Kartik Sheth 08BS0001412

Batch
2010
Project report
on
INVESTMENT
MANAGEMENT AT
PRIORITY BANKING
KOTAK MAHINDRA BANK
Submitted To: Submitted By:

Dr. Saji kumar Kartik Sheth
Enroll No. 08BS0001412
A Report on
INVESTMENT MANAGEMENT AT PRIORITY
BANKING
SUMMER INTERNSHIP REPORT 2009
Prepared By:
Kartik Sheth
Enrollment No: 08BS0001412
Kotak Mahindra Bank
ICFAI BUSINESS SCHOOL - AHMEDABAD Page 2

A Report on
INVESTMENT MANAGEMENT AT PRIORITY
BANKING
Prepared By:
Kartik Sheth
Enrollment No: 08BS0001412
Submitted to:
Dr. Saji Kumar
Kotak Mahindra Bank

ACKNOWLEDGEMENT
Through this acknowledgement, I express my sincere gratitude towards all those people who
have helped me in the preparation of this interim project report, which has been a learning
experience.
I appreciate the co-operation extended by the management, my company guide Mr. Mitul
Mehta (priority Relationship Manager) and staff of ―KOTAK MAHINDRA BANK” for
having given me the opportunity to work in their organization.
I would like to thank the Mr. Balabhaskaran (Director), Mr. Prashant Saxena (Placement
Coordinator), and Administrative staff of IBS-Ahmedabad for their support.
I express my Sincere thanks to Prof. Dr. Saji Kumar who guided me till this time and also
continue to give me valuable suggestions and encouragement as in the past.
Signature
Kartik Sheth

PREFACE
As a part of the summer internship, MBA students are required to prepare a project report. The
objective behind this project report is to relate the management knowledge gained in the
classroom to their practical application.
The preparation of this report is based on facts and findings noted during the organization
working period, information received from written, published documents the most important
practical exposure to different customers and briefing by the company guide.
The scope of the project report is limited to the company in the lights of its priority department
and lying emphasis on that particular department. The area of my specialization is
INVESTMENT MANAGEMENT AT PRIOIRTY BANKING.
My work in this report is, therefore, a humble attempt towards this end.
In spite of my best efforts, there may be errors of omission and commission, which may please
be excused.

Executive summery
To understand the investment management of the priority customers at banks and

by conducting a survey help the bank to understand that what customers wants in terms
of investment in this current scenario so that banks can improve upon its products &
services is the aim of the project. The project revolves around how the investment of the
priority customer is being maintained and taken to the profitability. The main objective of the
project is to make a difference to the organization by telling that what is the trend in the current
market regarding the investment.
Investment management is the process of understanding how the customer is, what is
the need of the customer, what is his profile, how much is risk taking ability of the customer of
the customer, and which investment opportunity is best suited to the customer based on its
needs and mentioned characteristics.
The project consist the background of the banking industry, introduction of Kotak Mahindra
Group & Bank, meaning of Priority Banking & its difference from normal banking, investment
management process, customer survey and analysis. Apart from the customer survey everything
is covered under this Interim Report.
In India Kotak Mahindra Bank has a reputation of bank of an urban area. It consist cream
customers, upper middle class and upper class. It faces the close competition from HSBC and
CITI bank. Because the class of services and the facilities provided by the Kotak Bank can be
closely compare to them rather than other banks.

LEARNINGS from the project are..
What is system of banking?
What are the different products of banking like Current & Savings A/c. mutual funds,
insurance and other structured products.
It makes me understand the practicality of the Banking Industry.
It also makes me understand the practicality of job of Priority Relationship Manager

(PRM).
How to handle a pressure of work?
How to convince a customer?
Where to invest so that it gives them maximum return to the customer?
What customer wants from the bank?
How to give them better services?
How to sale?

No. PARTICULARS page no.
1. INTRODUCTION & HISTORY OF BANKING INDUSTRY 10-14
2. INTRODUCTION OF KOTAK GROUP 15-18
3. INTRODUCTION OF KOTAK MAHINDRA BANK 19
3.1 Organization structure of bank 20
4. PRIORITY BANKING 21-24
4.1 What is Priority Banking? 21
4.2 How the concept of Priority Banking has evolved? 21
4.3 Structure of Priority Banking. 22
4.4 How Priority Banking is different from General Banking? 23-24
5. INVESTMENT MANAGEMENT AT PRIORITY BANKING. 25
5.1 Process of investment management 26
5.2 Customer profiling 27-29

5.2 Risk profiling of the customer 29-30
5.3 Investment Opportunities 31-34
5.4 Risk profiling of different investment opportunities 34-35
5.5 Finding out the best investment opportunity 36-37
5.6 Investment 38
5.7 Follow up 38
5.8 Convertibility/Review 39
5.9 Feed back 39
6. Analysis 40-44
Part – 1 Comparative study 40-42
Part – 2 Survey analyses 43-44
7. Findings 45
8. Recommendation 46
9. Practical Scenario 47-48
10. Leanings 49
11. References 50
12. Leads generated & Annexure 51-53

HISTORY OF BANKING
T he first banks were probably the religious temples of the ancient world, and were
probably established sometime during the third millennium B.C. Banks probably predated
the invention of money. Deposits initially consisted of grain and later other goods including
cattle, agricultural implements, and eventually precious metals such as gold, in the form of
easy-to-carry compressed plates. Temples and palaces were the safest places to store gold as
they were constantly attended and well built. There are extant records of loans from the 18th
century BC in Babylon that were made by temple priests/monks to merchants.
Prist drives the Usurers out of the Temple.
MAJOR EVENTS IN BANKING HISTORY
Knights Templar- earliest Euro wide /Mideast banking 1100-1300.

1602 - First joint-stock company, the ―Dutch East India Company‖ founded.
1781 – ―The Bank of North America‖ was found by the Continental Congress.
1800 - Rothschild family founds Euro wide banking.

1930-33 In the wake of the Wall Street Crash of 1929, 9,000 banks close, wiping out a
third of the money supply in the United States.
2008 - Washington Mutual collapses. It was the largest bank failure in history.
GLOBAL BANKING
A good definition of Tier I capital is that it includes equity capital and disclosed reserves.
Tier 1 Capital (US$

Rank Company billions) Country
1 Citigroup 73 US
2 JP Morgan Chase 69 US
3 HSBC 67 UK
4 Bank of America 64 US
5 Credit Agricole Group 63 France
6 Royal Bank of Scotland 43 UK
7 Mitsubishi Tokyo Financial Group 40 Japan
8 Mizuho Financial Group 39 Japan
9 HBOS 36 UK
10 BNP Paribas 35 France
Tier capital is also seen as a metric of a bank's ability to sustain future losses.

OLDEST PRIVATE BANKS
Monte dei Paschi di Siena 1472 - present, the oldest surviving bank in the world.
Founded in 1472 by the Magistrate of the city state of Siena, Italy.
C. Hoare & Co founded 1672
Barclays, which was founded by John Freame and Thomas Gould in 1690 and renamed
to Barclays by Freame's son-in-law, James Barclay, in 1736
Rothschild family 1700 - present
Wegelin & Co. Private Bankers 1741 - present, the oldest Swiss bank, founded in 1741
in St. Gallen, third largest private bank in Switzerland
Hope & Co, founded in 1762
OLDEST NATIONAL BANKS
Bank of Sweden — The rise of the national banks, began operations in 1668
Bank of England — The evolution of modern central banking policies, established in
1694
Bank of America — The invention of centralized check and payment processing
technology
Swiss bank
United States Bank
The Pennsylvania Land Bank, founded in 1723 and receiving the support of Benjamin
Franklin who wrote "Modest Enquiry into the Nature and Necessity of a Paper Currency"
in 1729.
Imperial Bank of Persia (Iran) — History of banking in the Middle-East

BANKING IN INDIA
 Only one Indian Bank in the top 100 Banks in the world
 India's best and brightest, the SBI, is roughly one-tenth the size of the world's
biggest bank - Citigroup
 Six Chinese banks feature among the top 25 Asian banks while India has only two
representatives - SBI and ICICI Bank.
Banking in India originated in the last decades of the 18th century. The oldest bank in
existence in India is the State Bank of India, a government-owned bank that traces its origins
back to June 1806 and that is the largest commercial bank in the country. Central banking is the
responsibility of the Reserve Bank of India, which in 1935 formally took over these
responsibilities from the then Imperial Bank of India, relegating it to commercial banking
functions.
Currently, India has 88 scheduled commercial banks (SCBs) - 27 public sector banks (that is
with the Government of India holding a stake), 31 private banks (these do not have government
stake; they may be publicly listed and traded on stock exchanges) and 38 foreign banks.
HISTORY
Banking in India originated in the last decades of the 18th century. The first banks were The
General Bank of India, which started in 1786, and the Bank of Hindustan, both of which are
now defunct. The oldest bank in existence in India is the State Bank of India, which originated
in the Bank of Calcutta in June 1806, which almost immediately became the Bank of Bengal.
This was one of the three presidency banks, the other two being the Bank of Bombay and the
Bank of Madras, all three of which were established under charters from the British East India
Company.

The Bank of Bengal, which later became the State Bank of India.
NATIONALISATION
By the 1960s, the GOI issued an ordinance and nationalised the 14 largest commercial banks
with effect from the midnight of July 19, 1969.
A second dose of nationalization of 6 more commercial banks followed in 1980. The stated
reason for the nationalization was to give the government more control of credit delivery. With
the second dose of nationalization, the GOI controlled around 91% of the banking business of
India.
LIBERALISATION
In the early 1990s, the then Narsimha Rao government embarked on a policy of
liberalization, licensing a small number of private banks. These came to be known as New
Generation tech-savvy banks, and included Global Trust Bank (the first of such new generation
banks to be set up), which later amalgamated with Oriental Bank of Commerce, Axis
Bank(earlier as UTI Bank), ICICI Bank and HDFC Bank.

INTRODUCTION OF THE KOTAK MAHINDRA GROUP
HISTORY OF THE KOTAK GROUP
The Kotak Mahindra Group was born in 1985 as Kotak Capital Management Finance Limited.
1986 - Kotak Mahindra Finance Limited starts the activity of Bill Discounting
1990 - The Auto Finance division is started
1995 - Brokerage and Distribution businesses incorporated into a separate company - Kotak
Securities.
1996 - The Auto Finance Business is hived off into a separate company - Kotak Mahindra
Prim Limited (formerly known as Kotak Mahindra Primus Limited).
1998 - Enters the mutual fund market with the launch of Kotak Mahindra Asset
Management Company.
2000 - Kotak Mahindra ties up with Old Mutual plc. for the Life Insurance business.
Kotak Securities launches its on-line broking site (now www.kotaksecurities.com).
2003 - Kotak Mahindra Finance Ltd. converts to a commercial bank - the first Indian
company to do so.
2006 - Bought the 25% stake held by Goldman Sachs in Kotak Mahindra Capital Company
and Kotak Securities.

DISTRIBUTION NETWORK
The Kotak group has a net worth of over Rs. 6,327 crore and has a distribution network of more
than 1300 branches, franchisees, representative offices and satellite offices across cities and
towns in India and offices in New York, London, San Francisco, Dubai, Mauritius and
Singapore. The Group services around 5.9 million customer accounts.
SERVICES OFFERED
Kotak Mahindra is one of India's leading financial organizations, offering a wide range of
financial from commercial banking, to stock broking, to mutual funds, to life insurance, to
investment banking, the group caters to the diverse financial needs of individuals and
corporates.
BOARD OF DIRECTOR OF KOTAK GROUP
1. Dr. Shankar Acharya chairman
2. Mr. Uday Kotak Executive Vice Chairman And Managing Director
3. Mr. Anand Mahindra
4. Mr. Cyril Shroff
5. Mr. Pradeep Kotak
6. Mr. Shivaji Dam

7. Mr. C. Jayaram – Executive Director
8. Mr. Dipak Gupta - Executive Director
9. Mr. Asim Ghosh
10. Ms. Bina Chandarana - Secretary & Senior Vice President
KOTAK GROUP OF COMPANIES
KOTAK MAHINDRA OLD MUTUAL LIFE INSURANCE:
KOTAK MAHINDRA ASSETMANAGEMENT COMP. LTD.(MUTUAL FUND):
KOTAK CAR FINANCE:
KOTAK SECURITIES:
KOTAK SECURITIES INSTITUTIONAL EQUITIES:
KOTAK MAHINDRA CAPITAL COMP. LTD.(INVESTMENT BANKING)
KOTAK MAHINDRA INTERNATIONAL BANKING:
KOTAK MAHINDRA WEALTH MANAGEMENT:
KOTAK MAHINDRA BANK

KOTAK MAHINDRA BANK
Established in 1985, The Kotak Mahindra group has long been one of India's most reputed
financial organizations. In February 2003, Kotak Mahindra Finance Ltd, the group's flagship
company was given the license to carry on banking business by the Reserve Bank of India
(RBI). This approval creates banking history since Kotak Mahindra Finance Ltd. is the first
company in India to convert to a bank.
CORPORATE IDENTITY
Logo of the Bank
BOARD OF DIRECTOR
1) Dr. Shankar Acharya Chairman
2) Mr. Uday Kotak - Executive Vice Chairman & Managing Director

ORGANIZATION STRUCTURE OF THE KOTAK MAHINDRA BANK
SENIOR VICE PRESIDENT
VICE PRESIDENT
ASSOCIATE VICE PRESIDENT
AREA MANAGER
BRANCH HEAD
PRIORITY BANKING BRANCH BANKING TRADE FINANCE NR SERVICES
PRM SDO SM RO BRM RM SDO SALES RM SO

TEAM
SALES TEAM SDO
PRM: Priority Relationship Manager
SDO: Service Delivery Officer
SM: Service Manager
RO: Relationship Officer
SO: Service Officer
BRM: Branch Relationship Manager
RM: Relationship Manager

PRIORITY BANKING
WHAT IS PRIORITY BANKING?
In general priority banking means giving priority to the customers in the services like financial
services, trade services, commercial banking, stock broking, mutual fund, insurance services
and investment banking offered by the bank compare to the normal bank customers.
As per Kotak Mahindra Bank priority banking is all about customer-customer needs, customer
goals, customer dreams and customer aspiration and fulfilling these by making their money
work for them. The core of the priority banking is to identify new opportunities to develop the
right investment plan and also for the management of the investment of the priority customer to
work towards the attainment of the financial objective of the customer. Means the investment
planning of the customer on the basis of risk profile, financial goals, time horizon and many
more. With comprehensive suite of banking services it access the wide range of investment
products like mutual funds, insurance and exclusive investment products from Kotak Mahindra
Group companies.
WHY CONCEPT OF PRIORITY BANKING HAS EVOLVED?
From the customer point of view:
Needs has given the rise to the concept of the Priority banking. Need of Convenience,
comfortness, relaxation, lifestyle etc. are some of the forces which are important for the
evolution of the priority banking. Nearer to home, Time saver, Home banking, Net banking,
Mobile banking, Electronic transfer, free services, investment planning, waiving off charges
has evolved due to the needs of the customers.

From the Bank point of view:
If we think from the bank point of view we can say that banks want money for the investment
purpose, for the lending purpose etc. but A/cs are not enough to generate those money. Also
HNI's have idle money which they are not able to utilize due to their unawareness and
ignorance of the investment opportunities which bank can provide.
STRUCTURE OF PRIOROTY BANKING
The structure of priority banking consist SVP, VP, AVP, AM, PRM, SDO. Its hierarchy shows
like behind; in the chart form.
PRIORITY BANKING
SENIOR VICE PRESIDENT
VICE PRESIDENT
ASSOCIATE VICE PRESIDENTS
AREA MANAGER
PRIORITY RELATIONSHIP MANAGER
SERVICE DELIVERY OFFICER

HOW PRIORITY BANKING IS DIFFERENT FROM THE GENERAL
BANKING?
Priority banking is in many ways different from the general/normal banking. On the basis it
differ. Like, on the basis of.....
1. Customer
2. Features & Services
3. Charges
Normal banking Priority banking
Customer: Investment of Rs 5K to 1 Lakh Investment of 10 lakh or more.
R.V. - Nil RV. - As per the A/c.
AQB - as per the A/c Rs. 1Lakh (generally)
Service class people HNI's or Business class
Features Net banking Yes Yes
& Home banking Yes* Yes
Services Mobile banking Yes* Yes
& Phone banking Yes Yes
Charges Bills pay Yes Yes
NEFT Yes* Yes
Anywhere banking Yes* Yes

Two way Sweep Yes Yes
Visa Card Yes* Yes
Net Card Yes Yes
Monthly Statement Yes Yes
PFP/PFR No Yes
RM Yes Yes
Priority Services No Yes
(Investment A/c, Demat A/c)
Financial Planner No Yes
Family Savings A/c No Yes
Debit card Yes* Yes
Dedicated Counter No Yes
ATM service Yes* Yes
Liquidity Benefits No Yes
PMS No Yes
Note: * - charged for the services provided.
(PLEASE REFER TO THE EXCEL SHEET PROVIDED IN THE CD)

INVESTMENT MANAGEMENT AT PRIORITY BANKING
Investment management is the professional management of various securities (shares, bonds

etc.) and assets (e.g., real estate), to meet specified investment goals for the benefit of the
investors. Investors may be institutions (insurance companies, pension funds, corporations etc.)
or private investors (both directly via investment contracts and more commonly via collective
investment schemes (e.g. mutual funds or Exchange Traded Funds) .
The provision of 'investment management services' includes elements of financial analysis,

asset selection, stock selection, plan implementation and ongoing monitoring of investments.
Investment management is a large and important global industry in its own right responsible for
caretaking of trillions of dollars, euro, pounds and yen. Coming under the remit of financial
services many of the world's largest companies are at least in part investment managers and
employ millions of staff and create billions in revenue.
Investment management at priority banking is not a onetime process; it is a continuous

process. Priority customers invest through bank in different investment products so it’s a duty
of the bank to manage their investments in profitable way. Investment management at priority
banking is done by a priority relationship manager for the customers who are mapped under
them or through his/her guidance customers have invested in the investment products.
Investment management process at priority banking is done in different steps which can be
described in this manner. It starts from the customer profiling and ends at feed back of the
customer.

PROCESS OF INVESTMENT MANAGEMENT

 "How you gather, manage and use information will determine whether you win or lose."
-Bill Gates
CUSTOMER PROFILING:
Customer profiling of the priority customer includes many things as mentioned below.
Age
Financial status
Dependant
Present & future income,
Current stage in life.
Investment knowledge.
AGE: Age of the customer defines in this manner.

18 to 29 yr. 30 to 39 yr. 40 to 49 yr. above 50.
It is very important parameter because it defines the time horizon for the investment in one or
the other way. Also it defines the investment purpose of the customer.
FINANCIAL STATUS: it is also one of the important parameter to know the customer. It can
be measured in this manner.
 Annual income of the customer is expected to..
Stay about same Grow Grow Decrease Decrease
Moderately substantially moderately substantially
 Excluding the PF and RE investment how long will your savings sustain customer?
3 months 6-18 months 18-36 months 36 months & more
DEPENDENT:
 It defines that how many persons are dependent on him/her.
None 1-2 3-4 more that 4
PRESENT & FUTURE INCOME:

 How secure is your customer’s current and future income?
Unstable somewhat somewhat stable very stable
Stable unstable
CURRENT STAGE IN LIFE:

 Which of the following defines the current stage in life of the customer?
- Self dependent & do not support anybody.
- Have dependent(s) & alternative financial solution.
- Have dependent(s) & without alternative financial solution.
- Nearing retirement.
- Retired.
INVESTMENT KNOWLEDGE: What is the investment knowledge of the customer is also

one of the important parameter which defines that how much knowledgeable the customer is in
terms of the investment?
Excellent Good Average Poor

Also includes questions like what, where, when, why, how.
What: means what is the status of the customer? Is it NTB (new to bank or existing customer).
How: means how much he wants to invest?
Why: why he wants to invest? Means what is the purpose of the investment. There are many
reasons for the investments. Like idle money, retirement planning or purely investment
purpose.
Where: Means where he wants to invest the money. Either in mutual fund, insurance, bonds,
equity market, or other structured products.
When: Means the time horizon. When he wants his money back?
 What is the time period for which he wants to invest his money?
Up to 1 yr. 1-3 yr. 3-5 yr. Above 5 yr.
RISK PROFILING OF THE CUSTOMER
Risk profiling of a customer tells about whether a customer is risk taker or risk averter. And
also how much risk he is willing to take. On the basis of the risk profiling of a customer a
customer can be divided in to three categories.
Conservative
Moderate
Aggressive

Conservative
Customer is that who almost risk averter is. Who is not willing to take more risk. If we say in
investment term he wants his capital guaranteed and also grows moderately year by year. He
also wants guaranteed return on his investments and willing to invest for a long term.
Moderate
Risk taking customers are those who are willing to take slightly higher risk than the
conservative ones but lower than the aggressive ones. In terms of investment language they
want their capital guaranteed or temporary decline in principal at times but willing to take
higher risk for the higher returns compare to conservative ones.
Aggressive
Ones are those who are willing to take high risk for higher returns. They want above average
return or high return at fluctuating value of investment also. They are the highest risk taker
amongst the entire three categories. They are not much bother about their capital; if it declines
at a time it also bearable for them but their returns has to be high.
 The risk profiling of the customer can be identified from through such kind of
questions.
- Which investment plan suits the customer most?
- Low & steady returns with safety on principal at all times.
- Medium rybeturns with temporary decline in principal at all times.
- Above average return with fluctuating value of investment.
- High returns high risk.

INVESTMENT OPPORTUNITIES
Investment management takes its step forward after the risk profiling of the customer to
investment opportunities. It defines where the money of the investor is being invested
according to the preference of the customer. There are many investment fields available in the
markets which are as follows.
Investmen
t
opportunit
ies
Mutual Structured Banking Equity
Insurance Products &

Funds Product
Debt market
MUTUAL FUND:
Mutual Fund investments are the unit based investment product where for the sum invested
investor gets units of the funds and then based on the NAV and Dividends they gets the
returns. It is one of the important investment options for the investors. It gives many options
to the investors for the investment. Like…
Equity funds.
Debt funds.
Index fund.
Liquid funds.
Sector specific funds.
Fund of funds.
INSURANCE:
Life Insurance helps a person to protect their self and their family against an uncertain future.
After deciding the amount of insurance that they require, they need to decide on the policy that
best suits their needs. Their insurance needs are dependent on their responsibilities and
financial commitments, which are defined by their life stage and their needs. There are also
many investment options in the life insurance according to the needs of a person. Like here at
Kotak Mahindra Bank we have….
Retirement investment plan
Smart advantage plan
Platinum advantage plus plan
Eternal life plan
Safe investment plan
Flexi plan
Easy growth plan
Capital multiplier plan
Child advantage plan
From the given different plans investors can invest in any of the investment plan according to
its need.

STRUCTURES PRODUCTS:
Structured products are those products which are those whose structure is already fixed. These
are different from organization to organization. There is only one structured product that is
available NIFTY LINKED DEBENTURE by the Kotak Bank in the market.
BANKING PRODUCTS:
Banking products are also one of the most attractive and safe investment alternatives available
for the customers. There are different products where an investor can invest ranging from Fixed
Deposits on which one can get interest from 4% to 10%, Savings accounts on which one can
get interest of 3.50%, SIPs (Systematic Investment Plans), OTCs where one can earn on the
basis of NAV appreciation by regular investment on the monthly basis for 10, 15, 20, 25, 30
years and on the basis of bonus. Portfolio management services (PMS) is also one of the
products where a portfolio of the shares is being made and given to the customer and then
portfolio manager manage that portfolio in a profitable way.
EQUITY & DEBT MARKET
Equity market or stock market is a system through which company shares are traded.
The equity market offers investors an opportunity to participate in a company's success through
an increase in its stock price. The Indian equity market focuses on the National Stock
Exchange (NSE) & Bombay stock exchange (BSE), a computerized system of
brokers/dealers with no physical trading. Investors invest in the shares of the small cap, mid cap
& large cap. Companies and get the returns in the form of increase in the stock prices and
dividends. It is one of the easiest but the riskiest form of investment product. It also consists
many products like

The debt market is the market for trading debt securities. The debt market thus involves
corporate bonds, government bonds, municipal bonds, negotiable certificates of deposit, and
various money market investments. The debt market includes the primary market, where debts
are first sold to the public; and the secondary market, where investors sell debts to each other
afterward. On the secondary debt market, debts can be sold on exchanges or on the over-the-
counter market, but most are traded over the counter.
RISK PROFILING OF THE DIFFERENT INVESTMENT OPPORTUNITIES
Investment opportunities are with varying degrees of risk. Investment opportunities like
banking products, mutual funds, insurance, equity or debt market, structured products etc are of
holding varying degree of risk. Some are highly risky, some are moderately risky and some are
less risky.
MUTUAL FUND is considered to be a risky product of investment because of the uncertainty

of the change of the economic situation and market condition. Both will affect the performance
of the mutual funds. Their NAV (Net Asset Value) & Dividends are depending upon it.
 Example Many of the mutual funds NAV are below 10 Rs. Which are of 10 Rs. face
value like ASIA and many are doing good and their NAV are high compare to others. Like
LIC G.SEC fund has the NAV of Rs. 25.79, also ICICI PRUDENTIALGILT FUND has
Rs.18.11 from Rs.10 right now.
DEBT MARKET is considered to be a less risky compare to equity and mutual funds; because
of the guarantee of the capital and regular returns. Debt market securities gives investors
guaranteed returns at steady growth in the capital. Debt market instruments are very famous
amongst the investors in such kind of market condition that is prevailing today. It’s a long term
investment product for say 5 to 10 years or more with moderate growth in the dividends as well
as invested capital.

Example: Bonds and Debentures are considered to be a liability for the companies.
Companies mortgage their assets to debenture holders. They are consider to be an owner of the
company’s assets. Also company has to pay regular interest to the debenture holders.
EQUITY MARKET is consider to be high risk investment product where trading in shares of
the companies is concern to be highly risky because of the market uncertainty. It’s a high risk
product compare to debt market and other investment opportunities because equity market is
highly volatile and minor economic and political changes as well as industrial changes can
change the market fundamentals.
 Example: Due to change in the govt. in the last election the markets swings and drop
down like anything. Also due to financial and economic crisis in America and in the world
our markets sinks from 21000 mark to below 8000 mark.
LIFE INSURANCE is one of the safest products for investment. There is no chance of capital
loss in this product. The capital will definitely appreciate at the time of maturity. Also with the
same capital there is always a gain of interest. Life insurance gives insurer a cover for its life.
The only point of concern is that the return that can be generated by investing in the life
insurance is might be lesser than the return generated by the equity market where the concept of
high risk high return is applicable.
 Example: Kotak Smart Advantage Plan gives back the Amount Invested (90% of the
total) guaranteed and also the bonus at the time of maturity (at 10, 15, 20, 25, 30 years) to the
investor plus 90% of the increased value of the NAV.
BANKING PRODUCTS are also one of the safe products of investment to some extent. Like
Fixed Deposits and savings are the most known products for the investment in current scenario
for the customers compare to other investment products in terms of safe and fixed returns. Also
other products like OTC’s where the money invested in that are invested in stock market and
returns generated are the profit that customers get in terms of increased value of NAV. But it is
based on the market volatility so it is more risky compare to others.

FIND OUT THE BEST INVESTMENT OPTION
The next and one of the most important steps in the process is to find out the best investment
option for the customer based on different criteria which suits the need of the customers. There
are many different criteria that are followed..
CUSTOMER
PREFERENCE
RETURNS FINANCIAL
GENERATED GOALS
CRITERIAS
FOR
INVESTMENT
INVESTMENT AMOUNT
RISK INVESTED
TIME
HORIZON
On the basis of criteria like what customer prefer (where he/she wants to invest), how much
amount he wants to invest, for what time period, what is the investment risk, what is the

financial goals of the customer, what is the risk of investment and the most important returns
generated.
We will explain this process by Practical examples.
Example: If a person wants to invest small amount say below 1Lk for 1-2 year with a 30K to
40K per month (Steady Income) and within the age group of 24 to 40 years than his investment
perspective would be for a long term so his investment would be ideally 60% into equity, 25 %
in debt, and 15% in liquid.
If his age is between 41 to 60 years than his investment portfolio will consist 40% equity, 30%
debt and 30% equity. And if above 60 years (Retired) than his investment will consist 20%-
25% equity, 50% debt and 25%-30% liquid ideally.
Now if he is a Priority Customer and he wants to invest than the investment module will
be different. Because a priority customer will not invest less than 10lk. So for such type
of customer the investment options are like this.
If he has any preference for the investment than his investment portfolio would be of that kind
but if his investment goal is not sure than on the basis of the suggestion of the Priority
Relationship Manager he/she makes investments.
Example: one of the investor wants to invest 1cr. Rupees but not sure where to invest. So our
PRM went there and convince him to invest in Kotak Smart Advantage Plan, an insurance
which is linked with the investment. The money of the customer invested in Dynamic Flow
Fund (DFF) which invests the customer’s money into Equity market and according to its
performance its current NAV is increased from Rs.10 to Rs. 13.65. Also it guarantees 90%
return. With bonus at the time of maturity at 10, 15, 20, 25 and 30 years.

Example: also one customer wants to invest 25 lk so our PRM went his house and convince
him to invest in the DFF because he wants higher returns which is assured also to some extent
and he also wants to take high risk and his investment horizon is long term. and now as
mentioned earlier he gets good return and is now he is satisfied with it. So after analyzing
different criteria his investment is planned.
INVESTMENT
The next step in the investment management process is the investment. After convincing the
customer the banking process like form fill up, documents collection, documents submission,
acceptance, issue of certificate etc has to be followed and when the form is passed from the
process than his amount is got invested and he is allotted units if incest in Mutual Fund, policy
will be hand over if Insurance is being taken or certificates are provided is any banking
products has been taken.
FOLLOW UP
Follow up has to be taken in terms of
What is the current NAV of the invested fund?
What is the value of the investment say in PMS?
Whether any dividend is declared or not?
Whether the investment option selected is profitable or not? If not than whether it needs
to be converted in any other investment option?
Is there any new profitable investment opportunity is available in the market?
Whether the customer is satisfied or not?
Such kind of follow ups is being taken by the relationship manager on a regular basis.
CONVERTIBILITY
If the term of maturity is nearby or if there is any profitable alternative is available in the
market than the amount invested in one product is being redeemed and invested in the other
product.
Example: Due to the knowledge and fear of market crash the amount invested in PMS is being
redeemed and invested in insurance and other investment products at 18000, 19000, 20500
mark by our PRMs. Because of other profitable investment options are available and this option
is no more remain profitable for the investor.
And the last step in the process of investment management is the feedback from the
customers.
FEEDBACK
Feed back of the customer is being taken by the manager about their relationship with the bank
whether they are satisfied or not from the way the bank has provided them the services. And
also it is an attempt to know about the new investment prospects.
This brings the end of the process of investment management but after this also there is a
continuous monitoring of the PRM is going on, on the investment of its customers. To check
out the current status and new prospects for the investment

ANALYSIS
The analysis consists of two parts.
PART – 1) Comparison with other banks – base (CUSTOMER, products &

services, DISTRIBUTION NETWORK, quality of service)
PART – 2) Survey analysis – base (investment perspective of

customers)
PART – 1) COMPARISON WITH OTHER BANKS
(HDFC, CITI, HSBC, ICICI, AXIS)
STRENGTH OF KOTAK BANK
QUALITY OF CUSTOMER BASE
Kotak Mahindra bank has cream quality customers compare to other banks because of higher
A/c opening limit and much secured processes. Which decrease the NPA nonperforming assets
of the bank and chance of loss of repayment.
PRODUCTS & SERVICES
1. Savings & Current A/c.
(PLEASE REFER THE EXCEL SHEET FOR ARTICLE KIND OF BATTER & CLEAR
DIFFERENTIATED BANKS COMPARISON)

DISTRIBUTION NETWORK
The Kotak group has a distribution network of more than 1300 branches, franchisees,
representative offices and satellite offices across cities and towns in India and offices in New
York, London, San Francisco, Dubai, Mauritius and Singapore. The Group services around 5.9
million customer accounts. This is highest in comparison with HSBC and CITI Bank.
QUALITY OF SERVICE OFFERD
In terms of service quality kotak Mahindra stands at the top of the chart with the other banks
like CITI, ABN Amro, HSBC, and STND. CHARTERED Compare to ICICI, HDFC, SBI,
AXIS the service quality of the KOTAK MAHINDRA BANK is superior.

WEAKPOINTS/ AREAS OF IMPROVEMENTS
Higher interest charges of term loan, home loan, personal loan, loan against property,
unsecured overdraft.
Home loan facility is not available at some of the cities like Baroda.
Higher paper work required.
Less promotional events.
Particulars KOTAK BANK (HDFC,ICICI,AXIS,CITI,
HSBC)
Term loan interest charges 14% to 16% 11% to 16%
Agri loan interest charges 14% to 16% 11% to 16%
Personal loan int. charges 22% to 24.75% 16% to 20%
Unsecured loan 19% to 21% 15% to 19%
Home loan (at Baroda) No (facility is not there) Yes
Paper work required for Heavy Compare to kotak less
loans
Reward system No Yes
Free Insurance to A/c No Yes
holders
A/c opening limit Min Rs 10,000 Min Rs 500, 5000, 10000
Global banking service in No Yes (CITI Bank)
priority A/c
Promotional programmes Less High
Time in process of loans 20 to 30 days 10 to 15 days

PART – 2) SURVEY ANALYSIS
Door to door survey – 31 Respondents
Oral & Telephonic survey – 90 Respondents TOTAL 121 Respondents
This shows that the most preferred bank in Most of the respondants sureveyed are
Priority customers is CITI followed by HDFC Businessmen than Serviceclass and than
and than Kotak. Professionals.
This graph explain that in current scenario the investment trend of the priority customers is
towards Equity market & Bank savings & FDs followed by insurance. The reasons behind this
are Stable govt. in India, FBI buying, Improved global trend & market upwardness.

It shows that most of the investors are willing We can see that investors are moderate
to invest for longer time period because of the (medium) risk taker. Medium risk high
higher return perspective. Return.
It shows that most of the investors want to It represents that the main reason for the
their investment decision on their own & the investment boom is the election result
with the help of banking or personal advisor. the stability of the government.

FINDINGS
CITI & HDFC bank are the most preferred banks amongst the priority customers.
Most of the priority customers are businessmen.
Customers are willing to invest in Equity market, insurance and bank savings & FDs.
Investors are long term investors.
Most of the investors are medium risk taker.
Most of the investors take their investment decision on their own.
Economic changes affect the investor’s investment perspective.

Recommendations
Customer satisfaction:
Kotak bank can improve upon its services through more customer interaction.
More focus upon their customer’s benefits with individual target achievement of the
employees.
Survival in the competition:
In today’s scenario Kotak has to compete with already established giants like HDFC,
SBI, ICICI, AXIS etc upon their offerings.
Kotak, to be in can lower down its lending rates which are as high as 14% to 24.75%
compare to other banks 10.5% to 20%.
Kotak can also become more liberal in processes without compromising upon its service
quality.
Increase Sales & revenue
For sales boost up from the survey it is being known that now more & more investors
want to invest in equity and debt. Market as well as insurance products.
Kotak can push its mutual funds, PMS (portfolio management services), profitable
insurance plans (like retirement, growth, and linked plans) to its customers.
At Baroda it has to introduce Home Loan facility which is not available there to increase
the revenue earnings.

PRACTICAL SCENARIO
If see in terms of unclaimed money only, the distribution of such funds RBI said that most of
this money is lying in saving deposit accounts. More than 77.4 lakh accounts, which form a
massive 75% of the entire accounts percent have these funds. In terms of unclaimed money this
segment accounts for Rs. 629.94 crore, which is over 60% of the total amount. Rs. 232 crore is
lying unclaimed in 8.3 lakh fixed deposit accounts.
The money has not been able properly generated into the market. There is ample amount of idle
money lying into the banks FDs and different savings A/c which is not being used according to
the market needs. Also the return customers get is nominal compare to other investment
opportunities available to them.
Today most of the people working in the market are for their benefit; hardly very few people
are working for their customers benefit. They all are TARGET oriented. They want to
complete their targets at the cost of the customers. They convince the customers to invest in the
products which are profitable to them but less compare to other investment opportunity because
they have targets for that.

In banking two kind of relationship can be maintained with the customer.
Take, invest and throw out.

Take, invest and maintained life long relationship.
But in today’s scenario it is needless to say that to save their jobs most of the employees of
almost all the banks are practicing first rather than second.

LEARNINGS
From the 3 month of my summer internship I got to learn lot of things. I had learned to apply
my theoretical knowledge into practical and where no theory can work accept the practicality. I
had learned some things as mentioned below.
Activities done Date Planned:
System Understanding of Banks 1/03/09
CASA understanding & comparison 16/03/09
Mutual fund understanding 25/03/09
Understanding of investment management 10/04/09
Start call calls & convincing the customers 11/04/09
It also makes me understand the practicality of the banking and gave me the answer of
my below questions.
It makes me understand the practicality of the Banking Industry.
It also makes me understand the practicality of job of Priority Relationship Manager

(PRM).
How to handle a pressure of work?
How to convince a customer?
Where to invest so that it gives them maximum return to the customer?
What customer wants from the bank?
How to give them better services?
How to sale?
REFERENCES
SITES:
www.kotak.com
www.google.com
www.wikipedia.com
www.mutualfundsindia.com
LITERATURE:
Pamphlets containing A/C details of the Kotak bank.
Kotak bank’s balance sheet.

LEADS GENERATED AND FORWARDED
PROSPECT NAME TYPE OF LEAD AMOUNT
1. NETAFFIM
IRRIGATION PVT. LTD LC/BANK GUARANTEE 50 CRORES
2. PRAYAG PACIFIC ORGANICS PL/OD 1 CR
3. PJ SOOD AGRI LOAN 30 LK
4. GANGA JEWELLERS PL/OD 30 LK
5. MARUTI POLE INDUSTRIES PL/OD 25LK
6. MBH POWER PVT. LTD PL/OD 25 LK
7. NOVEL CHEMICLES PL/OD 25 LK
8. METAL CUTTING SYSTEMS PL/OD 20 LK
9. PANKAJ EXTUSION PL/OD 15 LK
10. AR INDUSTRIES PL/OD 15 LK
11. MR. RAJ BUSINESS LOAN 15 LK
12. MR. SAMEER PATEL BUSINESS LOAN 15 LK
13. MR. BIPIN BHAI UNSECURED OD 5 LK
14. NITIN BHAI PL 1 LK

Investment perspective of the people
Questionnaire Date:
Note: This questionnaire will be used only for the academic purpose and the information provided will be kept
confidential.
Name:
Contact no:
Age: 18 to 30 yr. 31 to 40 yr. 41 to 50 yr. Above 50.
Q-1 What is your occupation?
Study Service
Profession Business
Q-2 Which bank is your primary banker?
HDFC CITI HSBC AXIS ICICI
Q-3 Are you willing to invest in the current scenario?
Yes No
Q-4 Where you want to invest?
Equity market Debt Market Mutual Fund
(Mid cap, small cap, large cap) (Liquid, equity, debt)
Insurance Savings & FD
Why:

Q-5 What is your investment horizon?
Small Term Medium Term Long Term
(Less than 1 year) (1 to 3 year) (Above 3 year)
Q-6 What is your risk perspective?
Conservative Moderate Aggressive
(Very low risk taker) (Medium risk taker) (High risk taker)
Q-7 What is your annual income?
1lk - 5lk 5.1lk – 10lk 10.1lk – 15lk 15lk – 25lk
>25lk
Q-8 How secure is your customer’s current and future income?

Unstable Somewhat Somewhat Stable very stable
Stable unstable
Q-9 Whose advice would you like to take for taking decision about the investment?
Bank (Relationship manager) Relatives Broker
Personal financial advisor No one
Why:
Suggestions:


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SUMMER INTERNSHIP REPORT 2009

Kotak Mahindra Bank

ICFAI BUSINESS SCHOOL - AHMEDABAD Page 2

Kotak Mahindra Bank

ICFAI BUSINESS SCHOOL - AHMEDABAD Page 3

ICFAI BUSINESS SCHOOL - AHMEDABAD Page 4

ICFAI BUSINESS SCHOOL - AHMEDABAD Page 5

To understand the investment management of the priority customers at banks and

ICFAI BUSINESS SCHOOL - AHMEDABAD Page 6

What is system of banking?

It makes me understand the practicality of the Banking Industry.

It also makes me understand the practicality of job of Priority Relationship Manager

How to handle a pressure of work?

How to convince a customer?

Where to invest so that it gives them maximum return to the customer?

What customer wants from the bank?

How to give them better services?

ICFAI BUSINESS SCHOOL - AHMEDABAD Page 7

1. INTRODUCTION & HISTORY OF BANKING INDUSTRY 10-14

2. INTRODUCTION OF KOTAK GROUP 15-18

3. INTRODUCTION OF KOTAK MAHINDRA BANK 19

3.1 Organization structure of bank 20

4. PRIORITY BANKING 21-24

4.1 What is Priority Banking? 21

4.2 How the concept of Priority Banking has evolved? 21

4.3 Structure of Priority Banking. 22

4.4 How Priority Banking is different from General Banking? 23-24

5. INVESTMENT MANAGEMENT AT PRIORITY BANKING. 25

5.1 Process of investment management 26

5.2 Customer profiling 27-29

ICFAI BUSINESS SCHOOL - AHMEDABAD Page 8

Part – 1 Comparative study 40-42

Part – 2 Survey analyses 43-44

9. Practical Scenario 47-48

12. Leads generated & Annexure 51-53

ICFAI BUSINESS SCHOOL - AHMEDABAD Page 9

Prist drives the Usurers out of the Temple.

MAJOR EVENTS IN BANKING HISTORY

Knights Templar- earliest Euro wide /Mideast banking 1100-1300.

ICFAI BUSINESS SCHOOL - AHMEDABAD Page 10

Tier 1 Capital (US$

5 Credit Agricole Group 63 France

6 Royal Bank of Scotland 43 UK

7 Mitsubishi Tokyo Financial Group 40 Japan

8 Mizuho Financial Group 39 Japan

10 BNP Paribas 35 France

ICFAI BUSINESS SCHOOL - AHMEDABAD Page 11

OLDEST NATIONAL BANKS

ICFAI BUSINESS SCHOOL - AHMEDABAD Page 12

ICFAI BUSINESS SCHOOL - AHMEDABAD Page 13

ICFAI BUSINESS SCHOOL - AHMEDABAD Page 14

HISTORY OF THE KOTAK GROUP

1990 - The Auto Finance division is started

Prim Limited (formerly known as Kotak Mahindra Primus Limited).

and Kotak Securities.

ICFAI BUSINESS SCHOOL - AHMEDABAD Page 16

BOARD OF DIRECTOR OF KOTAK GROUP

1. Dr. Shankar Acharya chairman

2. Mr. Uday Kotak Executive Vice Chairman And Managing Director

3. Mr. Anand Mahindra

4. Mr. Cyril Shroff

5. Mr. Pradeep Kotak