Summer Training Report

On
ANALYTICAL STUDY OF MUTUAL FUNDS
UNDERTAKEN AT

“INDIA INFOLINE FINANCE Ltd.”

I
n the partial fulfillment of Requirement for the award of Post Graduate Degree of
MASTERS OF BUSINESS ADMINISTRATION

SUBMITTED TO : SUMITTED BY :
Dept. of Management studies Priya
MBA 2th sem
20022020

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 TO WHOM IT MY CONCERN

This is certify the PRIYA student of BHAGAT PHOOL SINGH MAHILA

VISHWAVIDYALAYA has done six weeks training and project work under
by guidance and supervision towards the fulfillment of the award of
MASTER OF BUSINESS ADMINISTRATION.

ACKNOWLEDGEMENT

I wish to record my gratitude to all the persons with whom I interacted and
have contributed significantly for the completion of the project. It is very
difficult to put their names individually but their contribution cannot be

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underestimated without their help and co-ordination, this project would not
have been possible.

I take this opportunity to extend my heartiest thanks to Mr. Yogesh sharma

(Branch Manager) for providing me an opportunity to undergo training in
their esteemed organization.

I acknowledge my deepest sense of gratitude to Mr Yogesh Sharma who

provided me a new sight in to the project and kept me motivated and guided
constantly throughout my project period. I am also thankful for their
valuable time and helped me in collecting and analyzing data.

Besides, all the official and staff deserve my heartiest thanks for providing
co-cordial and made me feel like home.

DECLARATION

I Priya Roll no. 20022020 Class MBA Final year(2th sem) of the BPSMV
University Khanpur kalan, hereby declare that the Summer Training
Report entitled ANALYTICAL STUDY OF MUTUAL FUNDS is an
original work and the same has not been submitted to any other Institute
for the award of any other degree.

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 Priya

PREFACE

Theoretical & Practical Knowledge are complementary to each other. So, in

the other to acquaint themselves about management practices they are
required to undergo training. The purpose of Master of Business
Administration course is to provide and to promote future managers to the
country. In this course, there is the 6-weeks Practical training with some
business organization. So that the students can observe the application of
this course in real world. The main objective behind this 6-weeks training is
to apply the theory of their course into practice, which helps in the students
in the future.

I was engaged by INDIA INFOLINE FINANCE LIMITED as a

summer trainee. My project is on Depository Participant.

CONTENTS

ACKNOWLEDGEMENT
DECLERATION
PREFACE

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COMPANY PROFILE
 OVERVIEW……………………………………………………
 HISTORY………………………………………………………
 COMPANY DETAILS………………………………………….
 DIRECTOR DETAILS………………………………………….

MUTUAL FUNDS CONCEPT

 DEFINITION …………………………………………………...
 KINDS…………………………………………………………
 ADVANTAGES……………………………………………
 DISADVANTAGES……………………………………………

DEMATERIALIZATION
DEFINITION………………………………………………………………
FEATURES OF DEMATERILIZATION.....................................................
PROCEDURE………………………………………………………………
BENEFITS OF HAVING A DMAT ACCOUNT………………………….
DEMATERIALIZATION CHARGES……………………………………..

DP SERVICES
DEFINITION………………………………………………………………
BENEFITS OF DP………………………………………………………….
QUALITY
POLICY………………………………………………………...
QUALITY OBJECTIVE……………………………………………………

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METHODOLOGY
 RESEARCH DESIGN………………………………………………
 DATA COLLECTION METHOD……………………………………
 SAMPLING…………………………………………………………..
FIELD WORK ANALYSIS AND INTERPRETATION
DATA ANALYSIS………………………………………………………
LIMITATIONS…………………………………………………………..
FINDINGS………………………………………………………………..
RECOMMENDATION & CONCLUSION…………………………….

OVERVIEW

INDIA INFOLINE FINANCE LTD., is a premier integrated financial

services provider, and ranked among the top five in the country in all its
business segments, services over 16 million individual investors in various
capacities, and provides investor services to over 300 corporate, comprising

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such as Stock broking, Depository Participants, Distribution of Financial
products- Mutual Funds, bonds, fixed deposit, equities, Insurance Broking,
Commodities Broking, Personal Finance Advisory Services, Merchant
banking & Corporate Finance, placement of equity, IPOs, among others.
India Infoline Finance Ltd. has a professional management team and ranks
among the best in technology, operations and research of various industrial
segments.
History

IIFL was founded on Oct 17, 1995 by Nirmal Jain , a 1986 graduate
from University of Mumbai and an alumnus of Indian Institute of
Management, Ahmedabad. Jain is among the few successful entrepreneurs
post the economic liberalisation era in India ushered by PV Narasimha
Rao.] Jain was previously employed with Hindustan Lever Limited. The
company was founded as Probity Research and Services Private Limited
which provided research on the Indian economy, businesses and corporates.
The name was later changed to India Infoline Limited.
A few years into the business, the organisation found itself with clients
which included research organisations, banks and corporates. They then
began launching their research products to become more noticeable in the
market. In the meanwhile, the dotcom revolution was beginning to take
place in India. The website was created in 1999.
Taking the business one step ahead this group of consultants opened a
trading portal – www.5paisa.com –in 2000 thus moved into the business of
being a full service broking agency. During this time they widened their
distribution network
In 2001, the Indian dotcom industry saw a downfall. During this time,
sustaining became tough. The organisation then decided to tie-up with
leading Life Insurance company ICICI Prudential, thus putting to use its
distribution network and becoming India's first corporate agent for
insurance.
Today, IIFL Holdings Limited (Bloomberg Code: IIFL IN, NSE: IIFL, BSE:
532636) is India’s leading integrated financial services group with diverse

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operating businesses, mainly Non Banking and Housing Finance, Wealth
and Asset Management, Broking, Financial Product Distribution, Investment
Banking, Institutional Equities, Realty and Property Advisory Services.
IIFL Holdings has a consolidated net-worth of over Rs 45 billion; global
presence in Canada, United States, UK, Singapore, Hong Kong, Switzerland,
Mauritius, and UAE; An employee workforce of over 10,500, a strong
network of over 2,250 service locations spread across India, over Rs 233
billion loan assets under management; over Rs 1,250 bn wealth assets under
advice, management and distribution; over 500 stocks under research and
more than 300 of the world’s top institutional investors relying on IIFL's
research.
.

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 COMPANY DETAILS

DIRECTOR DETAILS

CIN U67120MH2004PLC147365

Company Name INDIA INFOLINE FINANCE LIMITED.

Company status Active

Roc Roc- Mumbai

Registration no. 147365

Company Category Company limited by shares

Company sub Category Non-govt. company

Class of company Public

Date of incorporation 07 July 2004

Age of company 13 Years,11month,19days

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 Mr. Jain
Chairman, IIFL Holdings Limited

Mr. Nirmal Jain is the founder and Chairman of IIFL Holdings

Limited. He is a PGDM (Post Graduate Diploma in Management)
from IIM (Indian Institute of Management) Ahmedabad, a Chartered
Accountant and a rank-holder Cost Accountant. His professional
track record is equally outstanding. He started his career in 1989 with
Hindustan Lever Limited, the Indian arm of Unilever. During his
stint with Hindustan Lever, he handled a variety of responsibilities,
including export and trading in agro-commodities. He contributed
immensely towards the rapid and profitable growth of Hindustan
Lever's commodity export business, which was then the nation's as
well as the Company's top priority. He founded Probity Research and
Services Pvt. Ltd. (later re-christened India Infoline) in 1995;
perhaps the first independent equity research Company in India. His
work set new standards for equity research in India. Mr. Jain was one
of the first entrepreneurs in India to seize the internet opportunity,
with the launch of www.indiainfoline.com in 1999. Under his
leadership, IIFL Holdings not only steered through the dotcom bust
and one of the worst stock market downtrends but also grew from
strength to strength.

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r. R Venkataraman
Ma

Mr. R. Venkataraman is a Co-Promoter and the Managing Director of

IIFL Holdings Limited. Before joining the Board of IIFL Holdings
Limited in July 1999, he has held senior managerial positions in
ICICI Limited, including ICICI Securities Limited, their investment
banking joint venture with J P Morgan of US, BZW and Taib Capital
Corporation Limited. He has also served as the Assistant Vice
President of G E Capital Services India Limited in their private
equity division and possesses diverse experience of more than 22
years in the financial services sector. Mr. Venkataraman holds a
Bachelor in Technology (B.Tech) in Electronics and Electrical
Communications Engineering from the renowned Indian Institute of
Technology (IIT), Kharagpur and a Post Graduate Diploma in
Management from the Indian Institute of Management (IIM),
Bangalore.

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 A K Purwar
Independent Director

Former Chairman, State Bank of India Mr. Purwar was the Chairman
of State Bank of India, the largest bank in the country from
November 2002 to May 2006 and held several important and critical
positions like Managing Director of State Bank of Patiala, Chief
Executive Officer of the Tokyo branch, covering almost the entire
range of commercial banking operations in his illustrious career at
the bank from 1968 to 2006. He is currently the Chairman of
IndiaVenture Advisors Private Limited, the equity fund sponsored by
the Piramal Group and independent director in many listed companies
in India including Engineers India Limited, Reliance
Communications Limited, among others.

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 C Ratnaswami
Non-Executive Director

MD of Hamblin Watsa, subsidiary of Fairfax Mr. Chandran

Ratnaswami is a Managing Director of Hamblin Watsa Investment
Counsel Limited, a wholly-owned investment management company
of Fairfax Financial Holdings Limited, Canada. Mr. Ratnaswami
serves on the Boards of ICICI Lombard General Insurance Company
Limited and Fairbridge Capital in India, Ridley Inc. in the United
States and Zoomermedia Limited in Toronto, Canada. He is also the
Chairman of the Board of Trustees of Lansing United Church in
Toronto, Canada.

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 Geeta Mathur
Independent Director

CFO of Helpage India Geeta Mathur specializes in the area of

project, corporate and structured finance, treasury, investor relations
and strategic planning. She started her career with ICICI, where she
worked for over 10 years in the field of project, corporate and
structured finance as well as represented ICICI on the Board of
reputed companies such as Eicher Motors, Siel Limited etc. She then
worked in various capacities in large organizations such as IBM and
Emaar MGF across areas of Corporate Finance, Treasury, Risk
Management and Investor relations. She is currently CFO of Helpage
India, one of the largest and oldest NPO’s in India working for the
cause of the elderly. Ms. Mathur is a certified Chartered Accountant.

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 Kranti Sinha
Independent Director

Former CEO of LIC Housing Finance Mr. Kranti Sinha served as the
Director and Chief Executive of LIC Housing Finance Limited from
August 1998 to December 2002 and concurrently as the Managing
Director of LICHFL Care Homes. He retired as the Executive
Director of LIC. He has also served as the Deputy President of the
Governing Council of Insurance Institute of India and as a member of
the Governing Council of National Insurance Academy, Pune apart
from various other such bodies. He is also an independent director on
the Board of Cinemax India Limited and Hindustan Motors Limited.

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 Nilesh Vikamsey
Independent Director

Senior Partner at Khimji Kunverji & Co Mr. Nilesh Vikamsey is a

Senior Partner at M/s Khimji Kunverji & Co., Chartered
Accountants, a member firm of HLB International, a worldwide
organisation of professional accounting firms and business advisers,
ranked amongst the top 12 accounting groups globally. Mr. Vikamsey
is an elected member of the Central Council of Institute of Chartered
Accountant of India (ICAI). He is also on the Board of a number of
companies like Federal Bank Limited, and SBI Life Insurance
Company Limited, among others.

What is a 'Mutual Fund'

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A mutual fund is an investment vehicle made up of a pool of moneys
collected from many investors for the purpose of investing in securities such
as stocks, bonds, money market instruments and other assets. Mutual funds
are operated by professional money managers, who allocate the fund's
investments and attempt to produce capital gains and/orincome for the
fund's investors. A mutual fund's portfolio is structured and maintained to
match the investment objectives stated in its prospectus.

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 BREAKING DOWN 'Mutual Fund'

Mutual funds give small or individual investors access to professionally

managed portfolios of equities, bonds and other securities.
Each shareholder, therefore, participates proportionally in the gains or losses
of the fund. Mutual funds invest in a wide amount of securities, and
performance is usually tracked as the change in the total market cap of the
fund, derived by aggregating performance of the underlying investments.

Mutual fund units, or shares, can typically be purchased or redeemed as

needed at the fund's current net asset value (NAV) per share, which is
sometimes expressed as NAVPS. A fund's NAV is derived by dividing the
total value of the securities in the portfolio by the total amount of shares
outstanding.

Kinds of Mutual Funds

1. Money market funds

These funds invest in short-term fixed income securities such as government
bonds, treasury bills, bankers’ acceptances, commercial paper and
certificates of deposit. They are generally a safer investment, but with a
lower potential return then other types of mutual funds. Canadian money
market funds try to keep their net asset value (NAV) stable at $10 per
security.

2. Fixed income funds

These funds buy investments that pay a fixed rate of return like government
bonds, investment-grade corporate bonds and high-yield corporate bonds.
They aim to have money coming into the fund on a regular basis, mostly
through interest that the fund earns. High-yield corporate bond funds are
generally riskier than funds that hold government and investment-grade
bonds.
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3. Equity funds
These funds invest in stocks. These funds aim to grow faster than money
market or fixed income funds, so there is usually a higher risk that you could
lose money. You can choose from different types of equity funds including
those that specialize in growth stocks (which don’t usually pay dividends),
income funds (which hold stocks that pay large dividends), value stocks,
large-cap stocks, mid-cap stocks, small-cap stocks, or combinations of these.

4. Balanced funds
These funds invest in a mix of equities and fixed income securities. They try
to balance the aim of achieving higher

returns against the risk of losing money. Most of these funds follow a
formula to split money among the different types of investments. They tend
to have more risk than fixed income funds, but less risk than pure equity
funds. Aggressive funds hold more equities and fewer bonds, while
conservative funds hold fewer equities relative to bonds.

5. Index funds
These funds aim to track the performance of a specific index such as
the S&P/TSX Composite Index. The value of the mutual fund will go up or
down as the index goes up or down. Index funds typically have lower costs
than actively managed mutual funds because the portfolio manager doesn’t
have to do as much research or make as many investment decisions.

6. Specialty funds
These funds focus on specialized mandates such as real estate, commodities
or socially responsible investing. For example, a socially responsible fund
may invest in companies that support environmental stewardship, human
rights and diversity, and may avoid companies involved in alcohol, tobacco,
gambling, weapons and the military.

7. Fund-of-funds
These funds invest in other funds. Similar to balanced funds, they try
to make asset allocation and diversification easier for the investor. The MER
for fund-of-funds tend to be higher than stand-alone mutual funds

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 Early history

The first modern investment funds (the precursor of today's mutual funds)

were established in the Dutch Republic. In response to the financial crisis of
1772–1773, Amsterdam-based businessman Abraham (or Adriaan) van
Ketwich formed a trust named Eendragt Maakt Magt ("unity creates
strength"). His aim was to provide small investors with an opportunity to
diversify.[1][2]
Mutual funds were introduced to the United States in the 1890s. Early U.S.
funds were generally closed-end funds with a fixed number of shares that
often traded at prices above the portfolio net asset value. The first open-end
mutual fund with redeemable shares was established on March 21, 1924 as
the Massachusetts Investors Trust. (It is still in existence today and is now
managed by MFS Investment Management.)
In the United States, closed-end funds remained more popular than open-end
funds throughout the 1920s. In 1929, open-end funds accounted for only 5%
of the industry's $27 billion in total assets.
After the Wall Street Crash of 1929, the U.S. Congress passed a series of
acts regulating the securities markets in general and mutual funds in
particular.

 The Securities Act of 1933 requires that all investments sold to the

public, including mutual funds, be registered with the SEC and that they
provide prospective investors with a prospectus that discloses essential
facts about the investment.
 The Securities and Exchange Act of 1934 requires that issuers of
securities, including mutual funds, report regularly to their investors; this
act also created the Securities and Exchange Commission, which is the
principal regulator of mutual funds.
 The Revenue Act of 1936 established guidelines for the taxation of
mutual funds.
 The Investment Company Act of 1940 established rules specifically
governing mutual funds.
These new regulations encouraged the development of open-end mutual
funds (as opposed to closed-end funds).

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Growth in the U.S. mutual fund industry remained limited until the 1950s,
when confidence in the stock market returned. By 1970, there were
approximately 360 funds with $48 billion in assets.[3]
The introduction of money market funds in the high interest rate
environment of the late 1970s boosted industry growth dramatically. The
first retail index fund, First Index Investment Trust, was formed in 1976
by The Vanguard Group, headed by John Bogle; it is now called the
"Vanguard 500 Index Fund" and is one of the world's largest mutual funds.
Fund industry growth continued into the 1980s and 1990s.
According to Pozen and Hamacher, growth was the result of three factors:

1. A bull market for both stocks and bonds,

2. New product introductions (including funds based on municipal
bonds, various industry sectors, international funds, and target date
funds) and
3. Wider distribution of fund shares, including through employee-
directed retirement accounts such as 401(k) and other defined
contribution plans and individual retirement accounts (IRAs.) Among
the new distribution channels were retirement plans. Mutual funds are
now the preferred investment option in certain types of fast-growing
retirement plans, specifically in 401(k) and other defined contribution
plans and in individual retirement accounts (IRAs), all of which
surged in popularity in the 1980s.[4]
In 2003, the mutual fund industry was involved in a scandal involving
unequal treatment of fund shareholders. Some fund management companies
allowed favored investors to engage in late trading, which is illegal,
or market timing, which is a practice prohibited by fund policy. The scandal
was initially discovered by former New York Attorney General Eliot
Spitzer and led to a significant increase in regulation.
Total mutual fund assets fell in 2008 as a result of the financial crisis of
2007–2008.

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 Mutual funds today

At the end of 2016, mutual fund assets worldwide were $40.4 trillion,

according to the Investment Company Institute. [5] The countries with the
largest mutual fund industries are:

1. United States: $18.9 trillion

2. Luxembourg: $3.9 trillion
3. Ireland: $2.2 trillion
4. Germany: $1.9 trillion
5. France: $1.9 trillion
6. Australia: $1.6 trillion
7. United Kingdom: $1.5 trillion
8. Japan: $1.5 trillion
9. China: $1.3 trillion
10.Brazil: $1.1 trillion
In the United States, mutual funds play an important role in U.S. household
finances. At the end of 2016, 22% of household financial assets were held in
mutual funds. Their role in retirement savings was even more significant,
since mutual funds accounted for roughly half of the assets in individual
retirement accounts, 401(k)s and other similar retirement plans. [6] In total,
mutual funds are large investors in stocks and bonds.
Luxembourg and Ireland are the primary jurisdictions for the registration
of UCITS funds. These funds may be sold throughout the European Union
and in other countries that have adopted mutual recognition regimes.

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 Advantages of Mutual Funds

.Diversification: Diversification, or the mixing of investments and assets

within a portfolio to reduce risk, is one of the advantages to investing in
mutual funds. Buying individual company stocks in retail and offsetting
them with industrial sector stocks, for example, offers some diversification.
But a truly diversified portfolio has securities with
different capitalizations and industries, and bonds with
varying maturities and issuers. Buying a mutual fund can achieve
diversification cheaper and faster than through buying individual securities.

Economies of Scale: Mutual funds also provide economies of scale. Buying

one spares the investor of the numerous commission charges needed to
create a diversified portfolio. Buying only one security at a time leads to
large transaction fees, which will eat up a good chunk of the investment.
Also, the $100 to $200 an individual investor might be able to afford is
usually not enough to buy a round lot of a stock, but it will buy many mutual
fund shares. The smaller denominations of mutual funds allow investors to
take advantage of dollar cost averaging.

Easy Access: Trading on the major stock exchanges, mutual funds can be

bought and sold with relative ease, making them highly liquid investments.
And, when it comes to certain types of assets, like foreign equities or
exotic commodities, mutual funds are often the most feasible way – in fact,
sometimes the only way – for individual investors to participate.

Professional Management: Most private, non-institutional money

managers deal only with high net worth individuals – people with six figures
(at least) to invest. But mutual funds are run by managers, who spend their
days researching securities and devising investment strategies. So these
funds provide a low-cost way for individual investors to experience (and
hopefully benefit from) professional money management.

Individual-Oriented: All these factors make mutual funds an attractive

options for younger, novice and other individual investors who don't want to
actively manage their money: They offer high liquidity; they are relatively
easy to understand; good diversification even if you do not have a lot of
money to spread around; and the potential for good growth. In fact, many
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Americans already invest in mutual funds through their 401(k) or 403(b)
plans. In fact, the overwhelming majority of money in employer-sponsored
retirement plans goes into mutual funds.

Style: Investors have the freedom to research and select from managers with
a variety of styles and management goals. For instance, a fund manager may
focus
on value investing, growth investing, developed markets, emerging markets,
income or macroeconomic investing, among many other styles. One
manager may also oversee funds that employ several different styles. 

Disadvantages of Mutual Funds

Fluctuating Returns: Like many other investments without a guaranteed
return, there is always the possibility that the value of your mutual fund
will depreciate. Equity mutual funds experience price fluctuations, along
with the stocks that make up the fund. The Federal Deposit Insurance
Corporation (FDIC) does not back up mutual fund investments, and there is
no guarantee of performance with any fund. Of course, almost every
investment carries risk.  But it's especially important for investors in money
market funds to know that, unlike their bank counterparts, these will not be
insured by the FDIC.

Cash: As you know already, mutual funds pool money from thousands of
investors, so every day people are putting money into the fund as well as
withdrawing it. To maintain the capacity to accommodate withdrawals,
funds typically have to keep a large portion of their portfolios in cash.
Having ample cash is great for liquidity, but money sitting around as cash is
not working for you and thus is not very advantageous.

Costs: Mutual funds provide investors with professional management, but it

comes at a cost – those expense ratios mentioned earlier. These fees reduce
the fund's overall payout, and they're assessed to mutual fund investors
regardless of the performance of the fund. As you can imagine, in years
when the fund doesn't make money, these fees only magnify losses.

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Diworsification: Many mutual fund investors tend to overcomplicate
matters – that is, they acquire too many funds that are highly related and, as
a result, don't get the risk-reducing benefits of diversification; in fact, they
have made their portfolio more exposed, a syndrome called diworsification.
At the other extreme, just because you own mutual funds doesn't mean you
are automatically diversified. For example, a fund that invests only in a
particular industry sector or region is still relatively risky.

Lack of Transparency: One thing that can lead to diworsification is the fact

that a fund's purpose or makeup isn't always clear. Fund advertisements can
guide investors down the wrong path. The Securities and Exchange
Commission (SEC) requires that funds have at least 80% of assets in the
particular type of investment implied in their names; how the remaining
assets are invested is up to the fund manager. However, the different
categories that qualify for the required 80% of the assets may be vague and
wide-ranging. A fund can therefore manipulate prospective investors via its
title: A fund that focuses narrowly on Congo stocks, for example, could be
sold with the grander title "International High-Tech Fund."

Evaluating Funds: Researching and comparing funds can be difficult.

Unlike stocks, mutual funds do not offer investors the opportunity to
compare the P/E ratio, sales growth, earnings per share, etc. A mutual fund's
net asset value gives investors the total value of the fund's portfolio,
less liabilities, but how do you know if one fund is better than another?

DEMATERIALIZATION

What is Dematerialization?

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Dematerialization (“Demat” in short form ) signifies conversion of a share
certificate from its physical form to electronic form for the same number of
holding which is credited to your demat account which you open with a
Depositor Participant (DP).

Dematerialization is a process by which the physical share certificates of an

investor are taken back by the company and an equivalent number of
securities are credited form atthe request of the investor. An investor will
have to first open an account with a Depository Participant and then request
for the Dematerialization of his share certificates through the Depository
Participant so that the Dematerialized holdings can be credited in the
account. This is very similar to opening a Bank Account.

Dematerialization of shares is optional and an investor can still hold shares

in physical form. However, he /she has to demat the shares if he /she wishes
to sell the same through the stock exchanges. Similarly, if an investor
purchases shares, he/she will get delivery of the shares in demat form.

FEATURES OF DMATERIALIZATION

 Holdings in only those securities that are admitted for

dematerialization by NSDL can be Dematerialized.
 Structure of holding in the securities should match with the account
structure of the depository account. If the shares are in the name of X
and Y it cannot be dematerialized in to the account of either X or Y

26
 alone. Further, if the shares are in the name of X first and Y second
and the account is in the name of Y first and X second, then these
shares cannot be dematerialized in this account. The dematerialization
process can be intimated only by X first and Y second and for this a
depository account will have to be opened in the name of X first and
Y second.
 Only those holding that are registered in the name of the account
holder can be dematerialized.
 Transfer cum demat scheme for some companies which have provided
for additional risk containment systems.
 Demat request received form client (registered owner ) with name of
matching exactly with the name appearing on the certificates merely
on account of initials not being spelt out fully or put after or prior to
the surname, can be processed. Provided the signature of the client on
the Dematerialization Request From (DRF) tallies with the specimen
signature available with the Issuers or its R & T agent.
 A client may, in the normal course, receive demat confirmation in
about 30 days from the date of submission of demat request to the DP.
 There are special processes for Securities issued by government of
India and simultaneous transmission and demat.

27
 PROCEDURE

 The client (registered owner ) will submit a request to the DP in the

Dematerialization Request Form for dematerialization, along with the
certificates of securities to be dematerialized. Before submission, the
client has to deface the certificates by writing “SURRENDERED FOR
DEMATERILISATION”.
 The DP will verify that the form is duly filled in and the number of
certificates number of securities and the security type (equity,
debenture etc.) are as given in the DRF. If the form and security count
is in order, the DP will issue and acknowledgement slip duly signed
and stamped, to the client.
 The DP will securities the form and the certificates. This security
involves the following:
o Verification of Client’s signature on the dematerialization
request with the specimen signature (the signature on the
account opening form.) If the signature differs, the DP should
ensure the identity of the client.
o Compare the names on DRF and certificates with the client
account.
o Paid up status
o ISIN
o Pari Passu Status
o Lock-in status
o Distinctive number

28
 In case the securities are not in order they are returned to the client
and acknowledgement is obtained. The DP will reject the request and
return the DRF and certificate in case:
o A single DRF is used to dematerialized securities of more than
one company.
o The certificates are mutilated, or they are defaced in such a
way that the material information is not readable. It may advise
the client to send the certificates to the Issuer/ R&T agent and
get new securities issued in lieu thereof.
o Part of the certificates pertaining to a single DRF is partly paid
up, the DP will reject the request and return the DRF along
with the certificates. The DP may advise the client to send
separate request for the fully paid-up and partly paid-up
securities.
o Part of the certificates pertaining to a single DRF is locked-in,
the DP will reject the request and return the DRF along with
the certificates to the client. The DP may advise the client to
send a separate request for the locked-in certificates. Also,
certificates locked-in for different reason should not be
submitted together with a single DRF.
 The DP will verify the nature of the security, its paripassu status with
reference to the list of ISIN codes available with it. The allotment of
ISIN must be verified at a second level. Wrong allocation may result
in avoidable losses to the clients. The ISIN is entered in the space
provided for it in the dematerialization request form.

29
 In case the securities are in order, the details of the request as
mentioned in the form are entered in the DPM (software provided by
NSDL to the DP )and a Dematerialization Request Number (DRN )
will be generated by the system.

 The DRN so generated is entered in the space provided for the

purpose in the dematerialization request form.
 A person other than the person who entered the data is expected to
verify details recorded for the DRN. The request is then released by
the DP which is forwarded electronically to DM (DM- Depository
Module, NSDL’ s software system) by DPM.
 The DM forwards the request to the issuer/ R&T agent electronically.
 The DP will fill the relevant portion viz., the authorization portion of
the demat request form.
 The DP will punch the certificates on the company name so that it
does not destroy any material information on the certificate.
 The DP will then dispatch the certificates along with the request form
and a covering letter to the issuer/R&T agent.
 The issuer/ R&T agent confirms acceptance of the request for
dematerialization in his system DPM (SHR ) and the same will be
forwarded to the DM.
 The DM will electronically authorize the creation of appropriate
credit balance in the client’s account.
 The DPM will credit the client’s account automatically.
 The DP must inform the client of the changes in the client’s account
following the confirmation of the request.

30
  The issuer/R&T may reject dematerialization request in some cases.
The issuer or its R&T agent will send an objection memo to the DP,
with or

Without DRF and security certificates depending upon the reason for
rejection. The DP has to remove reasons for objection within 15 days of
receiving the objection memo. If the DP fails to remove the objection within
15 days , the issuer on its R&T agent may reject the request and return DRF
and accompanying certificates to the DP. If the client requires, may generate
a new dematerialization request and send the securities again to issuer or its
R&T agent . No fresh request can be generated until the issuer or and its
R&T agent has rejected the earlier request and informed NSDL and the DP
about it.

31
 BENEFITS OF HAVING A DEMAT ACCOUNT

a) Trading in the share of the company is now under the compulsory

demat segment. With SEBI making demat mandatory on most of the
traded scripts, electronic transaction will be the only way everyone
will trade.
b) No stamp duty for transfer of securities in the electronic form. In case
of transfer of physical shares, stamp duty of 0.5 percent is payable on
the market value of share being transferred.
c) All risks associated with physical certificates such as delays, loss in
transit, theft, mutilation, bad deliveries, etc. eliminated. Your shares
can be kept in the “Frozen Mode” by your Depository Participants
under your specific instruction.
d) The concept of and “odd lot” in respect of dematerialized shares stand
abolished, i.e. in the demat mode, market lot becomes one share.
e) Dematerialization securities are most preferred by banks and other
financiers for providing credit facility against securities. Generally,
demat securities attract lower margin and lower rates of interest
compared to physical securities.
f) Even in the electronic mode of trading, the payment mechanism
(usually through a broker ) between the buyer and seller continues to
be as before. Also the usual brokerage charges would have to be
incurred. However, after the settlement, pay in and pay out are in the
same day for scrip less trading which mean you get your securities as
well as cash immediately.

32
 g) Shares bought or sold are transferred in your name on the very next
day of pay out. In case of physical shares, transfers of ownership takes
30 days or sometimes evern more.
h) No courier / postal charges for sending share certificates / transfer
deeds.
i) Facility for freezing /locking of investors accounts, which enables you
to make your account non-operational, for instance if you are abroad.
j) Facility to pledge and hypothecate your securities available.
k) As ate Depository System becomes popular, broker will be
increasingly reluctant to deal with physical shares

Dematerialization Charges

Schedule “A “ at Annexure “B “ of NSDL Bye Law had Prescribed

following charges:
1. Account Maintaining Charges.
2. Custody Charges .
3. Transaction Charges.
4. Rematerialization Charges.
5. Other Charges .
We will now examine different types of charges collected by Depository
Participants against actual provision in this regard:

33
 1. ACCOUNT OPENING CHARGES:
Through the above list do not cover account opening charges .
Clause No. 1 which is reproduced herein above stipulate that the client shall
pay the charges to the Depository Participants for the purpose of Opening &
maintaining his account which should be further read with list of charges
which stipulate.

2 Account Maintaining Charges :

This clearly means that charges paid by the clients for opening of Accounts
also covers Account maintaining Charges as well.
Which necessarily follows that Depository Participants can collect either
Accounts Opening Charges or Account Maintain Charges . But in no case
Client should be made liable to pay both the Charges that to Account
maintenance Charges on Periodically.

3.TRANSACTION CHARGES.
The DP for effecting Credit or Debit to the Clients Accounts these
charges .
A) Non –Scheduled Charges of Dematerialization .
The Schedule “ A “ at Annexure “ B” has not prescribed this sort of
Charges that referred as Charges of Dematerialization.
The NSDL Business Rule at 10.2.5 : Has prescribed FEE FOR
DEMATERIALIZATION & REMATERIALISATION as under:
The Depository shall charge no fee on Dematerialization requests.
However , in case of Rematerialization, a fee at the rate of 0.10% of the

34
 value of the securities requested for Rematerialization or Rs. 10/- per
certificate, whichever is higher will be charged.
Assuming most conservative Demat Charges , of flat fee of Rs. 2/- per
Certificate. DPs had collected from Investors Rs, 726.354 mn.towards
Demat Charges.

4 RENATERIALIZATION CHARGES:
This charges become payble at the time of Beneficial Owner Opting to
withdraw from the Depositor Environment & require his Securities in
Physical Mode.

5 OTHER CHARGES :
These Charges are actually designed to Carter need of Depository
Participants, for providing extra facilities i.e. more than & out side
statutory obligation to the Client.
Some banks, which are also Depository Participants, are asking the Account
holder to keep Fixed Deposit linked with Depository Accounts before
opening of accounts in depository

35
 DP services

Who is a Depository Participant?

Similar to the broker who trade on your behalf in and outside the Stock
Exchange: a Depository Participant (DP) is your representative (agent) in the
depository system providing the link between the Company and you through
the Depository. Your Depository Participant will maintain your holding
from time to time. According to SEBI guidelines, Financial Institutions like
banks, custodians, stockbrokers, etc. can become participant in the
depository. A DP is one with whom you need to open an account to deal in
electronic form. While the Depository can be compared to Bank, DP is like
branch of your bank with which you can have and account.

36
How does the Depository System Operate?

The Depository System functions very much like the banking system. A
bank holds funds in accounts whereas a Depository holds securities in
accounts for its clients. A Bank transfers funds between accounts whereas a
Depository transfers securities between accounts. In both systems, the
transfer of funds or securities happens without the actual handling of funds
or securities. Both the Bank and the Depository are accountable for the safe
keeping of funds and securities respectively.

37
A depository system provides the following advantages to an investor:
 Your shares cannot be lost or stolen or mutilated.
 You never need to doubt the genuineness of your shares, that is
whether they are forged or fake.
 Share transaction, such as transfer, transmission, and so on, can be
effected immediately.
 Transaction costs are usually lower than that in the physical segment.
 There is no risk of bad delivery.
 Bonus/rights shares allotted to you will be immediately credited to
your account.
 You will receive the statement of account of your
transactions/holdings periodically.
When you decide to have your shares in electronic form, you should
approach a Depository Participant (DP), an agent of the depository and pen
an account. You should surrender your shares certificates in physical form
and your DP will arrange to get them sent to and verified by the company
and, on confirmation, credit your account with and equivalent number of
shares. This process is known as dematerialization. You can always reverse
this process if you so desire, and get your shares reconverted into paper
form. This process is known as dematerialization

Share transaction (such as the sale or purchase, transfer of transmission ) in

the electronic form can be effected in a much simpler and faster way. All
you need to do is that after confirmation of sales/purchase transaction by
your broker, you should approach your DP with a request to debit/credit
your account for the transaction.

38
The depository will immediately arrange to complete the taransaction by
updating your account. There is no need for separate communication to the
company to register the transfer.

39
 DP services

Enter a world of safe, secure and convenient buying, selling and

transacting without suffering endless paperwork and delays. Buy/Sell
securities in electronic format at INDIA INFOLINE FINANCE
LTDonline and enjoy the benefits
 Protection against loss, theft, forgery, mutilation etc .
 Protection against bad deliveries.
 Immediate transfer of shares
 Linked to INDIA INFOLINE FINANCE LTDonline broking
account
 Online holding statement with live valuation of securities
 Auto debit/credit of securities
 Automatic credit of share on IPO allotment

40
 BENEFITS
OF DP
In the depository system, the ownership and transfer of securities takes place
by means of electronic book entries. At the outset, this system rids the
capital market of the dangers related to handling of paper. NSDL provides
numerous direct and indirect benefits like:

 Elimination of bad deliveries In the depository environment, once

holdings of an investor are dematerialised, the question of bad
delivery does not arise i.e. they cannot be held "under objection". In
the physical environment, buyer was required to take the risk of
transfer and face uncertainty of the quality of assets purchased. In a
depository environment good money certainly begets good quality
of assets.
 Elimination of all risks associated with physical certificates-
Dealing in physical securities have associated security risks of theft
of stocks, mutilation of certificates, loss of certificates during
movements through and from the registrars, thus exposing the
investor to the cost of obtaining duplicate certificates etc. This
problem does not arise in the depository environment.

41
 No stamp duty for transfer of any kind of securities in the
depository. This waiver extends to equity shares, debt instruments
and units of mutual funds.
 Immediate transfer and registration of securities - In the
depository environment, once the securities are credited to the
investors account on pay out, he becomes the legal owner of the
securities. There is no further need to send it to the company's
registrar for registration. Having purchased securities in the physical
environment, the investor has to send it to the company's registrar so
that the change of ownership can be registered. This process usually
takes around three to four months and is rarely completed within the
statutory framework of two months thus exposing the investor to
opportunity cost of delay in transfer and to risk of loss in transit. To
overcome this, the normally accepted practice is to hold the
securities in street names i.e. not to register the change of ownership.
However, if the investors miss a book closure the securities are not
good for delivery and the investor would also stand to loose his
corporate entitlements.
 Faster settlement cycle - The settlement cycle follow rolling
settlement on T+2 basis i.e. the settlement of trades will be on the
2nd working day from the trade day. This will enable faster turnover
of stock and more liquidity with the investor.
 Faster disbursement of non cash corporate benefits like rights,
bonus, etc. - NSDL provides for direct credit of non cash corporate
entitlements to an investors account, thereby ensuring faster
disbursement and avoiding risk of loss of certificates in transit.
 Reduction in brokerage by many brokers for trading in
dematerialised securities Brokers provide this benefit to investors
as dealing in dematerialised securities reduces their back office cost
of handling paper and also eliminates the risk of being the
introducing broker.
 Reduction in handling of huge volumes of paper
 periodic status reports to investors on their holdings and
transactions, leading to better controls.
 Elimination of problems related to change of address of investor
- In case of change of address, investors are saved from undergoing
the entire change procedure with each company or registrar.
Investors have to only inform their DP with all relevant documents

42
 and the required changes are effected in the database of all the
companies, where the investor is a registered holder of securities.
 Elimination of problems related to transmission of demat shares
- In case of dematerialised holdings, the process of transmission is
more convenient as the transmission formalities for all securities
held in a demat account can be completed by submitting documents
to the DP whereas, in case of physical securities the surviving joint
holder(s)/legal heirs/nominee has to correspond independently with
each company in which shares are held.
 Elimination of problems related to selling securities on behalf of
a minor - A natural guardian is not required to take court approval
for selling demat securities on behalf of a minor.
 Ease in portfolio monitoring since statement of account gives a
consolidated position of investments in all instruments.

43
 QUALITY POLICY

To achieve and retain leadership, INDIA INFOLINE FINANCE LTD shall

aim for complete customer satisfaction, by combining its human and
technological resources, to provide superior quality financial services. In the
process, INDIA INFOLINE FINANCE LTD will strive to exceed
customer’s expectations.

Quality Objectives

As per the Quality Policy, INDIA INFOLINE FINANCE LTD will:

 Built in-house processes that will ensure transparent and harmonious
relationships with its clients and provide high quality of services.
 Establish a partner relationship with its investor service agents and
verdures that will help in keeping up its commitments to the
customers.
 Provide high quality of work life for all its employees and equip them
with adequate knowledge & skills so as to customer’s needs.
 Continue to uphold the values of honesty & integrity and strive to
establish unparalleled standards in business ethics.

44
 RESEARCH
METHODOLOG
Y
RESEARCH DESIGN:

Research design stands for advantage planning of methods to be adopted for

collecting the relevant data and the techniques to be used un their analysis
keeping in the view the objective of research and availability of time and
money. We can classify research design mainly four parts:

1. Exploration
2. Diagnoses
3. Description
4. Experimentation

 Exploratory research studies are those whose main purpose is that of

formulating a problem for more precise investigation or of developing
the working hypotheses for an operational point of view.
 Descriptive research studies are those studies which are concerned
with describing the characteristics of a particular individual or of a
group.

45
  Diagnostic research studies determine the frequency with which
something occurs.
 Experimental research studies are those where the researcher test the
hypothesis of casual relationship between the variables.

Our research study carried out is descriptive and diagnostic in nature.

Descriptive research includes surveys and fact finding and enquiries of
different kinds.

In this research we seeks to measures like:-

 Preferences of people among various investment options.
 Awareness of mutual finds etc.

46
 DATA COLLECTION MEATHOD

When we go for solution of any real life problem it is often found that data
at hand are inadequate and hence, it becomes necessary to collecting the
appropriate data that differ considerably in context of money costs, time and
other resources at the disposal of the researcher.
The data is basically of two types:-
 Primary Data
 Secondary Data

Primary Data: Primary data are those which are collected a fresh and for
the first time and the thus happen to be original in character. These data can
be collected through experiment, we have collected primary data by using:-

 Questionnaires
 Telephonic Conversation

Secondary Data: Secondary data are those which have been collected by
some one else and which have been passed through the statistical process. In
our research we have collect secondary data by help of:-

 Research Reports
 Magazines
 Websites
 Government Publications etc.

47
 Sampling

All the item under consideration in any field of inquiry constitute a

‘universe’ or ‘population in known as a census inquiry. This in the
population in known as a census inquiry. This type of inquiry involves
a great ideal of time, money and energy. Hence quite often a few
items are selected from the universe for the purpose of the study. The
item so selected constitute what is technically called a sample.

The sample size taken in this research is 50. In our research we have
used probability sampling. Probability sampling are those based on
random sampling, systematic sampling, stratified sampling, area
sampling.

In the study the population from which the sample to be drawn dose
not constitute a homogenous group. So we apply stratified sampling
so as to obtain homogenous group. So we apply stratified sampling so
as obtain representative sample. In our research study we divide the
population in to 3 strata’s:-

 Businessman
 Service man
 Professional

We have divide our population in to 3 strata’s because these 3 group

have different investment portfolio, awareness pattern of financial

48
activities is also different. Behavior pattern was also different. Some
are risk avoider and some risk gambler.

49
 FIELD WORK

ANALYSI
S
INTERPRETATI
ON
ANALYSIS OF DATA

After the data have been collected, the researcher turns to the task of
analyzing them. The analysis of data requires a number of closely related
operations such as establishment of categories, the application of these
categories to raw data through coding, tabulation and then drawing statistical
inferences. The unwidely data should necessarily be condensed into a few
manageable groups and tables for further analysis. Thus researcher should
classify the raw data into some purposeful and usable categories. In the
process of analysis, relationships or differences supporting or conflicting
with original or new hypotheses should be subjected to tests of significance
to determine with what validity data can be said to indicate any conclusion.

50
Question: 1. Occupation of respondents?

Occupation No. of Respondents

Professional 25
Service Man 15
Business Man 10
Total 50

No. of Respondents

30
25
20
No. of
15
Respondents
10
5
0
1 2 3 4

Analysis:
From the above study we came to know that professionals are more
attractive toward Share market compare to service man and businessman.

51
Question:2. Where do you invest your money?

Sector No. of Respondents

Bank 23
Mutual Fund 7
Stock Market 5
Insurance 12
Bonds 3
Total 50

No. of Respondents

25
20
15 No. of
10 Respondents
5
0

Analysis:
From the above study we came to know that 46% investor, invest their
money in banking instrument, only 10% investor invest in share market.
Question:3. Are you fundamentally aware about Depository
participant?

Response No. of Respondents

Yes 14
52
No 36
Total 50
 No. of Respondents

40

30
No. of
20
Respondents
10

0
Yes No

Analysis:
From the above study we came to know that only 28% respondents have
awareness of DP

53
Question: 4. From which source you get information about Depository
participant?

Source No. of Respondents

Family & peers 5

Newspaper 15

Television 10

Internet 20

Total 50

No. of Respondents

25
20
15 No. of
10 Respondents
5
0
T elev is io n
N ew s pap er

Interne t
F a m ily &
p eers

Analysis:
From the above study we came to know that internet play a vital role to
aware the people about depository participant.
Question:5. Do you have Demat Account ?

54
 Response No. of Respondents

Yes 15
No 35

Total 50

No. of Respondents

40

30
No. of
20
Respondents
10

0
Yes No

Analysis:
From the above study we came to know only 30% people have Demat
account.

55
Question: 6. In which Depository participant you have Demat Account ?

Depository Participant No. of Respondents

INDIA INFOLINE 17
FINANCE LTD
RELIGARE 19
RELIANCE MONEY 9
INDIA BULLS 3
ANY OTHER 2
Total 50

20

15
No. of
Respondents
10
Depository
Participant
5

0
1 2 3 4 5

Analysis:
From the above study we came to know that Religare is forefront in opening
the demat account

Question7: How much brokerage is charged by your DP?

Options No. of Respondents

56
 High 15
Moderate 24

Low 11

Total 50

No. of Respondents

30
25
20
No. of
15
Respondents
10
5
0
High Moderate Low

Analysis:
From the above study we came to know that most of the DP are charging the
reasonable prices.

LIMITATION OF THE STUDY

However I have tired my best in collecting the relevant information yet there
are always present some limitations under which researcher has to work.

57
Here following are some limitations under which I had to work to as shown
below:

1. Limited Time: There was limited time in which this project has to be
completed. Therefore it was a major limitation of the study.

2. Sample Size: The sample size was only limited to one branch.

3. Limited Area: The area covered in this project was only Rohtak, not
whole Haryana.

4. Few interaction: There was few interaction with the people as we

were only limited within an area.

5. Communication Problem: The accurate decision cannot be taken by

the information collected; people were relocating while giving their
personal information.

6. Dynamic nature of the environment, what is true and relevant today

may not be true and relevant tomorrow.

FINDINGS

The Mutual Fund Industry is the important part of country capital

Market. Mutual funds have to provide very good services standards,
58
performance and transparency. I believe that the industry has scored
highly. Don’t believe that there is no risks in mutual funds even if
investor choose only dept funds because investment are always a
risk/return business. So be the prepared for that, there is no such thing
has risk.
In July 2007, sensex was crossed the bench mark 15600,Which means
all funds are giving good performance. In july 2007 purpreses are more
than sales.
Some important finding :-
 100% growth in the last 7 years.
 Today most of the mutual funds are concentrating on the metro
cities. Soon they will find scope in the growing cities.
 Open ended funds much famous compare to close ended.
 Mutual funds of reputed company like reliance, birla sunlife,
sundaram SBI etc. are providing more than 20% return.

As regards equity markets, we believe that it is very difficult to try and

time the markets consistency especially with a short-term perspective.
We don’t even believe in trying to predict indices or where the markets
are likely to be in the near future. But, what we do believe in is that
valuations are extremely attractive, If you look at it in historical terms
the valuation of the Sensex stocks are also good. And therefore, we
believe that, selectively on a purely bottom-up approach, there would be
many stocks that would be attractive at these levels. And therefore we
believe it is a good time to invest. However, any investor must

59
necessarily have the patience required to benefit from equities as an
asset class.

RECOMMENDATIONS & CONCLUSION:-

 India infoline finance ltd. should concentrates on commodity trading.

 In dia infoline finance ltd. should use more sales person for capturing
the contracts from abroad and also with in the country.
 More qualified key personal should be adopted for full growth &
development.
 In present, India infoline finance ltd. is not opening new D-MAT
ACCOUNT. It may also effect the business of India infoline finance
ltd..
 India infoline finance ltd. should start open new D-MAT ACCOUNT
in future.
 Time to time demonstration should be provided regarding their
products and services.
 India infoline finance ltd. sales person should time to time interact
with their customer and provide service as your personal finance
advisor.
 India infoline finance ltd. monthly publication ‘The Finapolis” effect
positively.

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