PREFACE

I have great pleasure in presenting my project to the MUMBAI UNIVERSITY. My topic is MARKET
SCOPING AND ANALYSIS OF FINANCIAL INVESTMENT & LOAN PRODUCTS. I have made
sincere efforts to make this project informative and I am sure it would justify the same.
The project gave me an opportunity to study various aspects related to financial investment and loan
products. It was a good learning experience throughout and it will certainly benefit the readers too. I
am quite assertive that my project will help the students of MUMBAI UNIVERSITY.
My project covers the basic knowledge of financial investment and loan products in INDIA, which is
essential to understand how these products, is operated in IIFL and how it has developed in our country
to greater extent in present age due to technical advancements.
Through this project I have tried to find out the increasing trend of financial investment and loan taking
abilities. My topic will definitely help the researchers who want to research related to financial
investment & loan products.

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EXECUTIVE SUMMARY
As a part of my study curriculum it is necessary to conduct a project report. INDIA INFOLINE ltd. has
given me opportunity to work in an organization and get exposure towards the emerging scenario. IIFL
provides various kinds of loans and also assist in managing individual as well institutional funds by
providing their exclusive services.
My topic for the project is titled as MARKET SCOPING AND ANALYSIS OF FINANCIAL
INVESTMENT & LOAN PRODUCTS which mainly emphasizes on three financial products i.e. Gold
Loan, Mutual Funds, and Insurance& as well it also comprises of other financial products.
This project helps me to understand various financial investment and loan products, this project report
elucidates Gold Loans feature, looks at the industry trend, market players, market size, and their
revenues and explain the opportunity and challenges existing in the sector. This project is carried out to
have an over view of mutual fund industry and to understand investors perception about mutual fund.
This project also explains the tie-ups with various Insurance companies by IIFL.
This project helps me to understand attributes of investors and those who take loan. This project has
been done to analyze financial investment and loan products. This is done by conducting surveys in
highly populated area of Churchgate. These data has been processed and then interpreted in the report.

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PROBLEM STATEMENT
MARKET SCOPING AND ANALYSIS OF FINANCIAL INVESTMENT AND LOAN PRODUCTS

SIGNIFICANCE OF THE STUDY

This study tries to cover various financial investment and loan products in IIFL. The study of this
project can be learning paradigm to academics
Gold loan is the quickest disbursed loan product in loan segment in IIFL. It takes hardly fifteen minutes
to get disbursed in IIFL once the gold is pledged. According to world gold council, imports in AprilJune quarter are headed for a record of 300-400 tones, which is a near 200% year on year increase.
While this strong demand may spell good news for NBFCs. Gold is safe financial instrument in times
of Economic Uncertainty.
Mutual funds are an ideal investment vehicle where a number of investors come together to pool their
money with common investment goal and to yield profits. In mutual funds money collected from
investors are diversified, they are made up a lot of different investment. That tends to lower a risk.
Fund manager manages the because of which an investor do not have to worry about record keeping.
Insurance is a tool which reduces the cost of loss or effect of loss caused by variety of risk. It
accumulates funds to meet individual losses. It is not device to prevent unwanted event of happening or
cause of loss but protects them against that loss by compensating which has lost.

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PURPOSE

To study the attributes of borrower.

This study tries to understand what loan process is.

This study describes organized and non-organized loan providers.

To know about mutual funds & its functioning.

This study helps in understanding different scheme in mutual funds.

To study benefits of mutual funds to investors.

To study various insurance policy in IIFL.

To study how IIFL works. What is its company structure?

OBJECTIVE
1) To know concept of gold loan in INDIA.
2) To study mutual funds in IIFL
3) To study ICICI Prudential, Reliance and HDFC life insurance.
HYPOTHESIS
H0 = People are not aware about gold loan
H1 = People are aware about gold loan
And
H0 = people do trust mutual funds
H1 = people do not trust mutual funds
METHODOLOGY
Descriptive methodology is used for this project

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PERIOD OF THE STUDY

Two months
THE STUDY AREA
Churchgate
DATA
Primary data was collected through questionnaire, face to face communication with some gold loan
companies as well as with some public investors
Secondary data was collected from the websites, magazines, and newspapers.

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ABOUT IIFL
INDIA INFOLINE finance ltd. is one of the largest companies growing company in gold loan sector,
IIFL is also one of the leading brokerage firms in India.
The company is engaged in activity of mortgage financing, loan against property securities, gold loan,
margin funding and other consumer financing products.
Mr. Nirmal Jain is the founder and chairman of IIFL LTD. He is PGDM from IIM Ahmadabad, a
CHARTERED ACCOUNTANT and a rank holder COST ACCOUNTANT. His professional track
record is equally outstanding. He started his career in 1989 with Hindustan Lever ltd, the Indian arm of
Unilever.
During his stint with Hindustan lever, he handed a variety of responsibilities, including export and
trading in agro commodities. He contributed immensely towards the rapid and profitable growth of
Hindustan Levers commodity export business, which was then the nations as well as companies top
priority. He found PROBITY RESEARCH & SERVICES Pvt.Ltd.in 1995. Perhaps the first
independent equity research company in India.
His work set new standards for equity research in India. Mr. Jain was one of the first entrepreneurs in
India to seize the internet opportunity, with the launch of www.indiainfoline .com in 1999. Under his
leadership IIFL not only steered through the dot com bust and one of the worst stock market downtrend
but also grew from strength to strength. IIFL gold loan is a listed company with a consolidated group
net worth of about Rs.1800 crores.
IIFL consolidated net profit rose by 11% quarter on quarter to Rs 73.2 crore in the third quarter
financial year 2012-2013.
Consolidated total income grew by6.6% to Rs 694 crore from 651 crore during the same period.

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Consolidated earnings before interest, tax, depreciation and amortization (EBITDA) went up by 14.5%
QoQ to Rs.355 crore in October December quarter.
The group has consistent and uninterrupted track record of profits and dividends since its listing in
2005. The company is listed on both Exchanges and also trades in derivatives segment. IIFL gold loan
is present every nook and cranny of the country, with over 3000 business location across 500 cities in
India. An individual can reach us in variety of ways online, over the phone, and through branches.

Corporate Structure

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INFOLINE LOGO INDIA

History & milestones

1996 A small group of professionals formed an Information Services Company.
The company was formed in October 1995 with a vision to produce high quality, unbiased, independent
research on the Indian economy, business, industries and corporate.

The quality gets recognition

The quality of this research soon resulted in a client list that read like a who's who of Indian business
and finance, from Hindustan Lever to Tatas, from Crisil to McKinsey, from SBI to Citibank.

Onwards and upwards!

IIFL launched their research products Probity 200 Company Reports, followed Economy Probe,
Sector Reports covering Pharmaceuticals, Information Technology, Oil & Gas and FMCG among
others. Leading FIIs, brokers, banks and companies were immediate subscribers.
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The launch of www.indiainfoline.com

Up popped a crazy idea if all this research were to be available free on the internet, the number of
users could well leap straight from hundreds to millions. They took the plunge and thus
www.indiainfoline.com was born! CDC (now Actis) was the first private equity firm to invest US$1mn.

Launched online trading through www.5paisa.com

IIFL commodities license

IIFL were again at the forefront to offer commodities broking to retail investors. A coincidence may be,
but this was when our magical linkage between transactional and advisory expertise began.

IIFL Maiden IPO the tipping point

Listing on the NSE and BSE gave impetus and momentum to expansion, scaling up and funding. It was
again full steam ahead. The IPO was at Rs15.2 (adjusted for split) and shareholders have received
Rs15.7 by way of dividend. The price was Rs60.65 as at FY13 end.

2009 Commenced our lending business

2011 The Launch of IIFL Mutual Fund

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IIFL Incorporated the Assets Management Company, and in doing so, ensured our coverage of the
entire gamut of financial service

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LITERATURE REVIEW

Investing is perilous enough when investing in stocks and bonds or even in mutual funds, but it can get
downright dangerous with the increase in complexity of many financially engineered investment
products. Following the 2007 subprime mortgage meltdown, which affected both Main Street to Wall
Street, a lot of blame was being spread around about whom or what was responsible. While the
meltdown resulted from a combination of factors, many argue that the complexity of the derivatives
products, which were developed from relatively simple mortgages, was a major contributor to the
subprime

crisis.

By slicing & dicing a mortgage, financial engineers created an array of investment products
like mortgage-backed

securities (MBS), asset-backed

securities (ABS),

collateralized

mortgage

obligations (CMO) or collateralized debt obligation (CDO). These exceedingly complex products are
so opaque that very few people really understand them and how they work. Investors, the credit rating
agencies and even the big banks and brokerage firm all failed to understand the risks of these
investments and all were burned by the following collapse. This outcome should serve as a warning for
those investors contemplating the purchase of complex investments. To read all about the credit crisis
and

mortgage

meltdown,

see The

Fuel

That

Fed

the

Subprime

Meltdown

The Problems

Underlying all structured investments are securities that are part of the capital markets. The risk and the
performance of structured investments are inevitably determined by the investments upon which these
complex securities are based, not the financial engineering.

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The Risks
Complex investments may have risks that are not apparent, or easy to understand. As a result, it might
be difficult to determine how the investment will make money.

The investment management industry is a unique space where a disproportionate portion of the profits
are captured by the asset managers with little to none of the risk exposure. However, this is about to
change. Technology innovation, globalization of markets, and recent market volatility such as the 2008
market collapse are driving painful changes (for some) in the asset management industry.

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GOLD LOAN

METHODS AND PROCESS OF GETTING GOLD LOAN

1. First check the gold weight and evaluate its purity accordingly and inform the customer
about valuation of gold. If he is willing to proceed further then the next procedure starts.
2. Check all documents are valid or not.
3. ID proof and address proof is must.
4. If all documents are valid, verified by the customer care executive then the loan is
disbursed.
5. Basic information is enquired and stored in the companys computer.
6. Verification of customers phone number is done.
7.

Gold ornaments and customers photograph is taken while creating loan account.

8. Customers name is entered in KYC register held with security guard.

9. Less documentation is done.
10. Seven days grace period is provided for the payment of interest, if not paid then customer is
penalized on the principal amount.
11. Interest payment can be done in any branch of gold loan.
12. Interest rate 1% to 2.47% can be charged accordingly.
13. Loan amount is offered from Rs.5000 to Rs.10, 00,000.
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COMMON RULES TO CHECK THE GOLD

1. Separate the ornaments
2. Assist the average weight
3. Jewelry slip
4. Sound vibration
5. Hallmark checking
6. Acid and salt test
7. Check the finishing of the ornaments
8. Verification of the KYC
9. Take photograph of customer and ornament

GOLD ORNAMENTS ACCEPTED FOR LOAN AGAINST GOLD

Sr.no.

Ornaments

Bangles

Chains

Mangalsutra

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Earrings

Finger Rings

KEY FEATURES OF GOLD LOAN

The key features of gold loans in the Indian context are easy disbursal, few limits on cash
usage, high LTVs and flexibility; it is easy to see why gold loans are becoming more and more
popular.

Why NBFCs are growing

By virtue of their business model, NBFCs have grown rapidly over the last year as evidence by
their increase in market share. A comparison of gold loan features across key player is high.

GOLD LOAN FEATURES

Secured

Loan is borrowed against the gold deposited by the

applicant.

Multipurpose

The loan can be used for any purpose as long as it is not for
any illegal activity or speculation in the stock market.
NBFCs place even fewer restriction on the use loan

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Quick

NBFCs and the unorganized sector disburse loans at a much

disbursal

faster pace (as low as three minutes to few hours) as

compared with banks which may take few days.

High

While banks would typically not give more than 75% of the
gold value as loan, NBFCs lending could go as high as 90%

LTV ratio

Shorter

in case high purity gold.

loan

tenures

There is no minimum period for the loan and, if needed, one

can return the loan amount the very next day. The average
tenure of the loan is about 90 days to 100 days.

Varied

The interest rate differs depends on the tenure and amount of

interest rates

loan. It varies from 12% to 18% in case of banks, while for

NBFCs, it could reach 24%. The interest rates charged by
the unorganized segment are much higher and can range
from 30% to 50%. Reasonable rates of interest are especially
applied if the loan to value does not exceed 50% to 60%.

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Multiple

Repayment can be structured as just interest amount with

repayment

principal being repaid at the end of the period in one lump

options

sum. Repayment through EMI, covering interest as well as

principal, can also be an option.

The key differentiators for NBFCs as compared to the banks and cooperatives are:

Quick loan approvals and disbursals, with minimal documentations

Multitude of loan options with higher LTVs.

Greater accessibility due to better penetration.

Non bankable customers are also served.

Better operation cost structure vis--vis banks.

Convenient hours of operation.

Flexibility: provision of very small and very large loan amounts.

RISK TO LENDERS AND BORROWERS:Since lenders take possession of the gold assets in a loan transaction, in case of a theft they may not
have sufficient funds to compensate all the borrowers for their loss in its entirety.

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This is more important for loans placed in the unorganized sector; banks/NBFC usually has better
security and insurance coverage. Furthermore, financial packages cannot compensate for personal
attachment a borrower has with the gold asset.

Moreover, a sharp decline in gold prices increases the original LTV, a lender may require an immediate
recovery of any amount that exceeds the original LTV ratio, but the borrower may be unable to pay this
amount.

Restructuring of the loan may be required in these cases. Additionally, if the value of the pledged asset
declines, a borrower may be more willingly to default on loan. This poses a serious concentration risk
to the lenders, especially to the NBFCs that have a high exposure to gold loans and lend at high LTV
ratios

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ORGANISATIONAL STRUCTURE OF IIFL GOLD LOAN BRANCH

BRANCH MANAGER

ASSISTANT BRANCH
MANAGER

Gold Valuer

Gold Valuer

Customer care
executive

Customer care
executive

Customer care
executive

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COMPETITORS OF IIFL IN GOLD LOAN MARKET

ICICI Bank
Loan against gold and gold ornaments:
ICICI bank presents loan against gold and gold ornaments, designed to provide liquidity against gold
without having to sell them.
This product is ideal to meet agriculture requirements like cultivation, dairy, poultry fisheries, etc. gold
coin and gold ornaments lying idle can be put to productive use by availing loan against gold.

THE ICICI BANK EDGE:

Hassle free quick processing of loans.

Simplified paper works.

Easy payment options

Attractive interest rate & LTV.

Loan amount ranging from Rs. 10,00 to Rs. 15,00,000.

MANNAPPURAM Finance Ltd.

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Indias first listed & highest credit rated Gold Loan Company:
Overview of the company the MANNAPPURAM Finance Ltd has in recent years emerged as a major
business house under the stewardship of Shri V.P. Nandakumar, the executive chairman of the company
this companys main activities are pawn brokering and money lending out on modest scale.

SERVICES:

Loan against Gold

Money Transfer

Foreign exchange

ATTRACTIVE FEATURES

Loan availed in 5 minutes

When disbursing in loan, we only require any one of your recent ID.

Pay interest only for the number of days your pledge is maintained with us.

Various schemes for your needs and to suit all income groups.

No other hidden charges.

No end use restriction.

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 MUTHOOT Finance
Muthoot Finance, Indias largest gold loan company is the first choice Indians who want to make their
dream reality.
May the dream be to start their own business or to buy their own house, Muthoot Finance have helped
almost every Indians dream come true.
Trusted over by over 76000 customers every day, Muthoot Finance gold loan has services and products
that fit the need of any customers, making it quickest, most convenient and safety way to take a gold
loan.

ATTRACTIVE FEATURES:

Loan disbursal in 5 minutes.

Loan amount ranging from Rs.1500 to 1 crore.

Minimal documentation.

High quality customer care service in short response time.

Gold loan available in 3600 Muthoot branches.

HDFC

Instant loans available on the gold jewelry you own.

Repayments only by servicing regular interest on the loan.

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Assured security of your gold jewelry.

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MUTUAL FUNDS
INTRODUCTION
Investment in share markets are influenced by the analysis & reasoning which help in predicting the
market to some extent. Over the past years a number of technical & theories for analysis have evolved,
these combined with modern technology guides the investor. The big players in the market, like
Foreign Institutional Investors, Mutual Funds, etc. have the expertise for various analytical tools &
make use of them. The small investors are not in a position to benefit from the market the way Mutual
Funds can do. Generally a small investors investments are based on market sentiments, inside
information, through grapevine, tips & intuition. The small investors depend on brokers and brokerage
house for his investments. They can invest through the Mutual Funds who are more experienced and
expert in this field than a small investor himself.
In recent years a large number of players have entered into his market. The project has been carried out
to have an overview of Mutual Fund Industry and to understand investors perception about Mutual
Funds in the context of their trading preference, explore investors risk perception & find out their
preference over Top Mutual Fund.
INDUSTRY PROFILE
Structure of the Indian Mutual Fund Industry
The largest categories of Mutual Funds are the ones floated by the private sector and by Foreign Asset
Management Companies. The largest of these are Prudential ICICI AMC and Birla Sun Life AMC. The
aggregate corpus of assets managed by this category of AMCs is in excess of Rs.350 billion.
Earlier the Indian Mutual Fund industry was dominated by the Unit Trust of India which has a total
corpus of Rs.700 billion collected from more than 20million investors. The UTI has many
funds/schemes in all categories i.e. equity, balanced, income etc. with some being open-ended and
some being closed-ended. The Unit Scheme 1964 commonly referred to as US 64, which is a balanced
fund, is the biggest scheme with a corpus of about Rs.200 billion.

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UTI was floated by financial institutions and is governed by a special Act of Parliament. Most of its
investors believe that the UTI is government owned and controlled, which, while legally incorrect, is
true for all practical purposes.
The second largest categories of mutual funds are the ones floated by nationalized banks. Canara bank
Asset Management floated by Canara Bank and SBI Funds Management floated by the State Bank of
India are the largest of these. GIC AMC floated by the General Insurance Corporation and Jeevan Bima
Sahayog AMC floated by the LIC are some of the other prominent ones. The aggregate corpus of funds
managed by this category of AMCs is about Rs.200 billion.
ABOUT MUTUAL FUNDS
A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial
goal. The money thus collected is then invested in capital market instruments such as shares,
debentures and other securities. The income earned through these investments and the capital
appreciation realized is shared by its unit holders in proportion to the number of units owned by them.
Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to
invest in a diversified, professionally managed basket of securities at a relatively low cost. The flow
chart below describes broadly the working of a mutual fund.

The structure of Mutual Funds in India is governed by SEBI (Mutual

Fund) Regulations, 1996.

It is mandatory to have a three tier structure of Sponsor Trustee Asset Management

Company.

The trust is established by a Sponsor or more than one sponsor who is like a promoter of a
company. He appoints the Trustees who are responsible to the investors of the fund.

The Trustees of the mutual fund hold its property for the benefit of the unit holders.

Asset Management Company (AMC) approved by SEBI is the business face of the mutual fund
as it manages all the affairs of the fund by making investments in various types of securities.

Custodian, who is registered with SEBI, holds the securities of various schemes of the funds in
its custody.

WHY MUTUAL FUNDS

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An investor normally prioritizes his investment needs before undertaking an investment. So different
goals will be allocated different proportions of the total disposable amount. Investments for specific
goals normally find their way into the debt market as risk reduction is of prime importance. This is the
area for the risk adverse investors and here, mutual funds are generally the best option. The reasons are
not difficult to see.
One can avail of the benefits of better returns with added benefits of anytime liquidity by investing in
open-ended debt funds at lower risk. Many people have burnt their fingers by investing in fixed
deposits of companies who were assuring high returns but have gone bust in course of time leading to
distraught investors as well as pending cases in the Company Law Board.
This risk of default by any company that one has chosen to invest in, can be minimized by investing in
mutual funds as the fund managers analyze the companies financials more minutely than an individual
can do as they have the expertise to do so. They can manage the maturity of their portfolio by investing
in instruments of varied maturity profiles. Since there is no penalty on pre-mature withdrawal, as in the
cases of fixed deposits, debt funds provide enough liquidity. Moreover, mutual funds are better placed
to absorb the fluctuations in the prices of the securities as a result of interest rate variation and one can
benefits from any such price movement.
Apart from liquidity, these funds have also provided very good post-tax returns on year to year basis.
Even historically, we find that some of the debt funds have generated superior returns at relatively low
level of risks. On an average debt funds have posted returns over 10 percent over one-year horizon. The
best performing funds have given returns of around 14 percent in the last one-year period. In nutshell
we can say that these funds have delivered more than what one expects of debt avenues such as post
office schemes or bank fixed deposits. Though they are charged with a dividend distribution tax on
dividend payout at 10 percent (plus a surcharge of 10 percent), the net income received is still tax free
in the hands of investor and is generally much more than all other avenues, on a post-tax basis.
Moving up in the risk spectrum, we have people who would like to take some risk and invest in equity
funds/capital market. However, since their appetite for risk is also limited, they would rather have some
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exposure to debt as well. For these investors, balanced funds provide an easy route of investment.
Armed with the expertise of investment techniques, they can invest in equity as well as good quality
debt thereby reducing risks and providing the investor with better returns than he could otherwise
manage. Since they can reshuffle their portfolio as per market conditions, they are likely to generate
moderate returns even in pessimistic market conditions.
This risk of default by any company that one has chosen to invest in, can be minimized by investing in
mutual funds as the fund managers analyze the companies financials more minutely than an individual
can do as they have the expertise to do so. They can manage the maturity of their portfolio by investing
in instruments of varied maturity profiles. Since there is no penalty on pre-mature withdrawal, as in the
cases of fixed deposits, debt funds provide enough liquidity. Moreover, mutual funds are better placed
to absorb the fluctuations in the prices of the securities as a result of interest rate variation and one can
benefits from any such price movement.
Next come the risk takers. Risk takers by their very nature, would not be averse to investing in highrisk avenues. Capital markets find their fancy more often than not, because they have historically
generated better returns than any other avenue, provided, the money was judiciously invested. Though
the risk associated is generally on the higher side of the spectrum, the return-potential compensates for
the risk attached.
Capital markets interest people, albeit not all for there are several problems associated. First issue is
that of expertise. While investing directly into capital market one has to be analytical enough to judge
the valuation of the stock and understand the complex undertones of the stock. One needs to judge the
right valuation for exiting the stock too. It is very difficult for a small investor to keep track of the
movements of the market. Entrusting the job to experts, who watch the trends of the market and
analyze the valuations of the stocks will solve this problem for an investor. Mutual funds specialize in
identification of stocks through dedicated experts in the field and this enables them to pick stocks at the
right moment. Sector funds provide an edge and generate good returns if the particular sector is doing
well.

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Next problem is that of funds/money. A single person cant invest in multiple high priced stocks for the
sole reason that his pockets are not likely to be deep enough. This limits him from diversifying his
portfolio as well as benefiting from multiple investments.
Here again, investing through MF route enables an investor to invest in many good stocks and reap
benefits even through a small investment. This not only diversifies the portfolio and helps in generating
returns from a number of sectors but reduces the risk as well. Though identification of the right fund
might not be an easy task, availability of good investment consultants and counselors will help
investors take informed decision.
TYPES OF MUTUAL FUNDS
Mutual fund schemes may be classified on the basis of its Structure and its
Investment Objective.
By Structure:
Open-ended Funds
An open-end fund is one that is available for subscription all through the Year. These do not have a
fixed maturity. Investors can conveniently buy and sell units at Net Asset Value ("NAV") related prices.
The key feature of open end schemes is liquidity.
Closed-ended Funds
A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15 years. The
fund is open for subscription only during a specified period. Investors can invest in the scheme at the
time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock
exchanges where they are listed. In order to provide an exit route to the investors, some close-ended
funds give an option of selling back the units to the Mutual Fund through periodic repurchase at NAV
related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the
investor.
Interval Funds
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Interval funds combine the features of open-ended and close-ended schemes. They are open for sale or
redemption during pre-determined intervals at NAV related prices.
By Investment Objective:
Growth Funds
The aim of growth funds is to provide capital appreciation over the medium to long- term. Such
schemes normally invest a majority of their corpus in Equities. It has been proven that returns from
stocks, have outperformed most other kind of investments held over the long term. Growth schemes are
ideal for investors having a long-term outlook seeking growth over a period of time.
Income Funds
The aim of income funds is to provide regular and steady income to investors. Such schemes generally
invest in fixed income securities such as bonds, corporate debentures and Government securities.
Income Funds are ideal for capital stability and regular income.
Balanced Funds
The aim of balanced funds is to provide both growth and regular income. Such schemes periodically
distribute a part of their earning and invest both in equities and fixed income securities in the
proportion indicated in their offer documents. In a rising stock market, the NAV of these schemes may
not normally keep pace, or fall equally when the market falls. These are ideal for investors looking for
a combination of income and moderate growth.
Money Market Funds
The aim of money market funds is to provide easy liquidity, preservation of capital and moderate
income. These schemes generally invest in safer short-term instruments such as treasury bills,
certificates of deposit, commercial paper and inter-bank call money. Returns on these schemes may
fluctuate depending upon the interest rates prevailing in the market. These are ideal for Corporate and
individual investors as a means to park their surplus funds for short periods.
Load Funds
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A Load Fund is one that charges a commission for entry or exit. That is, each time you buy or sell units
in the fund, a commission will be payable. Typically entry and exit loads range from 1% to 2%. It could
be worth paying the load, if the fund has a good performance history.
No-Load Funds
A No-Load Fund is one that does not charge a commission for entry or exit. That is, no commission is
payable on purchase or sale of units in the fund. The advantage of a no load fund is that the entire
corpus is put to work.

Other Schemes:
Tax Saving Schemes
These schemes offer tax rebates to the investors under specific provisions of the Indian Income Tax
laws as the Government offers tax incentives for investment in specified avenues. Investments made in
Equity Linked Savings Schemes (ELSS) and Pension Schemes are allowed as deduction u/s 88 of the
Income Tax Act, 1961. The Act also provides opportunities to investors to save capital gains u/s 54EA
and 54EB by investing in Mutual Funds, provided the capital asset has been sold prior to April 1, 2000
and the amount is invested before September 30, 2000.
Special Schemes
Industry Specific Schemes
Industry Specific Schemes invest only in the industries specified in the offer document. The investment
of these funds is limited to specific industries like InfoTech, FMCG, and Pharmaceuticals etc.
Index Schemes
Index Funds attempt to replicate the performance of a particular index such as the BSE Sensex or the
NSE 50.
Sectorial Schemes
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Sectorial Funds are those, which invest exclusively in a specified industry or a group of industries or
various segments such as 'A' Group shares or initial public offerings.

BENEFITS OF MUTUAL FUND INVESTMENT

Professional Management
Mutual Funds provide the services of experienced and skilled professionals, backed by a dedicated
investment research team that analyses the performance and prospects of companies and selects
suitable investments to achieve the objectives of the scheme.
Diversification

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Mutual Funds invest in a number of companies across a broad cross-section of industries and sectors.
This diversification reduces the risk because seldom do all stocks decline at the same time and in the
same proportion. You achieve this diversification through a Mutual Fund with farless money than you
can do on your own.
Convenient Administration
Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such as bad
deliveries, delayed payments and follow up with brokers and companies. Mutual Funds save your time
and make investing easy and convenient.
Return Potential
Over a medium to long-term, Mutual Funds have the potential to provide a higher return as they invest
in a diversified basket of selected Securities.
Low Costs
Mutual Funds are a relatively less expensive way to invest compared to directly investing in the capital
markets because the benefits of scale in brokerage, custodial and other fees translate into lower costs
for investors.
Liquidity
In open-end schemes, the investor gets the money back promptly at net asset value related prices from
the Mutual Fund. In close ended schemes, the units can be sold on a stock exchange at the prevailing
market price or the investor can avail of the facility of direct repurchase at NAV related prices by the
Mutual Fund.
Transparency
You get regular information on the value of your investment in addition to disclosure on the specific
investments made by your scheme, the proportion invested in each class of assets and the fund
manager's investment strategy and outlook.
Flexibility
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33

Through features such as regular investment plans, regular withdrawal plans and dividend reinvestment
plans, you can systematically invest or withdraw funds according to your needs and convenience.
Affordability
Investors individually may lack sufficient funds to invest in high-grade stocks. A mutual fund because
of its large corpus allows even small investor to take the benefit of its investment strategy.

Choice of Schemes
Mutual Funds offer a family of schemes to suit your varying needs over a lifetime.
Well Regulated
All Mutual Funds are registered with SEBI and they function within the provisions of strict regulations
designed to protect the interests of investors. The operations of Mutual Funds are regularly monitored
by SEBI.

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34

RISKS ASSOCIATED WITH MUTUAL FUNDS

The most important relationship to understand is the risk-return trade-off. Higher the risk greater the
returns/loss and lower the risk lesser the returns/loss. Hence it is up to you, the investor to decide how
much risk you are willing to take. In order to do this you must first be aware of the different types of
risks involved with your investment decision.
MARKET RISK

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35

Sometimes prices and yields of all securities rise and fall. Broad outside influences affecting the market
in general lead to this. This is true, may it be big corporations or smaller mid-sized companies. This is
known as Market Risk. A Systematic Investment Plan (SIP) that works on the concept of Rupee Cost
Averaging (RCA) might help mitigate this risk.
CREDIT RISK
The debt servicing ability (may it be interest payments or repayment of principal) of a company
through its cash flows determines the Credit Risk faced by you. This credit risk is measured by
independent rating agencies like CRISIL who rate companies and their paper. An AAA rating is
considered the safest whereas a D rating is considered poor credit quality. A well-diversified portfolio
might help mitigate this risk.
INFLATION RISK
Things you hear people talk about: Rs. 100 today is worth more than Rs. 100 tomorrow. Remember
the time when a bus ride cost 50 paisa? Mehangai Ka Jamana Hai. The root cause, Inflation.
Inflation is the loss of purchasing power over time. A lot of times people make conservative investment
decisions to protect their capital but end up with a sum of money that can buy less than what the
principal could at the time of the investment. This happens when inflation grows faster than the return
on your investment. A well-diversified portfolio with some investment in equities might help mitigate
this risk.
INTEREST RATE RISK
In a free market economy interest rates are difficult if not impossible to predict. Changes in interest
rates affect the prices of bonds as well as equities. If interest rates rise the prices of bonds fall and vice
versa. Equity might be negatively affected as well in a rising interest rate environment. A welldiversified portfolio might help mitigate this risk.
POLITICAL RISK
Changes in government policy and political decision can change the investment environment. They can
create a favorable environment for investment or vice versa.
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36

LIQUIDITY RISK
Liquidity risk arises when it becomes difficult to sell the securities that one has purchased. Liquidity
Risk can be partly mitigated by diversification, staggering of maturities as well as internal risk controls
that lean towards purchase of liquid securities. You have been reading about diversification above, but
what is it? Diversification is the nuclear weapon in your arsenal for your fight against Risk. It simply
means that you must spread your investment across different securities (stocks, bonds, money market
instruments, real estate, fixed deposits etc.) and different sectors (auto, textile, information technology
etc.). This kind of a diversification may add to the stability of your returns.
Net Asset Value (NAV)
The net asset value of the fund is the cumulative market value of the assets fund net of its liabilities. In
other words, if the fund is dissolved or liquidated by selling off all the assets in the fund, this is the
amount that the shareholders would collectively own. This gives rise to the concept of net asset value
per unit, which is the value represented by the ownership of one unit in the fund. It is calculated simply
by dividing the net asset value of the fund by the number of units. However, most people refer loosely
to the NAV per unit as NAV, ignoring the per unit. We also abide by the same convention.
Calculation of Net Asset Value
The most important part of the calculation is the valuation of the assets owned by the fund. Once it is
calculated, the NAV is simply the net value of assets divided by the number of the units outstanding.
The detailed methodology for the calculation of the net asset value is given below:
NAV =Market value of investments
+ Current assets and other assets
+ Accrued income
- Current liabilities and other liabilities
- Accrued expenses

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37

LIFE INSURANCE
Life insurance (or commonly life assurance, especially in the Commonwealth) is a contract between
an insured (insurance policy holder) and an insurer or assurer, where the insurer promises to pay a
designated beneficiary a sum of money (the "benefits") in exchange for a premium, upon the death of
the insured person. Depending on the contract, other events such as terminal illness or critical
illness may also trigger payment. The policy holder typically pays a premium, either regularly or as a
lump sum. Other expenses (such as funeral expenses) are also sometimes included in the benefits.
Life policies are legal contracts and the terms of the contract describe the limitations of the insured
events. Specific exclusions are often written into the contract to limit the liability of the insurer;
common examples are claims relating to suicide, fraud, war, riot, and civil commotion.
Life-based contracts tend to fall into two major categories:

Protection policies designed to provide a benefit in the event of specified event, typically a
lump sum payment. A common form of this design is term insurance.

Investment policies where the main objective is to facilitate the growth of capital by regular or
single premiums. Common forms (in the US) are whole life, universal life, and variable policies.

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38

IIFL LIFE INSURANCE TIE-UPS

An entry into this segment helped complete the client's product basket; concurrently, it graduated the
Company into a one stop retail financial solutions provider. To ensure maximum reach to customers
across India, we have employed a multi pronged approach and reach out to customers via our Network,
Direct and Affiliate channels. Following the opening of the sector in 1999-2000, a number of private
sector insurance service providers commenced operations aggressively and helped grow the market.
The Companys entry into the insurance sector derisked the Company from a predominant dependence
on broking and equity-linked revenues. The annuity based income generated from insurance
intermediation result in solid core revenues across the tenure of the policy.
Over the last five years, India Infoline sharpened its competitive edge in this business segment
through the following initiatives:
Client base:
Grew its 40,000 strong client base through knowledge-led analysis, translating into an attractive
opportunity to cross-sell products and generate referral business.
Distribution network:
Invested in a distribution network of 177 branches across 19 states, which provided it with an
unmatched reach within its segment.
Hands-on training :
Invested aggressively in training its field force more than 100 hours a year in product attributes across
the insurance sector - highlighting various product details and marketing skills apart from regular meets
where best practices are shared.
Technology:
The Company provides a prudent mix of proprietary and outsourced technologies, which facilitate
business growth without a corresponding increase in costs.
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39

Research and advice:

Provided clients with advice on diverse investment products based on the customers existing and
prospective financial profile.
Key features :

India Infoline was the first corporate in India to get the agency license in early 2001.

The Company is the biggest corporate agency in India for life insurance products.

The Company operates multiple channels, namely branch network, preferred client group,

direct marketing, corporate tax advisory, walk-ins and seminars, to reach out to customers.

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40

IIFL Life Insurance tie-ups are as follows:

ICICI PRUDENTIAL

Features and benefits of Lifetime Plus

ICICI Prudential's Lifetime Plus is a regular premium unit-linked insurance policy that provides you
with flexible investment options and of course, the protective benefit of an insurance cover. Take a look
at the features and benefits of this plan:
7 investment funds: Select among Flexi-Growth, R.I.C.H., Multiplier, Flexi-Balanced, Balancer,
Protector, and Preserver, based on your financial goals and risk profile.
Partial withdrawal of money: Withdraw funds in installments from the 4th year onwards.
Maturity benefit: Receive the Fund Value when your policy matures. Choose to take this value as a
single lump-sum amount or in monthly, bi-annual or annual installments spread over 1 to 5 years.
Death benefit: Your nominee receives the Sum Assured AND Fund Value should something happen to
you.
Additional allocation of units: Receive an additional allocation of units every 4th year, starting from
the end of the 8th year, at the rate of 5% of annual premium, into the investment fund.
Tax benefits: Enjoy tax benefits on the premiums you pay (under u/s 80 C) and tax exemptions on
maturity and death benefits [under u/s 10 (10 D)].

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41

RELIANCE
Investing for the long term to fulfill your family's goals is important, ensuring your family continues to
fulfill their dreams after you is even more important. Reliance Life Insurance Guaranteed Money Back
Plan provides an in-built Accidental Death Benefit as well as Waiver of Premium Benefit in the
unfortunate event of your demise. This plan is tailor-made to ensure that your family's goals are not
compromised due to life's uncertainties. This non-linked, non- participating money back plan allows
you to save for the future with assured payouts at various milestones in life.
FEATURES

Guaranteed loyalty and maturity additions

Double Sum Assured payable in case of accidental death
An additional Sum Assured up to Rs. 50 Lacs is payable on accidental deaths
Future premiums waived off
Optional rider benefits to enhance protection cover

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42

OTHER FINANCIAL PRODUCTS OF IIFL

NON CONVERTIBLE DEBENTURES
The debentures which can't be converted into shares or equities are called non-convertible debentures
(or NCDs).
Definition: Debentures are long-term financial instruments which acknowledge a debt obligation
towards the issuer. Some debentures have a feature of convertibility into shares after a certain point of
time at the discretion of the owner. The debentures which can't be converted into shares or equities are
called

non-convertible

debentures

(or

NCDs).

Description: Non-convertible debentures are used as tools to raise long-term funds by companies
through a public issue. To compensate for this drawback of non-convertibility, lenders are usually given
a

higher

rate

of

return

compared

to

convertible

debentures.

Besides, NCDs offer various other benefits to the owner such as high liquidity through stock market
listing, tax exemptions at source and safety since they can be issued by companies which have a good
credit rating as specified in the norms laid down by RBI for the issue of NCDs. In India, usually these
have to be issued of a minimum maturity of 90days.
HOME LOAN IIFL
IIFL Offers Better products to the borrowers with best services, Value Added features & benefits. IIFL
offers loans on the basis of customer needs & value added appropriately.
Loan Features

Home loan amount suited to your needs

Repayment options or tenure up to 20 years

Simplified documentation required

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43

Up to 80% ratio on value to loan

Special insurance schemes on home loans at lowest & attractive premiums.

No matter what the requirement. Get the best deals, and finance your perfect home, only from
IIHFL

Eligible Borrowers:
Salaried class: Corporate salaried employees, Government employees & salaried consultants.
Self-employed: Proprietorship, Partnership, Companies & Professionals.
Eligibility Income
criteria
Salaried
Self Employed
Mandatory Rule

Gross salary of Rs. 2 Lacs p.a.

Min. Profit after tax of Rs. 2 Lacs p.a.
The minimum income shall be computed by taking the income of applicant
and one co-applicant.
Where a guarantor is taken, the guarantor should also meet the minimum
income criteria.

FIXED DEPOSITS
The deposit placed by investors with companies for a fixed term carrying a prescribed rate of interest is
called Company Fixed Deposit. Financial institutions and Non-Banking Finance Companies (NBFCs)
also accept such deposits. Deposits thus mobilized are governed by the Companies Act under Section
58A. These deposits are unsecured, i.e., if the company defaults, the investor cannot sell the documents
to recover his capital, thus making them a risky investment option

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44

MARKET SCOPING AND ANALYSIS OF DATA

Market positioning of IIFL
Market Positioning of IIFL is AT INDIA INFOLINE WE GIVE YOU SINGLE WINDOW SERVICE
& WE ALSO ENSURE COMFORT. So, IIFL focus on the consumers who prefer almost all
investment activities at same place by providing number of financial services. IIFL provides other
investment option to the same person at same place like Mutual Funds, Insurance, Fixed Deposits, &
Bonds etc. and and help the person designing his portfolio. By this IIFL provides comfort to its
customers.
IIFL uses demographic segmentation strategy & segment people according to their occupation.
Employees plays intermediateries role to company and customers.
The executives of IIFL explains various new schemes of investments to its customer with its objective,
risk factor and expected returns.
Selling Skills
The sales management process is the basis of effective selling. Sales management means every steps of
the sales prrocess is executed effeciently leading to a sales.
Sales in financial services
In financial services, customers will rarely come forward to purchase service for them. Most services
are intagible for them.
For example opening a demat trading account is very different from buying a mobile phone, the
customer is well educated about what he seeks in case of consumer goods. In case of financial product
customer has to be advised on the benefits and as well as the
Needforthefinancialproducts
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The SALES in the financial service industry is highly dependent on how you manage your relationship
with your customers.
A SALE is three steps process:
Acquisition

Retention

Extension

Acquisition:
The process of prospecting and acquiring new customers using a structured sales process.
Retention:
The process of providing excellent services and support to existing customers and thus reducing
customer attrition.
Extension
The process of sustaining existing customers with marvelous services provided to them.

IIFL puts in such efforts to increase its sales and as well while prospecting its customers they take
special efforts such as:

Prospecting is all about finding potential new customers.

Prospecting is continuous activity of observing, identifying and qualifying.

Prospective customers who may be approached to sell product or services.

Personal contacts and observation.

Cold calling

Pamphlets distribution

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DATA ANALYSIS
India Infoline is one of the largest groups, which deals into brokerage, institutional brokerage,
consumer lending, institutional lending, and realty and wealth management.
As there is huge competition in market for financial sector, as consumer have many alternative options.
IIFL is a brand, in which there are many products such as gold loan, NCDs, insurance, equities, fixed
deposits, etc. Mannipuram, Muthoot, banks, are the competitors of IIFL. India Infoline need to identify
needs of their consumers what kind of product and services they are expecting to get from IIFL branch.
The view of consumers about India Infoline product & services are mentioned below:-

50
45
40
35
30
25
20
15
10
5
0

Emergency requirement of money in a year (times)

Figure 1

Interpretation:
Two times in a year consumers have emergency requirement of money the most. These consumers
should be focused more and their requirement must be fulfilled by IIFL.

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47

Family and Friends

Gold Loan

From Office

Savings

5%
25%
55%
15%

Figure 2

Interpretation:
As everyone requires money, consumer manages money mostly from family & friends, which they find
most trustworthy. In above diagram we can find only 15% of consumers seek their money requirement
through gold loan. These 15% consumers should be delighted with IIFL product & services. Customer
bonding should be increased & the 15% share should be expanded further.

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48

Yes

No

35%

65%

Figure 3

Hypothesis testing
H0: People are not aware about the gold loan.
H1: People are aware about the gold loan.
From the analysis done above, it could be easily seemed that majority of the respondents are aware
about gold loan.
65% of respondents were aware about the gold loan.
Conclusion:
Hence the researcher rejects the null hypothesis.
Thus it proved that people are aware about the gold loan.

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49

13%
Banks Saving A/C
40%

Insurance
Real Estate
Mutual Funds

30%

Fixed Deposit
Post Office
Ohers
5% 5% 7%

Figure 4

Hypothesis testing
H0 = People do trust mutual funds.
H1 = People do not trust mutual funds.
From the analysis done above, it could be easily conclude that majority of respondent trust fixed
deposits and bank savings.
From above question we came to know only 5% people do trust mutual funds, comparatively Fix
deposits & Bank Saving account is trusted more.
Conclusion:
Hence researcher rejects the Null Hypothesis.
Thus it is proved that people do not trust mutual funds.

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50

SWOT ANALYSIS OF IIFL

STRENGTHS

Integrated technology platform.

One stop shop.
Pan-India distribution network.
IndiaInfoline.com and 5paisa.com have developed onto brands.
Wide range of financial products.
Successful implementation of Insurance broking model.
Online portals successful branding as 5paisa.com.
Have over 2500 office in India in over 500 cities.
First Indian brokerage house to membership of Singapore Exchange.
IIFL has been awarded the best broker, India most improved brokerage,
Indias Fastest Growing Equity House.

WEAKNESSES

Lack of a bank arm to complete the bank-broker-depository chain.

Insignificant presence in institutional Segment.
High risk exposure as seen by conservative population.
Less emphasis on advertising causes lack of brand visibility.

OPPORTUNITIES
Changing demographics with higher disposable income and increasingly complex financial
instruments will drive demand for investment advisory services.
Rapid penetration of internet and computers means that technology enabled financial services
will gain market share.
High income urban families.
More penetration into growing cities.

THREATS
Economic slowdown/volatile movement in indices events like 2004&2008
Stock market falls have a cascading effect on our mutual funds mobilization.
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51

 Increase/Decrease in interest rate can impact insurance sales.

Stringent Economic measures by government and RBI.
Entry of foreign finance firm in Indian market.

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52

LEARNING FROM THE SUMMER INTENRSHIP PROJECT

Had a practical experience of working in reputed organization.

Got the practical knowledge of the market.
Learned the importance of the excel sheet.
Learned to manage time properly.
Learned the various policies of the company.
Learned marketing activity, where I use to distribute pamphlets regarding gold loan, home loan, etc.

Learned how to approach the customers. Learned how to take appointments.

Enhanced my communication and convincing skills.
Learned about various products of the India Infoline Ltd.
Learned about Gold loan what is the process of gold loan?

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53

RECOMMENDATIONS

Commitment should be equalized for every person.

Provide the facility of free demonstration for all.
Improvement in the opening of new scheme on gold loan.
There should be a limited number of clients under the customer care executive so that he can

handle new as well as employee of the IIFL.

Some promotional activities are required for the awareness of the customer and as well as

employee of the IIFL.

People at young age should be encouraged to invest in gold loan.
Seminars should be held for providing information to prospective and present customers.

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54

CONCLUSION
On the basis of the study it is found that India Infoline Ltd is better service provider than the other gold
loan company because the loan in 10 minutes and there is no charges on loan amount.
Infoline Ltd. provides the facility to the customer as well as relationship manager facility for
encouragement and protects the interest of the investors. For borrowers, gold loans have emerged as
one of the best means of raising quick, short term capital. For lenders, gold loans are more
advantageous compared with home and car loan because of the shorter tenures, lower processing time
and cost, and greater returns due to higher interest rates.
These factors along with appreciation in value of gold, have led to an explosion in the gold loan
market. With every one wanting a piece of this action, the organized sector is challenging the large
unorganized gold loan market dominated by pawn brokers and money lenders, with NBFCs leading
the pack due to simpler approval and disbursal process, flexible products and better accessibility.
An examination of these trends makes clear that banks/NBFCs that arent yet into the gold loan market
might find it attractive. This is due to the following factors better ROI due to lower cost, higher interest
rate and strong collateral.
Ability to compensate for lower off-take car/home loans. Scope for cross sell opportunities in future
including other gold based products. Opportunity to capture the growing under served and under
penetration market.
With approximately 65% of the market in rural areas, firm need to develop strategies to target this
segment effectively and provide better accessibility to borrowers. When expanding, firms need to
ensure consonance of services and operation throughout the network.
Firms need to manage risks related to possible sharp fall in gold prices and non-adherence of regularity
norms and also need to ensure that physical assets are properly valued, stored and documented.

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55

Gold saving schemes are also emerging wherein the customers pay regular cash flows which on
maturity are added with a certain amount of interest payment to purchase gold for customers. With
frequent hikes in interest rates by the RBI and subsequent hike in rates by banks, the cost of personal
loan borrowing is increasing. This will lead to an increased consumer willingness to secure gold loans

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56

References

http//www.indiainfoline.com

http//www.nseindia.com

http//www.bseindia.com

http//www.angelbroking.com

http//www.sebi.gov.in/dp/indiainfo.pdf

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57

APPENDIX
Questionnaire which was used during survey is given below:
Q1) How many times in year you have emergency requirement of money?
0__

1__

2__

3__

4__

5__

6__

Q2) How do you manage when you require money?

Q3) Are you aware about the concept of gold loan?

Yes__

No__

Q4) Have you ever used gold loan services?

Yes__

No__

Q5) If yes which company ____ Amount of loan ____

Q6) What according to is safest instrument of investment & saving?
Bank Saving __

Insurance__

Fixed Deposits__

Real Estate__

Post Office__

Mutual Funds__

Others__

Q7) Where do you save and invest your money?

Instrument

Do you invest

Approx. Amount

option

In.

Invested pa.

YES

NO

Regular

Random

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58

Share market
Insurance
Mutual Funds
Post Office
Fixed deposit
Bonds
Q8) What is your approximately monthly house hold expenses?
>10000__
upto15000__ upto 20000__ upto25000__
above30000__
Q9) Do you have your owned house or rented?
Owned__
Rented__
When do you plan to buy new house

If Rented
Amount required to buy house (budget)

If Owned
Q10) Have you taken any housing loan?
YES__
NO__
Q11) Have you made any provision for your retirement?
YES__
NO__

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59