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Management Education & Research Institute, New Delhi Page1


I hereby declare that the project work entitled “Performance and

awareness of mutual fund” submitted to the Management
Education & Research Institute, New Delhi, is a record of an
original work done by me under the guidance Mr. Ranjit Kumar
Rawat (Cluster Head, Karvy Stock Broking Ltd.)) , Mr. Ashutosh
Chaturvedi (Zonal Head, Karvy Stock Broking Ltd.), Mr. Kamlesh
Kumar Yadav (Relationship Manager, Karvy Stock Broking Ltd.) and
Mr. K. K. Sharma (Placement Coordinator, Management Education &
Research Institute) and this project work has not performed the basis
for the award of any Degree or diploma/ associate ship/fellowship and
similar project if any.

Name: Lokesh Jain

Roll No. : 109219
PGDM (2009-11)

Management Education & Research Institute, New Delhi Page2

Table of Contents

Executive summary ………………………………….……………………………………..…6

Introduction: Company Detail………………….…….………………………………….……8

Where Karvy stand in the market………………………………………………………….….9

Karvy Groups…………………………………………………………………………….…..10

Mission statement of Karvy………………………………………………………….……....11

Vision of Karvy …………………………………………………………………………...…11

Karvy value……………………………………………………………………………..……12

Karvy Services: An overview …………………………………………………………..…...13

Marketing strategy of Karvy ………………………………………………………………...22

HR Policy of Karvy ………………………………………………………………………....24

National level organization chart………………………………………………………..…...25

Branch level organization chart……………………………………………………….……..26

Quality policy of Karvy………………………………………………………………….…..27

Quality objective of Karvy……………………………………………………………….….27

Achievements of Karvy………………………………………………………………….…..28

SWOT analysis of Karvy………………………………………………………………..…...30

Mutual Fund Industry detail…………………………………………………………….…...30

Development of Mutual Fund in India……………………………………………………....31

Regulatory Body………………………………………………………………………….….35

Management Education & Research Institute, New Delhi Page3

Competitors detail…………………………………………………………………………....36

Product detail…………………………………………………………………………..…….40

Structure of Indian Mutual Funds……………………………………………………..……..41

Mutual Fund – A globally proven investment……………………………………….………43

Critical view about Mutual Funds……………………………………………………..……..44

Mutual Fund cycle…………………………………………………………………….……..47

Types of Mutual Fund……………………………………………………………….………48

Research objective……………………………………………………………………….…..55

Research Methodology………………………………………………………………….…...56

Research analysis and interpretation……………………………………………………..…..59





Management Education & Research Institute, New Delhi Page4

I am really happy and exited in representing this summer training project report
before you.

I must express my gratitude towards KARVY STOCK BROKING LTD. for

giving mean opportunity to work with on this report.

And of course I am very much thankful to our honorable Mr. Ranjit Kumar
Rawat (Cluster Head, Karvy Stock Broking Ltd.)) , Mr. Ashutosh Chaturvedi
(Northern Regional Head, Karvy Stock Broking Ltd.) and Mr. Kamlesh Kumar
Yadav (Relationship Manager, Karvy Stock Broking Ltd.) for giving me
opportunity and his guidance helps me through out preparing this report. He has
also provided me a valuable suggestions and excellence guidance about this
training, which proved very helpful to me to utilize my theoretical knowledge in
practical field.

At last I am also thankful to my friends, to all known and unknown individuals

who have given me their constructive advise, educative suggestion,
encouragement, co-operation and motivation to prepare this report.

Management Education & Research Institute, New Delhi Page5


India’s economy is highly developing. The development is taken place due to

the growth in the financial system. This financial system provides the
background to various investors regarding varied options to invest. Thus,
development of the economy depends on how these investors invest for the well
being in long run.

As financial markets become more sophisticated and complex, investors need a

financial intermediary who provides the required knowledge and professional
expertise on successful investing. Mutual Funds represent perhaps the most
appropriate investment opportunity for investors. No wonder the concept of
Mutual Fund was initially developed in the U.S. market, but the entry of the
concept in the Indian Financial Market was in the year 1964 with the
formulation of the UTI, at the initiative of the RBI and Govt. of India.

For most people, money is a delicate matter and when it comes to investing they
are wary. Simply because there are many investment options out there, each out
promising the other. An important question facing many investors is whether to
invest in Banks, National Savings, Post office, Non-banking finance companies,
Fixed deposits, Shares etc. or to invest distinctively in Mutual Funds.

It has been perceived that there is huge potential market in the region of New
Delhi. Thus an exploratory research with the hypothesis “The region of New
Delhi being progressively industrializing & developing should provide a large &
wider market share for Mutual Fund” has been done.

Thus the purpose of this research was to find why people do not actively invest
in mutual fund in spite of various benefits like Professional management,
Diversification, Convenience liquidity, Flexibility, Tax benefits etc. as well as
to find out potential of business of KARVY in distribution of Mutual Fund in
New Delhi.

After performing the detailed exploratory research by interviewing different

persons who act as investment advisor like Insurance advisor and Post office
advisor etc. with the help of questionnaire, certain facts were revealed regarding
the view about Mutual Funds in the mind of investors.

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I have observed that approximately 60% of the people are unaware of Mutual
Funds but most of them are interested to know about Mutual Funds and ready to
attend seminar arranged by KARVY. They are also interested to work with
KARVY if sufficient information is provided to them about Mutual Fund and

People from service class prefers safety of income plus the regular income as
well as tax benefits while on the other hand Professional and Businessman focus
on high return with some risk.

For growth and development of the Mutual Fund Industry, the misconception
regarding Mutual Fund should be removed & the awareness for the same should
be made.

Management Education & Research Institute, New Delhi Page7


Karvy Consultants Limited was established in 1982 at Hydrabad. It was

established by a group of Hydrabad-based practicing Chartered Accountants. At
initial stage it was very small in size. It was started with a capital of

In starting it was only offering auditing and taxation services. Later, it acts into
the Registrar and Share transfer activities and subsequently into financial
services and other services like Financial Product Distribution, Investment
Advisory Services, Demat Services, Corporate Finance, Insurance etc.

All along, Karvy’s strong work ethics and professional background leveraged
with Information Technology enabled it to deliver quality to the individual. A
decade of commitment, professional integrity and vision helped Karvy
achieving a leadership position in its field when it handled largest number of
corporate and retail that proved to be a sound business synergy.

Today, Karvy has access to millions of Indian shareholders, besides companies,

banks, financial institutions and regulatory agencies. Over the past one and half
decades, Karvy has evolved as a veritable link between industry, finance and

In January 1998, Karvy became first Depository Participant in Andhra Pradesh.

An ISO 9002 Company, Karvy’s commitment to quality and retail reach has
made it an Integrated Financial Services Company.

Today, company has 230 branch offices in 164 cities all over the India. The
company adds 5 new offices every month to the company’s ever growing
national network in every nook and corner of the country. The company service
over 16 million individual investors, 180 corporate and handle corporate
disbursements that exceed Rs.2500 Crores.

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KARVY is a legendary name in financial services, Karvy’s credit is defined by

its mission to succeed, passion for professionalism, excellent work ethics and
customer centric values.

Today KARVY is well known as a premier financial services enterprise,

offering a broad spectrum of customized services to its clients, both corporate
and retail. Services that KARVY constantly upgrade and improve are because of
company’s skill in leveraging technology. Being one of the most techno-savvy
organizations around helps company to deliver even more cost effective
financial solutions in the shortest possible time.

What bears ample testimony to Karvy’s success is the faith reposed in company
by valued investors and customers, all across the country. Indeed, with Karvy’s
wide network touching every corner of the country, even the most remote
investor can easily access Karvy’s services and benefit from company’s expert

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Karvy Consultants Limited

Karvy Comtrade Limited

Karvy Insurance Broking limited

Karvy Realty (India) Limited

Karvy Globle Service Limited

Karvy Data Management Service Limited

Karvy Financial Service Limited

Karvy Investor Services Limited

Karvy Stock broking Limited

Karvy Computer Shares Pvt. Ltd.

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Mission Statement of ‘Karvy’

An organization exists to accomplish something or achieve something. The

mission statement indicates what an organization wants to achieve. The mission
statement may be changed periodically to take advantage of new opportunities
or respond to new market conditions.

Karvy’s mission statement is “To Bring Industry, Finance and People


Karvy is work as intermediary between industry and people. Karvy work as

investment advisor and helps people to invest their money same way Karvy
helps industry in achieving finance from people by issuing shares, debentures,
bonds, mutual funds, fixed deposits etc.

Company’s mission statement is clear and thoughtful which guide

geographically dispersed employees to work independently yet collectively
towards achieving the organization’s goals.

Vision of Karvy

Company’s vision is crystal clear and mind frame very directed. “To be
pioneering financial services company. And continue to grow at a healthy
pace, year after year, decade after decade.” Company’s foray into IT-enabled
services and internet business has provided an opportunity to explore new
frontiers and business solutions. To build a corporate that sets benchmarks for
others to follow.

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Karvy Values:


Karvy has adequate internal control systems and procedures commensurate with
the size nature of its business. These system and procedures provide reasonable
assurance of maintenance of proper accounting records, reliability of financial
information, protection of resources and safeguarding of assets against
unauthorized use.

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1. Stock broking
2. Demat services
3. Investment product distribution
4. Investment advisory services
5. Corporate finance & Merchant banking
6. Insurance
7. Mutual fund services
8. IT enabled services
9. Registrars & Transfer agents
10. Loans

1. Stock Broking:

KARVY is working as Capital Market Intermediaries. Stockbrokers are

regulated by SEBI [Stock-brokers and Sub-brokers] Regulations, 1992. The
stockbroker is a member of the stock exchange. Stockbrokers are the
intermediaries who are allowed to trade in securities on the exchange of which
they are members. They buy and sell on their own behalf as well as on behalf of
their clients.

Stockbrokers expand their business by engaging sub-broker. Sub-brokers mean

“any person not being a member of a stock exchange who acts on behalf of a
stock broker as an agent or otherwise for assisting the investors in buying,
selling or dealing in securities through such stock-brokers.”

2. Demat Services:

Karvy is a depository participant with the National Securities Depository

Limited (NSDL) for trading and settlement of dematerialized shares.

Depository Participants (DPs) are described as an agent of the depository. They

are intermediaries between the depository and the investors. The relationship
between the DPs and the depository is governed by an agreement made between
the two under Depositories Act.

A DP can offer depository-related services only after obtaining a certificate of

registration from SEBI.
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Since Karvy is also in the broking business, investors who use Karvy’s
depository services get a dual benefit. They can use Karvy’s brokerage services
to execute transactions and Karvy’s depository services to settle them.

3. Investment Products Distribution:

Company is also concern with the distribution of investment products like

(a). Fixed Deposit

(b). Bonds
(c). IPO
5 (a). Fixed Deposit:

KARVY is dealer of 34 fixed deposits of various types which includes fixed

deposits of Public Sector, Non Banking Finance Companies, Housing Finance
Companies and Manufacturing Companies.

Company is dealer of following Fixed Deposits

Sl. No. Company Name
2 Sardar Sarovar Narmada Nigam Ltd.
3 Tamilnadu Power Finance Corporation Ltd.


Sl. No. Company Name
1 Ashok Leyland Finance Ltd.
2 Bajaj Auto Finance Ltd.
3 Birla Home Finance Ltd.
4 Cholamandalam Investment & Finance Co. Ltd.
5 Escorts Finance Ltd.
6 First Leasing Company of India Ltd.
7 IDBI Suvidha
8 Nicco Uco Alliance Credit Ltd.

[FD of Non Banking Finance Companies with which Karvy deals]

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Sl. No. Company Name
1 Can Fin Homes Ltd.
2 Dewan Housing Finance Corporation Ltd.
3 Gruh Finance Ltd.
4 HDFC Ltd.
5 PNB Housing Finance Ltd.
6 Sundaram Home Finance Ltd.

[FD of Housing Finance Companies with which Karvy deals]

Sl. No. Company Name
1 A P Paper Mills Ltd.
2 Amtek India Ltd.
3 Atul Ltd.
4 Ballarpur Industries Ltd.
5 Chambal Fertilizers & Chemicals Ltd.
6 Escort Ltd.
7 Greaves Ltd.
8 Gujarat Alkalies & Chemicals Ltd.
9 Indian Express
10 Ind-Swift Ltd.
11 JK Industries Ltd.
12 Jindal Steel & Power Ltd.
13 Sound Craft Industries Ltd.
14 Supreme Industries Ltd.
15 Zuari Industries Ltd.

[FD of Manufacturing Companies with which Karvy deals]

(b). Bonds:

Karvy is dealer of following bonds

• RBI Saving Bonds


Management Education & Research Institute, New Delhi Page15

(c). IPO:

Company is also provides services related to Initial Public Offer of company.

Company provides stationary at the time of IPO as well as provides information
to investors regarding IPO and solves their queries.

4. Investment Advisory Services:

This division provides portfolio management services to high net-worth

individuals and corporate. The expertise of Karvy in research and stock broking
gives it the right perspective to provide investment advisory services. Company
provides advisory services to its clients.

Financial goal of each individual investor varies according to his dream,

ambition and family size and future financial planning for the children & old
age pension for self and wife so does the pathway to achieve it. Karvy apply the
principles of Financial Planning as both science & art, it understands the time
horizon, risk bearing capacity and investment goals of investors keeping in mind
their psyche and financial needs. Based upon this Karvy helps individual
investors to plan their entire life up to retirement, Taxes, Insurance needs and
other important personal financial goals. It designs portfolio for investor to
invest their saving in various financial products like shares, bonds, debentures,
mutual funds, fixed deposits, insurance etc., Company design portfolio by
considering following factors.

• Investor’s requirement of getting money back,

• Investor’s willingness to take risk,
• Investor’s tax planning etc.

5. Corporate finance & Merchant banking:

Corporate finance is the financial activity of corporation. It deals with the firm's
operations with regard to investing and financing. It concerned with how firms
raise capital and the consequences of alternative methods of raising capital.
Firm’s capital can be raised by raising loans, issuing shares, and acquiring or
merging with other businesses by public or private companies.

Merchant banking is a financial intermediation that matches entities that need

capital and those that have capital. Hence they facilitate the flow of capital in
the market.
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Karvy enjoys SEBI category (I) authorization for Merchant Banking. Karvy
offers the full spectrum of Merchant Banking Services, beginning from
identifying the best time for an issue to final stage of marketing it, to harvest
unparalleled success.

As a merchant banker Karvy offer following services:

• Issue management
• Instrument designing
• Pricing of the issue
• Registration process for the issue of shares
• Marketing efforts
• Final allotment to investors
• Listing details on stock exchanges
• Loan syndication
• Lease financing
• Corporate advisory services
• Underwriting
• Portfolio management

6. Insurance:

Karvy is also dealer of many private life insurance companies. At New Delhi,
Motinagar branch, company is associated with dealing of following companies.

• ICICI Prudential Life Insurance

• HDFC Life Insurance
• TATA AIG Life Insurance

7. Mutual Fund Services:

Since its inception in 1982, Karvy has demonstrated a dedication coupled with
dynamism that has inspired trust from various segments – corporate,
government bodies and individuals. Karvy has since been performing a pivotal
role as the intermediary – the interface – between these players.

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With Mutual Funds emerging as a distinct asset class, Karvy has made a
strategic choice to leverage the power of latest technology to provide a cutting
edge to its services. Karvy, today, service nearly 80% of the asset management
companies (AMCs) across an extensive network of service centers with assets
under service in excess of Rs.10,000 crores.

Karvy's ability to mass customize and offer a diverse range of products for a
diverse range of customers has helped mutual fund companies to uniquely
position themselves in the market place. These diverse range of services cut
across multiple delivery channels – service centers, web, mobile phones, call
center – has brought home the benefits of technology to investors, distributors,
and the mutual funds.

Going forward, Karvy shall strive to create new products and services, which
would address the needs of the end customer. Company’s single minded focus
in delivering products for customers has given it the distinguished position of
being the preferred provider of financial services in the country.

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List of Mutual Fund Clients of KARVY:

1 Alliance Mutual Fund

2 Birla Mutual Fund
3 Bank of Baroda Mutual Fund
4 Can Bank Mutual Fund
5 Chola Mutual Fund
6 Deutsche Mutual Fund
7 DSP Merrill Lynch Mutual Fund
8 Franklin Templeton Investments
9 GIC Mutual Fund
10 HDFC Mutual Fund
11 HSBC Mutual Fund
12 IL & FS Mutual Fund
13 JM Mutual Fund
14 Kotak Mutual Fund
15 LIC Mutual Fund
16 Punjab National Bank Mutual Fund
17 Prudential ICICI Mutual Fund
18 Principal Mutual Fund
19 Reliance Mutual Fund
20 State Bank of India Mutual Fund
21 Standard Chartered Mutual Fund
22 Sundaram Mutual Fund
23 SUN F&C Mutual Fund
24 Tata Mutual Fund
[List of MF Companies with which Karvy deals]

8. Income Tax enabled services:

Karvy has been started this service since March, 2004. Karvy is work as TIN
Facilitation Centre it provides following IT enabled services.

a. Distribution of PAN Card.

b. Distribution of TAN Card.
c. Services related to e-TDS.

Karvy work as an intermediary between NSDL and IT payers. Karvy provides

various form for different IT enabled services and guide people to fill that

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forms. It also solves queries of the tax payers. It also distributes PAN and TAN
card to the tax payers.

TIN Overview

National Securities Depository Ltd. (NSDL) has established a nationwide Tax

Information Network (TIN) on behalf of the Income Tax Department (ITD).
This is designed to make the tax administration more effective, furnishing of
returns convenient, reduce compliance cost and bring greater transparency.

While NSDL will be the primary agency responsible for the design,
implementation and maintenance of TIN as per the requirements of ITD, other
agencies will also play key roles in the TIN system.

Karvy has established infrastructure required to provide IT enabled services so,

Karvy provides TIN facilitation centers all over India on behalf of NSDL.
Besides Karvy following companies can also work as intermediary between
NSDL and customers.

• Alankit Assignments Ltd.

• Integrated Enterprise (I) Ltd.
• Shell Tran source Ltd.

Management Education & Research Institute, New Delhi Page20

9. Registrars & Transfer agents:
In 1985, Karvy entered the Registrar and Share Transfer Business to create a
market niche in the competitive field of financial services. In 1994-95,
it reached a milestone when it processed 104 Public Issues constituting 46 per
cent market share. Now in its second decade of existence, Karvy is the leader in
the industry: In an opinion poll conducted by an independent market research
agency - MARG, Karvy has been rated as India’s Most Admired Registrar on
various parameters: -

• Overall Excellence.
• Handling of Volumes
• Timely Dispatch
• Quality Management and Technological Up gradation.

A SEBI Category 1 Registrar, So far, Karvy has handled over 675 ISSUES as
Registrars to public issues processed over 52 million applications and is
servicing over 16 million investors from various locations spread over 205

10. Loan:
Karvy has recently started this service at selected branches of metro cities. This
service has not been started in Saurashtra-Kucch region. Karvy provides loans
for following.

• Vehicle Loan
• Home Loan
• Personal Loan

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Market Positioning:
Market positioning statements of Karvy are “At Karvy we give you single
window service” and “We also ensure your comfort”.

So, Karvy focus on the consumers who prefer almost all investment activities at
same place by providing number of various financial services. At Karvy a
person can purchase or sell shares, debentures etc. and at the same place
also demat it. Karvy also provides other investment option to the same
person at same place like Mutual Fund, Insurance, Fixed Deposit, and
Bonds etc. and help the person in designing his portfolio. By this way Karvy
provides comfort to its customers.

Karvy is also positioned according to Ries and Trout. Karvy is promoted as a

no. 1 investment product distributor and R & T agent of India.

Target Market:

Karvy uses demographic segmentation strategy and segment people based on

their occupation. Karvy uses selective specialization strategy for market
targeting. Target person for the Karvy Stock Broking and Karvy Investment
Service are persons who can work as sub-broker for the companies. Companies
focus on Advisors of Insurance and post office, Tax consultants and CAs for
making sub-broker.

Management Education & Research Institute, New Delhi Page22

Marketing channel System:

Karvy uses one level marketing channel for investment product distribution.
Sub-brokers work as intermediary between consumer and company. Company
has both forward and backward flow of activity through channel. Company
distributes stationery, brokerage, and information forward to its sub-broker. The
sub-brokers send filled forms, queries, amount of investment etc. back to the

Training Channel Members:

Karvy provides training to the sub-brokers because they will be viewed as the
company by the investors. The executives of Karvy explain various new
schemes of investment to the sub-brokers with its objective, risk factors and
expected return. Company also periodically arrange seminar to guide sub-

Advertising and Promotion:

The objective of advertising of Karvy is to create awareness about services of

Karvy among investors and sub-brokers and increase sub-brokers of Karvy.

Company doesn’t give advertisement in media like TV, Newspapers, and

Magazines etc. Karvy’s advertisement is made indirectly by the companies
associate with it. Karvy is R & T agent of around 700 companies. They publish
name, address and logo of Karvy on their annual report.

Karvy also publish its weekly Stock Market Newsletter ‘Karvy Bazaar Baatein’
and monthly magazine ‘The Finapolis’ to guide investors and sub-brokers about

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Karvy’s HR Department is located at Hyderabad.

Recruitment and Selection Policy:

The upper level members like zonal managers, regional managers, branch
managers and senior executives are recruited by publishing recruitment
advertisement in leading national level newspaper. The qualified applicant are
then called for interview and selected.

The regional manager has authority to select lower level employee like peon,
marketing executives, accountant etc. by approval of zonal manager.

Training and Development:

Continuous training and upgrading technical, behavioral and managerial skills is

a way of life in Karvy. Karvy encourages employees to hone their skills
regularly to enable them to face the challenges of the changing requirements of
customers that fit market up and down.

Training needs analysis is done on a regular basis and systematic methodologies

are ensured that skills and capabilities of all employees are constantly upgraded
to enable them to perform in the challenging work environment.

New employee has given training under experienced employee. The new
employee work under experience employee and observe his all activities. When
company employs new technology or there is any change in the working of
company the training program is arranged.

Employee Motivation:

Karvy’s employees are highly empowered. They don’t have to report any person
of the same branch but they report upper level branch. If particular branch earn
certain profit then Karvy gives them special incentives. This also helps in
maintaining co-operation between employees.

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(Marketing) (Finance) (HRM)

Zonal Manager

Regional Manager

Branch Mgr. Branch Mgr. Branch Mgr.

Accountant Sr. Executives


[National Level Organization Chart of Karvy]

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Branch Manager

Sr. Executive Executives Executive

(Investment) (SB - 4) (IT)

Marketing Clerk

(Demat) Accountant

Peon Peon

[Branch Level Structure of Karvy]

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Quality Policy Of Karvy:
To achieve and retain leadership, Karvy shall aim for complete customer
satisfaction, by combining its human and technological resources, to provide
superior quality financial services. In the process, Karvy will strive to
exceed Customer’s expectations.

Quality Objectives of Karvy

• Build in-house processes that will ensure transparent and

harmonious relationships with its clients and investors to provide high
quality of services.

• Establish a partner relationship with its investor service

agents and vendors that will help in keeping up its commitments to the

• Provide high quality of work life for all its employees and
equip them with adequate knowledge & skills so as to respond to
customer's needs.

• Continue to uphold the values of honesty & integrity and

strive to establish unparalleled standards in business ethics.

• Use state-of-the art information technology in developing

new and innovative financial products and services to meet the changing
needs of investors and clients.

• Strive to be a reliable source of value-added financial

products and services and constantly guide the individuals and
institutions in making a judicious choice of same.

• Strive to keep all stake-holders (shareholders, clients,

investors, employees, suppliers and regulatory authorities) proud and

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Achievements of Karvy:

• Largest mobilizer of funds as per PRIME DATABASE

• First ISO - 9002 Certified Registrar in India

• A Category- I Merchant banker

• A Category- I Registrar to Public Issues

• Ranked as "The Most Admired Registrar” by MARG

• Handled the largest- ever Public Issue - IDBI

• Strategic tie-up with Jardine Fleming India Securities Ltd

• Handled over 500 Public issues as Registrars

• Handling the Reliance Account which accounts for nearly 10

million account holders

• First Depository Participant from Andhra Pradesh

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• Employees are highly empowered.
• Strong Communication Network.
• Good co-operation between employees.
• Number 1 Registrar and Transfer agent in India.
• Number 1 dealer of Investment Products in India.


• High Employee Turnover.


• Growth rate of mutual fund industry is 40 to 50% during last

year and it expected that this rate will be maintained in future also.
• Marketing at rural and semi-urban areas.

• Increasing number of local players.
• Past image of Mutual Fund.

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Following are list of Mutual Fund companies in India.

Sr. No. Mutual Fund Name No. of

1 Alliance Mutual Fund 36
2 Benchmark Mutual Fund 5
3 Birla Mutual Fund 74
4 Bank of Baroda Mutual Fund 17
5 Can Bank Mutual Fund 25
6 Chola Mutual Fund 45
7 Deutsche Mutual Fund 40
8 DSP Merrill Lynch Mutual Fund 40
9 Escorts Mutual Fund 15
10 Franklin Templeton Investments 130
11 GIC Mutual Fund 5
12 HDFC Mutual Fund 79
13 HSBC Mutual Fund 32
14 IL & FS Mutual Fund 43
15 ING Vysya Mutual Fund 55
16 JM Mutual Fund 55
17 Kotak Mutual Fund 56
18 LIC Mutual Fund 35
19 Morgan Stanley Mutual Fund 1
20 Punjab National Bank Mutual Fund 4
21 Prudential ICICI Mutual Fund 124
22 Principal Mutual Fund 68
23 Reliance Mutual Fund 74
24 Sahara Mutual Fund 12
25 State Bank of India Mutual Fund 59
26 Standard Chartered Mutual Fund 100
27 Sundaram Mutual Fund 52
28 SUN F&C Mutual Fund 1
29 Tata TD Mutual Fund 100
30 Taurus Mutual Fund 9
31 Unit Trust of India 42
32 UTI Mutual Fund 66

Development of Mutual Funds in India

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The mutual fund industry in India started in 1963 with the formation of Unit
Trust of India, at the initiative of the Government of India and Reserve Bank
the. The history of mutual funds in India can be broadly divided into four
distinct phases

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

Second Phase – 1987-1993 (Entry of Public Sector Funds)

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

Third Phase – 1993-2003 (Entry of Private Sector Funds)

With the entry of private sector funds in 1993, a new era started in the Indian
mutual fund industry, giving the Indian investors a wider choice of fund
families. Also, 1993 was the year in which the first Mutual Fund Regulations
came into being, under which all mutual funds, except UTI were to be registered
and governed. The erstwhile Kothari Pioneer (now merged with Franklin
Templeton) was the first private sector mutual fund registered in July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more
comprehensive and revised Mutual Fund Regulations in 1996. The industry now
functions under the SEBI (Mutual Fund) Regulations 1996.
Management Education & Research Institute, New Delhi Page31
The number of mutual fund houses went on increasing, with many foreign
mutual funds setting up funds in India and also the industry has witnessed
several mergers and acquisitions. As at the end of January 2003, there were 33
mutual funds with total assets of Rs. 1, 21,805 crores. The Unit Trust of India
with Rs.44,541 crores of assets under management was way ahead of other
mutual funds.

Fourth Phase – since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI
was bifurcated into two separate entities. One is the Specified Undertaking of
the Unit Trust of India with assets under management of Rs.29, 835 crores as at
the end of January 2003, representing broadly, the assets of US 64 scheme,
assured return and certain other schemes. The Specified Undertaking of Unit
Trust of India, functioning under an administrator and under the rules framed by
Government of India and does not come under the purview of the Mutual Fund
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and
LIC. It is registered with SEBI and functions under the Mutual Fund
Regulations. With the bifurcation of the erstwhile UTI which had in March
2000 more than Rs.76,000 crores of assets under management and with the
setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund
Regulations, and with recent mergers taking place among different private
sector funds, the mutual fund industry has entered its current phase of
consolidation and growth. As at the end of September, 2004, there were 29
funds, which manage assets of Rs.153108 crores under 421 schemes.
The graph indicates the growth of assets over the years.

Management Education & Research Institute, New Delhi Page32



120000 121805 121778

Rs. In Crores

80000 79464


0 25
Mar-65 Mar-87 Mar-93 Jan-03 Mar-03 Sep-03 May-04


[Growth in Assets Under Management]

[Source: www.amfiindia.com]

Mutual Funds – Organisation

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

Management Education & Research Institute, New Delhi Page33

45% 42%
15% 14%
5% 3% 4%




Fund Type

[Assets Under Management By Fund Type]

[Source: www.amfiindia.com]

40% 38%
30% [Assets
20% 19%




Fund Type

Under Management By AMC]

[Source: www.amfiindia.com]

Management Education & Research Institute, New Delhi Page34


Financial System is basically responsible for the major up and downs in the
economy. So, there are some regulatory bodies on it which ensures effectiveness
in the management of fund of the investors and transparency in the transactions.

Ministry of Finance

SEBI RBI Dept. of IT

Stock Brokers Commercial PAN

R & T Agent Banks TAN
Mutual Fund NBF Co. e-TDS

[Regulatory bodies]

Management Education & Research Institute, New Delhi Page35


1. Bajaj Capital

It was established in 1964 at Delhi. In 1965 it innovates a new financial

instrument ‘Companies Fixed Deposits’ and becomes the first company to raise
Fixed Deposits. The objective of company is to provide professional
guidance to investors on where, when and how to invest and to assist the
corporate sector in its resource raising activities. Bajaj Capital became the
first company to set up ‘Investment Centers’ all over India for this
purpose. Today, Bajaj Capital has 90 offices in over 40 important Indian
Cities and has a team of around 500 employees nationwide.

Services provided

• Merchant banking
• Buying and Selling of Money Market Investments
• Distribution of financial products
• Investment Advisory Service

» Company fixed deposits

» Bonds
» Mutual funds
» Life insurance
» General insurance
» Pension schemes
» Post office schemes
» Tax saving schemes
» Insurance linked investment schemes
» Initial public offerings
» Housing loans
» NRI schemes
» Car insurance

• Financial Planning

» Investment planning
» Retirement planning
Management Education & Research Institute, New Delhi Page36
» Insurance planning
» Children's future planning
» Tax planning
» Short-term cash flow planning
2.MCS Ltd.

It is established in 1985 in Delhi. It is one of the largest Data Processing House

employing more than 600 people.

MCS Ltd. has 8 branches all over India.

Volumes Handled

• Share registry activities for over 100 corporate servicing

over 10 million investors.
• Mutual fund operations for 25 funds, servicing over 4.5
million investors.
• Billing & settlement plan for Indian operations of IATA
Geneva for 1.2 million tickets per annum covering (26 airlines & over 1200

Services Offered:

• Registrars and Transfer Agents

• Registrars to IPO’s /Right Issues
• Registrars to Open Offers
• Registrars to Mutual Funds
• Data Processing for Airlines
• Print Shop Services

MCS is a major player in these activities in the Country with a market share of
about 25%. MCS today provides these services to over 140 Corporate and
Mutual Funds for a total investor base of 15 million.
3. N.J.India Investments Pvt. Ltd.
NJ India Invest (formerly known as NJ Capital stocks) was started in 1994 to
cater to the growing financial services sector. NJ India Invest evolved out as a
client focused need based investment advisory firm. NJ regards mutual fund as
one of the best investment avenue available to satisfy any kind of investment
Management Education & Research Institute, New Delhi Page37
4. ICICI Securities Ltd.

ICICI Securities Limited (i-SEC) is a wholly owned investment-banking

subsidiary of ICICI Limited. ICICI is the only non-Japanese Asian financial
institution to be listed on the New York Stock Exchange (NYSE). ICICI
Securities was formed on 22nd Feb. 1993, when ICICI's Merchant Banking
Division was spun off into a new company; ICICI Securities today is India's
leading Investment Bank and one of the most significant players in the Indian
capital markets.

ICICI Brokerage Services Limited (IBSL) set up in March 1995, IBSL is a

100% subsidiary of i-SEC. It commenced its securities brokerage activities in
February 1996 and is registered with the National Stock Exchange of India
Limited and The Stock Exchange, Mumbai.

ICICI has started a website ICICIdirect.com which is the most comprehensive

website, which allows you to invest in Shares, Mutual funds, Derivatives
(Futures and Options) and other financial products.

ICICI has a large network of branches all over India.

Services offered:
• Merchant Banking
• Demat Service
• Stock Broking


HDFC is the leading financial company in India. IT has large network of

branches all over India. HDFC Securities which is fully subsidiary of HDFC
provides demat service.

HDFC and its subsidiary provides following services.

• Demat Service
• Life Insurance
• Banking Service
• Housing Finance
• Vehicle Finance
• Education Loan
Management Education & Research Institute, New Delhi Page38
• Personal Loan
• Mutual Fund

6. Kotak Securities Ltd.

Kotak Securities needs no introduction as one of the largest stock broking

houses in the country and a leading distributor of primary market offerings.
Kotak Securities limited is a joint venture between Kotak Mahindra Bank and
Goldman Sachs, the international investment banking and brokerage firm.

Kotak Securities is a corporate member of both the BSE and the NSE. It is also
a depository participant with the National Securities Depository Limited
(NSDL) for trading and settlement of dematerialized shares.

Services offered:

• Stock Broking
• Financial Product Distribution
• Demat Services
• Investment Advisory Services

7. Motilal Oswal Securities Ltd.

Motilal Oswal Securities Ltd (MOSt) is one of the leading equity research and
broking houses of India. MOSt has a 20-member research team, which is
engaged round the clock in analyzing the Indian economy and corporate sectors
to identify equity investment ideas. Asia Money Broker's Poll 2002 has rated
MOSt as one of the best Indian broking house, for research, for the second time
since 2000.

Motilal Oswal is member of NSDL and CDSIL for DP. It has wide network of
branches. It has 158 branches all over India.

Services Offered:

• Demat Services
• Stock Broking
• Investment Advisory Service

Management Education & Research Institute, New Delhi Page39


Mutual funds serve as a link between the saving people and the capital market in
that they mobilize saving from investors and bring them to borrowers in the
capital markets. In short, it is a common pool of money into which investors
place their contribution that is to be invested in accordance with a stated

A mutual fund uses the money collected from the investors to buy those assets,
which are specially permitted by its stated investment objective. When an
investor subscribes to a mutual fund, he/she buys a part of asset or the pool of
funds that are outstanding at that time.

A mutual fund is constituted as an investment company and an investor buys

into the fund, means he buys the share of the fund and is known as a unit holder.
Since each unit holder is a part of owner of a mutual fund, it is necessary to
establish the value of his part. Since the unit held by an investor evidences the
ownership of the fund’s assets, the value of the total asset of the fund when
divided by the total number of units issued by the mutual fund gives us the
value of one unit. This is called as Net Asset Value (NAV).

Management Education & Research Institute, New Delhi Page40


Mutual fund industry is highly regulated by the government keeping in view of

the protection of investor’s interest as well as to maintain operational

In India SEBI Regulations Act, 1996, guides the formation and operation of
Mutual Funds. A Mutual Fund comprises of 4 separate entities.

1. Sponsor
2. Board of Trusties
3. Asset Management Company
4. Custodian and Depositories
5. Distributors

1. Sponsor:
“Sponsor” is defined under SEBI regulation as any person who, acting alone or
in combination with another body corporate, establishes a mutual fund. The
sponsor gets the fund registered with SEBI. The sponsors form a trust and
appoint a Board of Trustees.

• The sponsor must contribute at least 40% of the net worth of

the AMC.
• The sponsor must posses a sound financial track record over
5 years prior to registration.

2. Board of Trustees:

Mutual funds are managed by Board of Trustees. Trust is created by a document

called the Trust Deed that is executed by fund sponsor in favour of trustees.

• The trustees appoint the AMC and custodian with the prior
approval of SEBI.
• They also approve all the schemes floated by the AMC.
• They have right to dismiss the AMC, with the approval of
• Half of the trustees should be independent persons. Neither
the AMC, nor its employees can act as trustee.

Management Education & Research Institute, New Delhi Page41

• A trustee can not be appointed as a trustee of two or more
mutual funds until and unless he is an independent person or has permission
from the Mutual Fund where he is trustee.
• Trustees can be removed only by prior approval of SEBI.
3. Asset Management Company:

The role of an AMC is to act as the investment manager of the Trust under the
Board supervision and direction of the Trustees.
The AMC is required to be approved and registered with SEBI.

• The AMC of a Mutual Fund must have a net worth of at least

Rs. 10 crore at all time.
• The AMC can not act as a trustee of any other Mutual Fund.
• They will float schemes only after obtaining the prior
approval of the Trustees and SEBI.
• The director of AMC should be a person of reputed of high
standing and at least have five years experience in relevant field.
• AMC can be terminated with 75% unit holders or majority of

4. Custodian and Depositories:

As per SEBI Regulations Mutual Funds shall have a custodian who is not any
way associated with the AMC. It carry outs the activity of safe keeping the
securities or participating, in any clearing system. The custodian should be
independent from sponsors and AMC and should have a sound track record and
adequate relevant experience.

As Indian capital markets are moving away from having physical certificates to
ownership of these securities in “dematerialized” form with Depository. Mutual
Fund’s “dematerialized” securities are hold by depository participant.

5. Distributors:

For a fund to sell units across a wide retail base of individual investors, an
established network of distribution agents is essential. AMCs usually appoint
Distributors or Brokers, who sell units on behalf of the fund. A broker usually
acts on behalf of several mutual funds simultaneously and may have several
sub-brokers under him for the purpose of distribution of units.

Management Education & Research Institute, New Delhi Page42

Management Education & Research Institute, New Delhi Page43

Worldwide, the mutual fund has a long and successful history. The popularity of
mutual fund has increased manifold. In developed financial market, like US
mutual funds have almost overtaken bank deposits and total assets of over US $
3 trillion.

In India, Mutual Fund industry started with the setting up of UTI in 1964. Public
sector banks and financial institution began to establish Mutual Funds in 1987.
The private sector and foreign institutions were allowed to set up Mutual Fund
in 1993.


A Mutual Fund is a trust that pools the savings of a number of investors who
share a common financial goal. The money thus collected is then invested in
capital market instruments such as shares, debentures and other securities. The
income earned through these investments and the capital appreciation realized is
shared by its unit holders in proportion to the number of units owned by them.
Thus a Mutual Fund is the most suitable investment for the common man as it
offers an opportunity to invest in a diversified, professionally managed basket of
securities at a relatively low cost.

Management Education & Research Institute, New Delhi Page44

Critical View About Mutual Fund

1. Portfolio Diversification:

Each investor in a fund is a part owner of all the funds assets, thus enabling
investor to hold a diversified investment portfolio even with a small amount of
investment, which would otherwise require big capital.

2. Professional Management:

Mutual Funds provide the services of experienced and skilled professionals,

backed by a dedicated investment research team that analyze the performance
and prospect of companies and selects suitable investments to achieve the
objectives of the scheme.

3. Diversification:

Mutual Fund invests in a number of companies across a broad cross-section of

industries and sectors. This diversification reduces the risk because all stock can
not go through a downtrend at the same time and in the same proportion. You
achieve this diversification through a mutual fund with powerless money that
you can do on your own.

4. Reduction of Transaction Cost:

The investors bear all the cost of investing such as brokerage or custody of
securities. When going through the fund investor has the benefit of economies
of scale; the funds pay lesser cost because of larger volumes, a benefit passed on
to its investors.

5. Liquidity:

By investing in Mutual Funds the investors can cash their investment by selling
their units to the fund if open-ended, or selling them in the stock market if the
fund is close ended.

6. Convenience & Flexibility:

Management Education & Research Institute, New Delhi Page45

Mutual Funds Companies offer investor to transfer their holding from one
scheme to other.

7. Tax Benefits:

The investors are totally exempt from paying any tax on the income they receive
from the Mutual Funds.
Investment up to 10000 in ELSS qualifies for tax rebate of 20%.

8. Regulatory oversight:

Mutual funds are subject to many government regulations that protect

investors from fraud.

9. Convenience:

You can usually buy mutual fund shares by mail, phone, or over the Internet.


1. No Control over Costs:

An investor in a mutual fund has no control over the overall cost of investing.
He/she has to pay investment management fees as long as he/she remains with
the fund. Fees are payable even while the value of the investment may be

2. No Tailor made Portfolios:

Investors who invest on their own can build their own portfolios of shares and
bonds and other securities. Investing through fund means he/she delegates this
decision to the fund managers.

3. Managing a Portfolio of Funds:

Availability of a large number of funds can actually mean too much choice for
the investor. He/she may again need advice on how to select a fund to achieve
his/her objectives, quite similar to the situation when he/she has to select
individual shares or bonds to invest in.

Management Education & Research Institute, New Delhi Page46

4. Entry and Exit Cost:

When large bodies like a fund invest in shares, the concentrated buying or
selling often result in adverse price movements i.e. at the time of buying, fund
has to pay high and vise-versa. But now SEBI has confirmed that no AMC can
charge entry load on new mutual fund.

5. No Guarantees:

No investment is risk free. If the entire stock market declines in value, the value
of mutual fund shares will go down as well, no matter how balanced the
portfolio. Investors encounter fewer risks when they invest in mutual funds than
when they buy and sell stocks on their own. However, anyone who invests
through a mutual fund runs the risk of losing money.

Management Education & Research Institute, New Delhi Page47


[Mutual Fund Cycle]

[Source: amfiindia.com]

From above cycle, it can be observed clearly that how the money from the
investors flow and they get returns out of it. With a very small amount of fund,
investors pool their money with fund managers.

After studying the market, the fund manager invests money of the investors in
various securities like shares, bonds, debentures, government securities etc. to
achieve goal of the investors.

With ups and downs in the market returns are generated and they are passed on
to the investors in form of dividend or capital gain or lost. The above cycle is
very clear and also very effective.

The fund manager while investing on behalf of investors takes into

consideration various factors like time, risk; amount etc. so that he/she can make
proper investment decision.

Management Education & Research Institute, New Delhi Page48

Types of Mutual Fund

Types of Mutual Fund

By Objective

Equity Fund Debt Fund Balanced Fund Money Market Gilt Fund

By Duration

Open Ended Close Ended Interval

By Load

Load Fund No Load Fund

Other Fund

Tax Saving Index Fund Sector Fund Comm. Fund Offshore

[Fig.10: Types of Mutual Funds]

Management Education & Research Institute, New Delhi Page49

1. By objective:
Investment goals vary from person to person. While somebody wants security,
others might give more weightage to returns alone. Somebody else might want
to plan for his child’s education while somebody might be saving for the
proverbial rainy day or even life after retirement. With objectives defying any
range, it is obvious that the products required will vary as well. So, Mutual
funds can be classified based on the objectives of the investor.

(a). Equity Fund:

Equity funds invest a major portion of their corpus in equity shares issued by
companies. NAV of equity funds are fluctuated by fluctuation in price of shares
that it holds. So there is a high risk as well as high return in equity fund.
Potential to earn in such funds is higher when they are invested for long term.

The leading example of such funds are

Prudential ICICI Growth Plan,

Tata Pure Equity Fund,
Reliance Vision,
Franklin India Prima Fund etc.

(b). Debt Fund:

Debt funds invest in debt instruments debt instruments issued by governments,

private companies, banks and financial institutions. By investing in debt, these
funds target low risk and stable income investors. These funds are low risk low
return funds.

The leading examples are:

Birla Income Plus,

Principal Income Fund,
HDFC Income Fund,
UTI Bond Fund etc.

(c). Balanced Fund:

A balanced fund is one that has a portfolio comprising debt instruments as well
as preference and equity shares. The idea is to reduce volatility of funds, while

Management Education & Research Institute, New Delhi Page50

providing some upside for capital appreciation. They are best suitable for the
people looking for a combination for capital appreciation and regular income
and best time spend for such investment is more than 3 years.

The leading examples are

Prudential ICICI Balanced Fund,

Birla Balance Fund,
Franklin India Balance Fund,
Sundaram Balance Fund etc.

(d). Money Market Fund:

Money market funds invest in securities of a short-term nature, which generally

means securities of less than one-year maturity such as Treasury Bills issued by
governments, Certificates of deposit issued by banks and Commercial paper
issued by companies.

The major strength of money market funds are the liquidity and safety of
principal that the investors can normally expect from short term investments.
The leading examples are

Prudential ICICI Liquid Plan,

Templeton India Liquid Fund,
Grindlays Cash Fund etc.

(e). Gilt Fund:

These funds are sort of government funds wherein the investments are made in
debt instrument of government, which carry no risk of non payment of interest
as the RBI manages the payment of interest and principal on the investments.
These funds are best suited for regular income and long term investment

The leading examples are

Prudential ICICI Gilt Fund,

Tata Gilt Securities Fund,
Templton India Government Securities Fund etc.

Management Education & Research Institute, New Delhi Page51

2. By Duration:

(a). Open-ended Fund:

An open ended fund is one that is available for subscription and repurchase on a
continuous basis. These schemes do not have a fixed maturity period. Investors
can conveniently buy and sell units at NAV related prices which are declared
daily basis. The key feature of this fund is liquidity.

(b). Close-ended Fund:

A close ended fund has a stipulated maturity period e.g. 5-7 years. The fund is
open for subscription only during a specified period at the time of launch of the
scheme. Investors can invest in the scheme at the time of initial public issue and
thereafter they can buy or sell units on stock exchange where the units are listed
at NAV. These mutual fund schemes disclose NAV generally on weekly basis.

(c). Interval Fund:

Interval funds combine the features of open-ended and close-ended schemes.

They are open for sale or redemption during pre determined intervals at NAV
related prices.

Risk Return Grid

Benefits offered by
Tolerance/Return Focus Suitable Products
Bank/ Company FD, Debt Liquidity, Better Post-
Low Debt
based Funds Tax returns
Partially Balanced Funds, Some Liquidity, Better Post-
Debt, Diversified Equity Funds Tax returns, Better
Partially and some debt Funds, Mix Management,
Equity of shares and Fixed Deposits Diversification
Capital Market, Equity
Expertise in stock
High Equity Funds (Diversified as well
picking, Liquidity, Tax
as Sector)
free dividends

[Table11: Risk Return Grid of various MF]

Management Education & Research Institute, New Delhi Page52

3. By Load:

(a). Load Fund:

Marketing of new mutual fund scheme involves initial expenses. These initial
expenses may be recovered from the investors by entry or exit load.
But now SEBI has confirmed that AMC can not charge entry load on new
mutual fund.

(i). Entry Load or Front-end Load:

If initial expenses recovered from investors at the time of investor’s entry into
the fund, by deducting a specific amount from his initial contribution it is called
Entry Load. But now it has been banned by SEBI.

(ii). Exit Load or Back-end Load:

If initial expenses recovered at the time of the investor’s exit from the scheme,
by deducting a specified amount from the redemption proceeds payable to the
investor it is called exit load.

(iii). Deferred Load:

The load amount charged to the scheme over a period of time is called a
deferred load.

(b). No Load Fund:

Funds that don’t charge entry, exit, or deferred load or any other charges for
sales expenses are called no load funds.

• Now, generally all Mutual Fund companies charge 2 to 2.5%

entry load on equity fund.

• Generally there is no exit load on equity and sectoral funds

to maintain liquidity of that funds.

• Generally there is no entry load on gilt scheme and income


• There is 0.25 to 1% exit load on gilt and income fund if

investors exit from fund before specified time which is generally 3 to 6 months.
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4. Other types of fund:

(a) Tax Saving Funds:

These schemes offer tax rebates to the investors under specific provisions of the
Income Tax Act, 1961 as the Government offers tax incentives for investment in
specified avenues. E.g. Equity Linked Saving Scheme (ELSS). Pension schemes
also offer tax benefits.

The leading examples are

Prudential ICICI Tax Plan,

Templeton India Pension Plan,
Franklin India Taxshield etc.

(b) Index Funds:

Index Funds replicate the portfolio of a particular index such as the BSE
Sensitive index, S&P NSE 50 index (Nifty), etc. These schemes invest in the
securities in the same weightage comprising of an index. NAV of such funds are
changed accordance with the change in the index.

The leading examples are

Birla Index Fund,

HDFC Index Fund,
Prudential ICICI Index Fund,
UTI Index Fund etc.

(C) Sector Funds:

These are the funds which invest in the securities of only those sectors or
industries as specified in the offer documents. E.g. Pharmaceuticals, Software,
Petroleum etc. These types of funds are more risky compared to diversified

The leading examples are

Birla IT Fund,
Management Education & Research Institute, New Delhi Page55
Franklin India Pharma Fund etc.

(d) Commodity Funds:

Commodity funds invest into the different commodities directly or through

shares of commodity companies. E.g. Commodity fund invest in gold or shares
of gold mines. Commodity funds have not yet developed in India.

(e) Off Shore Funds:

These funds invest in equities in one or more foreign countries there by

achieving diversification across the country’s borders. However they also have
additional risks such as the foreign exchange rate risk and their performance
depends on the economic conditions of the countries they invest in.

Management Education & Research Institute, New Delhi Page56


Any activity done without an objective in a mind cannot turn fruitful. An

objective provides a specific direction to an activity. Objectives may range from
very general to very specific, but they should be clear enough to point out with
reasonable accuracy what researcher wants to achieve through the study and
how it will be helpful to the decision maker in solving the problem.

The objective of any research is basically divided into two categories.

Primary Objective:

To find out market potential of Karvy Investor Service Ltd.

Secondary Objectives:

Following are secondary objectives.

• To assess an awareness of mutual funds in Delhi.

• To find out how many people are interested in dealing of
mutual fund.

Management Education & Research Institute, New Delhi Page57


1. Research Design:

A research design is a pattern or an outline of a research project’s working. It is

a statement of only the essential elements of a study, those that provide the basic
guidelines for the details of the project. It comprises a series of prior decision
that taken together provide master plans for executing a research projects.

A research design serves as a bridge between what has been established i.e., the
research objectives and what is to be done, in conduct of the study to relish
those objectives. If there were no research design, the research would have only
foggy notions as about what is to be done.

I have used ‘Exploratory Type’. The research is of both qualitative as well as

quantitative type.

2. Unit of Analysis:

Middle class, Upper Middle class and HNIs people.

Characteristics of interest:

• People’s knowledge about Mutual Fund

• People’s knowledge about Karvy
• People’s interest in getting knowledge of Mutual Fund
• People’s willingness to deal in Mutual Fund with Karvy

3. Sources of Data:

a. Primary Source:

The primary data is collected using sampling method and by survey using

b. Secondary Source:

Management Education & Research Institute, New Delhi Page58

Secondary data includes information regarding present market scenario,
Information regarding Mutual Funds and competitors are collected by Internet,
Magazines and News papers and books.

4. Sample Planning:

Sample Size: 50 units

Sample Extent: Delhi

Sampling Design:

A Sample Design is a definite plan for obtaining a sample from a given

population. It refers to the technique or method the researcher would adopt in
selecting items for the sample.

I have used both ‘Convenience Sampling Method’.

5. Data Collection Method:

I have used ‘Survey Method’ to collect data. I have collected data using

Questionnaire Plan

I have used ‘Structured Questionnaire’ for gathering the required data through
contacting respondent personally.

Type of Information:

I have collected Fact, Awareness, Attitude, Future action plan and reason using

Type of Questions:

‘Close-ended questions’ of ‘Dichotomous’ and ‘Multiple Choice’ type are

asked in the questionnaire for data collection.

6. Data Analysis & Interpretation:

Management Education & Research Institute, New Delhi Page59
Data Analysis is based on the data collected by way of Questionnaires. From the
collected data findings are extracted. The data is tabulated and frequency
distribution chart is prepared.

Management Education & Research Institute, New Delhi Page60


1. Percentage of investors

Inference : Graph shows that 30% of people are investing in mutual fund.
That mean it is a good opportunity for the company as they can grap the
rest unaware people to being them investor in mutual fund by making
them aware about mutual fund.

2. Reason for Investment

Inference : Graph shows that 50% (above among all) people

are interested in investing in mutual fund. That mean company
can increase investors for investing in mutual fund by giving
them equity based mutual fund.

Management Education & Research Institute, New Delhi Page61

3. Frequency of Investment

Inference: Graph shows that 40% people are investing in mutual fund
once a month. So company suggests people about SIP and company
suggest rest of the people about the benefits of SIP.

4. Awareness about scheme offered for Mutual Fund

Inference: Graph shows that 66% of people have few knowledge about
mutual fund and 10 % of people do not know about mutual fund. That
means company can make fully aware about mutual fund to people and
tell them benefit associated with mutual fund so that they will invest in
Mutual fund.

5. Awareness of tax advantage by Mutual Fund

Management Education & Research Institute, New Delhi Page62
Inference: Graph shows that 38 % of people don’t know about tax
benefit associated with mutual fund and 34 % of people are not sure
about tax benefit through mutual fund. This is the good opportunity
for company to increase investors of mutual fund by making aware
them tax benefit associated with mutual fund in such schemes like ELSS.

6. External advisor for Investors

Inference: Graph shows that 38 % of people invest in mutual fund

on the suggestion of their friends. So they are potential investors for
the company. Company can take care of these investors by suggest
them to invest on professional advisory.

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7. Types of Mutual Funds in which they invest

Inference: Graph shows that most of the people (58 %)

invest in equity based mutual funds. They are risk taker.
Company can take care of these investors by suggesting
them balanced and debts funds.

8. Why they are not investing in mutual funds.

Inference: Graph shows that 48% of people are not investing in

Mutual fund because of bitter past experience. 14% have not knowledge
about mutual funds. 22 % do not believe on this service.
6 % are not able to select the best scheme for them.Company assumes
that these investors have lack of advisory. So company should suggest
them for investing on basis of professional advisor.

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9. People those interested to know more about mutual fund.

Inference: Graph shows that 86 % of people are interested to know

more about mutual funds. This is the great opportunity for the
company to increase the investors by making them aware about
mutual funds and telling them benefits associated with mutual funds.

Management Education & Research Institute, New Delhi Page65


• Due to limitation of time and cost constrains a sample size of

only 50 respondents are chosen.

• Data Analysis and interpretation done may not be that strong

due to small sample and ‘Convenience Sampling Method’.

• The sample extent for research is only Delhi.

• Some of the respondents may be biased in giving responses.

• My inexperience in research area might have affected results.

Management Education & Research Institute, New Delhi Page66


Corporate advisory services

Merchant bankers offer customised solutions to solve the financial problems of

their clients. Merchant bankers study the working capital practices that exist
within the company and suggest alternative policies. They also advise the
company on rehabilitation and turnaround strategies, which would help
companies to recover from their current position. They also provide advice on
appropriate risk management strategies.

Loan syndication

Arrangement of loans for clients, by analysing their cash flow pattern, so that
the terms of borrowing meet the client’s cash requirements and offer assistance
in loan documentation procedures.


Total number of all holdings held by a company is called portfolio. The

portfolio mix is aimed at spreading the risk over different sectors. It consists of
all assets of company.


Net Asset Value is the current market worth of the mutual fund shares. It is
calculated daily by taking the funds total asset securities, cash and any accrued
earning deducting liabilities, and dividing the reminder by the number of shares


The principal function of a depository is to dematerialize securities and enable

their transactions in book-entry form. A depository established under the
Depositories Act can provide any service connected with recording of allotment
of securities or transfer of ownership of securities in the record of a depository.

Management Education & Research Institute, New Delhi Page67

Capital gain

The profit made from selling shares, mutual funds etc.


Abbreviation for Initial Public Offering. Generally associated with admission to

listing of the share capital on the stock exchange.

Management Education & Research Institute, New Delhi Page68


1. Which are the investment tools you invest in?

[] Bank Fixed Deposit
[] RBI Bonds
[] Mutual Funds
[] Equities
[] others (Please specify)

Re2. You primarily invest for (Rank according to your preference)

[ ] Returns
[ ] Liquidity
[ ] Savings
[ ] Tax Benefits

4. Rank the investments options according to you preference of

[ ] Bank Fixed Deposit
[ ] RBI Bonds
[ ] Mutual Funds
[ ] Equities
[ ] Any other (Please specify)

5. What is the frequency of you investments?

[] Once a Month
[] Once in 6 Months
[] Once a Year

6. Do you invest in Mutual Funds?

[ ] Yes
[ ] No

7. If the answer to question 9 is "Yes"

a.)Are you aware of the various schemes offered by Mutual Funds?

[ ] Yes
[ ] No
[ ] Few

b.)Do you know that you can get Tax Advantages by investing in Mutual
[ ] Yes
[ ] No
[] Not Sure

Management Education & Research Institute, New Delhi Page69

c.)On whose external advice do you invest?
[ ] Bank
[ ] Distributor
[ ] Agents
[ ] Direct investments
[ ] C.A.
d.)Which types of Mutual Fund do you invest in?
[ ] Debt
[ ] Equities
[ ] Balanced

8.If the answer to question 9 is "No"

You do not invest in Mutual Fund because of (you may give multiple

[] Bitter past experience

[] Lack of Knowledge
[] Lack of confidence in service being provided
[] Difficulty in selection of schemes
[] In-efficient investment advisors

9. If Mutual Fund offer you Steady Returns, Tax Benefits, Liquidity,

Diversification of Portfolio, Lesser Risk would consider it as an investment
option in the future for you?
[ ] Yes
[ ] No
[ ] May be

10. Would you be interested to know more about Mutual Funds?

[ ] Yes
[ ] No

Name : ……………..……………….

Age :……………………………….


Mobile No. :……………………………...

Management Education & Research Institute, New Delhi Page70


1. www.mutualfundsindia.com
2. www.amfiindia.com
3. www.themanagementor.com
4. www.dewb-vc.com
5. www.karvy.com
6. www.indiacorporateadvisor.com
7. www.nsdl.co.in
8. www.incometaxdelhi.nic.in
9. www.incometaxindia.gov.in
10. D.C.Anjaria & Dhaivat Anjaria, “AMFI Workbook”, Ed. – 2 (Association of
Mutual Funds in India)

Management Education & Research Institute, New Delhi Page71