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Introduction of the company

About Us

We are a one-stop financial services shop, most respected for quality of its
advice, personalized service and cutting-edge technology.

Vision

Our vision will not be accomplished only by maintaining high growth alone. Our
vision is to emerge as the most respected financial services company in
India. We are will be respected by our stakeholders if we beat street
expectations and grow faster than the industry, by customers if our research and
service is par excellence, by employees if we can build a wonderful environment
to work in, by society if we are a responsible corporate citizen. Needless to
emphasize that it is imperative for all us to align our goals and values to this
vision.

We need to be most respected by our stakeholders, our customers, our

employees and by society in general. Needless to emphasize, it is imperative for
all of us to align our personal goals and values to the organization’s vision.

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What does our Vision NOT imply?

1. Wanting to become most respected does not imply that we will not grow
and become a leading player.

2. One cannot be respected if one is not amongst the leading players.

3. For example, India cannot be a respected as a “football” country because

our ranking is extremely low and we have never featured in the World Cup
finals.

4. We cannot have poor profitability and growth and expect to be respected.

Hence, it is clear that we have to grow and attain leadership position in order
to get respect.

How and what is different to have a vision of being most respected vis-à-
vis fastest growing or profitable etc?

 The vision helps in resolving a conflict situation. Say there is an

opportunity to make money or grow rapidly but a bit of risk to reputation.

 That is what will differentiate us from other companies. It would be most

natural for any company to aim to be the most profitable or the biggest player.
But in the business that we are in, which is financial services, customer trust,
and consequently respect, are paramount and is the only lasting differentiator.

 There are indeed a number of respected companies in India´s financial

sector, including well managed private sector banks and rapidly growing
entrepreneurial outfits.

 As things stand today, investors respect our calls on the market, traders
swear by our entrepreneurial dynamism that has helped them tide over a
volatile environment.

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  Our technology team is respected by peer companies, reflected in their
prompt emulation. It is this complement of trust, thought, technology and
service that evokes a distinctive and spontaneous respect for India Infoline
over other banking and non-banking financial services firms in India.

So how do we accomplish our Vision?

 You can make all the difference.

 The goal is clear: to delight the customer with the comfort and
convenience of a one-stop shop, reaching out to her, wherever she may be.
And we can do all this only if our only assets, people, function at the peak of
their morale and productivity.

 A company´s respect is nothing but sum total of the respect that all its
people command.

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 History of the company

India Infoline Ltd

India Infoline Ltd is listed on both the leading stock exchanges in India,
viz. the Stock Exchange, Mumbai (BSE) and the National Stock Exchange
(NSE). The India Infoline group, comprising the holding company, India Infoline
Ltd and its subsidiaries, straddles the entire financial services space with
offerings ranging from Equity research, Equities and derivatives trading,
Commodities trading, Portfolio Management Services, Mutual Funds, Life
Insurance, Fixed deposits, GoI bonds and other small savings instruments to
loan products and Investment banking.

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 India Infoline Ltd, being a listed entity, is regulated by SEBI (Securities
and Exchange Board of India). It undertakes equities research which is
acknowledged by none other than Forbes as 'Best of the Web' and '…a must
read for investors in Asia'. India Infoline's research is available not just over the
internet but also on international wire services like Bloomberg (Code: IILL),
Thomson First Call and Internet Securities where it is amongst the most read
Indian brokers.

Its various subsidiaries are in different lines of business and hence are governed
by different regulators. The subsidiaries of India Infoline Ltd are:

India Infoline Securities Pvt Ltd

India Infoline Securities Pvt Ltd is a 100% subsidiary of India Infoline Ltd, which
is engaged in the businesses of Equities broking and Portfolio Management
Services. It holds memberships of both the leading stock exchanges of India viz.
the Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE). It
offers broking services in the Cash and Derivatives segments of the NSE as well
as the Cash segment of the BSE.

A SEBI authorized Portfolio Manager, it offers Portfolio Management Services to

clients. These services are offered to clients as different schemes, which are
based on differing investment strategies made to reflect the varied risk-return
preferences of clients.

India Infoline Commodities Pvt Ltd

India Infoline Commodities Pvt Ltd is a 100% subsidiary of India Infoline Ltd,
which is engaged in the business of commodities broking. Our experience in
securities broking empowered us with the requisite skills and technologies to
allow us offer commodities broking as a contra-cyclical alternative to equities
broking. We enjoy memberships with the MCX and NCDEX, two leading Indian
commodities exchanges, and recently acquired membership of DGCX. We have

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a multi-channel delivery model, making it among the select few to online as well
as offline trading facilities.

India Infoline Distribution Co Ltd (IILD)

India Infoline.com Distribution Co Ltd is a 100% subsidiary of India Infoline Ltd

and is engaged in the business of distribution of Mutual Funds, IPOs, Fixed
Deposits and other small savings products. It is one of the largest 'vendor-
independent' distribution houses and has a wide pan-India footprint of over 232
branches coupled with a huge number of 'feet-on-street', which help source and
service customers across the length and breadth of India. Its unique value
proposition of free doorstep expert advice coupled with free pick-up and delivery
of cheques has been met with an enthusiastic response from customers and fund
houses alike. Our business has expanded to include the online distribution of
mutual funds, wherein users can view and compare different product offerings
and download application forms which they can later submit to the product
provider.

Mortgages & Loans

IILD has also entered the business ot distribution of mortgages and loan products
during the year 2005-2006. The business is still in the investing phase and We
plan to roll the business out across its pan-Indian network to provide it with a truly
national scale in operations.

India Infoline Insurance Services Ltd

India Infoline Insurance Services Ltd is also a 100% subsidiary of India Infoline
Ltd and is a registered Corporate Agent with the Insurance Regulatory and
Development Authority (IRDA). It is the largest Corporate Agent for ICICI
Prudential Life Insurance Co Ltd, which is India's largest private Life Insurance
Company.

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India Infoline Investment Services Ltd

India Infoline Investment Service Ltd is also a 100% subsidiary of India Infoline
Ltd. It has an NBFC licence from the Reserve Bank of India (RBI) and offers
margin-funding facility to the broking customers.

India Infoline Insurance Brokers Ltd

India Infoline Insurance Brokers Ltd is a 100% subsidiary of India Infoline Ltd and
is a newly formed subsidiary which will carry out the business of Insurance
broking. We have applied to IRDA for the insurance broking licence and the
clearance for the same is awaited.

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 The Management Team

Mr. Nirmal Jain

Nirmal Jain is the founder and Chairman of India Infoline Ltd. He holds an MBA
degree from IIM Ahmedabad, and is a Chartered Accountant (All India Rank 2)
and a Cost Accountant. He has had an impeccable professional and academic
track record. He started his career in 1989 with Hindustan Lever Limited. During
his stint with Hindustan Lever, he handled a variety of responsibilities, including
exports and trading in agro- commodities with Rs3bn annual turnover. He then
joined hands with two local brokers to set up their equity research division,
Inquire, in 1994. His work set new standards for equity research in India. In 1995,
he founded his own independent financial research company, now known as
India Infoline Ltd.

Mr. R Venkataraman

R Venkataraman is the co-promoter and Executive Director of India Infoline Ltd.

He holds a B. Tech degree in Electronics and Electrical Communications
Engineering from IIT Kharagpur and an MBA degree from IIM Bangalore. He has
held senior managerial positions in various divisions of ICICI Limited, including
ICICI Securities Limited, their investment banking joint venture with J P Morgan
of USA and with BZW and Taib Capital Corporation Limited. He has also held the
position of Assistant Vice President with G E Capital Services India Limited in
their private equity division. He has varied experience of more than 14 years in
the financial services sector.

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 The Board of Directors

Apart from Nirmal Jain and R Venkataraman, the Board of Directors of India
Infoline comprises:

Mr Sat Pal Khattar (Non Executive Director)

Mr Sanjiv Ahuja (Independent Director)

Mr Nilesh Vikamsey (Independent Director)

Mr Kranti Sinha (Independent Director)

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 Investment Committee

Unlike most of the Portfolio Management firms operating in India, India Infoline
has got the concept of an Investment Committee, which takes the decision
regarding investment into the portfolios. The members of this committee:

Mr. Nirmal Jain

He is the founder and Chairman of India Infoline Ltd. Being an

MBA from IIM Ahmedabad, and a Chartered Accountant (All
India Rank 2) and a Cost Accountant; he has had an impeccable
professional and academic track record. He started his career in
1989 with Hindustan Lever Limited. During his stint with Hindustan Lever, he
handled a variety of responsibilities, including exports and trading in agro-
commodities with Rs3bn annual turnover. He then joined hands with two local
brokers to set-up their equity research division Inquire in 1994. His work set new
standards for equity research in India. In 1995, he founded his own independent
financial research company, now known as India Infoline Ltd.

Mr. R. Venkataraman

He is the co-promoter and Executive Director of India Infoline Ltd.

He is a Bachelor in Technology (B. Tech) in Electronics and
Electrical Communications Engineering from IIT Kharagpur and an
MBA from IIM Bangalore. He has held senior managerial positions
in various divisions of ICICI Limited, including ICICI Securities
Limited, their investment banking joint venture with J P Morgan of
USA and with BZW and Taib Capital Corporation Limited. He has also held the
position of Assistant Vice President with G E Capital Services India Limited in
their private equity division. He has varied experience of more than 14 years in
the financial services sector.

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Mr. Anand P Tandon

He is a co-founder of Gryffon Investment Advisors. He is an MBA

from IIM Ahmedabad and a Bachelor in Technology (B. Tech)
from IIT Kanpur. He has over 15 years of capital market
experience at the senior level in India, as head of institutional
brokerage as well as head of research for various foreign and
domestic broking houses operating in India. His previous assignments included
Executive Director at ASK Raymond & James Associates, Head of Research of
IIT Investrust Ltd an institutional stock brokerage firm. He has also worked in the
quantitative research group at Citibank India as well as a consultant with Arthur
Andersen.

Mr. R. Venkat Subramanian

He is a co-founder of Gryffon Investment Advisors. He is a

Chartered Accountant and a Bachelor of Science from the
University of Madras. He has been an independent Portfolio
Manager, based in Dubai, covering the Indian and US stock
markets for private clients primarily of Indian origin. Earlier he
was a co-founder, and head, private client advisory group of a stock brokerage
company in southern India. With over 12 years of stock market investing
experience, he has a deep understanding of all key sectors of the Indian
economy, and has successfully invested in the markets through multiple market
cycles.

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 Schemes

Growth Portfolio

This is for those who would rather run a marathon than a sprint.
They are not concerned with day-to-day price movements. The
portfolio comprises the choicest of fundamentally sound companies. The focus is
on medium to large capitalization blue chip companies, considered to be
undervalued from the point of view of their long-term growth prospect and well
placed to deliver extra-ordinary capital appreciation over the long term.

Momentum Portfolio

This is for those who want to live life in the fast lane. The main objective of this
portfolio is to generate capital appreciation through short to medium term
investments in equities and equity related instruments. The investment choice is
primarily influenced by technical factors like price and volume indicators, RSI,
MACD, and other studies. Secondary factors will be reasonable levels of market
capitalization, good liquidity, competitive position in the industry, sectors with
good growth prospects, etc.

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 NRI Portfolio

The main objective of the scheme is to generate capital

appreciation through investments in equities with a long-term
perspective. The scheme will invest in all equity and equity related instruments
with emphasis on fundamentally sound, well-researched blue chip companies
perceived to be undervalued from the point of view of their long term growth
prospects. The focus will be on medium to large capitalisation companies which
have a proven track record or earning capability, quality management, leadership
status in sectors or potential to achieve such status, etc and that have the
potential to deliver growth over the long term. The scheme is aimed at medium
risk taking investors willing to invest in companies over a long-term period.

Customized Portfolio

The objective of this scheme is to generate optimum returns

based on the assessment and understanding of the risk profile of
the client. The scheme will be customized to suit the needs of the client. Based
on the assessment of the client profile, the optimum portfolio mix will be
formalized. Asset classes include equity or equity related instruments including
Mutual Funds, debt and debt related instruments including debt mutual funds,
commodities markets, etc. The clients can specify the asset mix they prefer.
They can also opt for 100 percent investment in a particular asset class. Within
the asset class, the Portfolio Manager will have the discretion to choose the
instruments to generate optimum returns. This scheme can also be managed on
non-discretionary basis. This scheme is suitable for investors who are willing to
invest across a varied range of assets, with a medium to long-term perspective.
Chance of growing faster. In India, like in most other countries, the regulator
(SEBI) undertakes its own due diligence before granting portfolio management
licenses. Even after granting the license, SEBI requires the Portfolio Managers to
adhere to certain rules, audit procedures and submit periodic returns.

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Performance

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 Comprehensive Products and Services

We are a one-stop financial services shop, most respected for quality of its
advice, personalized service and cutting-edge technology.

Equities

Indiainfoline provided the prospect of researched investing to its clients, which

was hitherto restricted only to the institutions. Research for the retail investor did
not exist prior to Indiainfoline. Indiainfoline leveraged technology to bring the
convenience of trading to the investor’s location of preference (residence or
office) through computerized access. Indiainfoline made it possible for clients to
view transaction costs and ledger updates in real time.

PMS

Our Portfolio Management Service is a product wherein an equity investment

portfolio is created to suit the investment objectives of a client. We at Indiainfoline
invest your resources into stocks from different sectors, depending on your risk-
return profile. This service is particularly advisable for investors who cannot
afford to give time or don't have that expertise for day-to-day management of
their equity portfolio.

Research

Sound investment decisions depend upon reliable fundamental data and stock
selection techniques. Indiainfoline Equity Research is proud of its reputation for,
and we want you to find the facts that you need. Equity investment professionals
routinely use our research and models as integral tools in their work.
They choose Ford Equity Research when they can clear your doubts.

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 Commodities

Indiainfoline’s extension into commodities trading reconciles its strategic intent to

emerge as a one-stop solutions financial intermediary. Its experience in
securities broking has empowered it with requisite skills and technologies. The
Company’s commodities business provides a contra-cyclical alternative to
equities broking. The Company was among the first to offer the facility of
commodities trading in India’s young commodities market (the MCX commenced
operations only in 2003). Average monthly turnover on the commodity exchanges
increased from Rs 0.34 bn to Rs 20.02 bn. The commodities market has several
products with different and non-correlated cycles. On the whole, the business is
fairly insulated against cyclical gyrations in the business.

Mortgages

During the year under review, Indiainfoline acquired a 75% stake in Moneytree
Consultancy Services to mark its foray into the business of mortgages and other
loan products distribution. The business is still in the investing phase and at the
time of the acquisition was present only in the cities of Mumbai and Pune. The
Company brings on board expertise in the loans business coupled with existing
relationships across a number of principals in the mortgage and personal loans
businesses. Indiainfoline now has plans to roll the business out across its pan-
Indian network to provide it with a truly national scale in operations.

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Home Loans Personal Loans
Get expert advice that suits your Freedom to choose from 4 flexible
needs options to repay

 Loan against residential and  Expert recommendations

commercial property
 Easy documentation
 Expert recommendations
 Quick processing and
 Easy documentation disbursal
 Quick processing and  No guarantor requirement
disbursal

 No guarantor requirement

Invest Online

Indiainfoline has made investing in Mutual funds and primary market so

effortless. All you have to do is register with us and that’s all. No paperwork no
queues and No registration charges.

Invest in Mutual Fund

Indiainfoline offers you a host of mutual fund choices under one roof, backed by
in-depth research and advice from research house and tools configured as
investor friendly.

APPLY IN IPOs

You could also invest in Initial Public Offers (IPO’s) online without going through
the hassles of filling ANY application form/ paperwork.

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 SMS

Stay connected to the market

The trader of today, you are constantly on the move. But how do you stay
connected to the market while on the move? Simple, subscribe to India Infoline's
Stock Messaging Service and get Market on your Mobile!

There are three products under SMS Service:

• Market on the move.

• Best of the lot.

• VAS (Value Added Service)

Insurance

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 Company’s 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.

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 Wealth Management Service

Imagine a financial firm with the heart and soul of a two-person organization. A
world-leading wealth management company that sits down with you to
understand your needs and goals. We offer you a dedicated group for giving you
the most personal attention at every level.

Newsletters

The Daily Market Strategy is your morning dose on the health of the markets.
Five intra-day ideas, unless the markets are really choppy coupled with a brief on
the global markets and any other cues, which could impact the market.
Occasionally an investment idea from the research team and a crisp round up of
the previous day's top stories. That's not all. As a subscriber to the Daily Market
Strategy, you even get research reports of India Infoline research team on a
priority basis.

The Indiainfoline Weekly Newsletter is your flashback for the week gone
by. A weekly outlook coupled with the best of the web stories from Indiainfoline
and links to important investment ideas, Leader Speak and features is delivered
in your inbox every Friday evening.

List of Newspaper:

1. Daily Newsletters 5. Commodity Newsletters

2. Weekly Newsletters 6. Mutual Fund Newsletters

3. Monthly Newsletters

4. Yearly Newsletters

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 Equities

Meaning to Equity: -

1. A stock or any other security representing an

ownership interest.

2. On a company's balance sheet, the amount of the

funds contributed by the owners (the stockholders) plus the retained
earnings (or losses). Also referred to as "shareholders' equity".

3. In the context of margin trading, the value of

securities in a margin account minus what has been borrowed from the
brokerage.

4. In the context of real estate, the difference

between the current market value of the property and the amount the
owner still owes on the mortgage. It is the amount that the owner would
receive after selling a property and paying off the mortgage.

5. In terms of investment strategies, equity (stocks) is

one of the principal asset classes. The other two are fixed-income (bonds)
and cash/cash-equivalents. These are used in asset allocation planning to
structure a desired risk and return profile for an investor's portfolio.

Meaning and Definition of Shares: -

Section 2(46) states that ‘share’ means a share in the share capital of a
company and includes stock except where a distinction between stock and share
is expressed or implied. According to Justice Farwell, “A share is not a sum of
money but is an interest measured by a sum of money, and made up of various
rights contained in the contract.”

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 In the view of the Supreme Court of India, “A share is not any sum of
money but an interest measured by a sum of money and made up of diverse
rights conferred on its holder by the articles of the company which constitute a
contract between him and the company.

Thus, a share is the interest of a shareholder in the company measured by

a sum of money and represents the rights and obligation of its holder and the
company.

KINDS OF SHARES/SHARE CAPITAL

A company can issue only two kinds of shares:

A. Preference Shares

B. Equity Shares

A. Preference Shares: - Preference shares means those shares which carry

the following preferential rights:

1. In respect of payment of dividend – They carry a right of

preferential dividend during the continuance o the company. The
dividend may consist of a fixed amount or the amount payable at a
fixed rate. This dividend is payable before anything is paid to the
equity shareholders.

2. In respect of repayment of capital – They carry a preferential

right to repayment of capital in the event of winding u of the
company. It means that the capital of preference shareholders is
repayable before any thing is repaid to the equity shareholders on
the winding up of the company.

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 B. Equity Shares/ Equity share capital: - Equity shares means the shares,
which are not equity shares.

Companies (Amendment) Act, 2000 provides that the equity shares

may be of following kinds:

1. With voting rights, and

2. With differential rights as to dividend, voting or otherwise in

accordance with such rules and subject to such conditions as may
be prescribed.

Kinds of Preference Shares: - Preference shares are of the following kinds:

1. Cumulative preference shares

2. Non- cumulative preference shares

3. Participating preference shares

4. Non-participating preference shares

5. Convertible preference shares

6. Non-convertible preference shares

7. Irredeemable preference shares

8. Redeemable preference shares

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 DISTINCTION BETWEEN EQUITY AND

PREFERENCE SHARES

Basis of Equity shares Preference shares

distinction

1. Preferential Equity shares do not carry a Preference shares carry

right to dividend preferential right to dividend. preferential right to
dividend.

2. Preferential Equity shares do not carry a Preference shares do not

right to preferential right to claim carry a preferential right
repayment of repayment of capital. to claim dividend.
payment of
capital

3. Fixed dividend Equity shares do not carry a right
to a dividend of fixed amount or
an amount calculated at a fixed
rate.
Preference shares carry
a right to a dividend of
fixed amount or an
amount calculated at a
fixed rate.

4. Redemption Equity shares cannot be Preference shares must

redeemed. be redeemed at a fixed
date or after a certain
period of time after from
the date of issue subject
to a maximum period of
20 years.

5. Conversion Equity shares cannot be Preference shares can

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 converted into preference shares.
6. Voting right An equity shareholder is entitled
to vote on all resolutions affecting
the company.
7. Risk Investment in equity shares
involves high risk.
8. Kinds Equity shares may be (1) with
voting rights, (2) with differential
right as to dividend, voting etc.
India Infoline provided the prospect of researched investing to its clients,
which was hitherto restricted only to the institutions. Research for the retail
be converted into equity
shares.
A preference shareholder
can vote only on
resolutions which directly
affect the rights attached
to the preference shares
held by him. He can vote
on all resolutions only
when his dividend has
remained unpaid.
Investment in preference
shares involves much
less risk as compared to
equity shares.
Preferential shares may
be cumulative, non-
cumulative, non-
participating or
redeemable.
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investor did not exist prior to India InfolineIndia Infoline leveraged technology to
bring the convenience of trading to the investor’s location of preference
(residence or office) through computerised access. India Infoline made it possible
for clients to view transaction costs and ledger updates in real time.

Over the last five years, India Infoline sharpened its competitive edge
through the following initiatives:

Multi-channel delivery model:

The Company is among the few financial intermediaries in India to offer a

complement of online and offline broking. The Company’s network of branches
also allows customers to place orders on phone or visit our branches for trading.

Integrated middle and back office:

The customer can trade on the BSE and NSE, in the cash as well as the
derivatives segment all through the available multiple options of Internet, phone
or branch presence.

Multiple-trading options:

The Company harnessed technology to offer services at among the lowest rates
in the business. Membership: The Company widened client reach in trading on
the domestic and international exchanges.

Technology:

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The Company provides a prudent mix of proprietary and outsourced
technologies, which facilitate business growth without a corresponding increase
in costs.

Content:

The Company has leveraged its research capability to provide regular updates
and investment picks across the short and long-term.

Service:
Clients can access the customer service team through various media like toll-free
lines; emails and Internet- messenger chat for instant query resolution. The
Company’s customer service executives proactively contact customers to inform
them of key changes and initiatives taken by the Company. Business World rated
the Company’s customer service as ‘Best’ in their survey of online trading sites
carried out in December 2003.

Key features

 Membership on the Bombay Stock Exchange Limited and the National

Stock Exchange

 Registered with the NSDL as well as CDSL as a depository participant,

providing a one-stop solution for clients trading in the equities market

 Broking services in cash and derivative segments, online as well as offline

under the brand of 5paisa.com

 Presence across 19 states through a 177 strong branch network, with

75,000 online registered users

 Provision of free and world-class research to all clients.

Advertisers

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Financial Advertisers Non-Financial Advertisers

• Citibank
• Kothari Pioneer • The Economist
• ICICI Prudential Life • World Quest Networks
Insurance • Asian Paints
• Prudential ICICI Mutual Fund • IBM
• DSP Merrill Lynch • Microsoft
• Bank of Punjab • Bacardi
• Zurich Mutual Fund • GM
• Alliance Capital AMC • Intel
• Franklin Templeton AMC • Godrej
• HDFC Group • Kerala Tourism
• SBI AMC Development Corporation
• Birla Sun Life AMC • India Tourism Development
• ICICI Home Loans Corporation
• ICICI Safety Bonds • Close-up
• OM Kotak Mahindra Life • Lafarge
Insurance • Network Solutions
• Sundaram Finance • Baazee
• Contests2Win
• Walletwatch
• Livizi

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 Portfolio Management

Meaning of Investment Portfolio: - The term ‘investment portfolio’ refers

to the various assets of an investor, which are to be considered as a unit.
An investment portfolio is, therefore, not merely a collection of unrelated
assets but a carefully blended assets combination within a unified
framework. It is necessary for investors to take all decisions as regards
their wealth position in a portfolio context.

Meaning of Investment Portfolio Management: - Management means

utilization of resources in the best possible manner. Investment portfolio
management, therefore, involves maintaining a proper combination of
securities, which comprise the investor’s portfolio in a manner that they
give maximum return with minimum risk. This requires framing of a proper
investment policy. The term investment policy means formation of
guidelines for allocation of available funds among the various types of
securities including variation in such proportion under changing conditions
and decision to hold cash for future commitments. For this purpose, an
investment can conveniently be divided into two groups, (1) individual
investor and (2) institutional investor. In the following pages, we are
explaining in the brief the formulation of investment policies in respect of
each of these groups of investors.

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Factors Affecting Investment Decisions: - Following are the basis which
generally have a bearing on investment decisions:

1. Amount of Investment
2. Objective of Investment Portfolio
3. Selection of Investment
A. Type of securities
B. Proportion between fixed and variable yield securities
C. Selection of Industries
D. Selection of Companies
4. Timing of Purchase

You get recessions. You have stock market declines. If you don't
understand that's going to happen, then you're not ready; you won't do well in the
markets. No need to worry. We at India Infoline would take care of all issues
related to managing your hard earned money.

Our Portfolio Management Service is a product wherein an equity

investment portfolio is created to suit the investment objectives of a client. We at
India Infoline invest your resources into stocks from different sectors, depending
on your risk-return profile. This service is particularly advisable for investors who
cannot afford to give time or don't have that expertise for day-to-day
management of their equity portfolio.

It is all about your money, being managed by the experts, while you
continue with your routine life. Isn't it simple and totally hassle free.

What's more, you can keep track of your dividends / bonus / rights issues
with paperless tracking. So you always know how fast your investment is
growing. It basically means assigning the right job to the right person.

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Salient Features of India Infoline PMS:

Expert team of Research Analysts

Stock Picking done by the Investment Committee

Dedicated Relationship Manager

Technology and Service driven Back-Office

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 Frequently Asked Questions

What is the safety of clients' portfolios with India Infoline?

India Infoline currently has net worth of over Rs. 8 bn. Further; the
company does not indulge in proprietary trading. The company is
professionally managed by a team with an impeccable track record and is
a profit making entity thereby lending safety to the customers' money. In
addition, as a precautionary measure, we keep the custody of shares with
a reputed bank (currently with HDFC Bank). In any case (as per advice
from our legal counsel), the beneficiary ownership of shares remains with
the customers and is not affected by company's performance or solvency.

Do you guarantee the initial corpus and any 'return' thereon?

As per SEBI regulations governing Portfolio Management Services in

India, neither capital nor returns can be guaranteed. We shall endeavor to
outperform the benchmark indices like Nifty but there can be no guarantee
or certainty of the same. We believe, over long term, equities' performance
will track corporate performance. We expect India's GDP to grow at 8-9%
p.a. in real terms or 13-14% p.a. in nominal terms. The industrial and
services sector should grow at a faster pace. Therefore historical trends
indicate that well managed portfolios in Indian equities can yield upto 20-
25% p.a. returns.

31
 What is the difference between a discretionary and a non-
discretionary Portfolio Management Services?

The discretionary portfolio manager independently manages the funds of

each client in accordance with the needs of the client. The client cannot
make decisions for the management of his/ her portfolio. On the other
hand, in non-discretionary portfolio management, the client is actively
involved in decision making for the management of the portfolio. We offer
both types of services.

 What is the minimum and maximum limit for investing in Portfolio

Management Services?

At India Infoline the minimum size of the portfolio that we offer is INR 10
Lacs for discretionary and INR 50 Lacs for Non-Discretionary. There is no
upper limit on the amount you can invest.

 How can I introduce my initial corpus?

Initial corpus can be brought in by way of either Cash and/ or securities/

shares. The initial portfolio of securities/ shares will be re-aligned as per
the model portfolio by selling those shares.

 Why should I pay performance fees?

The base management fee being charged is much lower than that
charged by others. We have consciously kept our fee more performance
linked, as we strongly believe that it will align the interests of the firm and
the client. It also incentives the Portfolio Manager since they have a stake
in the profitability of the portfolio.

32
 Will India Infoline share the losses?

Portfolio Manager is any person who pursuant to a contract or

arrangement with a client, advises or directs or undertakes on behalf of
the client (whether as a discretionary portfolio manager or otherwise) the
management or administration of a portfolio of securities or the funds of
the client, as the case may be. It is only the service, which he gives to the
client, for which he charges a fee, and it is not any partnership that he gets
into with the client. As per SEBI regulations, no portfolio manager can
legally share losses.

 Do you invest in IPOs?

If the Portfolio Manager finds any IPO, which presents a good investment
opportunity then the Portfolio Manager will invest in the relevant IPOs.

 Do you invest in Derivatives (Futures/Options)?

Under SEBI guidelines, a Portfolio Manager is allowed to invest in the

Derivatives Segment only to the extent of the value of the portfolio. This
has also been mentioned in the Disclosure Document and clients are
advised to read it carefully before investing. However, our policy will be to
use Derivatives only as a hedging strategy and will be restricted only to
those portfolios, which have a short-term outlook on the investment
strategy.

 Do you indulge in day trading under the Portfolio Management

Service?

Our Portfolio Management Schemes are designed from a long-term

perspective and we will invest in accordance with the objectives of each
Scheme. It is advisable to keep any equity portfolio invested over a longer
term because in the long run, equities outperform most other asset
classes. Therefore, we will not indulge in any day trading activities under

33
 the Portfolio Management Service. Moreover, SEBI guidelines forbid any
day trading activity by Portfolio Managers.

 How and when can I see my Portfolio Value, Transactions and

Reports?

All clients can access entire information related to their portfolios through:-

Log on to the web and then view and/or download the reports in excel.
These reports and transaction information is updated on the website every
week. The reports include Performance Summary of Portfolios,
Transaction Statement, Holdings statement, and Realized gain/ loss
statement.

There is an e-mail sent to the client regarding the same fortnightly.

The client also gets the hard copy of all the reports and statements every
quarter.

 Can I partly withdraw my money from PMS account?

Yes, you can withdraw. You just have to give a request for the same in
writing. But the minimum investment has to remain intact.

 Do I need to have Permanent Account Number?

A Permanent Account Number (PAN) has to be provided for investment in

the PMS scheme.

 Can an NRI avail of the Portfolio Management Service?

The Portfolio Management Scheme is open for all Indian nationals,

resident or otherwise. NRIs will have to open a PIS Account as required
under RBI guidelines in order to invest in the PMS scheme, which facility
we will provide to all NRIs.

34
 Research

IIL special research cell where some of India's finest financial analysts bring you

intensive research reports on how the stock market is faring, when is the right

time to invest, when to execute your order and more.

IIL make sure that investors are always prepared to make own investment

decision when the opportunity arises.

IIL bring you intensive research reports - whether sect oral or company-wise or

more - that tell you exactly when and where to invest. So whenever there is an

exciting investment opportunity, you are in the know and always ready to invest.

Research reports IIL will help you choose your investments wisely, without

wasting time. Presented in a lucid and easy-to-understand format; these reports

help you make informed decisions.

35
 Commodities

Definition 1

A physical substance, such as food, grains, and metals, which is interchangeable

with another product of the same type, and which investors buy or sell, usually
through futures contracts. The price of the commodity is subject to supply and
demand. Risk is actually the reason exchange trading of the basic agricultural
products began. For example, a farmer risks the cost of producing a product
ready for market at sometime in the future because he doesn't know what the
selling price will be.

Definition 2

More generally, a product which trades on a commodity exchange; this would

also include foreign currencies and financial instruments and indexes.

Why invest in commodities?

Ans.: Leverage is very important to the commodities markets. Unlike the stock
market, where you might have to invest 10,000 dollars to leverage 10,000
dollars. A commodities trader can leverage tens of thousands of dollars worth of
a commodity for pennies on the dollar. Also unlike stocks, commodities have
intrinsic value and will not go bankrupt.

The futures markets are so crucial to the well being of our nation, that the
government established the Commodity Futures Trading Commission (CFTC) to
oversee the industry. There is also a self-regulatory body, the National Futures
Association (NFA), who monitor the activities of all futures market professionals
to ensure the integrity of the futures markets.

Commodities also give the investor the ability to participate in virtually all
sectors of the world economy and have the potential to produce returns that tend
to be independent of other markets. In fact portfolios that add commodity
investments can actually lower the overall portfolio risk by diversification.

36
What is the difference between hedging and speculating?

Ans.: Just about every product that you consume would likely cost dramatically
more without the commodities futures markets. Because of the intrinsic risks
associated to being in business, lacking the ability to shift risk, a
manufacturer/producer of goods or services would be forced to charge higher
prices, and the consumer would have to pay those higher prices. This shifting of
risk to someone willing to accept it is called hedging. Manufacturers could
effectively lock in a sales price by going short an equivalent amount of goods
with futures contracts. If a mining company knew that they were going to sell
1000 ounces of gold in several months, they could protect themselves for a
future price decline by going short 10 gold futures contracts today. If the price of
gold fell by $30 in the following months, they would receive that much less in the
cash marketplace for their gold, but earn that much back when they offset their
short gold futures position. The futures price will eventually become the cash
price. A user or buyer of goods can use the futures market in the same manner.
They would need to protect themselves from a future price increase, and
therefore go long futures contracts.

The person willingly accepting a risk does so because of the opportunity to

profit from price movements, this is known as speculating. The cotton in your
shirt, the orange juice, cereal and coffee you had for breakfast, the lumber,
copper and mortgage for your home, the gas or ethanol that you put in your car
all would be priced many times higher without the participation of speculators in
the futures markets. Through supply and demand market forces, equilibrium
prices are reached in an orderly and equitable manner within the exchanges, and
world economies, and you, benefit tremendously from futures trading.

37
What qualities do you want your commodity broker to have?

Ans.:

1. Experience - Always make sure that your commodity broker has

seen both bull and bear commodity markets. Also, make sure that your
commodity broker does not have a havit of being in trouble with the
National Futures Association.

2. Honest dialogue- Does your commodity broker call you when you
are down in a trade as readily as when you are in a winner? Does your
broker only call to ask you to send in more risk capital?

3. Availability during market hours - Are your calls returned in a

prompt and professional manner?

Commodities are a distinct asset class with returns that are for the most part
independent of stock and bond returns. Therefore, investing in commodities can
help diversify a portfolio of stocks and bonds, lowering risk and possibly boosting
returns. Reaching this level of diversification has been made easier with the
development of investment products that passively track a broad range of
commodities.

India Infoline’s extension into commodities trading reconciles its strategic

intent to emerge as a one-stop solutions financial intermediary. Its experience in
securities broking has empowered it with requisite skills and technologies.
Increased offering: The Company’s commodities business provides a contra-
cyclical alternative to equities broking. The Company was among the first to offer
the facility of commodities trading in India’s young commodities market (the MCX
commenced operations only in 2003). Average monthly turnover on the
commodity exchanges increased from Rs 0.34 bn to Rs 20.02 bn. The

38
 commodities market has several products with different and non-correlated
cycles. On the whole, the business is fairly insulated against cyclical gyrations in
the business.

India Infoline distinguished its business through the interplay of knowledge

and technology:

Complete solution:

The Company provides a complete - advice to execution – solution facilitated by

information and advice on likely commodity trends in the Indian and international
environment.

Technology:
The Company has extended the trading terminal to the investor’s
home/workplace reinforced with real-time commodity information and ledger
position.

Rates:
The Company harnessed technology to offer services at among the lowest rates
in the business. Membership: The Company widened client reach in trading on
the domestic and international exchanges.

Key Features

1. Enjoys memberships with the MCX and NCDEX, two leading Indian
commodities exchanges

2. Recently acquired membership of the DGCX

3. Multi-channel delivery model, making it among the select few to offer online as
well as offline trading facilities

4. Extended commodity trading to retail investors, among the few Indian financial
intermediaries to do so

5. Online business at 80% of revenues dominates commodities trading revenues

39
6. Provides regular commodity updates pertaining to the Indian and international
environment

Loans

They say you mustn't trust a man till you know his house. Everyone likes hearing
people say “Wow, what a beautiful house you have!” From cave dwelling, we
have evolved and now a house provides far more than just shelter...it also
becomes a source of pride. A Housing Loan is used as finance to help you buy or
modify that perfect home.

The different Housing Loan products can be classified as:

Home Loans & Home Extension Loans

NRI Loans

Land Loans

Home Equity Loans

• What is a housing loan? • Repayment capacity

• Who can apply?

• Credit documentation
• General Terms and conditions
of a Housing Loan product. • Legal documentation

• Charges applicable to housing

loan products. • Tax Benefits

• Property Insurance

40
What is a housing loan?

They say you mustn't trust a man till you know his house. Everyone likes
hearing people say "Wow, what a beautiful house you have!" From cave
dwelling, we have evolved and now a house provides far more than just
shelter...it also becomes a source of pride. A Housing Loan is used as
finance to help you buy or modify that perfect home. The different Housing
Loan products can be classified as:

Home Loan
Home Extension Loans
Home Improvement Loans
Land Loans
NRI Loans
Home Equity Loans
Short term Bridging Loans
Balance Transfer

 Who can apply?

As long as you want to buy a house in India, you can apply for a Home
Loan. You could be a Resident Indian or an NRI; you could want to buy a
property now or in the future, but you may still apply for a Home Loan. In

41
 case you go with the last option and want to wait before you consider
nests, all you have to be sure of is the amount you are willing to spend on
this property and the HfIs will let you know your eligibility based on your
income which will help you plan out your budget. To find out your
eligibility, please use our calculator.

General Terms and Conditions of a Housing Loan Product

You are allowed to visit zoos on the condition that you do not feed the
animals. When you're 18, you are allowed to go for that late night party on the
condition that someone drops you home before 12. Every step we take requires
condition to be fulfilled. Similarly, these are the general terms & conditions of a
Home Loan. For more details, please refer to the individual product.

LTV Ratio will not exceed a particular percentage. This percentage differs
from HFI to HFI and the components of the value of property are covered in Cost
of Property

Elastic can be stretched only to a certain extent. The loan tenure also will
not go beyond 20 years. However, HFIs do provide for different tenures with
different terms and conditions.

Your EMI normally does not exceed 50% of your Gross Monthly income.

The total monthly payment towards all the loans you have availed of,
including the present one, will normally not exceed 50% of your Gross Monthly
Income.

Your loan eligibility is calculated using LTV, IIR and FOIR norms and the
lowest from the three is chosen.

42
 Your profile is considered by the HFI before your repayment capacity is
judged.

If the HFI insists on a personal guarantor, you need to provide one before
the disbursement of your loan.

Your property should be both technically and legally clear before your loan
can get disbursed by the HFI.

In case you have bought an under construction property, your loan will be
partly disbursed, as per the stages of construction and PEMI needs to be paid on
it.

The disbursement, in most cases, will be in the name of the builder or the
seller or the society or the development authority unless you have made some
payment to them.

Repayment of the loan is either via Deduction Against Salary, Post Dated
Cheques, standing instructions or by cash / DD.

You can either choose to repay the loan using the Annual rests or Monthly
rests.

Charges applicable to Housing Loans

The different kinds of charges applicable to Home Loans are listed below:

1. Upfront Fees

2. Rate of Interest

3. Legal and Technical Charges

4. Stamp Duty and Registration Charges

43
 5. Personal Guarantee from Charges

6. Cheque Bounce Charges

7. Delayed Payment Charges

8. Additional Charges

9. Incidental Charges

10. Prepayment Charges

11. PDC Swapping Charges

Legal and technical charges: Some HFIs charge you for the legal and technical
checks undertaken on your documents and property, by lawyers and the
technical team of the HFI.

Stamp duty and registration charges: If you go in for a registered mortgage,

these charges incurred by the HFI are passed onto you. Sometimes these
charges are rather heavy depending on the State laws in the state from where
you purchase your property.

Personal Guarantee form charges: A piece of paper signed does not have
much value unless stamped and validated by the concerned authority. That
power of attorney documents that you signed with your spouse would not be
credible unless signed on an Rs.100 stamp paper. Similarly, HFIs currently
charge you a minimum of Rs.100 to get the personal guarantee validated and
stamped in the eyes of the law.

PDC swapping charges: In case you want to exchange the PDCs you gave the
HFIs for EMI repayments because of a change in bank accounts, a change in
EMI amount, etc., the HFis might charge a flat fee for it.

Repayment capacity

Your repayment capacity is judged according to your income and your income is
considered differently if you are salaried and differently if you are self-employed.
Income is used to calculate the amount of money that you will be able to shell out

44
every month towards your loan installment using IIR and FOIR norms. FOIR
calculation also takes into account the installments of loans you are currently
repaying. The lower between the IIR and FOIR is chosen as your maximum
repayment capacity. This is then compared to the loan amount that you have
requested for and the loan eligibility as per LTV norms and the lowest of these
would be your final loan eligibility.

Salaried Self-employed

Any extra income on your salary slipAny non-recurring income that affects
(including overtime, etc.) is subtracted profit (like sale of asset) is subtracted.

50% of the average variable incomeAny non-recurring expense that

over the last 6 months is added adversely affects profits and was not
capitalized (like repairs and
maintenance) is added

Any fixed cash or voucher payment that50% of the average depreciation of the
can be proved is added. last two years is added.

HRA that can be received and is not

being received is added.

50% of the average annual income of

the last two years is added.

45
Credit Documentation

Would you trust any Tom, Dick or Harry with any matter at all? We all require a
certain assurance from people before we trust them; some sort of guarantee that
they are trustworthy. For HFIs this guarantee rests in the form of tangible
documents. Credit documents are required by all HFIs but vary in kind based on
your occupation, employer, qualifications, experience, etc. Credit documents can
be classified as…

Income documents: Money money money...no one can take a chance on the
credibility of money matters because at the end of the day, business is business.
Almost everything about your loan is based on your income and therefore proof
regarding the same is required by the HFI to ensure that no miscommunications
occur.

Personal documents: Previously, tribes and clans had passwords without which
you could not enter into the territory; as proof of who he was, King Solomon had
a ring as identification. Throughout history, proof of identity has been important
as mistaken identity has never been uncommon. To prevent any such shams,
HFIs also require a set of documents, for a general Home Loan Product,
identifying who you are.

He following list out all the documents needed. {Under this line will be placed the
document sent separately as an excel sheet}

Legal Documentation

We might be living in the electronic age but that doesn't take away the
importance and monopoly of paper as everything to do with law will always be on
paper. To stick by this unwritten rule, there are legal documents that need to be
submitted by you to the HFI for mortgaging and these differ from state to state

46
and also depend on your property type. The following form a broad outline of the
documents required and a detailed list can be found here.

Copy of the offer letter sent by the HFI, accepted by you.

Title documents of the property which include

-Duly registered sale agreement.

-Receipts of your own contribution.
-Allotment letter
-Registration receipt
-If needed, land documents indicating ownership.
-Possession letter
-Lease agreement, if the property is bought from a development authority
-Mortgage deed if the HFI opts for a registered mortgage.

• No Objection Certificate from the developer, society or development

authority

• Personal Guarantees, if required.

• Documents for alternate or additional security.

• Post dated cheques for the EMIs.

• These documents do NOT cover the entire list needed and if it is a resale
property, the pertaining agreements, etc. will also need to be attached.

• Tax Benefits

• Tax benefits are currently available only under Home Loans and Home
Extension loans. The details are given under the respective sections.

• Property Insurance

47
 Some events are not in our hands and are completely unavoidable.
Floods, drought and storms uproot trees and destroy the land. Along with this the
birds lose their homes and while building a nest may not be that bad and the loss
is not that great, the money that you invest in your cosy home might just be
washed away. For this reason insuring your property is a good idea as you
safeguard the asset against damage or loss.. Property insurance is not
compulsory though some HFIs insist on a mortgage redemption life insurance
policy and you will therefore get a reduced interest rate. Some of the points that
need to be noted regarding property insurance are:

1. You can choose the tenure of your insurance.

2. The premium is charged up front

3. The longer your tenure, the greater the discounts insurance companies
offer you.

48
 NRI LOANS

Who is an NRI?

What is an NRI Loan?

What are the additional Documents needed to submit along with the application
form?

What are the Tax Benefits applicable to Non – Resident Indians?

What are the Terms and conditions of a NRI Loan?

 Who is an NRI?

Both the RBI and the Income Tax Act define NRIs differently but HFIs go
with the RBI definition of an NRI as far as Home Loans are concerned.

According to the RBI, an NRI is an Indian citizen holding a valid

Indian passport and who

• Is staying abroad for employment, business or vocational purposes.

• Is staying abroad for an uncertain duration due to certain

circumstances.

 What is an NRI Loan?

The main difference between an NRI loan and a normal Home Loan is the
person to whom the loan is available. An NRI loan is a loan applicable for
Non-Resident Indians only when any of the following are undertaken in
India.

49
 • Constructing a property on a plot of land.

• Purchase of an under construction or resale house.

• Purchase of a plot sold by a society / development

authority.

• Renovation or improvement of an existing property.

 What are the additional Documents needed

to submit along with the application form?

Apart from the usual documents needed while submitting the application
form, NRIs also need the following:

1. A copy of your passport and visa.

2. Salary certificate in English, specifying name, date of joining,

designation and salary details.

3. Both domestic (NRE/NRO/FCNR) and international bank

statements for the last six months.

4. If you are not available in India when the application form is

submitted, then a General Power of Attorney duly attested by the
Indian consulate in your resident country needs to be submitted. If
you will be in India then the Power of Attorney can be locally
notarized.

5. A copy of your appointment letter as well as contract.

6. In case you are employed in the Middle East, you need to submit a
copy of your labour card/identity card that is translated in English
and countersigned by the respective consulate.

50
 7. In case you are employed in the merchant navy, you need to
submit a copy of your CDC as well as your contract slip with
Income details.

 What are the Tax Benefits

applicable to Non – Resident Indians?

Unless returns are filed in India, NRIs cannot avail of the tax benefits as
mentioned under Home Loans.

 What are the Terms and conditions of a NRI Loan?

Apart from the usual Home Loan terms & conditions, the terms and
conditions of NRI Loans are:

1. Your loan tenure normally does not exceed 10 years even though
some HFIs will sanction a loan for 15 years.

2. Your own contribution for the house is made upfront at the beginning.

3. Repayment of the loan is done via EMIs which will begin only after
the entire disbursement, in case of a part disbursement. During
disbursement PEMI is paid at the applicable rate.

4. Repayment for the entire tenure of the loan is through PDCs from the
NRE account or any other account as per RBI rules and regulations.
Some HFIs also allow you to pay from your NRE account.

5. LTV Ratio and Eligibility calculations are the same for resident
Indians and NRIs though for the eligibility, more weight age is put on
the following criteria.

51
- Qualifications
- Current job profile
- Past experience
- Probability of continuing abroad for the loan tenure
- Probability of servicing the loan with an extended tenure in case you
have to return to India

6. If you decide to rent out your house/flat, and the rented income is

More than your EM I: the money needs to be adjusted towards loan

repayment.

Less than EM I: the difference must be paid out of your NRE/ FCNR/
NRO account in India or the amount must be remitted to the extent of the
shortfall from abroad.

52
 LAND LOANS

 What is a land loan?

 Are any additional documents required?

 What are the Tax Benefits I will get?

 What are the Terms and conditions of a Land Loan?

 What is a land loan?

It is said that when you bake a cake from scratch, it is more satisfying than
buying a baked one. If you prefer and want to construct your own house,
land loans are meant for you. To put it simply, land loans finance your
purchase of a plot of land on which you may either begin construction
immediately or wait a while before commencing. This loan is usually
availed of if you do not want to incur an immediate cash outflow. As there
are difficulties with documentation and the unwanted possibility of
encroachments, not all HFIs offer land loans.

 What are the additional documents required for a land loan?

1. Apart from the usual documents needed for Home Loans, you also
need to submit the following docs.

2. Original documents regarding land ownership.

3. 'No Encumbrance' certificate for the land.

53
 4. The layout / drawing of the plot's location, approved by the Town
Planning Authority.

5. Revenue receipts and land records for the plot of land.

6. Tax receipts for taxes paid by the owner of the plot of land.

What are the Tax benefits I gain?

As of now there are no tax benefits for Land loans but once your land loan
is converted to a Home Loan for the construction of your house, all the tax
benefits are applicable.

 What are the general terms and conditions that are a part of Land
Loans?

The general terms and conditions applicable to Land loans are as given
below:

1) Most HFIs insist that the purchase of land is from a development

authority or society and some also allow purchase from developers.
Purchase of land from an individual owner is not usually financed by HFIs.

2) The land has to be developed and boundaries must be clearly

demarcated. The location of land is also extremely important and most
HFIs only finance those plots that are within the limits of the Concerned
Municipal Corporation.

3) The maximum loan tenure offered by a HFI for the purchase of land is
10 years and they either charge around 1% of the loan amount as fee, or
they charge a flat amount.

54
4) Limits regarding the maximum and minimum loan amount lent for plot
purchase are demarcated by HFIs and differs from HFI to HFI depending
on the schemes they offer.

5) Age norms, eligibility calculations and repayment of land loans are

similar to those of normal Home Loans.

6) The limit on the LTV ratio financed for land purchase varies from HFI to
HFI from anywhere between 70% to 80%.

7) Depending on the type of land, some HFIs insist on additional/collateral

security, while for most, loan security occurs in the form of an equitable
mortgage by taking deposit of the original title deeds of the plot of land.

8) As always, unless you have paid a sum to buy the land, the
disbursement is in favor of the seller of the plot. Normally, HFIs do not
offer loans to plots of land purchased over six months ago.

9) The rate of interest on a land loan is usually similar to the rate of

interest charged on regular Home Loans.

55
 HOME EQUITY LOANS

1. What is a Home Equity Loan?

2. What is the difference between a Home Loan and a Home Equity Loan?

3. Who can apply for a Home Equity Loan?

4. What are the additional documents required for a Home Equity Loan?

5. What are the Terms and conditions for a Home Equity Loan?

 What is a Home Equity Loan?

Awning your guitar to get your sister that cycle she wanted is a touching
thing to do. It helps you use the value of something you own to get
something you want, without having to sell that object. Home Equity Loans
work on similar lines and is available to fund those who already own a
property. It is therefore a mortgage given against your property and can be
used by you to meet any of your financial needs as long as you declare
and give it in writing that the funds you receive will be used for legal
purposes only and you can't even use this amount for speculation
purposes. All this is to prevent any arm wrestling with the law and have a
cleaner process.

56
  What is the difference between a normal Home Loan and a Home
Equity Loan?

Home Loans Home Equity Loans

Loan is for property that has to beLoan is for already purchased property
purchased

End use of loan is monitored to makeEnd use of loan is not monitored so the
sure you use the money only for thefunds can be utilized to meet any
purchase of the property. financial requirements.

Agreement value is taken as benchmarkProperty needs to be value by the

as it is finance for the property. government or reliable valuer as the
property is already purchased.

 Who can apply for a Home Equity Loan?

The requirements for a Home Equity Loan are similar to those of a Home
Loan except that it is not yet available for NRIs.

57
 What are the additional documents required for a Home Equity
Loan?

1. Once again, the documents required for an HEL are the same as
those required for a normal Home Loan. There are only three
additions to this list of documents.

2. Firstly, you also need to hand over a photocopy of the property

documents before the sanction.

3. Secondly, you need a valuation report stating the value of the

property, as examined by the valuer appointed by the HFI.

4. Lastly, the assurance that you will not spend the money on
illegalities, etc. need to be given in a declaration as per RBI norms.

 What are the Terms and conditions of a Home Equity

Loan?

The term ‘no strings attached’ can only be used while selling sandals and
as is everything about life, these are the terms and conditions of HEL,
apart from those for normal Home Loans also.

1) Even though the loan can be utilized to meet any personal requirement
of yours, you cannot use it for illegal motives and most HFIs ask you to
write down your plans with their cash. This might not be a good time to
bring up your child hood desire to burst a chemical bomb…

2) The tenure for this loan will be less than that of the residual age of the
property and will range from between 5 to 10 years.

3) NRIs cannot avail of HELs for the time being.

58
 4) While the loan eligibility amount calculation remains similar to normal
Home Loans, the LTV ratio would be 50% to 60% as compared to the
85% of normal Home Loans.

5) An HFI will make use of a valuer to determine and report the value of
the property. The lower between the market valuation & that of the valuer
is chosen as a basis on which the loan amount is calculated using the LTV
ratio method.

6) The disbursement of the loan amount is always in your favour.

RELATED DOCUMENTATION

Personal Information

App form Application form of the financier duly filled and signed by the
applicant and co - applicants.

Photo Photograph of the applicant and co - applicants.

Age Proof  Passport Res. Proof  Passport

 Ration card  Ration card

 Voter's ID  Voter's ID Card

Card
 Driving license
 Driving license
 School leaving
 Pan card (IT) certificate

59
  Birth certificate  Pan card (IT)

 LIC policy  Birth certificate

LIC policy
 Bank
statements
or passbook
having address.

Financial Information

Saving History Updated bank statements of the operating accounts and

salary account for the last six months.

Income document  Latest salary slip of the previous month

 Form 16 provided by the employer

For Salaried Employees

 Appointment letter

 Salary certificate on the employer's letter head

 Proof of cash reimbursements made

 Last 6 months salary slip if var. inc. is a part of salary.

 Last three years audited Profit & Loss accounts

60
 For Self-Employees

 three years audited Balance Sheet

 Advance Tax challans, if applicable

 Last three years personal ITR duly acknowledged

 Last three years business ITR duly acknowledged

 Partnership deed of the partnership firm

 Memorandum of Association of the company

 Articles of Association of the company

 Updated bank statements of the business accounts for the last six months.

 Business profile covering details on promoters, their background, number

of factories / branches and employees, nature of business activity, list of major
suppliers and clients and annual turnover of the previous year.

 Proof of occupancy of the establishment from where the business is being

carried out.

61
 For NRIs

 Copy of passport

 Latest salary slip of the previous month

 Appointment letter

 Salary certificate on the employer's letter head

 Labour card / Identity card (translated and attested by employer if it is in a

language other than English

 Contract agreement, if applicable

 Bank statements of salary and operating accounts (NRE / NRO / NRNR /

FCNR) for the last six months.

 Power of Attorney (Duly notarised if customer is in India or to be attested by

the consulate of the respective country)

For Shippies

 Voyage salary slips for the last one year

 Continuous Discharge Certificate

62
 Insurance

Meaning

System whereby individuals and companies concerned about

potential hazards pay premiums to an insurance company, which
reimburses (in whole or part) them in the event of loss. The insurer profits
by investing the premiums it receives. Some common forms of insurance
cover business risks, automobiles, homes, boats, worker's compensation,
and health. Life insurance guarantees payment to the beneficiaries when
the insured person dies. In a broad economic sense, insurance transfers
risk from individuals to a larger group, which is better able to pay for
losses.

Life/Health Insurance

Life/health insurance in the United States in 1998 represented 27.6

percent of the worldwide market, second to Japan's 28.6 percent and well
ahead of the United Kingdom's 9.8 percent, which ranked third. A variety of
life insurance (which provides income for a beneficiary at the insured's
death), annuities (provides income for life for the annuitant), and health
care products are offered. In 1997 Americans purchased $1.97 trillion of
new life insurance; the average new policy totaled $97,358. Term policies
and ordinary/whole life policies account for virtually all of the total life
insurance in-force of $13.2 trillion. At the end of 1997, 373 million policies
were enforce with an average size of $165,800 per insured household.
Term policies provide "pure insurance" (no cash value) and maximally
cost-effective protection to growing families.

63
 Ordinary/whole life policies provide protection as well as building up
cash values (investment component), which the policyholder can either
borrow on or obtain by surrendering the policy. Life/health policies are sold
on an individual or group basis—(the employer or association receives the
master policy and the insured members receive certificates of insurance).
Annuities-fixed (predetermined amount) and variable (varies with
investment returns) can be purchased by making a single payment or a
series of payments. The annuity income can start immediately or at some
future date. Different types of annuity contracts meet different needs.
Today there is a strong demand for individual annuity products, driven by
the movement of the baby boomers through the preretirement phase,
increased life expectancy and the fear of outliving savings, and concerns
about the long-term viability of Social Security. Health (medical, disability,
long-term care) insurance plans are offered by insurance companies,
managed health care organizations, and medical prepayment
organizations. Long term care products provide for reimbursement for
covered nursing home and home health care expenses incurred due to
physical or mental disability.

Role of Government

Federal and state governments play important roles in managing large

social insurance programs, such as social security, Medicare,
unemployment compensation, federal deposit insurance, and pension
benefit guaranty. In these areas the government acts either as a partner or
competitor to the insurance industry, or as an exclusive provider. Federal
and state governments also manage property and casualty programs, such
as "all-risk" crop, crime, flood, and workers' compensation.

64
 An entry into this segment helped complete the client’s product basket;
concurrently, it graduated the Company into an 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.

Insurance can be termed as a form of risk management which is mainly

used to protect an individual against the risk of prospective financial loss, if
any. Insurance can be used as a tool to shield an individual against
potential risks like travel accidents, death, unemployment, theft, property
destruction by natural calamities, fire mishaps etc.

The detail about all these types of insurance offered by us is as follows:

Health Care Insurance

With such high medical and health care costs these days, it’s hard to even
think about visiting a doctor. But what about an unexpected mishap or an
unforeseen disability or attack, where the potential medical bills could
shoot up to a sky? Where would you get so much money?

These are exactly the situations where you feel you had a security,
something which could come to your rescue and save you from such
financial crisis. While some companies do provide its employees with
health insurance, for others, this is a must.
Especially for the aging couples, who have a comparatively more chances
of needing emergency bill money? The health insurance does it all, so that

65
they do not have to worry for the huge payments at the last minute.
A health insurance can cover all from a routine immunization to a major
illness.

Life Insurance

Loss of a family member is a catastrophe which glooms a family’s

life. But even more tragic is the death of a sole bread earner for the family,
who then has to go through the pain of losing their loved one, as well as
the financial loss putting their survival in jeopardy.

This financial hardship due to a sudden death of a family member or

a disability resulting to a loss of job or inability to work can be avoided to a
great extent by taking up a life insurance policy.
A Life insurance or disability insurance covers such losses and pays a
family, compensation to restore the earnings lost by them due to a sudden
death or disability.

The monthly premiums for a life insurance are generally based upon
the age, health, and occupation information of the applicant, in addition to
the total benefits to be paid to him for his policy.

Home Insurance

Real estate property and hard assets are subject to accidental risks
like theft, destruction due to natural disasters or fire accidents etc. with
such huge investments gone into buying a real estate property like your
home or office, the risk involved is a loss of large amount of money.

66
 Home and property insurance helps you in managing and protecting
against these risks. The cost of a real estate property and its insurance is
mostly based upon the worth of the already insured hard assets and also
the location in which the assets are situated.

Travel Insurance

This is intended to cover any of the financial or any other losses

which were incurred by the insured while traveling, be it nationally or
internationally, such as mountain trekkers, cruise travelers etc.

Auto Insurance

Any vehicle on road, no matter how safe its driver is, is bound to
meet with an accident or two, which may leave it with just a few scratches,
or crash it up totally. Most countries today require you to have an auto
insurance while on road in your vehicles.

If you have an accidental car crash, a total repair could cost you a
fortune. On the other hand, a little scratch on your Land Cruiser might also
soar up your bills to a high. Whether or not you need auto insurance
mostly depends on the type of car you own.

If you have an expensive car and a little repair could wipe you out
financially, you should very well go in for a buying an all-inclusive and
crash insurance which could protect you against any and every harm done
to your vehicle.

67
 The Company’s 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 forcemore 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.

Research and advice:

Provided clients with advice on diverse investment products based on the

customer’s existing and prospective financial profile.

68
Key features: -

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

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

3. 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.

69
 Wealth Management Service

Backed by a team of experts, IIL team will recommend an appropriate

financial strategy to meet your needs.

The key to achieving success is having a carefully planned financial

strategy based on a thorough understanding of your needs and appetite for risk.

Analysis of your needs to develop your customized investment and

insurance portfolio.

Our relationship manager will help you analyze:

• Your cash-flow requirements

• Your cash-flow requirements

• Desired investment horizon

• Long-term goals

70
 Newsletters

The Daily Market Strategy is your morning dose on the health of the
markets. Five intra-day ideas, unless the markets are really choppy coupled with
a brief on the global markets and any other cues, which could impact the market.
Ocassionally an investment idea from the research team and a crisp round up of
the previous day's top stories. That's not all. As a subscriber to the Daily Market
Strategy, you even get research reports of India Infoline research team on a
priority basis.

The India Infoline Weekly Newsletter is your flashback for the week gone
by. A weekly outlook coupled with the best of the web stories from India Infoline
and links to important investment ideas, Leader Speak and features is delivered
in your inbox every Friday evening.

List of Newsletters we provide:

• Daily Newsletters

• Weekly Newsletters

• Monthly Newsletters

• Yearly Newsletters

• Commodity Newsletters

• Mutual Fund Newsletters

71
 5paisa Products and services

5paisa is the trade name of India Infoline Securities Private Limited

(5paisa), member of National Stock Exchange and The Stock Exchange,
Mumbai. 5paisa is a wholly owned subsidiary of India Infoline Ltd, India’s leading
and most popular finance and investment portal. 5paisa has emerged as one of
leading players in e-broking space in India. Our key product offerings are as
follows:

Investor Terminal (IT)

Investor Terminal is recommended for infrequent investors, who fall into

the "Buy and Hold" school of investing, made very popular by Warren Buffet - the
Oracle of Omaha. A typical retail investor is a busy corporate executive or
businessmen who makes equity investments for long term and does not trade
everyday. He prefers a trading interface which works behind proxy and firewalls
as they access the Internet and the stock markets from their work place, where a
direct connection is difficult because of corporate IT security policies. This
product does not have intra-day tick-by-tick charts.

Trader Terminal (TT)

Trader Terminal is for the dedicated day traders, who churn their portfolio
on minor movements in the market, sometimes several times a day. Their rapid
and high volume trading requires a powerful interface for lightning fast order
execution. They monitor marked to market positions on a minute-to-minute basis,
with facilities for panic exit. They need all the analysis - fundamental and
technical, market gossip, price and volume information and much more - all at
one click.

72
 5paisa Trader Terminal

Target customer segment: -

Trader Terminal is almost a substitute for NSE NEAT terminal and VSAT. In
fact, it has many more powerful features that only a premium trader can
appreciate. Target customer segments are

1. It is for dedicated day traders, who churn their portfolio on minor

movements in the market, sometimes several times a day. Their rapid and
high volume trading requires a powerful interface for lightening fast order
execution.

2. High Net worth Individuals with large and active equities portfolio who
need to monitor and action swiftly.

3. Large corporate or trusts who have dedicated staff to monitor, analyze and
shuffle their portfolios

4. Trader Terminal features

5. Trade execution in a fraction of a second!

6. Live streaming quotes. Price watch on any number of scrips.

7. Intra day charts, updated live, tick-by-tick.

8. Live margin, position, marked to market profit & loss report.

9. The Lowest Brokerage on the face of the earth!

10. Set any number of price alerts on any number of scrips.

11. Flexibility to customize screen layout and setting.

12. Facility to customize any number of portfolios & watch lists.

73
13. Facility to cancel all pending orders at one click.

14. Facility to square off all transactions at one click.

15. Top Gainers, Top Losers, Most Active, updated live.

16. Index information; index chart, index stock information live.

17. Market depth, i.e. Best 5 bids and offers, updated live for all scrips

18. Instant trade confirmation.

19. Online access to both accounts and DP.

20. Live updated Order and Trade Book.

21. Details of pending, executed and rejected orders.

22. Online access to Customer Service.

23. 128 - bit super safe encryption.

24. Facility to place orders on the phone in all major cities.

25. Facility to place after market orders

26. Online fund transfer facility from leading Banks

27. Online intra-day technical calls.

28. Exhaustive database of over 5000 companies

29. Historical charts and technical analysis tools.

30. India Infoline's world - acclaimed news service and research.

31. Lots more… Last but not the least, ideas that help you make money!

74
 5paisa Investor Terminal

Target customer segment: -

1. Investor Terminal (IT) is targeted at:

2. Investors, who invest quite often, churn their portfolios regularly and keep
a close watch on the market. They need to watch live quotes and live
charts.

3. Active stock market traders with medium volumes

4. Students and researchers who need live streaming quotes and intra day
charts

5. Corporate treasury people

How to open an account

Alternatively just mail us at info@5pmail.com with your contact telephone

numbers or address. Our representative will get in touch with you soon.

Account opening formalities are simple. Documents required are 2 latest

passport size photos, proof of identity and address i.e. say electricity/ telephone
bill, passport photocopies. Potentially large customers should also give PAN nos
and photocopy of latest Income Tax return.

75
 GLOSSARY

General

| Stages of construction | Survey nos. | City survey nos. | Pre - approval |

| Tax benefits | Refinance / Balance transfer |Load bearing construction |
| Encumbrance | Lien |

Eligibility, Terms & Appraisal

| Gross Monthly Income | Eligibility | Tenure | Own Contribution / Margin Money |

| Credit Profile | Personal Guarantor | Co – applicant | Co – owners |
| Cost of Property |

Documentation

| Offer letter | Sale agreement | Stamp duty | Registration |

| Own contribution receipts | Demand notice / Payment notice | Approved plans |
| Layout | Commencement certificate | Completion / Occupation certificate |
| Conveyance Deed | Possession letter | Allotment letter | Disbursement advice |
| Disbursement details | 7 / 12 extract | Property card |

Rate of Interest

| Annual Rests | Monthly Rests | Fixed Rate of Interest | Variable Rate of Interest
|
| Weighted Average Rate of Interest |

Charges

| Bounce Charges | Prepayment |

76
Security

| Security | Mortgage |

Repayment & Pre – payment

| Standing Instructions | Amortization |

General

Stages of construction:

Disbursement is usually dependent on the stages of construction of the

property. Broadly, the stages of construction are classified as follows:

Survey nos:

Names are oft repeated and therefore, numbers serve as a more useful and
helpful form of identification. Like employee identification codes, plots of land
also have their own identification numbers so that it is easy to understand which
plot of land is being discussed. This is a number given to every plot of land and is

77
usually used when properties do not fall under the urban development plans of
the Town Planning Authority.

City survey no:

This is the same as survey numbers except that it is used for properties that fall
under the urban development plans of the Town Planning Authority.

Pre – approval:

Don't want to make an early commitment? No problem. You are allowed to apply
for a loan even before you decide on the property. Even if the loan is sanctioned,
it will be disbursed only after the property is selected and technically and legally
cleared. These cases are called Pre-approvals and they help you decide on a
budget to buy a property of your choice.

Tax benefits:

Yes, home loan customers are in fact allowed tax benefits and for further details,
please refer to Tax Benefits in the Home Loan page.

Refinance / Balance transfer:

Sometimes we make choices and realize that better options are available. What
happens if you have taken a loan and then find options at a lower ROI? Well, you
can actually switch to them! What's more, you can either Switch Products from
the same HFI or a different one. This is known as Balance Transfer.

Load bearing construction:

All constructions require slabs and columns in their construction for balance and
distribution of weight and pressure. The larger the construction and the more the
number of floors, the more the number of slabs and columns used in its
construction and therefore the more the load. In a construction having only 1-2

78
floors, the load is borne by the walls not slabs/columns and so the cost here is far
lower than that in a framed construction.

Encumbrance:

Encumbrance means restriction. Just as no one can claim, sell or lend the book
you have bought with your own money, no one can claim, sell or mortgage the
property bought by you. The encumbrance clause under the NOC ensures that
no one else has a right or mortgage on the property that you own. A simple rule
of what belongs to me stays mine and no one can do anything with it.

Lien:

A lien is an ownership right over property. Under the NOC, a clause of

Acceptance of Lien is covered. This states that you cannot sell a mortgaged
property to anyone without permission from the HFI. When a property is
mortgaged, the HFI also has a right over it and therefore will have a say in the
property's transaction.

Eligibility, Terms & Appraisal

Gross Monthly Income:

What you earn is what HFIs need to learn. Money is what most categories are
based on and therefore, it is primarily your income that determines the loan
amount sanctioned to you, where a percentage calculation for IIR and FOIR is
made based on your earnings. You can be put into the salaried or self-employed
category. For more clarification and calculation details, please refer to the FAQ
section.

If you earn a fixed income, then the amount on your monthly slip is taken
into consideration. Luckily enough, if there is any additional/variable income, it
will be added to this, so that you are eligible for a greater loan amount.

79
 Being self-employed further puts you in either the professional or the non-
professional bracket. If you are a doctor, CA, lawyer, etc., you fall into the first
bracket where it is common knowledge that income is more than that displayed.
Thus, the average Gross Professional Receipts shown on the Income and
Expenditure account for the last two years are taken into consideration. This
however, must be filed with the tax authorities.

If you're not a professional, i.e. a businessman, then your net profits are
computed and all sources of income are taken into consideration to ensure that
you get maximum benefit. This is displayed in the Profit and Loss account, which,
as always needs to be filed with the tax authorities.

Eligibility:

Your credit profile tells the HFI how well you handle the repayment of loans. This
along with your income, age, etc. will determine your loan amount. Usually, this is
lowest between LTV and the IIR and FOIR and is decided by the HFIs.

Tenure:

Time and tide wait for no man and tenure refers to the number of years during
which the loan is to be repaid in full. It varies according to loan amount, scheme,
EMI, etc.

Own contribution / Margin money:

The loan unfortunately doesn’t cover the complete cost of your property. As
mentioned above, percentages play an important part and after the HFIs
calculate how much loan amount you can get, the remainder, a small part and a
minimum amount, needs to be put in by you. ‘Show me the money’ is a popular
phrase with the play-it-safe banks and most insist on your contribution to be paid
before any disbursement is handed.

80
Credit profile:

Before we enter into a contract, or make a deal, or even go out to make new
friends, don’t we always run a background check to make sure we’re safe? It is a
human tendency. Banks work on similar lines and your background is important
to the HFI while deciding your eligibility and repayment capacity. This profile
includes your previous loans taken, if any, and the way you repaid them. So, a
clean track record is very useful here. Whoever said honesty doesn’t pay?

Personal Guarantor:

Say you had to appoint someone in your company; wouldn’t you always prefer
choosing someone who has recommendations to those who do not? The same
way, HFIs would also prefer individuals who have people to back them up. Most
HFIs require you to have 1-2 of these guarantors and they too need to meet
specific norms as listed by the HFIs.

Co–applicant:

A traditional Indian custom is to learn how to share. Our strong family ties and
faith in relationships is understood and just as we share smiles and tears, bruises
and burdens, we can share the responsibility of buying a home. Banks provide
you with the option of having a co–applicant to your loan, the only conditions
being that they cannot be minors and that only blood relatives and spouses can
shoulder this responsibility. Given below is a table that better explains the
relationship accepted for co-applicants.

Co – owners:

All HFIs insist that all co – owners have to necessarily be co – applicants As per
law; no minor can enter into a contract and therefore cannot be a co-owner.

81
Income clubbing of co – applicants

Parent- Brother- Sister-

Husband- Parent-Son Brother-Brother
Daughter Sister Sister
Wife

Only Other Only Staying Staying Brother- Sister-

Siblings
son Brothers child Together Separately Sister Sister

Cost of property:

1. Prices, prices, prices...but now you can kill many birds with one cash
amount. The cost of property includes
2. The agreement value of the property.
3. Stamp duty and registration charges, so you don’t have to keep running
around to get your papers validated.
4. Society transfer charges
5. Garage charges if you have a vehicle, and would like it under a roof.
6. Basic necessities like electricity, water, etc. If your developer is taking care
of extra furnishing, those charges will also be included here as long as an
agreement regarding it has been stamped and registered.
7. This saves you the hassle of opening your wallet every time you realize
your property needs necessities. However, if not included in the
agreement, any cash dealings concerned with the house purchase will not
be included here.

Documentation

Offer letter:

The messenger of good tidings, this letter's receipt means that your loan has
been sanctioned. It consists of: Terms and Conditions of the loan i.e. interest

82
rate, loan amount, tenure, EMI, etc. Special conditions of the loan that need to be
completed before disbursement. The letter has to be handed over to the HFI after
being signed and accepted by you and is a part of the documents kept by the HFI
as security.

Sale agreement:

It's a paper world all over again. Every transaction, every deal has to be verified
by papers that are duly signed and registered. This document is one of them, and
hands over ownership rights from the seller to you and binds you two together.

Stamp duty:

All documents need to be stamped for them to be legally enforceable. The stamp
duty differs from state to state and the stamp duty rates are available with the
Registrar of Stamps at every location.

Registration:

The final step for you to be the legal owner of your property is registration where
the stamped document needs to be registered with the Registrar of Properties.

Own contribution receipts:

It is pretty much self-explanatory and refers to the receipts for the payments
made by you to meet your own contribution. Most HFIs release their
disbursement only after these receipts are handed over.

Demand notice / Payment notice:

After your property has been constructed, the developer/builder will send you a
letter requesting you to make the necessary payments. Only after getting this
letter will the HFI hand over the disbursement because, apart from the other
things they look into, this letter becomes the basis of disbursement.

Approved plans:

83
Construction sites and their projects need to be approved by the municipal
corporation so that banks are sure that the project is legal and sticks to all
governmental requisites and safety regulations. These are known as the plans,
drawings or layouts of the property.

Layout:

No one blindly gets into anything. Sometimes you can visualize with the help of
words but the work is so much simpler with a proper picture in front of you. This
is where layouts come in. This document is available with the builder and shows
us the site of the construction and how it will look when completed. It is only
required by the HFIs if the project you are investing in is not part of the pre-
approved list of projects.

Commencement certificate:

It is also provided by the municipal corporation and indicates the exact location of
the project. It is also a permit for the developer to start construction on the
project.

Completion certificate / Occupation certificate:- It is a crucial document given

by the municipal corporations to the developer after the completion of formalities
like

a) Getting water and electricity connection

b) Completing the construction as per given permissions, etc.

Conveyance Deed:

After the project is complete, the developer must form a society in whose favour
he must transfer the property and convey its title. This deed is proof of the
transfer. The landowner and property owner can be different and this deed is
used more often in such cases.

Possession letter:

84
The completion of the property is official when you receive this letter from the
developer. It states that the property can be occupied and also displays the
payments still to be made by you before you can be given the keys. Based on
this letter, the HFIs normally release the final disbursement.

Allotment letter:

When you are given a property, an allotment letter is issued by the development
authority to authenticate the transaction.

Disbursement advice:

A letter from the HFI follows every disbursement handed to you. It contains all
the details of the previous disbursement taken by you and includes: the last
disbursement amount details regarding the cheques, PEMI, EMI, ROI,etc. status
of the loan (if partly or fully disbursed) dues, if any, from you.

Disbursement details:

These are given in the disbursement advice. The stage of construction of the
property will determine the disbursement. The amount of disbursement taking
place can be calculated as follows: (Cost of property @ x stage of construction) -
(your contribution)

7 / 12 extract:

Our personal diaries, if read, will reveal almost everything about us-who we are,
the people we have met, what we've done, etc. This document is like a personal
diary of the property. It bears the name of the landowner and each and every
transaction undertaken, along with detailed descriptions. It is like a history book
or biography of the plot of land that will also indicate if anyone has/is mortgaging
the property.

It is required only in some states and will exist only if it is not part of the
urban development plans as per the Town Planning Authority. The terms might

85
be different in different places but the concept of the document as well as its use
will remain the same.

Property card:

This is available where the place forms a part of the urban development plans as
per the Town Planning Authority. Everything else is similar to the 7/12 extract.

Rate of Interest

Annual Rests:

This is an option that can be chosen so that the EMI is calculated on an annual
basis. To understand the process better, we can take an example. Let Rs.1000
be your loan amount, 10% be the interest rate p.a., and EMI be Rs.50.

Therefore, the total EMI for the whole year for you is 12 x 50=Rs.600 and
the interest charged to you is Rs.100.

The interest is then subtracted from your total EMI i.e. 600-100=500, and
500 becomes the amount repaid by you for that year.

This amount is reduced from your original principal (1000-500=500) and

this balance becomes your principal for the next year with the whole process
repeating itself. This is also known as the Annual reducing Balance.

Monthly Rests:

Another option, and a more popular one at that, is one where the duration for
calculation is a month and not a year. This is also called Monthly Reducing

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Balance of principal as EMI is calculated on a monthly basis and the same
method is followed in this calculation as in Annual rests.

Fixed Rate of Interest:

When you have a hunch that perhaps the market interest rate might rise, this is a
smart scheme to opt for. As the very name suggests, after you get the final
disbursement, the rate of interest remains fixed during the course of the loan,
remaining unaffected by the market changes in ROI.

Variable Rate of Interest:

It is almost like the opposite of the previous scheme and is chosen when you
think the market ROI is going to fall. Rates are reviewed at regular intervals and
the new rates are applicable on your loan amount.

Weighted Average Rate of Interest:

When the property you wish to take the loan for is still under construction,
disbursement is dependent on the stage of construction. In this case, the current
market interest rate is taken, in spite of you opting for a fixed ROI scheme. In the
end, the average rate of interest that’s is given remains fixed.

Charges

Bounce charges:

Time is money and no one likes a cheque that has bounced, especially not
banks. There is therefore a charge if your cheque bounces or gets dishonored so
care must be taken to prevent this unnecessary expense.

Prepayment:

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So you have a surplus of cash and would like to pay back more than your EMI;
with the option of prepayment, you can do so, either partly or completely paying
back the loan at any time. There are however, strings in the form of minimum
amount payable and maximum number of times you can do so during a financial
year. These are set by the HFIs themselves.

Security

When you go skydiving, you always make sure you have two parachutes; one
being the back up. Banks get mortgaged property, fixed deposits, shares, bonds,
and personal guarantees etc. as security to ensure that they have back up in
case the loan cannot be repaid and the mortgaged asset is usually the house for
which the loan is given.

Mortgage:

Our first introduction to mortgaging probably came in the way of playing

'Monopoly' as children. Well mortgage is when the property is hypothetically
given to the HFI. There are three types of mortgages. They are: (a) Equitable
mortgage – all the documents of the property will be in the hands of the banks.
(b) Mortgage by way of Memorandum of Entry –a signed declaration that states
the mortgaging of the property to the HFI is then entered into the Memorandum
of Entry of Mortgage. If the loan installments are not paid, this memorandum can
be enforced. There is a cost that must be paid to avail of this mortgage. (c) –
Registered mortgage or English mortgage - This is the safest and most
expensive form of mortgage for an HFI and there are no paper hassles as
documents of the property are not needed. You just enter into a mortgage deed
with the HFI which needs to be stamped and registered for it to be enforceable.
This is seldom used as the ownership of the property goes to the bank.

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Repayment & Pre – payment

Standing Instructions:

This facility makes paying the loan simple. Through a written declaration, your
bank is instructed to withdraw the sum of your EMI every month, from your
account and automatically deposit it in the HFIs' EMI account. This will save
everyone time and effort as the process is automatic.

Amortization:

This is the break-up of the repayment of the loan amount through the tenure of
the loan. It also helps you get to know what your outstanding principal is at any
point of time.

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 SWOT ANALYSIS
In any organization, strength and weaknesses indicate the capability
and preparedness of the organization to respond to the business
opportunities likely to be available in the environment and the extent to
which it is able to use its strengths to neutralize the threats. SWOT
analysis is done for the purpose of generating a corporate plan. It is a
macro level process, which has to be interpreted at different micro level
like technical, financial, human resource etc.

STRENGTHS:

1. Many product lines.

2. Broad market coverage
3. R&D skills and leadership
4. Ability to overcome commercial and technical challenges.
5. Provide quality products with consumer satisfaction.
6. Strong foundation laid by the top management.
7. Organization’s sells his product directly to the users
8. Organization’s improves the quality of product and service
continuously.
9. Quality and Accuracy is main strength.
10. Organization’s productivity is too high.
11. Business focus approach.

WEAKNESSES:

1. Work force with low skill levels.

2. Lack of sufficient executives in frontier areas of technology.
3. Company does not advertise his product on T.V and other ad
medium.
4. Company does not make the public relation by giving sponsorship,
seminars, speeches and company magazines.
5. Company does not introduce new product line.
6. Improper strategic decisions.
7. Improper Project planning, Monitoring, Evaluation & Control.
8. High conflict and politics.

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OPPORTUNITIES:

1. Covering maximum market

2. Company advertises his product on internet.
3. Start on line selling facility.
4. Expand core business.
5. Expand into foreign markets.
6. Apply R&D skills in new areas.

THREATS:
1. Employee turnover.
2. Competition in market.
3. New Products.
4. Threats by Local Banks & Companies.
5. Increase in industry rivalry.
6. Rising labor costs.

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 CONCLUSIONS AND RECOMMENDATIONS

CONCLUSION

The overall result of the survey showed mixed response among the
people. The people knew about investment/saving and they do so. People prefer
to do saving rather than doing investment because high return carry high risk.
So, fixed deposit scheme & government securities is favored by maximum
number of people because of mind set which is very difficult to change. Where as
now people are also investing in shares, mutual fund & insurance to earn high
return. The mind set of the people work for more security rather than risk cover &
other. So, the mindset of the people is to be molded.

IndiaInfoline is a one-stop financial services shop, most respected for

quality of its advice, personalized service and cutting-edge technology. Our
vision will not be accomplished only by maintaining high growth alone. Our
vision is to emerge as the most respected financial services company in
India.

We are a one-stop financial services shop, most respected for quality of its
advice, personalized service and cutting-edge technology.

Equities
Portfolio Management System
 Research

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Commodities
Mortgages
Invest Online
Invest in Mutual Fund
APPLY IN IPOs
SMS
Insurance
Wealth Management Service
Newsletters:

List of Newspaper: -

1. Daily Newsletters 5. Commodity Newsletters

2. Weekly Newsletters 6. Mutual Fund Newsletters

3. Monthly Newsletters

4. Yearly Newsletters

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 RECOMMENDATIONS

There are few recommendations, which have been figured out of the
project that may be useful for the organization to improve: -

1. A proper channel is required to make the people aware about Investment.

Advertisements in the Daily Newspaper may be a channel of propaganda.

2. Television is also a very strong media of advertising. It reaches out the

masses and is a very good audio-visual tool.

3. Regular survey of this kind can help the company to know the response of the
people.

4. Improvement needs in the process of Demat Account opening.

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 Bibliography

A. Web sites: - www.indiainfoline.com

www.5paisa.com
www.insurance.com
www.equity.com
www.commodity.com
B. Books Referred: -
1. Corporate Induction Training Module of IndiaInfoline Ltd.
(Booklet)
2. Financial Management
Dr. Janardan Jha
K. Shivarama Gouda
3. Company Law and Secretarial Practice
Dr. R.L. Nolakha
4. Fundamentals of Accounting
Dr. T.P. Ghosh

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