 78 27 8 224 111 78 27 8 224 111 78 27 8 224 111 78 27 8 224 111 78 27 8 224

Mean Rank 111.97 111.80 110.17 134.50 113.95 105.85 117.04 141.94 117.22 99.03 128.83 123.31 123.64 103.43 100.37 87.38 101.94 129.29 111.83 97.50 105.50 126.08 109.48 87.44

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Test Statisticsa,b Services Chi-Square Df Asymp. Sig. 1.021 3 .796 Credit worthiness 2.809 3 .422 Trust 6.383 3 .094 Bank charges Return Management Pattern 7.371 3 .061 9.250 3 .026 7.121 3 .068

a. Kruskal Wallis Test b.Grouping Variable: Age

SERVICES
Ho: There are no differences among the population groups so they have same mean H1: There are differences among the population groups so they do not have same mean

Interpretation:
As observed significance level is above 0.05, there is no significant difference in importance that respondents in the age groups give to the services while taking investment decision. Thus, Ho is accepted and H1 is rejected.

CREDITWORTHINESS
Ho: There are no differences among the population groups so they have same mean H1: There are differences among the population groups so they do not have same mean

Interpretation:
As observed significance level is above 0.05, there is no significant difference in importance that respondents in the age groups give to the creditworthiness while taking investment decision. Thus, Ho is accepted and H1 is rejected.

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TRUST
Ho: There are no differences among the population groups so they have same mean H1: There are differences among the population groups so they do not have same mean

Interpretation:
As observed significance level is above 0.05, there is no significant difference in importance that respondents in the age groups give to the trust while taking investment decision. Thus, Ho is accepted and H1 is rejected.

BANK CHARGES
Ho: There are no differences among the population groups so they have same mean H1: There are differences among the population groups so they do not have same mean

Interpretation:
As observed significance level is above 0.05, there is no significant difference in importance that respondents in the age groups give to the bank charges while taking investment decision. Thus, Ho is accepted and H1 is rejected.

RETURN
Ho: There are no differences among the population groups so they have same mean H1: There are differences among the population groups so they do not have same mean

Interpretation:
As observed significance level is below 0.05, there is significant difference in importance that respondents in the age groups give to the return while taking investment decision. Thus, Ho is accepted and H1 is rejected. The mean rank table signify that respondents in age group of above 65 years give maximum importance to returns. This is due to the fact that after 65 years any individual would prefer that he can earn the most from the investment because at this age it is the only source of income for him.
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MANAGEMENT PATTERN
Ho: There are no differences among the population groups so they have same mean H1: There are differences among the population groups so they do not have same mean

Interpretation:
As observed significance level is above 0.05, there is no significant difference in importance that respondents in the age groups give to the management pattern while taking investment decision. Thus, Ho is accepted and H1 is rejected.

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Criteria considered for TPP Investment and Monthly Income

EXHIBIT 1.3

Monthly Income

N 66 107 35 16 224 66 107 35 16 224 66 107 35 16 224 66 107 35 16 224 66 107 35 16 224 66 107 35 16 224

Mean Rank 111.48 110.69 116.06 121.03 108.92 114.52 107.53 124.59 103.91 121.08 98.90 120.28 116.92 117.64 105.83 74.47 119.55 104.26 125.36 110.41 114.46 105.14 130.07 115.22

Services

0 Rs.- 15000 Rs. 15001 Rs.- 30000 Rs. 30001 Rs.- 45000 Rs. Above 45000 Rs. Total

Credit worthiness

0 Rs.- 15000 Rs. 15001 Rs.- 30000 Rs. 30001 Rs.- 45000 Rs. Above 45000 Rs. Total

Trust

0 Rs.- 15000 Rs. 15001 Rs.- 30000 Rs. 30001 Rs.- 45000 Rs. Above 45000 Rs. Total

Bank charges

0 Rs.- 15000 Rs. 15001 Rs.- 30000 Rs. 30001 Rs.- 45000 Rs. Above 45000 Rs. Total

Return

0 Rs.- 15000 Rs. 15001 Rs.- 30000 Rs. 30001 Rs.- 45000 Rs. Above 45000 Rs. Total

Management Pattern

0 Rs.- 15000 Rs. 15001 Rs.- 30000 Rs. 30001 Rs.- 45000 Rs. Above 45000 Rs. Total

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Test Statisticsa,b Services Credit worthiness Chi-Square Df Asymp. Sig. .506 3 .918 1.129 3 .770 Trust 5.205 3 .157 Bank charges Return Management Pattern 7.274 3 .064 4.194 3 .241 4.816 3 .186

a. Kruskal Wallis Test b. Grouping Variable: Monthly Income

SERVICES
Ho: There are no differences among the population groups so they have same mean H1: There are differences among the population groups so they do not have same mean

Interpretation:
As observed significance level is above 0.05, there is no significant difference in importance that respondents in the income groups give to the services while taking investment decision. Thus, Ho is accepted and H1 is rejected.

CREDITWORTHINESS
Ho: There are no differences among the population groups so they have same mean H1: There are differences among the population groups so they do not have same mean

Interpretation:
As observed significance level is above 0.05, there is no significant difference in importance that respondents in the income groups give to the creditworthiness while taking investment decision. Thus, Ho is accepted and H1 is rejected.

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TRUST
Ho: There are no differences among the population groups so they have same mean H1: There are differences among the population groups so they do not have same mean

Interpretation:
As observed significance level is above 0.05, there is no significant difference in importance that respondents in the income groups give to the trust while taking Investment decision. Thus, Ho is accepted and H1 is rejected.

BANK CHARGES
Ho: There are no differences among the population groups so they have same mean H1: There are differences among the population groups so they do not have same mean

Interpretation:
As observed significance level is above 0.05, there is no significant difference in importance that respondents in the income groups give to the bank charges while taking investment decision. Thus, Ho is accepted and H1 is rejected.

RETURN
Ho: There are no differences among the population groups so they have same mean H1: There are differences among the population groups so they do not have same mean

Interpretation:
As observed significance level is above 0.05, there is no significant difference in importance that respondents in the income groups give to the return while taking investment decision. Thus, Ho is accepted and H1 is rejected.

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MANAGEMENT PATTERN
Ho: There are no differences among the population groups so they have same mean H1: There are differences among the population groups so they do not have same mean

Interpretation:
As observed significance level is above 0.05, there is no significant difference in importance that respondents in the income groups give to the management pattern while taking investment decision. Thus, Ho is accepted and H1 is rejected.

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2) MANN-WHITNEY U TEST

Criteria considered for TPP Investment and Gender


EXHIBIT 2.1

Gender Services Male Female Total Credit worthiness Male Female Total Trust Male Female Total Bank charges Male Female Total Return Male Female Total Management Pattern Male Female Total

N 173 51 224 173 51 224 173 51 224 173 51 224 173 51 224 173 51 224

Mean Rank 112.66 111.95

Sum of Ranks 19490.50 5709.50

114.68 105.12

19839.00 5361.00

113.03 110.71

19554.00 5646.00

112.97 110.89

19544.50 5655.50

111.75 115.03

19333.50 5866.50

111.12 117.19

19223.50 5976.50

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Test Statisticsa Credit Services Mann-Whitney U Wilcoxon W Z Asymp. Sig. (2-tailed) a. Grouping Variable: Gender 4383.500 5709.500 -.071 .944 worthiness 4035.000 5361.000 -.951 .341 Trust 4320.000 5646.000 -.234 .815 Bank charges 4329.500 5655.500 -.208 .836 Return 4282.500 19333.500 -.329 .742 Management Pattern 4172.500 19223.500 -.641 .521

SERVICES
Ho: There are no differences among the two population groups so they have same mean H1: There are differences among the two population groups so they do not have same mean

Interpretation:
As observed significance level is above 0.05, there is no significant difference in importance that male and female respondents give to the services while taking investment decision. Thus, Ho is accepted and H1 is rejected.

CREDITWORTHINESS
Ho: There are no differences among the two population groups so they have same mean H1: There are differences among the two population groups so they do not have same mean

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Interpretation:
As observed significance level is above 0.05, there is no significant difference in importance that male and female respondents give to the creditworthiness while taking investment decision. Thus, Ho is accepted and H1 is rejected.

TRUST
Ho: There are no differences among the two population groups so they have same mean H1: There are differences among the two population groups so they do not have same mean

Interpretation:
As observed significance level is above 0.05, there is no significant difference in importance that male and female respondents give to the trust while taking investment decision. Thus, Ho is accepted and H1 is rejected.

BANK CHARGES
Ho: There are no differences among the two population groups so they have same mean H1: There are differences among the two population groups so they do not have same mean

Interpretation:
As observed significance level is above 0.05, there is no significant difference in importance that male and female respondents give to the bank charges while taking investment decision. Thus, Ho is accepted and H1 is rejected.

RETURN
Ho: There are no differences among the two population groups so they have same mean H1: There are differences among the two population groups so they do not have same mean
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Interpretation:
As observed significance level is above 0.05, there is no significant difference in importance that male and female respondents give to the return while taking investment decision. Thus, Ho is accepted and H1 is rejected.

MANAGEMENT PATTERN
Ho: There are no differences among the two population groups so they have same mean H1: There are differences among the two population groups so they do not have same mean

Interpretation:
As observed significance level is above 0.05, there is no significant difference in importance that male and female respondents give to the management pattern while taking investment decision. Thus, Ho is accepted and H1 is rejected.

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3) Z-Test Ho: p = 0.5 50% of people prefer investing in balanced type of fund H1: p < 0.5 Proportion of people investing in balanced type of fund is less than 50% Level of Significance () = 0.05 Defining the probability of success p1 = p/n = 42/121 = 0.347 q1 = q/n =79/121 = 0.653 pHo = 0.5 qHo = 0.5

Calculation of Standard Deviation Standard deviation = p = pq/n = (0.50X0.50)/121 = 0.00094 =0.0454


FIGURE 3.1

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Calculation of z-statistics Calculated Z statistics = (p1 pHo) / p1 = (0.347 0.50) / 0.0454 = - 3.370

Z-Critical for 95% confidence level is -1.645 from the z table which is greater than the calculated value i.e. -3.370

Therefore Ho rejected and H1 is accepted. Interpretation: Hence, Proportion of people investing in balanced type of mutual fund is less than 50%. Thus, it can be safely concluded that in India, though people are eager to earn higher return still popularity and preference for balanced type of mutual fund is increasing day by day.

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FINDINGS
In Ahmedabad city, the public sector bank which is preferred the most is SBI as 24% of the respondents has shown their preference towards it not only for maintaining their account but also for investing in the TPP offered by it and in private sector banks the major customer base is enjoyed by ICICI ( 21%). This can be because of the better services and proper returns provided by these banks in order to satisfy their customers expectations About 81% of the respondents are aware about the third party products and among them 93% has already invested in the various TPP investments provided by the banks Out of the total investors of TPP majority of them go for Insurance and Mutual Funds while other products like demat services are preferred less. Such investments through banks are done on the basis of the advice of the financial advisors and friends and the reasons considered are security and savings while the benefits they seek the most are convenient and time saving services along with low premium Majority of the investors investing in TPP, give weightage to criteria like bank charges and return while investing in them .The management pattern of the banks are given least importance because people do not relate their earnings directly to such aspects. The current situation shows that only about 4% of the respondents are highly dissatisfied with the services of the banks while a major chunk of people place themselves at either satisfactory(45%) or a moderate(32%) level. This shows that banks are able to deal in such products and can satisfy the customers to a great extent Nowadays people prefer a smart investment by investing a little amount in various instruments instead of blocking their entire sum in a single option, as majority (43%) of the respondents are ready to invest 10% - 20% of their monthly income in the insurance through banks. While for mutual funds 47% of the respondents prefer an investment of less than 10% of their monthly income It is observed that out of total respondents 50% of the them are investing in mutual funds via banks and the most influential factors for such investment are less risk and services. This can be because of the risk aversed attitude of the investors For selecting Demat services through banks more priority is given to the reasons like low brokerage and absence of Annual Maintenance Charges
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Bad experience in the past, lack of awareness, inappropriate services etc. are the main reasons why the respondents avoid the demat services and mutual funds through banks. In Kruskal Wallis Test i. ii. iii. Test for occupation groups shows that Professionals give maximum importance to criteria like services provided by the banks in contrast to the self-employed Test for age groups, people above 65 years give maximum importance to return than all other age groups Test for income groups, no significant difference exist among the groups with respect to importance they give to various criteria for investment through banks In Mann Whitney U Test In gender groups, both male and female give equal importance to all the criteria for investment through banks The Z-test signifies that proportion of population investing in balanced type of mutual fund is less than 50% so it can be derived that people mostly prefer balanced type of mutual funds because it gives benefits of both i.e. equity and debt funds

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RECOMMENDATIONS
Investors should be made more aware of the benefits of the Third Party Products through banks. Nobody will invest until and unless he is fully convinced. Investors should be made to realize that ignorance is no longer bliss and what they are losing by not investing The advisors should try to change the mindsets of the people. They should target for more and more young investors. Young investors as well as persons at the height of their career would like to seek advise from them due to lack of expertise and time Banks needs to give proper training to the Individual Financial Advisors about the Funds/Schemes and its objective, because they are the main source to influence the investors Before making any investment Financial Advisors should first enquire about the risk tolerance of the investors/customers, their need and time (how long they want to invest), benefits expected by them, criteria focused by them for their investment, etc. By considering these things they can take the customers into consideration
Thus by doing all this, the bank can increase its fee-based income, Return on assets as well as the non-interest income, which leads to much progress of the banks

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CONCLUSION
Banks have proved that banks could exist across centuries with a shining presence if they are able to provide the service expected by customers by adopting the key word of change and adopting to changing requirements of the customers in particular, the banking industry in general and the economy at large. Banks need to constantly look for innovative services which offer customers the convenience of transacting from anywhere, at any time and using delivery channels more suitable for them and at the same time act as a means for increasing the profits for banks too. Regulators could explore the possibility of allowing banks having tie-up arrangements with more than one insurance company, giving wider choice for the customers. Going by the present pace, Bancassurance would turn out to be a norm rather than an exception in future in India. There needs to be a clear cut identification of activities between banking and insurance at the institutions level as also at the level of regulators. Adequate training coupled with sufficient incentive system could avert the banks staff resistance if any. In sum, Bancassurance strategy would be a win-win situation for all the parties involved the customer, the insurance companies and the banks. Many of people have fear of Mutual Fund. They think their money will not be secure in Mutual Fund. They need the knowledge of Mutual Fund and its related terms. Many of people do not have invested in mutual funds through banks due to lack of awareness so AMC can play a role of a bridge between the banks and the investors in order to influence the people for investment in mutual funds through banks . As the awareness and income is growing the number of mutual fund investors are also growing. Most of the respondents had preferred broking firms for the Demat Services as the think that banks are not able to maintain a balance between the variety of services/products and their quality. The bridge has been reached and many are beginning to walk those cautious steps across it. Third Party Products by Banks in India has just taken a flying start. It has a long way to go after all The SKY IS THE LIMIT!

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BOOKS
Shekhar K.C (2005), Banking Theory and Practice, Vikas Publishing House. Kothari C.R., Research Methodology, New Delhi, Vikas Publishing House pvt.Ltd. 1978

WEBSITES
http://www.rbi.org.in/scripts/AnnualPublications.aspx?head=A%20Profile%20of%20Ban ks http://www.rbi.org.in/scripts/AnnualPublications.aspx?head=Statistical%20Tables%20Re lating%20to%20Banks%20of%20India http://finance.indiamart.com/investment_in_india/banking_in_india.html http://www.bankingindiaupdate.com/general.html http://www.rbi.org.in/scripts/publications.aspx http://www.moneycontrol.com/mutualfundindia http://www.mutualfundsindia.com/index.asp http://www.timesofmoney.com/TOM/html/index.html

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Indigenous Bankers: Indigenous bankers are individuals or private firms which receive deposits and give loans and thereby operate as banks. Since their activities are not regulated, they belong to the unorganized segment of the money market. Net Asset Value: In effect, the share price of a fund computed daily by adding the value of the funds securities and other assets, subtracting liabilities, and dividing by the number of shares outstanding. For a mutual fund with a front-end load, net asset value is identical to the "asked price" or "offering price." Open-ended funds: Investors can buy and sell the units from the fund, at any point of time. Close-ended funds: These funds raise money from investors only once. Therefore, after the offer period, fresh investments cannot be made into the fund. Yield: A measure of mutual fund performance, which is figured by dividing the income generated (dividends, capital gains distribution, etc.) per share for a specific time period by the funds current price per share. For example if, during a year, a single share of a fund had paid income totaling $1 and its share price was $10, the annual yield for that year would be figured by dividing 1 by 10, which equals one tenth, or a yield of 10%. Asset Management Company: A company that invests its clients' pooled fund into securities that match its declared financial objectives. Asset management companies provide investors with more diversification and investing options than they would have by themselves. New fund offer: New Fund Offer or NFO is a mutual fund (MF) type. These MFs get into the market for the first time and are open to subscription by general public.

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Key Information Memorandum: This Key Information Memorandum (KIM) is a document which sets forth the information, which a prospective investor ought to know before investing. Front-end Load: Sales charge applied at the time the investor purchases shares. Back-end Load: Charge imposed by a mutual fund when an investor redeems shares. Redemption fees and contingent deferred sales charges are examples. ISIN: International Securities Identification Number. A unique international code which identifies a securities issue. Each country has a national numbering agency which assigns ISIN numbers for securities in that country. Beneficiary Owner: A beneficial owner of stock is any person or entity with sole or shared power to vote or dispose of the stock. This SEC definition is intended to include a holder who enjoys the benefits of ownership although the shares may be held in another name. Rematerialisation: The process of getting the securities in an electronic form, converted back into the physical form is known as Rematerialisation. Exchange Fee: Fee charged when an investor switches from one mutual fund to another in the same family of funds. Redemption Fee: A fee charged to an investor who redeems shares. It is generally expressed as a percentage of the value of shares redeemed.

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QUESTIONNAIRE
Dear Sir/Madam, We are conducting a survey which is a part of Grand Project for partial fulfilment of MBA curriculum. Your views about the questions asked are welcomed and are of great importance to our project. The survey is solely for the academic purpose and details provided by you will be very much confidential.

BACKGROUND INFORMATION:
1) Do you have a bank account? Yes No
If yes, then in which bank

SBI BOB ICICI Bank HSBC Bank Axis Other______________________ 2) Are you aware about the Third Party Products? Yes No
If yes, then have you ever invested for the same?

Yes No 3) Do you think Banks need to deal with Third Party Products? Yes No

4) In which products have you invested through banks? Insurance Mutual Funds Demat Account Services Others__________________
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5) Through which banks you invested in the Third Party Products (TPP)? SBI BOB ICICI HSBC Axis Other_______________

6) What are your sources of information while investing in Third Party Products provided by Banks? Internet Newspaper Financial Advisor Friends Advertisements

7) Rank the following Criteria you consider before taking the decision of investment through particular Bank? Services Credit worthiness Trust Bank charges Return Management Pattern

8) How will you rate the Satisfaction level of the services provided to you by the Banks through which you made your investment? Highly Satisfied Satisfied Moderate Dissatisfied Highly Dissatisfied

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SECTION 1: INSURANCE

9) Do you invest in insurance through banks? Yes No


If yes, then which type of insurance you generally take from banks?

General Insurance Life Insurance

10) What amount of your monthly income you invest in Insurance through Banks? Less than 10% 10% 20% 20% 30% More than 30%
11) Rank the following reasons for taking Insurance from Banks? Security Savings Brand Name of the Bank Easy accessibility

12) What are the benefits you receive from the investment in Insurance through Banks? Availability of a complete package Good quality product Time savings & convenience Low premium Other______________________________

13) Are you satisfied with the services provided by your bank regarding TPP Investment? Yes No If No, then which bank you prefer for your further investment in Insurance? ____________________________________

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SECTION 2: MUTUAL FUNDS


14) Do you invest in Mutual Funds through banks? Yes No
If yes, then are you a regular or new investor in mutual funds?

Regular New 15) What amount of your monthly income you invest in Mutual Funds through Banks? Less than 10% 10% 20% 20% 30% More than 30% 16) Which type of fund you prefer the most? Equity Debt Balanced Money Market Others_____________________________ 17) Rank the following factors which influence you to invest in Mutual Funds provided by various banks? Brand Name Trade Convenience Less Risk Trust Services 18) If you are not investing in the Mutual Funds provided by banks then what are the reasons behind it? Availability of less brands Lack of awareness Do not prefer investment in mutual fund Inappropriate services/improper management Bad experience in the past Others_____________________

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SECTIONS 3: DEMAT ACCOUNT SERVICES

19) Do you have Demat Account with any Bank/Broking Firm? Yes No
If yes, Name the Bank/ Broking Firm_____________________________

20) Rank the following reasons for selecting the Demat Account Services provided by Banks? Low brokerage Online Offline trading facility Good SMS Tips Convenience No Annual Maintenance Charge

21) Are you satisfied with the Demat Account Services provided by the Banks? Yes No
If No, then which bank you prefer for your further Demat Account Service? _______________________________________

22) If you do not opt for Demat Account Services provided by banks then what is the reason behind it? Lack of awareness Do not prefer investment in stock market Inappropriate services/improper management Bad experience in the past Others_____________________

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PERSONAL DETAILS:

Name (Optional):________________________________________________________ Gender: Age: Male 20 years 35 years 36 years 50 years 51 years 65 years Above 65 years Female

Occupation:

Self employed Government employee Private Industry employee Professionals (like CA, Doctors, etc.)
Rs. 0 Rs. 15,000 Rs. 15,001 Rs. 30,000 Rs. 30,001 Rs. 45,000 Above Rs. 45,000

Monthly Income:

Thank You

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