A

PROJECT REPORT
ON
INVESTOR EDUCATION AND AWARENESS THROUGH SEBI INITIATIVES

A report submitted in the partial fulfillment of the required for the

Award of degree of

BACHELOR OF BUSINESS ADMINISTRATION

PANJAB UNIVERSITY, CHANDIGARH

Under the guidance of: Submitted by:

Prof . Shilpa Nischay Jain

Univ roll no 22046730

SHREE ATAM VALLABH JAIN COLLEGE

LUDHIANA
(SESSION: 2024-2025)
 ACKNOWLEDGMENT

It is tremendous pleasure for me to put forward the following project report on

“ INVESTOR EDUCATION AND AWARENESS THROUGH SEBI INITIATIVES ”. I am
really grateful to Dr. Shilpa for her mind blowing guidance and path showing by
letting a torch of knowledge in his field and in other fields in which I was facing
the problems during the whole course of this academic year . She has been
invaluable and our ever exploring person.

A felling of elation insists us on expressing our heartist thanks, deep sense of

gratitude and indebtness to our major advisor for their impeachable and vital
encouragement, perceptive enthusiasm , unstilted intreast and untiring efforts
,even in their busy schedule who helped us in preparing the project report ,
without which we could have never been able to complete this project report .

Nischay Jain
Roll No – 22046730
 STUDENT DECLARATION

I hereby affirm that work presented in this project report entitled on INVESTOR
EDUCATION AND AWARENESS THROUGH SEBI INITIATIVES is exclusively my
own and there are no collaboration does not contain any work for which
degree of diploma has been avoided by any other university / institution .

Nischay Jain
Univ. Roll No – 22046730
 CERTIFICATE

Certified that the project report entitled INVESTOR EDUCATION AND

AWARENESS THROUGH SEBI INITIVATIES . submitted to Punjab University ,
Chandigarh for the award of Bachelor of Business Administration is a record of
independence research word carried out by Nischay Jain under my supervision
& guidance . This has been previously submitted for the award of any diploma ,
degree or other similar tittle .

Name & Sign of guide

Dr . Shilpa
 INDEX

ABOUT SEBI 1-2

INTRODUCTION 3

KEY CONCEPT OF PERSONAL FINANCE 4-6

FINANCIAL PLANNING 7-43

SECURITIES MARKET 44-59

DO’ & DON’TS 60-61

CONCLUSION 62

BIBLOGRAPHY 63

QUESTIONNAIRE 64-68
ABOUT SEBI

Securities and Exchange Board of India (SEBI) is a statutory body set up by the
Parliament of India in 1992 to protect the interests of investors and to regulate
and develop the Indian securities market. It started operations in 1988 through
an order of Government of India. The key functions of SEBI are focused upon
development of Indian securities market, regulation of various intermediaries in
the securities market and protection of the interests of investors.
It is head quartered in Mumbai with regional offices in Delhi, Kolkata, Chennai
and Ahmedabad and various local offices across different States.

Buying and selling of shares takes place in the stock exchanges through stock
brokers. These intermediaries in securities market can function only if they are
registered with SEBI. They are also required to follow the rules, regulations and
guidelines laid down by SEBI to protect the investors. Similarly, SEBI also
regulates other participants in the capital market like stock exchanges, brokers,
depositories, depository participants, portfolio managers, merchant bankers,
share transfer agents, etc. Mutual funds collect money from different investors
and then invest that money in various schemes as per the choice of the investors.
They are governed by rules formulated by SEBI.

Mutual Funds have to disclose details of the scheme, where they will invest
money, the fees charged from the investor, etc. They also have to make periodic
disclosures for the benefits of investors as mandated by SEBI. SEBI also educates
investors and facilitates redressal of their grievances.
For details on functions of SEBI and other information please visit their official
website www.sebi.gov.in.
INTRODUCTION

Financial literacy assumes much significance in today's world. Financial literacy,

as a life skill, is to be imparted to every individual for management of their
personal finances. People face various issues like complexity of financial
products, prevalence of fraudulent and Ponzi schemes, need for funds to get a
better quality of life after retirement, etc. These issues have generated need for
a better management of personal finances with proper management of income
and expenditure.

Financial education helps people in being financially literate and develop a

positive attitude towards managing their income, expenditure, assets and
liabilities properly, which would lead them to a situation of better financial well-
being.

Financial planning is must for every household. Financial planning goes beyond
savings. It is an investment with a purpose. It is a plan to save and spend future
income and should be carefully budgeted.

This literature provides a fair understanding of the personal finance world,

explaining the concept of financial planning, key concepts in financial literacy,
various investment options, savings and investment products, insurance and
pension products, retirement planning, caution against Ponzi schemes, tax
saving options, investor protection measures, do’s and don’ts of investing, etc.
KEY CONCEPTS OF PERSONAL FINANCE

Some important concepts in personal finance which an individual

should be aware of while managing their personal finances are
mentioned as below:

Savings
Savings are the surplus of income over expenditure.

Income
Money earned from various sources like Salary, Wages, etc.

Expenditure
Money spent on various items which include essential
and nonessential items.

People usually meet their short term goals with savings. Money in savings
account of a bank earns a small amount of interest and it is easy to withdraw it
whenever needed. People can save in savings bank accounts, Post Office savings
accounts, etc.

Investments
Investment is the act of deployment of money out of savings into financial or
non-financial products with the expectation of earning higher returns over a
period of time. The various products in which investments may be done are
financial products viz. fixed deposit in bank, buying shares in stock market,
investing in Mutual funds, etc. and non-financial products viz. purchase of land,
gold, silver, etc. The investments may be done for short term, medium term or
longterm. While investing one should always remember that return on
investments may rise or fall over time and it is quite normal for that to happen.
Importance of saving and investing
Investing money makes it grow for you. Any increase in the value of the
investment over a period of time, or investment income/returns that you
receive, gets you that much closer to your financial goals. One should start saving
and investing early in his or her life. The earlier you start, the better you will be
placed in meeting your goals like owning a house, financing your child's
education, funding for your retirement, etc.

Assets and Liabilities

Items that you own and have economic value are your assets and items which
you owe to others or have borrowed from others are your liabilities. For
example, if you save and then invest in a fixed deposit, it is your asset. On the
other hand, if you borrow funds/ take a loan from a bank or any individual, it is
your liability.

Debt
Money borrowed to meet shortfall of money when expenses are more than the
funds available in hand is called debt.

Time Value of Money

As time passes, you will realize that if 10 years back you could afford to purchase
a full lunch for a particular amount of money, then today you could afford to get
only a portion of the lunch in that amount of money. This means that the value
of a five-hundred-rupee note would be higher today than after five years.
Although the note is the same, you can do much more with the money if you
have it now because over a period, you can make the money grow by earning
interest on the money. By receiving ₹500/- today, you can increase the future
amount of your money by investing the money and gaining interest or capital
appreciation over a period of time.

At the most basic level, the time value of money shows that time literally is
money, i.e. the value of the money you have now is not the same as it will be in
the future and vice versa.
Inflation and its effect on Investments
Inflation refers to rise in prices of goods and services. Over a period of time, as
the cost of goods and services increases, the ability of a unit of money, say one
rupee, to buy goods and services keeps declining. In other words, the Purchasing
Power of money, i.e. ability of money to buy anything, decreases. It is important
to take into account the effects of inflation on your investments during financial
planning. Investors greatly fear inflation since it reduces the value of their
investment.

The steps that you can take to avoid the adverse effects of inflation
The return you can expect after factoring in the effects of inflation. To reduce the
risk of decrease in the value of money, you can invest the money available to you
today at a rate equal or higher than the rate of inflation.

Power of Compounding
With simple interest, you can earn interest only on the principal (that is, the
amount you initially invested); while with compounding interest, you earn
interest on the principal as well as, previously earned interest.

Rupee Cost Averaging

Rupee cost averaging is the process in which you invest a fixed amount of money
at regular intervals irrespective of market fluctuations.
For example, you buy more units when unit prices are low and less units when
unit prices are high. By investing according to a schedule, you avoid the complex
or even impossible duty of trying to figure out the exact best time to invest. The
rupee cost averaging effect averages out the costs of your units and hence
lessens the impact of short-term market fluctuations on your investment.
FINANCIAL PLANNING

Financial planning is the process of estimating financial needs of a person and

implementing a comprehensive plan to meet those financial needs during his or
her lifetime through investment. For instance, birth of a child, education,
purchasing house, marriage, meeting emergency situations like an illness, to
meet the impact of an accident, death, or natural calamities like flood, etc.

Financial Planning Process

Determine Your Current Financial Situation

If you want to plan for the future, you need to understand your current financial
position. You need to understand what your incomes, expenses, assets and
liabilities/debts are? Your net worth is simply assets you own minus liability you
owe .
Your net worth indicates your capacity to achieve your financial goals, such as
buying a home, paying for university education, future medical expenses,
repayment of loan, etc.

Develop Financial Goals

Your financial goals can range from acquiring assets, saving for emergency as well
as making investments for your future financial security. The financial goals of an
individual can be categorized as below: a. Basic financial goals (food, clothing,
shelter, etc.) b. Secondary or advanced financial goals (education, house,
marriage, etc.) c. Retirement planning d. Estate planning Individuals can use a
variety of investment, risk management and tax planning strategies to meet their
financial goals. These goals change over an individual's lifetime and accordingly
the financial plan should be reviewed on a regular basis for any modification as
per change in the circumstances.
Mr. Warren Buffett, one of world’s successful investor, has said: “Don’t
save what is left after spending; spend what is left after saving.”

Therefore, the basic concept that everyone should focus upon while
utilising his income.

Income – Savings = Expenditure

Wealth is not built overnight. One needs to set specific financial goals. A good
financial goal should be SMART i.e. Specific, Measurable, Achievable, Realistic
and Timebound.

Goal-based investing focuses on meeting goals that are personal and specific.
The focus of this approach is to arrive at future value of different goals and then
pursuing these goals through asset allocation made for investments according to
each individual’s financial goal. To adopt this strategy while investing, one must
plan as per one's age, risk appetite (ability to take risk), financial situation and
investment horizon.
Five-Step Approach to Achieve Financial Goals

STEP 1: Identify specific financial goals :

It is important to prepare a proper plan to fix each investment with a specific
goal. It is very important to identify one’s financial goals and aspirations and
estimate the amount of money it would be needed to fulfil them.

STEP 2: Classify goals into Short-term, Medium term or Long term:

• Short-term goals are typically financial requirements that are expected to arise
in time period ranging from a few months to one year.
• Medium-term goals may have a time horizon of one year to eight years. Goals
like buying a property, starting your own venture, getting enrolled in a
professional course, etc. can be medium-term financial goals.
• Long-term goals may have a time horizon of eight years or more for example
child's marriage, retirement planning, etc.

STEP 3: Decide upon asset-allocation:

Asset-Allocation is a strategy for investing your money into various asset classes
such as equity and debt that would suit an investor's income and risk appetite.
Asset Classes may be referred to groups of financial instruments which have
similar financial characteristics. Asset Allocation refers to an investment strategy
that aims to balance risk and reward - in the form of returns - by dividing the
assets of an individual’s portfolio according to his/her financial goals, risk
tolerance and investment horizon.

Asset Allocation:
Allocate assets depending on your age, lifestyle, family commitments and your
financial goals. While allocating your funds, distribute your investments across
various asset classes such as equity, bonds, real estate, etc., to benefit from
diversification, which helps reduce risk and increases the possibility of earning
moderate to high returns on your investments.
STEP 4: Choose the right investments with diversification :
Arriving at the right risk-return combination and choosing the right asset
allocation can seem difficult. For a longer term goal, it is advisable to focus on
maximizing returns with diversified asset allocation.
Diversification - It refers to the process which reduces risk by making
investments into various financial instruments, industries and other categories.
It aims to minimize loss on return by investing in different asset classes (debt,
equity, gold, real assets, etc.) that would react differently to the same event, such
as those relating to the economy or markets.
Although diversification does not provide guarantee against loss, it is the most
important component for reaching long-term financial goals while minimizing
risk.

STEP 5: Review and revise financial plans :

Regularly review the progress towards your goals and investments. Review your
investments like stocks and mutual funds in your portfolio. Certain products may
seem tailor-made for specific needs, but they may not be actually useful for one's
portfolio. Be aware of such investment options.

Choosing investment opportunity and understanding risk

The investment products available for an investor are fixed income securities,
equity investments, mutual funds, etc. Every asset class has its own risk and
return. Investments in equities are considered as high risk investments as their
returns are subject to performance of individual companies and general
economic scenario. On the other hand, investments in the debt instruments are
considered having relatively low risk. For instance, Government bonds are
considered to be effectively "risk free" due to the trust that government will not
default on the repayment to investors.
Three pillars of investment :

The investment decision by an individual is influenced by safety, liquidity and

return. They are called the three pillars of investment.

i.Safety: This is about how well protected the principal and return on the
investment.

ii. Liquidity: This pillar of investment is the degree of ease with which you can
encash or liquidate your investment at fair value .

iii. Return: It could be in the form of income, appreciation of capital invested or

both. Income means an investment’s earnings in the form of interest or dividend
payment. Capital appreciation means the increase in market value of investment
over a period of time.

Returns from Investment

Returns from Investment can be described as money made by an investor on his/

her investment.
The returns can be in two ways as explained below:
Regular Income :
Equity Investment: You get dividend when you buy and hold equity shares of a
company and units of equity mutual fund.
Fixed Income -Investment: In debt securities, you receive fixed interest on
interest-bearing Investments.
Capital Appreciation :
When the value of initial investment increases over a period of time and the
investor benefits by selling part or whole of the investment at the increased
value, it is called capital appreciation.
Risks and Returns
Risk can be defined as the probability or likelihood of a loss occurring in relation
to your expected returns from any particular investment. It is a measure of the
level of uncertainty of achieving the returns as per investor expectations.

Risk V/S Return

Risk and investing go hand in hand. The good news is that "risk" comes with the
potential for "rewards" from investing which is what makes the whole process
worthwhile.
SAVINGS RELATED PRODUCTS

The various savings related products available to the public. These include
deposit schemes offered by banks, government deposit schemes, public deposits
issued by companies, etc.

• Why to keep money in banks

Drawbacks of keeping cash at home are mentioned as below:
• Unsafe – Money can be stolen or lost due to natural calamities
• Loss of growth opportunities – Loss of interest income
• No/Low credit eligibility – Deposit in banks creates eligibility for taking loans.
Therefore, it is beneficial to keep money in banks rather than at home in cash.

• Banking
Commercial banks are regulated financial institutions as they deal with public
money and trust. Commercial banks in India are regulated by Reserve Bank of
India. Banks are required to go through mandatory inspection and audits at
various intervals and are also audited by the Reserve Bank of India every year.
Bank deposits are comparatively lower risk investments. Banks offer various
types of deposits, depending on the needs of the customers. Bank deposits are
preferred more for their liquidity and safety than for the returns. It is also
possible to get loans from banks against fixed deposits up to 75 to 90 % of the
deposit amount.
Central Government deposit insurance scheme ensures that all deposits are
insured by the Government up to a limit of ₹5 lakhs per customer in that
particular bank. So, even in case of a failure of a bank, depositors are assured
that the Government will step in and return up to ₹5 lakhs of their savings in that
bank. For complete details on the scheme, one can refer the website of Reserve
Bank of India, from time to time.
• Account Opening Process — Know Your Client (KYC)

Norms For opening any type of bank account, customers need to undergo the
process of complying with KYC norms. KYC Stands for “Know Your Customer”.
The objective of KYC is to enable banks to know and understand their customers
better and help them manage their risks prudently. The KYC documents generally
accepted by banks are: Photograph, Document for proof of identity (copy of PAN
Card, Aadhaar Card, etc.) and Document for proof of address (copy of electricity
bill, driving license, passport, Aadhaar card, etc).
Mutual Fund

A mutual fund pools in money from many investors and invests the money in
stocks, bonds, short-term money-market instruments, other securities or assets,
or some combination of these investments. All mutual funds are required to be
registered with SEBI before they launch any scheme.

Salient features of mutual funds are:

• Professional management - Money is invested through fund managers

with proven expertise in the field of investment.
• Diversification - Diversification is an investing strategy that can be summed
up as investing small amounts of your money in different investment
options like different schemes of mutual funds and holding shares of
multiple companies.
• Economy of scale - A mutual fund buys and sells large amount of securities
at one go. This makes its transaction cost lower than what an individual
would pay for securities transactions.
• Liquidity - Just like individual shares, mutual fund units can be converted
into money through sale in the market or through redemption.
• Simplicity - Buying a mutual fund unit is simple and the minimum
investment amount required is small.
• Tax Benefits - Different mutual fund categories are subjected to different
tax treatments. It is important to understand the tax benefits of a fund
before you invest in it .

Mutual funds are segregated in different categories based on the objectives of

the mutual fund scheme. The schemes are designed to keep in mind the needs
of various types of investors, risk averse investors (basically a conservative
Investor who does not want to take high risk), moderate investors (investors who
can take some amount of risk) and aggressive investors (investors who are willing
to take risk in search of higher return.
Categorization of Mutual Funds

Systematic Investment Plan (SIP)

An SIP or a Systematic Investment Plan allows an investor to invest a fixed

amount of money regularly in a mutual fund scheme. It lets you set aside a fixed
sum of money at regular intervals (weekly, monthly or quarterly) with an
objective to gain capital appreciation in the longer run. SIP investment inculcates
the habit of savings. Instead of trying to time the market, by investing on a
regular basis, the investor benefits from the rupee-cost averaging factor. As the
investments are done over different market cycles, the investor benefits from
the market volatility by getting to buy more units of the same fund when the
markets are low and buying less units when the prices are high.

An investor can invest a pre-determined fixed amount as low as ₹500/- in a

scheme every month or quarter, depending on his/her convenience through
post-dated cheques, through Standing instruction (SI) facility or through ECS
(Electronic Clearing Service) facility. Investors need to fill up an application form
and SIP mandate form on which they need to indicate their choice for the SIP
date (basically when the pre-determined amount will be invested). Subsequent
SIPs may be auto-debited through a standing instruction, electronic clearing
service or post-dated cheques.

Advantages of SIP

Commodity Derivatives Market

Commodities are goods with economic value. They are earth's natural products
which are produced and traded. They are usually raw materials for further
processing. The broad types of commodities are as under: (Agricultural
commodities: Food & non-food crops. ) Non-Agricultural commodities: Metals,
Energy, Polymers, etc. Others: cattle head, processed foods like juices, etc.
Commodity Price Risk

Commodity price risk is the price uncertainty that adversely impacts the financial
position of those who both use and produce commodities. For example, as the
price of steel rises, this increases the cost of automobile production and can
negatively impact that producer's profit margins. Similarly, commodity price risk
can equally impact producers of a commodity, not just users. If crop prices are
low one year, a farmer may plant less of that crop. If prices subsequently rise
next year, the farmer will miss out on a potentially profitable crop. This is called
commodity price risk. The factors that can affect commodity prices include
political and regulatory changes, seasonal variations, weather, technology and
market conditions.

Risk Faced by Various Stakeholders

Various stakeholders face many risks in commodity trading, especially farmers,
such as:
• Price volatility and price risk
• Lack of quality storage facilities
• Need for finance at the time of sowing of crops
• Dependence on local middlemen and agents for selling their crops
• Small farm holdings — no bargaining power
• Opaque/manipulated prices at Mandis

Protection against price risk in commodities

A producer of a commodity is at risk of prices moving lower. Conversely, a
consumer of a commodity is at risk of prices moving higher. The producers and
consumers of commodities can participate in the commodity derivatives
exchange to protect against adverse price movements. The process of protecting
against financial loss or price risk is called "Hedging''. A hedge will guarantee a
consumer the supply of a required commodity at a set price and a producer the
known price for commodity output.
Benefits of Commodity Derivative Exchange

Commodity derivative exchange offers following benefits to producers and

consumers of commodities:
Price discovery: Helps producers / sellers and consumers / buyers and also
exporters & importers of a commodity to discover price for a future date and
helps them take informed decision.
Price risk management: Helps hedge price risk or insure against adverse price
movement and lock in profit margin.

Commodity Derivative Exchanges

A commodity derivative exchange is an organized, regulated market that

facilitates the purchase and sale of contracts whose values are linked to the price
of commodities (e.g., wheat, barley, crude oil, gold, etc.).
Typically, the buyers of these contracts agree to accept delivery of a commodity
at a price on a future date, and similarly, the sellers agree to deliver the
commodity at a price on a future date.
For example, in case of Agricultural commodities, Commodity Derivatives
Exchange helps in reducing the price risk, both for the farmers (seller of crop)
and the consumer (buyers of crop /food processors) by helping them decide a
price today (i.e. at the time of sowing or at the time of harvesting of the crop)
for the crop to be delivered in the future. The transaction in the exchange is done
through commodity brokers. The settlement of contract to buy and sell is
guaranteed by the commodity derivatives exchange.
The trading rules and procedures of recognized Commodity Derivatives
Exchanges and Commodity Brokers are regulated by Securities and Exchange
Board of India (SEBI) — a statutory body established under SEBI Act, 1992. In
India, major commodity derivative exchanges are as follow:
• Multi Commodity Exchange of India Ltd (MCX) — predominantly non-
agricultural products like gold, silver, aluminium, copper, nickel, lead, zinc and
energy products like crude oil and natural gas are traded on this exchange.
• National Commodity and Derivative Exchange (NCDEX) -predominantly
agricultural products like pulses, cereals, sugar, etc. are traded on this
exchange.

There are three types of contracts in commodity derivatives market. These are
Forward Contracts, Futures Contract and Options. Forward contract is an
agreement between two parties to sell or buy a certain commodity at a fixed
price in the future. This contract hedges the risk for the buyer against price
fluctuations and the seller can get a guaranteed price for his product at a
specified date.
Forward contracts are traded over the counter , while futures contracts are
traded on the commodity derivatives exchanges. Forward contracts can be
privately negotiated. Futures contract have a standardized way of execution and
the transaction is guaranteed by the clearing house of a recognized commodity
derivative exchange which minimizes the risk of defaults on the settlement of
transaction.
An options contract refers to the financial instrument which gives the buyer of
the option the right but not the obligation to exercise the option at a
predetermined date at a predetermined price. Options contracts are of two
types as explained below:

Call Option: Call option gives one the right to buy the underlying security
Put Option: Put option gives one the right to sell the underlying security.

Investors are charged a premium when they buy an options contract. On expiry
of the contract, generally the transaction is cash settled instead of actually
buying/selling the underlying security unlike in the cash market. Hence, many
investors find Futures & Options (F&O) cheaper to trade, however, it is riskier
than the cash segment because F&O is time dependent and you cannot hold on
to the contract till the desired time i.e. when the market is favourable to earn
positive returns. On the expiry of the contract, even if you cash settle the
contract instead of taking delivery, the change in value of the underlying will be
either credited or debited to your account.
Trading in Commodity Derivatives Market

To deal with the legal/ logistics/ quality requirements of Derivatives Markets

farmers would have to form a society/ trust/ Farmers Producing Organization
(FPO), etc.
Collectively they would have to deposit their produce in the warehouse of the
Exchange. Quality of the produce for the purpose of standardization to be
assayed (checked / tested) by Exchange recognized assayers.
Exchange would issue a warehouse receipt (Loans can be obtained from banks
against these receipts). Exchanges assume responsibility for maintaining the
quality of the product for a certain period of time.
The depositors now have time to check the prices (on the exchange) at which
they can profitably sell the produce.
When the desired price is likely to be realized, the bid is placed at the exchange.
Once the order matches with the purchaser's bid, the trade is concluded.
Farmers have to give delivery on the Exchange platform.
Funds are given to the farmers upon satisfactory delivery of the commodity.
INSURANCE RELATED PRODUCTS

INSURANCE

Insurance allows individuals, businesses and other entities to protect themselves

against significant potential losses and financial hardship at a reasonably
affordable cost. Insurance is a form of risk management, primarily used to
manage the risk of an uncertain future loss. Thus, insurance is a promise of
compensation for specific potential future losses in exchange for a periodic
payment called premium. An entity which provides insurance is known as the
insurer. A person who buys insurance is known as an insured or the policy holder.
The insured receives a contract called the insurance policy which contains details
like the conditions and circumstances under which the insured will be financially
compensated along with other details related to the insurance policy.

The insurance policy are generally classified into following:

SCHEME AND KEY FEATURES

Life Insurance - Term Insurance

- In event of your unfortunate demise during the policy term, your nominees
will receive the “Sum Assured” which you had selected while purchasing the
plan.
- Active for a fixed period of time (popularly referred to as the "term of the
policy").

Life Insurance - Endowment Insurance

- A life insurance contract designed to pay a lump sum amount after a specific
term (on the maturity of the policy) or on death of the policy holder (insured).
- Typical maturities of insurance policies are ten, fifteen or twenty years up to a
certain age limit. Some policies also pay out in the case of critical illness.
Life Insurance - Whole Life
- Type of life insurance policy which stays active as long as you pay the
premiums.

Life Insurance – Unit Linked insurance

- Combination of insurance and an investment vehicle.
- A portion of the premium paid by the policyholder is utilized to provide
insurance coverage to the policyholder and the remaining portion invested in
equity and debt instruments.

Personal Accidental cover policy

- Insurance plan which provides monetary compensation in the event of bodily
injuries or disability or death caused solely by accident.

Motor Insurance
- Insurance for cars, trucks, motorcycles and other road vehicles. - Also called as
vehicle insurance, car insurance or auto insurance.

Health Insurance
- Insurance coverage that covers the cost of an insured individual's medical and
surgical expenses.
- The "insured" is the owner of the health insurance policy or the person with
the health insurance coverage.

Travel Insurance
- Insurance for covering against travel risks such as lost or stolen luggage,
cancellation cover (if you are not able to travel due to unexpected medical
reasons) and most importantly, unexpected medical costs abroad.
- Comprehensive travel insurance policy will provide:
Emergency medical cover
Losses incurred due to unforeseen cancellations or having to cut your trip short
Death and disability cover
Personal liability cover
Luggage cover

Property Insurance
- Policy that provides financial reimbursement to the owner or renter of a
structure and its contents in the event of damage or theft.
- Property insurance can include homeowner’s insurance, renters insurance,
flood insurance and earthquake insurance.

Group Insurance
- Insurance policy that covers a defined group of people, for example the
members of a society or professional association or the employees of a particular
employer.

Role of IRDAI (Insurance Regulatory and Development Authority of India) –

Insurance Regulatory and Development Authority of India regulates the
insurance sector in India. It aims to protect the interests of the insurance policy
holders and ensures systematic growth of the insurance industry.
PENSION RETIREMENT AND ESTATE PLANNING

Pension Services

Pension may be described as a regular payment which one aspires to receive

regularly, once the person retires from his regular occupation/ job or attain a
certain age from which he/ she does not want to work. Pension plans provide
financial security and stability during old age when people don't have a regular
source of income. Retirement planning ensures that people live with pride and
without compromising on their standard of living, during later part of their life.
Pension schemes give an opportunity to invest and accumulate savings and get
lumpsum amount as regular income through annuity plan on retirement.

Being a Pensioner
No need to open separate account for pension.
Existing account can be used for receiving pension.
Pension account can be transferred to another branch or different bank.
Do remember to submit your ‘Life Certificate’ to your bank branch in November,
every year
“Jeevan Pramaan'’ – Digital Life Certificate using Aadhaar and mobile at:
www.jeevanpramaan.gov.in.

National Pension System (NPS)

NPS aims to institute pension reforms and to inculcate the habit of saving for
retirement amongst the citizens. With effect from 1st May, 2009, NPS has been
provided for all citizens of the country including the unorganized sector workers
on voluntary basis. The subscriber will be allotted a unique Permanent
Retirement Account Number (PRAN). This unique account number will remain
the same for the rest of the subscriber's life. This unique PRAN can be used from
any location in India. NPS is a government approved pension scheme for Indian
citizens in the 18-60 age groups.
Investment Options under the NPS
The subscribers to the NPS choose the investment options in which their
contributions have to be invested. Following options are offered by the NPS:
E (Equity): High Return, High Risk option- Fund invests predominantly in
equityoriented investments.
C (Corporate Bonds): Medium Return, Medium Risk option- Fund invests
predominantly in fixed income bearing securities other than government
securities.
G (Government Securities): Low Return, Low Risk option- Fund invests
predominantly in pure low risk government fixed income securities.
A (Alternative Investments): High risk and High return option- Fund invests in
Alternative Investment Schemes including instruments like CMBS (Commercial
Mortgage-Backed Securities), MBS (Mortgage Backed Security), REITs (Real
Estate Investment Trusts), AlFs (Alternative Investment Funds), InvITs
(Infrastructure Investment Trusts), etc. This asset class is not available for
investment made under Tier 2 account .

Active Choice Option

Subscriber can choose the proportion of their funds that may be invested in each
of the investment option. This is called the Active Choice. The only restriction is
that the proportion invested in asset class E cannot exceed 75 percent and that
in asset class A is restricted to 5 percent .

Auto Choice Option

Under this choice the subscriber’s contribution will be invested in the lifecycle
fund. The lifecycle fund is a dynamic allocation of the subscriber’s wealth to the
different asset classes in a defined proportion determined by the age of the
subscriber, with the exposure to equity decreasing and that to the safer
corporate bonds and government securities increasing with the age of the
subscriber.
Role of PFRDA in Pension Segment
Pension Fund Regulatory and Development Authority (PFRDA) is a statutory
regulatory body established by an Act of Parliament of India with the charter to
promote, develop and regulate pension sector in India.

Retirement Planning
The transition into retirement is a very unique and dramatic step in life. Yet, the
transition into retirement is rarely given the planning or thought it deserves.
Everyone wants to lead a comfortable retirement life. Without adequate
planning it probably won't happen.

Key Features of Retirement Planning

• Start early and retire with financial security: If you start saving for retirement
at age 25, so that you wish to retire by 60, you can invest over 35 years.
• Plan wisely: Set aside some money for medical expenditure and emergency
needs after retirement. Allocate your savings towards important financial
goals such as children's education and marriage.
• Track and review your plan: The financial plan has to be reviewed at regular
intervals to make sure that the plan meets its objectives. .
• Don't dip into your retirement savings: Don't touch this pool of savings pre—
retirement. If you spend money from your retirement kitty to fulfil your
present needs, you will lose out big in the long run. The corpus for your
retirement will be inadequate .

Estate Planning
Estate planning refers to planning during one's lifetime, earmarking one's assets
to beneficiaries, typically family members, loved ones and institutions, so that
they can be used/ claimed after one's demise with ease, and without any
significant cost. Making a "Will" is an essential part of estate planning.
Following are the constituents of estate planning :

Will
It is a written legal declaration of desires to distribute assets of the deceased
after his or her demise. This way one can transfer assets to loved ones, according
to his or her preferences. By making a Will, one can avoid any feud among
beneficiaries over distribution of assets. Making a Will is a simple process.

Process of creating a Will

• Make a list of movable and immovable items.

• Decide which asset shall be given to whom (partially of fully).
• Mention the name and details of the person who will execute the Will.
• Preferably, get the Will witnessed by a doctor and lawyer as it gives
authenticity to the Will.
• Registration of Will is not compulsory, but preferable.
• You may write the Will on plain paper or take the help of your lawyer in
making a Will.
• Problems Arising in the Absence of a Will

Beneficiaries of the distribution of assets and the quantum of benefits to them

don’t happen in the way you would have liked.
Asset distribution happens as per personal laws/relationships.
May lead to expensive litigation among beneficiaries and other claimants.
Succession disputes could take years to resolve and can be costly. Even in the
absence of disputes, the resolution process can be costly and reduce the benefits
of the assets inherited.

Nomination
A nominee is a person who receives the right to have custody of the money on
the death of the account holder. A nominee is only a custodian of the asset
owner's money and doesn't have any ownership rights. In the absence of
nomination, it could be expensive and time consuming for the legal heirs of the
deceased to get their money. It is not mandatory but advisable; nomination
alleviates the problems faced by legal heirs in case of death of account holder.
One should always remember to fill in the nomination details while opening any
account.

Power of Attorney

Power of attorney is a legal document that allows another person to act on your
behalf. It ensures that important matters are dealt with by someone you trust if
you are unable to deal with them yourself.
If you aren’t able to personally accomplish a task, you may grant someone else
the power to do it for you. This permission can include things like accessing your
bank accounts, selling a vehicle, purchasing property or getting a home loan. In
fact, your power of attorney can grant your agent the authority to conduct nearly
any type of Transaction you could conduct on your behalf .
The person who grants power of attorney to an agent is called the principal, and
the principal may use either a general power of attorney or special power of
attorney to give power to his or her agent. (Agent means many people to whom
the power is given by the principal to act on the behalf of the principal). A general
power of attorney gives the agent power to accomplish anything the principal
could do, whereas a special power of attorney gives the agent limited powers,
such as the power to accomplish a specific transaction.

Procedure to transfer person’s wealth and assets after his or her death After the
demise of an individual, his or her legal heirs have to approach various
authorities (like banks, depositories, mutual fund companies and Insurance
companies) with their claim on the deceased assets. They have to present the
death certificate along with legal heir’s certificate to these authorities to transfer
the assets of the deceased in their name. If the deceased has made a Will, the
assets and the wealth of the deceased will be distributed as per his or her Will.
In the absence of a Will, the transfer will be made only to legal hiers.
BORROWING RELATED PRODUCTS

Borrowing is an act of taking money and paying it back over a period. In meeting
financial goals, in case the savings are inadequate, one resorts to borrowing.
Borrowing provides the flexibility of repaying in small instalments over a period
of time. Equated Monthly Instalments (EMI) is a very popuar mode of repayment
of loan.

Collateral is a property or other asset that a borrower offers as a security to the

lender in exchange of availing the loan. If the borrower stops making the
promised loan repayments, the lender can seize the assets financed and the
collateral to cover its losses. A lender's claim to a borrower's collateral is called
a lien.

Different types of loan available

Scheme and key features

Personal Loan
This loan can be utilized for any purpose, for example, paying debt, marriage
expenses or vacation expenditure. No collateral security is required for this type
of loan.

Vehicle Loan
This loan is issued for the purpose of purchasing new or second-hand vehicles
for personal and commercial uses.

Education loan
Students should have an admission offer from an institution before they apply
for education loan.
Gold Loan
Gold loan is given only on providing gold as a security to a bank or any other
lending institution.

Housing Loan
Housing Loans are taken by people for a variety of house-related purposes such
as construction of a house, house renovation, extension of house, buying of
property or land, etc.

Consumer Durable
Loans Consumer Durable Loans are the loans which may be availed for
purchasing of consumer durables like television, refrigerator, etc.

Credit Score
Credit information agencies play a vital role in decision making in loan
application process. After an applicant fills out the application form and hands it
over to the lender, the lender first checks the credit score and credit report of
the applicant. If the credit score is low, the lender may not even consider the
application further and reject it at that point. If the credit score is high, the lender
will look into the application and consider other details to determine if the
applicant is creditworthy. The credit score works as a first impression for the
lender, the higher the score, the better are your chances of the loan being
reviewed and approved. The decision to lend is solely dependent on the lender
and credit score or credit report does not in any manner decide if the loan or
credit card should be sanctioned or not.

Credit Information Bureau (India) Ltd (CIBIL) is India's first credit information
company, also commonly referred as a credit bureau. CIBIL collects and
maintains records of individuals' and non-individuals' (commercial entities)
payments pertaining to loans and credit cards. These records are submitted to
CIBIL by banks and other lenders on a monthly basis; using this information a
Credit Information Report (CIR) and credit score is developed, enabling lenders
to evaluate and approve loan applications. A credit bureau is licensed by the
RBI and governed by the Credit Information Companies (Regulation) Act of 2005.
The Reserve Bank of India requires all credit bureaus to give one free full credit
report, every year, to all consumers.
Government Schemes for Various Savings & Investment Options

• Government Schemes

Government of India accepts deposits from the public and some of them are also
tax saving instruments. National Savings Certificates, Kisan Vikas Patra, Post
Office Savings Certificates, Sukanya Samrudhi Deposit, PPF, etc. are some of the
examples of various schemes run by Government of India. These schemes have
different durations for investments and carry specific interest rates.

Overdraft is a facility available to bank customers wherein they can take a short
term loan from bank to meet their urgent requirements with a promise to pay
back the same amount in the timelines agreed between the bank and the
customer.

B. Basic Insurance Schemes Run by Government of India

1. Pradhan Mantri Suraksha Bima Yojana

Provides accidental insurance cover to bank account holders in the age group of
18 to 70 years.
A fixed annual premium is deducted from the bank account of the insured
through auto—debit facility.
Person would be eligible to join the scheme through one savings bank account
only.
Insurance covers permanent and partial disability due to accident .

2.Pradhan Mantri Jeevan Jyoti Bima Yojana

Provides life insurance cover to bank account holders in the age group of 18 to
50 years.
A fixed annual premium is deducted from the bank account of the insured
through auto debit facility.
Person would be eligible to join the scheme through one savings bank account
only.

3. Pradhan Mantri Jan Aarogya Yojana -Ayushman Bharat

Provides healthcare facilities targeting poor, deprived rural families and
identified occupational category of urban workers' families.
There is no restriction on family size, age or gender.
All members of eligible families, as present in SECC (Socio-Economic Caste
Census 2011) database, are automatically covered.
No money needs to be paid by the family for treatment in case of
hospitalization.
All pre-existing conditions are covered from day one of the policy. The benefit
cover will include pre & post hospitalization expenses. You can go to public or
empanelled private hospitals across the country and get free treatment.

C. Public Provident Fund (PPF)

Tax free savings scheme offered by the Government of India.
PPF account can be opened with either a post office or with any nationalized or
private bank.
Joint account cannot be opened and only one account can be opened by a citizen
in India along with nomination facility.
Investments made in the PPF account during a particular financial year are
available to claim deduction under Section 80C of Income Tax Act up to a certain
limit.
Investors can also avail loans against a particular amount of their investments
made in PPF account subject to other conditions of the scheme.

• Pension Schemes run by Government of India Atal Pension Yojana

(APY)
Pension oriented savings scheme focused on the citizens in the unorganized
sector. It may be opened for all bank account holders.
Objective is to provide a fixed amount of pension to unorganized sector workers,
who find no coverage under other social security schemes.
Minimum age of joining the APY is 18 years and the maximum age is 40 years.
Exit before 60 years is not generally permitted except for in the event of death
of the beneficiary or a terminal disease. However, the spouse can continue with
the scheme after the death of the beneficiary.

• Borrowing related schemes of Government of India

Educational Loans through Vidyalakshmi Portal
The web address of the portal is www.vidyalakshmi.co.in.

Stand up India
Scheme for financing SC/ST and/or Women Entrepreneurs above 18 years of age.
Objective is to facilitate bank loans to the above mentioned target groups.
Purpose of loan is for setting up a new enterprise in manufacturing, trading or
services sector.
TAX SAVING OPTIONS

Income tax is that percentage of your income that you pay to the government so
that it can fund its many expenses such as infrastructural development, pay the
salaries of those employed by the state or central governments, etc. All taxes are
levied based on the passing of a law, and the law that governs the provisions for
our income tax is the Income Tax Act (IT Act), 1961 as amended by subsequent
Finance Acts.
Income tax has to be paid by every individual person, Hindu Undivided Family
(HUF), Association of Persons (AOP), Body of Individuals (BOI), corporate firms,
companies, local authorities and all other artificial juridical persons that
generate income.

Taxes are calculated on the annual income of a person, and an annual cycle (year)
as per the Income Tax law starts on the 1st of April and ends on the 31st of March
of the next calendar year. The law recognizes and classifies the years as "Previous
Year" and "Assessment Year". The year in which income is earned is called the
previous year and the year in which it is charged to tax is called the assessment
year.

Deductions allowed under Income Tax Act

Section 80C - Deduction for money invested in life insurance, provident fund,
ELSS schemes of mutual fund, Special Bank Deposits of 5 year term, contribution
to NPS account (Tier 1 account only), National Savings Certificate, principal
repayment of housing loan, etc.
Section 80CCD (1 B) - In addition to deduction claimed under Section 80C.
Investment in NPS by any individual is available for claiming deduction under
Section 80CCD (1B) of the IT Act.
Amount available for deduction under this section is over and above the amount
available for claiming deduction under Section 80C of IT Act.
Caution against Ponzi Schemes and Unregistered Investment
Advisers

Ponzi Schemes
Ponzi Schemes are named after Charles Ponzi, who constructed one such
scheme at the beginning of the 20th century. Of course the concept was well
known prior to Ponzi’s rise to infamy. A Ponzi scheme is a fraudulent investment
scheme promising high rates of return to investors. The scheme generates
returns for earlier investors from their own money or money paid by subsequent
investors, rather than any actual profit earned. The perpetuation of the returns
that a Ponzi scheme advertises and pays requires an ever-increasing flow of
money from investors to keep the scheme going.

The Ponzi scheme usually attract new investors by offering returns that other
investments cannot guarantee, in the form of short-term returns that are either
abnormally high or unusually consistent. As more investors become involved, the
likelihood of the scheme coming to the attention of authorities increases. It has
been the typical experience that promoter then vanishes, taking all the
remaining investors' money. Such schemes typically collapse under their own
weight as fresh investments slow down and the promoter starts having problems
paying the promised returns.

The system is destined to collapse because the earnings, if any, are less than the
payments to investors. Sometimes, the authorities are able to clamp down on
such schemes before they collapse because they act on suspicion of a scheme
being a Ponzi scheme.

Ways to spot one

• Here are few tips that help you to spot a Ponzi scheme:
• High returns with little or no risk
• Every investment carries some degree of risk. Higher the return, higher is
the risk involved. Be highly suspicious of any guaranteed high return
investment opportunity.
• Overly consistent returns
 • Investments tend to go up and down over time. Be sceptical
about an investment that regularly gives positive returns
regardless of overall market conditions.

Unregistered investments
Ponzi schemes typically involve investment schemes that are not registered with
the regulators or any government agency for their activity. Registration is
important because it provides investors with access to information about the
company's management, products, services and finances.

Unlicensed sellers
Any investment scheme requires to be registered with concerned authority and
state securities laws require investment professionals and firms to be licensed or
registered. Most Ponzi schemes involve unlicensed individuals or unregistered
firms.

Non-transparent disclosure
Avoid investments if you don't understand them or can't get complete
information about them. Account statement errors may be a sign that funds are
not being invested as promised.

Difficulty in receiving payments

Be suspicious if you don't receive a payment or have difficulty cashing out. Ponzi
scheme promoters sometimes try to prevent participants from cashing out by
offering even higher returns for staying invested.
STRUCTURE OF PONZI SCHEME

Protection from fraud

Recently, in India, many of the investors lost money because of the operation of
unregistered entities offering investment schemes. The Sharada Chit Fund Scam
in West Bengal and the illegal mobilization of funds by Sahara firms are relevant
examples. One needs to caution himself or herself about the operation of
fraudulent agencies luring investors by offering higher returns within a short
period. You can keep your money safe by being aware of these risks.

Caution against Unregistered Investment Advisers

Caution against Unregistered Investment Advisers SEBI registers Investment
Advisers under SEBI (Investment Advisers) Regulations, 2013 [Last amended on
July 03, 2020]. "Investment Adviser" means any person, who for consideration,
is engaged in the business of providing investment advice to clients or other
persons or group of persons and includes any person who holds out himself as
an investment adviser, by whatever name called.
The aim of the Regulation is to regulate "investment advice" which refers to
advice relating to investing in, purchasing, selling or otherwise dealing in
securities or investment products, and advice on investment portfolio containing
securities or investment products, whether written, verbal or through any other
means of communication for the benefit of the client and shall include financial
planning: Provided that investment advice given through newspaper, magazines,
any electronic or broadcasting or telecommunications which is widely available
to the public shall not be considered as investment advice for the purpose of
these regulations. Investment Advisers are supposed to obtain registration from
SEBI and follow the Code of Conduct. It is illegal to act as Investment Adviser
without SEBI registration. SEBI is making concerted efforts to stop such illegal
activity. Some unscrupulous and ignorant entities may not get themselves
registered and, or, may not follow the Code of Conduct.

It is illegal to act as Investment Adviser without SEBI registration. SEBI is making

concerted efforts to stop such illegal activity. Some unscrupulous and ignorant
entities may not get themselves registered and, or, may not follow the Code of
Conduct. Investment Advisers have to limit themselves to giving advice and they
should not handle cash or securities.

Investors therefore need to be aware and guard themselves against above

mentioned practices present in the market and deal with caution with entities
claiming expertise in capital markets. Investors are advised to take advice for
investment only from entities registered under SEBI.

Grievance Redressal Mechanism

A. SCORES (SEBI Complaints Redress System)

SEBI launched a centralized web based complaints redressal system “SCORES”.
The purposes of SCORES is to provide a platform for aggrieved investors whose
grievances, pertaining to securities market, remain unresolved by the concerned
listed company or registered intermediary after being approached directly.
Whenever an individual entity faces an issue, he or she has to first contact his or
her company, exchange or broker for filing his complaint. If he is not satisfied
with the resolution provided to him or has not received any response from his
concerned company, exchange or broker where he has filed his complaint, then
he can directly file his complaint on SCORES.
For filing a complaint on SCORES, you may either access http://scores.gov.in or
download SCORES Mobile Application. An investor may lodge a complaint on
SCORES within three years from the date of cause of complaint. In case an
investor fails to lodge a complaint within the stipulated time, he may take it up
with the entity concerned or in the appropriate court of law. You have to first
register on SCORES before lodging your complaint. If you already have a
username and password, then click on the “Register/ login to lodge complaints”.
If you are a first time user, then click on "Register Here" under the title "Not
Registered yet?" and enter your personal details such as name, address and
mobile number. Then, you will have to select a category among the following
options: Listed companies/registrar & transfer agents; Brokers /stock exchanges;
Depository participants/depository; Mutual funds; other entities and
Information to SEBI. Now you should enter specific details of the complaint in 14
Supporting documents up to 2 MB can be attached in the PDF format. In case
the data to be uploaded for each category is more than 2 MB, it can be sent by
post to any SEBI office

Registration number
On filing the complaint, a unique registration number will be generated, which
can be used for future communication. An e-mail with the complaint registration
number will also be sent to the e-mail ID added in the complaint registration
form

View complaint status

You can check your complaint status by logging in to your account. In case of
physical complaints sent to SEBI, enter the password sent to you by SEBI in the
acknowledgement letter and then you can check your complaint. you should try
to contact the person or company that is the cause of your complaint. You might
be able to resolve your problem more quickly by speaking to them directly rather
than waiting for a response to your complaint.

SEBI SCORES Mobile Application

SEBI has launched SCORES mobile app to facilitate the investors to lodge their
grievances at the convenience of their smart phones. The App has all the
features of SCORES which is presently available electronically where investors
have to lodge their complaints by using internet. After mandatory registration
on the App, for each grievance lodged, investors will get an acknowledgement
via SMS and e-mail on their registered mobile numbers and e-mail ID
respectively. Investors can, not only file their grievances but also track the status
of their complaints. Investors can also key in reminders for their pending
grievances. Investors can access the FAQs on SCORES for better understanding
of the complaint handling process. Connectivity to the SEBI Toll Free Helpline
number has been provided from the App for any clarifications/help that
investors may require.
B.Grievance Redressal- Securities Market

C.Grievance Redressal- Banking Industry

D.Grievance Redressal- Insurance Industry

E.Grievance Redressal- Pension Industry

SECURITIES MARKET

FRAMEWORK OF SECURITIES MARKET

The regulation of buying, selling and dealing in securities such as shares of a

company, units of mutual funds, Derivatives, etc. and stock exchanges,
commodity derivative exchanges and depositories comes within the purview of
Securities and Exchange Board of India (SEBI) in terms of SEBI Act, 1992 (SEBI
Act) and various SEBI regulations/ circulars/ guidelines/ directives.

SEBI was established on April 12, 1992 in accordance with the provisions of the
SEBI Act. The mandate of SEBI is to protect the interests of investors in securities
and to promote the development of, and to regulate the securities market and
for matters connected therewith or incidental there to.

At present, the four main legislations governing “the securities market” are:

• The SEBI Act, 1992, which empowers SEBI with statutory powers for (i)
protecting the interests of investors in securities, (ii) promoting development
of the securities market, and (iii) regulating the securities market.

• The Companies Act, 2013, which provides regulations for issuance,

allotment and transfer of securities, and related matters in public issues of
securities;

• The Securities Contracts (Regulation) Act, 1956, which provides for

recognition and regulation of transactions in securities in a Stock Exchange.

• The Depositories Act, 1996, which provides for electronic maintenance and
transfer of ownership of dematerialized (demat) shares.
INVESTMENTS IN SECURITIES MARKET

Before investing in securities, it is better to understand the market and be

fully aware of the risks involved. Be aware of your capacity to handle risk
and invest accordingly. Generally, you can evaluate a potential investment
by analysing seven key risks as mentioned below.

Types of Risks

1. Market risk or Systematic Risk - An investor may experience losses due to

factors affecting the overall performance of financial markets and
macroeconomic factors. Stock market bubbles and crashes are good
examples of heightened market risk.

2. Unsystematic Risk - Unsystematic risk can be described as the uncertainty

inherent in a particular company or industry. Examples of unsystematic risk
include a new competitor in the marketplace with the potential to take
significant market share from the company an investor is invested in, a
regulatory change, such as one that could drive down company sales, a shift
in management, a product recall, etc.

3. Inflation risk - also called as purchasing power risk, is the chance that the
cash flows from an investment won't be worth as much in the future as they
are today because of a decline in its purchasing power due to inflation.

4. Liquidity risk - arises when an investment cannot be bought or sold or

converted into cash quickly enough to prevent or minimize a loss or to meet
any immediate expense. You can minimize this risk to a great extent by
diversifying your investments.

5. Business Risk - It refers to the risk that a business might stop its operations
due to any unfavourable market or financial situation.

6. Volatility Risk - It refers to the risk when the stock prices of a company may
fluctuate, even when those companies aren't in danger of failing. vii. Currency
 Risk Currency risk arises when there is a possibility of losing money due to
unfavourable movements in exchange rates. It may happen from change in
price of one currency in relation to other and investors who have assets
across national borders are exposed to this risk.

Mitigate the risk

The investors can try to mitigate the risk by different means. Asset allocation is
one strategy through which an investor can benefit from diversification of their
investments into various sectors and companies to mitigate risk.
Volatility risk can be managed by investing through Systematic Investment Plan
of Mutual Funds or buying equities directly from the market in smaller lots over
a period of time. A good understanding of the fundamentals of a company can
help one make an appropriate judgment about the health of a company. Of
course, investors should ignore the rumours and unsolicited messages for
investing in securities market.
Investments in securities market are done through primary market as well as
secondary market. The difference between primary market and secondary
market is that in the primary market, investors are allotted securities directly by
the company, while in the secondary market investors buy securities from the
existing investors through their stock brokers. Investments in securities market
are subject to taxation, which includes short term and long term tax on capital
gains as well as dividend pay-outs.

The pre-requisites to invest in securities

In order to invest in equity shares, an investor should have three accounts:

• Savings Account – Saving bank account with a commercial bank
• Trading Account - Trading account with a SEBI registered stock broker of a
recognized stock exchange to buy or sell securities on the Stock Exchange
• Demat Account - Demat account with a SEBI recognized Depository
Participant (DP) of Depository for holding securities in dematerialized/electronic
form The Demat account can be opened with depository participant (DP) of any
of the Depository. National Securities Depository Ltd. (NSDL) and Central
Depository Services (India) Ltd. (CDSL) are two SEBI registered depositories in
India.

The list of SEBI registered stock brokers and depository participants may be
obtained from SEBI’s official website (www.sebi.gov.in) or from the websites of
the respective stock exchanges & depositories.

Primary Market
When a company publicly issues new stocks and bonds for the first time, it does
so in the primary market. In many cases, this takes the form of an initial public
offer (IPO). SEBI examines the prospectus issued to the public for subscription of
shares to see that it meets with the requirements of the SEBI Regulations.
Companies issuing securities via the primary market hire merchant bankers who,
on behalf of the company, prepare the prospectus and ensure related
compliance for the issue of shares viz. finalization of allotment process, listing of
shares in the stock exchanges, etc.

Application Supported by Blocked Amount (ASBA) for Shares

An investor can now apply for shares in the primary market through ASBA. In
public issues w.e.f. May 01, 2010 all the investors can apply through ASBA. ASBA
is an application by an investor containing an authorization to the bank to block
the application money in his/ her bank account, for subscribing to an issue.
Blocked amount continues to earn interest. If an investor is applying through
ASBA, his application money shall be debited from the bank account only if
his/her application is selected for allotment, after the basis of allotment is
finalized. The investor need not have to bother about refunds as money to the
extent required for allotment of securities, is deducted from the bank account
and in case the securities are not allotted to the investor, then the blocked
amount in his/ her bank account is released and made available to use. SSS
Unified Payment Interface (UPI) in ASBA

A new feature of utilizing Unified Payment Interface (UPI) while making payment
in ASBA, has also been introduced recently. This feature may be used for the
purpose of blocking of funds and making payments in the public issue process.
This requires the investors to create a UPI ID and PIN using any of the UPI enabled
mobile application. Usage of UPI in public issue process brings in comfort, ease
of use and reduces the listing time for public issue.

Secondary Market
Secondary market is the market where securities are traded after the company
has issued the stocks and bonds in the primary market. The shares are listed and
traded on the stock exchanges which facilitates the buying and selling of stocks
in the secondary market. Major SEBI recognized stock exchanges in India are BSE
Ltd. (formerly Bombay Stock Exchange Ltd.) and the National Stock Exchange of
India Ltd. (NSE). Anyone can purchase securities on the secondary market as long
as they are willing to pay the price at which the securities are being traded.
Investment in securities market should be done after carrying out research on
the background of the company, future prospects and financial strength of the
company.
Know Your Client (KYC)
For the purpose of opening of Demat and trading account with a Depository
Participant (DP)/Stock broker, the investor has to complete Know Your Client
(KYC) process with the respective DP/Stock Broker. KYC is mandatory under the
Prevention of Money Laundering Act, 2002 and Rules framed there under.
Investor has to submit Officially Valid Documents (OVDs) as proof of identity and
proof of address such as PAN card / Unique Identification (UID) (Aadhaar)/
Passport/ Voter ID card/ Driving license, etc. KYC process may be done online
through Aadhaar based EKYC mechanism or offline by visiting or sending the
documents to the registered address of the indeminity.

Once you have opened an account with a stock broker, you can buy or sell shares
of a company through a stock broker of the recognized stock exchange where
the shares are listed and traded. You can place order to buy or sell securities with
your broker using the online trading account by visiting broker's website, mobile
trading app of broker, through he phone using Call & Trade facility or physically
visiting their office.

Modes of placement of orders

Trading days and Trading & Settlement Cycle

Trading on the stock exchange takes place on all days of the week (except
Saturdays and Sundays and holidays declared by the Stock Exchange in advance).
In case of purchase of shares, investors are required to make payment to the
bank account of your stock broker prior to the pay-in day for the relevant
settlement. Once payment is made by the investor, the broker would credit the
shares in the Demat account of investor after pay-out day. Similarly, in case of
sale of shares, investors are required to deliver the shares to Demat account of
broker prior to the pay-in day for the relevant settlement. Once the shares are
delivered by the investor, the broker would credit the

What is the pay-in day and pay-out day?

Pay-in day is the day when the brokers shall make payment of funds (in case of
purchase of shares) or delivery of securities (in case of sale of shares) to the stock
exchange. Payout day is the day when the stock exchange makes payment of
funds (in case of sale of shares) or delivery of securities (in case of purchase of
shares) to the broker. Settlement cycle is on T+2 rolling settlement basis w.e.f.
April 01, 2003 (where T stands for the trade day). For example, trades executed
on a Monday are typically settled on the following Wednesday (considering 2
working days from the trade day). The funds and securities pay-in and pay-out
are carried out on T+2 day.
The exchanges have to ensure that the pay-out of funds and securities to the
clients is done by the broker within 24 hours of the pay-out.

Margin and Pledging / Re-pledging of securities

When an investor buys a stock, he has two options to pay the entire price of the
stock upfront, called early pay to pay only a certain percentage of the price of
the stock and borrow money from the broker to finance the rest. The percentage
of the price of the stock paid upfront is called margin. The payment of the
remaining amount can be made by the designated pay-out time.
Similarly, when an investor desires to sell his stocks he has the option to either
pay in the shares to be sold or can give a margin upfront. Margin can be provided
in the form of cash or instruments like fixed deposits, bank guarantee, securities,
units of mutual funds, government securities and treasury bills in demat form.
Margin is provided in the form of securities, in favour of the broker only in the
form of pledge. A pledge is a deposit of some personal property as collateral for
a debt. Stock Brokers can accept securities (viz shares) as collateral only in the
form of margin pledge created on the securities held in client’s demat accout.
Investor needs to give instructions to create margin pledge on securities. This
instruction can be in physical form or electronically through “SPEED-e” (for
NSDL) and “Easiest” (for CDSL).

Contract Note
A Contract Note is evidence of trade done by the stock broker given to the
investor and is a legal document which contains details of the transaction such
as securities bought/sold, traded price, time of trade, brokerage, etc. Contract
Notes can be issued in physical form or in electronic form. In case investor opts
for electronic contract note, a specific authorization needs to be given to the
stock broker along with the details of email of the investor. Such electronic
contract notes shall be digitally signed and encrypted which would make them
difficult to be tampered.

Basic Services Demat Account (BSDA)

SEBI with a view to achieve wider financial inclusion, encourage holding of demat
accounts. In order to reduce the cost of maintaining securities in demat accounts
for retail individual investors, SEBI has made available a Basic Services Demat
Account" (BSDA) to investors.
Benefits of BSDA

• Nil/Low Annual Maintenance Charges (AMC)

• Free of charge periodic Transaction and Holding statements of
the Demat account.
• physical statements free of charge during the billing cycle.
• At least 2 Delivery Instruction Slips (DIS) shall be issued at time
of account opening.

Annual Maintenance Charges (AMC)

It refers to the charges collected by Depository Participants (DPs) towards the
maintenance of Demat accounts of the beneficiary owners (Account Holders),
depending upon the value of holdings in the Demat account.
SECURITIES AND SECURITIES MARKET

• Equity shares or commonly called as shares ,represent a share of ownership

in a company . An investor who invests in a company is a shareholder. And is
entited to receive all corporate benefits like dividends out of all to company.
The investor also entitled to receive the right to cast a vote with regard to
decision making process of the company at general meeting of company.

• Debt securities represents money that is borrowed by the company from an

investor and must be repaid to the investor. Debt securities are also called
debentures and bonds. An investor who invests in debt securities is entitled
to receive payment of intreast and repayment of principal. Debt securities
are issued for a fixed term , at the end of which the securities can be
redeemed by the issuer of securities . Debt securities are secured or
unsecurd.

• Derivatives are financial instruments whose value deponds upon the value of
another assets such as shares , debt securities ,etc. the main types of
exchange traded derivatives and future and options

• Mutual funds are type of financial instruments made up of a pool of money

collected from investors. Those funds mutual fund then invest in securities
such as shares , bonds ,money market instruments and other assets.

Securities Market is a place where companies can raise funds by issuing

securities such as equity shares , debt securities etc. is a place where investors
can buy and sell various securities.
PRIMARY MARKET AND SECONDARY MARKET

Primary Market: This market is also called as the new issues market where
company / institutions raise funds (capital) from public by issuing new securities
(shares, debentures, bonds, etc.

There are two major types of issuers of securities:

• Corporate Entities (companies) which mainly issue equity instruments
(shares) and debt instruments (bonds, debentures, etc.)
• Government (Central as well as State) which issues debt securities (dated
securities and treasury bills).

The types of issues made in Primary Market are:

Public Issue
Securities are issued to general public and anyone can subscribe to them. Public
issue of equity shares can be categorized as follow :
Initial Public Offer (IPO): An IPO is where first public offer of shares is made by a
company. An IPO can be in the following forms:
• Fresh issue of shares where new shares are issued by the company to the
public investors . In this kind of an issue , the funds of investors will go to the
company to be used for the purpose for which the issue is made.
• Offer to sale where existing shareholders such as promotors or financial
institutions or may other person offer their holding to public . in this kind of
an issue , the funds of investors will go to such sellers of the shares and not
to the company

Preferencial Issue

In this mode of issue ,securities are issued to an indentified set of investors like
promotors, strategic investors, employees , etc.
Right Issue
When the company gives its existing shareholders the right to subscribe to
newely issued shares, in propotion to their existing shareholding it is called right
issue.

Bonus Issue
When the existing shareholders of a company are issued additional shares. In
proporation of their existing shareholding and without any additional cost , then
it is called bonus share.

The securitries which are issued in primary market are listed on a recognized
stock exchange in less than six working days from date of the closure of the issue.
The shares are then listed on the recoganized stock exchanges ,where further
trading of the shares take place.

Depository Participant - The shares allotted by the company are credited in

the demart account of the investor which is maintained with a depository
through a sebi registred depositry participant (DP). An investor can sell the
shares on the stock exchange through a sebi registred stock broker and receive
money.

Secondary Market – once the securities are issued in primary market, they get
listed on stock exchange and the investors can buy or sell these listed securities
through stock exchange.
Basics of investing

Before you start investing in securities market, you need to understand and
identify your investment goals, objectives and risk appetite (the extent up to
which you are willing to take risk). Every investment decision should reflect your
needs and requirements and should be as per your desired preferences. For
example, whether you are willing to invest in safe products which give steady
returns or if you want to take slightly higher risk and invest in products which
may give you higher returns. Every investment comes with the risk of change in
the inherent value of that investment. For example, investment in shares of
automobile industry will attract the risk attached with the automobile industry

Once you have decided your goals and identified your risk appetite, please
decide the amount you want to invest and the time period over which you want
to invest. The ability to take risk differs from investor to investor and could be
dependent on the goals as well as the age of the investor.

Investors should make informed decision before investing in the shares of a

company. They should carefully read all the information related to the company
such as disclosures related to the company, its promoters, the project details,
financial details, etc. These details can be found on the websites of the stock
exchanges.

For investing in securities market, investors may also approach any SEBI
registered Investment Adviser. A list of SEBI registered Investment Adviser(s) may
be found on the following link: https://www.sebi.gov.in.
MARKET INFRASTRACTURE INSTITUTIONS AND MARKET
INTERMEDIATRIES IN SECURITY MARKET

Market Infrasture Institution- The infrastructure to facilitate the transactions in

securities market is provided by stock exchange depositories and clearing
corporation. These institution are also known as market infrasture institutions.
A list of sebi registred market infrastructure institution is available on website.

The stock exchanges - provide a nation wide computerized screen based trading
platform to facilite buying and selling of securities, through their registred stock
broker and at market determined prices in fair manner.
The major nation-wide stock exchanges are BSE limited (BSE), National Stock
Exchange (NSE) and metropolitan stock exchange of india (MSE).

Clearing Corporations – The main function of clearing corporations is to gurantee

the settlement of trades executed on the stock exchanges. In other words this
gurante that’s every buyer will get the securities that every buyer will get the
securities which are brought by him and seller of securities will get the money
for the securities sold by him.

Market intermeditries are important participants in the smooth functioning of

the primary and the secondary markets. These markets intermadetries support
the the process of executing order for buying or selling of secutries. Some
important intermeditries are stock broker, depository participants ,merchant
banking , share and transfer agent , registers etc.
Depositories are institutin that hold securties of investors in electronic form and
provide demart services to the investos through their depository participants
(DP) . There are two depostries in our country namely , National securities
depository limited (NSDL) and central depository service (India) limited (CDSL).
Under each depository ,there are registred depositoy particpants (DPs) which
provide various services to the investors like opening and maintaing of demart
account, dematrialization of shares etc.
Ways to Mitigate the Risk in
The investors can try to mitigate risk by different means. Asset
allocation is one strategy through which an investor can mitigate risk
by diversifying their investments into various companies and asset
classes

Margin money

The margin money is prescribed by exchanges / Clearing Corporations and

collected from investors by brokers before executing a trade on their behalf. The
margin money is collected to mitigate the risk of non- payment of funds for buy
trades or non-delivery of securities for sell trades by an investor. Margin can be
provide in the form of cash or securities or cash equivalent i.e. fixed deposits,
bank guarantee, units of mutual funds, government securities, and treasury bills
in demat form etc. With effect from September 01, 2020 investors (client) can
provide margin in the form of “securities” only by pledging the securities in
favour of specially designated demat account of stock broker. Early Pay-in: In case
investor wants to avail exemption from payment of margin, investor may use
“early pay-in” facility where payment of funds / delivery of shares shall be made
to the broker before the pay-in date or as per time/date specified by the broker.

Consolidated Account Statement (CAS)

Consolidated Account Statement (CAS) is a single/ combined account statement
which shows the details of transactions made by an investor during a month
across all Mutual Funds and also other securities held in the demat account(s).
In order to get your CAS, you should update your PAN card number with your
stock broker/ depository participant
DERIVATIVES MARKET

Derivatives refers to the financial instruments which derive their value from an
underlying security or financial instrument. The underlying products can be
equity, commodity, currency, etc.

Derivatives are primarily used by investors for hedging their position and
minimizing the price risk. Hedging is basically a risk management strategy in
which the investors invest in the instruments strategically to offset the risk of any
adverse price movements.

The players in derivatives may be hedgers, speculators and arbitrageurs and

different roles may be played in different situations. Futures and Options, or
commonly called as F&O segment, are an essential part of the derivatives
segment of the securities market.

Futures and options are two different types of derivatives. A futures contract is
a standardized exchange traded contract to buy or sell an underlying product at
a predetermined price on a future date.

An options contract refers to the financial instrument which gives the buyer of
the option the right but not the obligation to exercise the option at a pre-
determined date and price.

A call option gives one the right to buy the underlying security and a put option
gives one the right to sell the underlying security. Investors are charged a
premium when they buy an options contract
ARBITRATION MECHANISM

Arbitration refers to a quasi-judicial process of settlement of disputes between

Stock Broker and investor. When one of the parties feels that the complaint has
not been resolved satisfactorily either by the other party or through the
complaint resolution process of the Exchange, the parties may choose the route
of arbitration process available with Stock Exchange.

For further information regarding the list of investor service centres, process of
arbitration and fees and charges involved, you may visit the websites of
respective stock exchanges.
Do's and Don'ts for investing / trading in securities market

Do's
• Always consult a SEBI registered Investment Advisor for your investment
needs in securities market.
• Invest in a scheme/product depending upon your investment objective and
risk appetite.
• Insist on a valid contract note/ confirmation memo for trades done within 24
hours of the transaction. Keep track of your portfolio in your Demat account
on a regular basis.
• Read all the documents carefully before signing them.
• You should carefully note all the charges/ fees/ brokerage that are applicable
on your accounts and keep a record of the same.
• Keep a record of documents signed, account statements, contract notes
received and payments made.
• Periodically review your financial needs / goals and review the portfolio to
ensure that the same are possible to achieve.
• Always pay for your transactions using banking channel, i.e. no dealing in
cash.
• Always keep your information updated. Inform your stock broker / DP
whenever there is change in your address or bank details or email ID or
mobile number. Since SIM cards now have the feature of getting ported to
different service providers, investors may keep same mobile numbers
attached with their respective accounts. (Mobile number is the key to all
important transactions.)
• Avail nomination facility for all your investments. Multiple nominations are
allowed in Demat accounts.
• Examine and review your trading account periodically.
• Regularly check daily SMS and email from Exchange regarding trades done
on that day.
• Regularly check Monthly SMS and email from Exchange regarding funds and
securities balances of the investors maintained with the Trading Member.
Don'ts
• Don't borrow money for investment.
• Don't deal with unregistered brokers/ other unregistered intermediaries.
• Don’t pay more than the agreed brokerage/charges to the intermediary.
• Don’t execute any document with any intermediary without fully
understanding its terms and conditions.
• Don’t sign any blank form or Delivery Instruction Slips.
• Don’t issue general Power of Attorney (PoA) in favour of the Stock
Broker/Depository Participant. Exercise due diligence by issuing a very
specific one, if you want to issue a PoA
• In case of disputes, file written complaint to intermediary/Stock
Exchange/SEBI within a reasonable time.
• Dabba Trading is illegal. Even if it appears that you are saving on costs, do
not indulge in Dabba Trading as it offers no benefits of safe and guaranteed
trades done on Stock Exchanges. Dabba trading is essentially informal trading
using cash that takes place directly among traders, who bet on stock price
fluctuation.
CONCLUSION

Investor education and awareness are critical pillars for the development of a
transparent, fair, and efficient financial market. SEBI, through its various
initiatives, has played a pivotal role in empowering investors by promoting
financial literacy, safeguarding their rights, and encouraging informed decision-
making. From organizing workshops and launching educational portals to
regulating intermediaries and cracking down on fraud, SEBI's efforts have
significantly enhanced investor confidence. As markets continue to evolve, it is
essential for investors to stay informed, and for SEBI to continue adapting its
outreach strategies to meet emerging challenges. A well-informed investor is not
only better protected but also contributes to a stronger and more resilient
financial ecosystem.
BIBLOGRAPHY

Securities and Exchange Board of India (SEBI). (n.d.). Investor Education

Website. Retrieved from https://investor.sebi.gov.in
SEBI. (2021). Investor Charter. Retrieved from: www.sebi.gov.in
SEBI. (n.d.). SCORES – SEBI Complaints Redress System. Retrieved from:
https://scores.gov.in
National Institute of Securities Markets (NISM). (n.d.). Financial Education
Initiatives. Retrieved from: https://www.nism.ac.in
Bombay Stock Exchange (BSE). (n.d.). Investor Education Programs. Retrieved
from: https://www.bseindia.com
National Stock Exchange of India (NSE). (n.d.). Investor Awareness and
Education. Retrieved from: https://www.nseindia.com
Press Information Bureau (PIB). (2021). SEBI’s initiatives for Investor
Protection and Awareness. Government of India. Retrieved from:
https://pib.gov.in
Economic Times. (2022). SEBI’s drive on financial literacy and investor
protection. Retrieved from: www.economictimes.indiatimes.com
Reserve Bank of India (RBI). (n.d.). Financial Literacy Initiatives in
collaboration with SEBI and other institutions. Retrieved from: www.rbi.org.in
 Questionnaire
1. Basic Information
Age:
• Below 18
• 18-30
• 31-40
• 41-50
• 51 and above
Gender:
• Male
• Female
• Other
Occupation:
• Student
• Working Professional
• Self-Employed
• Retired
• Other (Please Specify): _______________
2. General Investment Knowledge
1. How familiar are you with the term "Securities Market"?
• Very familiar
• Somewhat familiar
• Not familiar
2. Are you aware of SEBI (Securities and Exchange Board of India) and its
role?
• Yes
• No
• Not sure
 3. Have you ever invested in the stock market, mutual funds, or other
financial instruments?
• Yes
• No
4. Do you know the difference between a stock and a bond?
• Yes
• No
• Not sure
3. SEBI Initiatives Awareness
1. Are you aware of SEBI's investor education initiatives like Securities
Market Awareness Campaigns, Investors' Awareness Programs, or SEBI
Investors Protection Fund?
• Yes
• No
2. Have you ever attended any of SEBI’s investor awareness programs or
webinars?
• Yes
• No
• Not aware of such programs
3. Are you familiar with SEBI’s online resources such as the investor
education section on their website?
• Yes
• No
• Not sure
4. Do you think SEBI’s initiatives have helped increase your awareness about
frauds or scams in the financial markets?
• Yes
• No
• Not sure
4. Investor Protection and Rights
 1. Are you aware of the rights of investors in India under SEBI’s guidelines?
• Yes
• No
2. Do you know where to report any financial fraud or misconduct in the
securities market?
• Yes
• No
3. In case of a dispute with a broker or financial institution, do you know the
procedure to resolve it with SEBI?
• Yes
• No
4. Have you ever used SEBI’s "Investor Grievance Redressal Mechanism"?
• Yes
• No
• Not aware of this facility
5. Financial Literacy and Investment Decision-Making
1. How confident are you in making your own investment decisions?
• Very confident
• Somewhat confident
• Not confident
2. Do you consult a financial advisor before making investment decisions?
• Yes
• No
• Sometimes
3. How often do you seek information about the risks involved in your
investments?
• Always
• Sometimes
• Never
 4. Have SEBI’s educational campaigns made you more cautious and aware
while investing in the stock market or mutual funds?
• Yes
• No
• Not sure
6. Challenges in Investment Awareness
1. What are the main barriers you face in understanding financial markets
and investments? (Select all that apply)
• Lack of knowledge/education
• Complexity of investment options
• Lack of reliable sources of information
• Fear of losing money
• Other (Please specify): _______________
2. What could SEBI do to improve investor education in India? (Select all that
apply)
• More interactive webinars and workshops
• Better online resources and tools
• Increased advertisements and campaigns
• Simplification of financial products
• Other (Please specify): _______________
7. Feedback
1. How would you rate the overall effectiveness of SEBI’s investor education
initiatives?
• Excellent
• Good
• Average
• Poor
2. What additional resources or information would you like SEBI to provide
to help you make informed investment decisions?
• _______________
3. Any other suggestions or comments?
• _______________