Final Project Report On Small Saving Options

SUMMER INTERNSHIP PROGRAM 2009 Project Final Report ON STUDY OF AWARENESS LEVEL OF SMALL SAVING OPTIONS AND KNOWING THE CUSTOMER PREFERENCES AND KNOWLEDGE ABOUT THESE PLANS

BY RAJESH BOHRA IBS AHMEDABAD 08BS0002545

KOTAK MUTUAL FUND

1

Project Final Report ON STUDY OF AWARENESS LEVEL OF SMALL SAVING OPTIONS AND KNOWING THE CUSTOMER PREFERENCES AND KNOWLEDGE ABOUT THESE PLANS

BY RAJESH BOHRA IBS AHMEDABAD 08BS0002545

The Report is submitted as partial fulfillment of the Requirement of MBA Program of IBS Submitted to:s Mr. Prashant Saxena 2

Mr. Nayan Maniyar Contents Acknowledgments......................................................................................................4 Abstract........................................................................................ ................................5 Introduction to company............................................................................................6 INTRODUCTION TO MUTUAL FUND AND ITS VARIOUS ASPECTS.................................7 ADVANTAGES OF MUTUAL FUND.................................................................................9 DISADVANTAGE OF MUTUAL FUND.............................................................................9 CATEGORIES OF MUTUAL FUND:.................................................................................10 Introduction to Project..............................................................................................11 Need of Small Savings Plans....................................................................................12 Category of small saving Investment................................................................13 Detail Study of Small saving plan.............................................................................14 Objective of the project:...........................................................................................24 Methodology for Project....................................................................................... .....25 Limitations of project:........................................................................................ .......25 PLAN ANALYSIS OF CUSTOMER SURVEY............................................................26 Analysis of project:............................................................................. ......................27 Interpretation from all graphs made:........................................................................49 Conclusion:.................................................................................................. .............51 References............................................................................................................ ....52 Executive Summary..............................................................................................53 Attachments........................................................................................... ..................54

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Acknowledgments I would like to thanks Mr. Manminder Malhi, state head of Kotak Mutual Fund, who allowed me to do my summer project at well regarded Asset Management Company and offer me the opportunity to learn more about mutual funds and banking. I express my appreciative thanks to Mr. Prashant Saxena , faculty guide for his guidance and help to complete my summer project. I would also like to thank Mr. Nayan Maniyar, asst. manager-sales of Kotak Mutual Fund for his helpful advice and guidance and my thanks to those unnamed staff of Kotak Mutual Fund.

Rajesh Bohra 08bs002545 IBS, Ahmedabad

4

Abstract Investing money is a freater than earning money, especially in market slow down and with so many options available (mutual fund, FDs, Insaurances, Post office savings.) Today saving plans play an important role in the econmy. India's high savings rate has been a crucial driver of its economic boom, providing productive capital and helping to fuel a virtuous cycle of higher growth. Indian mutual fund market has high proportion and about 5-10% of the Indian population is in mutual fund investment. My project is ‘Study of awareness level of small saving options and knowing the customer Preferences and knowledge about these plans’. The purpose of the project is to know about the small savings options and how customer prefers these plans. Today around 27% of total investment is covered by small saving plans. Secondary data will be used for getting knowledge about these plans and customer’s preferences will be known by the Primary sources/data. Primary data is collected from the market survey through the questionnaire. After that social economic class (SEC) A, B, C is formed on the basis of profession and education. Data entry is done in SPSS software. Analyzing is done on the basis of hypothesis formed. Finally through this analyzing we get to know about how people invest acc. to their income and age.

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Introduction to company

Kotak Mahindra Asset Management Company Limited (AMC) is a wholly owned subsidiary of Kotak Mahindra Bank Ltd. Kotak Mahindra Finance Limited (KMFL) was set up in 1985 with a capital base of Rs. 3 million and a single product. From those beginnings, KMFL has grown into a highly diversified financial services company with a net worth of over Rs. 59 billion. The Group currently offers financial services of every kind, including loans, lease and hire purchase, consumer finance, car finance, investment banking, stock broking and primary market distribution of equity and debt products, business information services and more. The Group has offices across 370 cities in India as well as in Dubai, Mauritius and London. Kotak Mahindra (UK) Ltd, a subsidiary of KMFL, is the first company owned from India to be registered with the Securities and Futures Authority in London.

No. of schemes No. of schemes including options Equity Schemes Debt Schemes Short term debt Schemes 6

66 178 24 126 8

Equity & Debt

3 7

Corpus under management -- 15813.2734 Crs. As on Mar 31, 2009

INTRODUCTION TO MUTUAL FUND AND ITS VARIOUS ASPECTS Mutual fund is a trust that pools the savings of a number of investors who share a common financial goal. This pool of money is invested in accordance with a stated objective. The joint ownership of the fund is thus “Mutual”, i.e. the fund belongs to all investors. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciations realized are shared by its unit holders in proportion the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. A Mutual Fund is an investment tool that allows small investors access to a well-diversified portfolio of equities, bonds and other securities. Each shareholder participates in the gain or loss of the

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fund. Units are issued and can be redeemed as needed. The funds Net Asset value (NAV) is determined each day. Investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. Mutual fund issues units to the investors in accordance with quantum of money invested by them. Investors of mutual funds are known as unit holders.

8

When an investor subscribes for the units of a mutual fund, he becomes part owner of the assets of the fund in the same proportion as his contribution amount put up with the corpus (the total amount of the fund). Mutual Fund investor is also known as a mutual fund shareholder or a unit holder. Any change in the value of the investments made into capital market instruments (such as shares, debentures etc) is reflected in the Net Asset Value (NAV) of the scheme. NAV is defined as the market value of the Mutual Fund scheme's assets net of its liabilities. NAV of a scheme is calculated by dividing the market value of scheme's assets by the total number of units issued to the investors.

ADVANTAGES OF MUTUAL FUND •

Portfolio Diversification

•

Professional management

•

Reduction / Diversification of Risk

•

Liquidity

•

Flexibility & Convenience

•

Reduction in Transaction cost

•

Safety of regulated environment

•

Choice of schemes

•

Transparency

DISADVANTAGE OF MUTUAL FUND •

No control over Cost in the Hands of an Investor

•

No tailor-made Portfolios 9

• •

Managing a Portfolio Funds

Difficulty in selecting a Suitable Fund Scheme

10

CATEGORIES OF MUTUAL FUND:

11

Introduction to Project The project is ‘Study of awareness level of small saving options and knowing the customer Preferences and knowledge about these plans’. The purpose of the project is to know about the small savings options and how customer prefers these plans. After losing their investments in stock markets in the past, small investors prefer risk-free small savings schemes, which saw 27.33 per cent surge in collection of money. Customer prefers these small savings plan because the return is and there is no risk. In current scenario of market slowdown everyone wants safe side investment, so this is best option for them. In fact mutual fund has tapped 5-10% of Indian market. From the customer point of view investment product helps them to get better return than the regular saving account. Small saving plans are the important aspects of the investments. These financial plans not only provide you money growth but also provide you with financial security at various steps in your life. It depends on your needs which product suits you best. For an example if you are looking for short term savings then you can invest your money in post offices , government bonds, mutual funds, and if you are concentrated to long term savings then public provident funds (PPF ),life insurance, long term bank deposits (FDs, RDs) can help you. In the project I will analyze customer preference towards these plans and their expectation towards these plans according to their age.

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Need of Small Savings Plans India's high savings rate has been a crucial driver of its economic boom, providing productive capital and helping to fuel a virtuous cycle of higher growth, higher income and higher savings. Since the 1990s, the gross domestic savings rate has risen steadily from an average of 23% to an estimated high of 35% in the 2006/07 fiscal year (April-March). The latter rate compares very favorably not only with developed economies (the US and the UK have savings rates of around 14%), but also with other emerging economies—with a few exceptions such as Malaysia (38%) and Chile (35%). After losing their investments in stock markets in the past, small investors are preferring risk-free small savings schemes, which saw 27.33 per cent surge in collection to Rs 54,126 crore in April-August in the current fiscal from Rs 42,507 crore in April-August in the past two fiscal years. The above plans show how the small savings are useful to the developing country like India. Addition of rupee to rupee makes a huge amount and it is very useful to the country’s economy. Since India’s 60% population is dependable on agriculture so these small saving plays a great role and encourage the common man to come out for saving and this make a country economically good.

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Category of small saving Investment Small Saving Options investment can be done through following ways:I. Variable return II. Fixed return The following plans in project can be explain through above category: 1. Variable return: - In this the return totally depends on the market like mutual fund investments. In this SIP(systematic investment plan) can be taken as small saving plan.SIP helps the customers to b shares of mutual fund by making regular payments-usually as little as Rs500. 2. Fixed return: - In this the return is being fixed earlier by the government. The chances of change in the rate of interest are less. This contain:I. Kisan Vikas Patra II. National Savings Certificate III. Fixed Deposits IV. Post office term Deposit V. Monthly Income Scheme Account VI. Recurring Deposit Account VII.Public Provident Fund(PPF) VIII.RBI Bonds IX. Post office Saving Account X. Pay Roll Saving Scheme XI. Senior Citizen Saving Schemes

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Detail Study of Small saving plan Following are details of the saving plans which are considered in project:-s

1. Kisan vikas patra a) Maturity Period – 8 years 7 months

b) Money doubles in the after maturity period c) Mode of payment- Lumpsum d) Minimum amount—Rs 100 e) Maximum amount—No limit f) No tax and loan facility is available. Advantages:• • •

Long term investment. Return is double after maturity. Mostly liked by people from rural and people whose income is less.

Disadvantages:• •

If money is taken back before maturity period than interest provide is 3.5%. Investment time is very high, so less preferred.

Product Availability:•

Through agents and all post offices

Marketing of the product:•

Through agents, internet.

advertisements, 15

Word

of

mouth

and

2. National Saving Certificate a) Maturity Period—6 years

b) Interest—8.16% (compounded half yearly) c) Mode of payment- Lumpsum d) Minimum amount—Rs 100 e) Maximum amount—No limit f) Loan facility—No g) Tax benefits—Yes

Advantages:• •

Tax benefit is there Interest is compounded half yearly so, it increases after 6 months and becomes 12.06% after 6 years. Mostly liked by every category of people.

•

Disadvantages:• •

Money is encased back after maturity period only. Investment time is high.

Product Availability:•

Through agents, banks and all post offices

Marketing of the product:•

Through agents, advertisements, Word of mouth and internet

3. Public Provident Fund a) Maturity Period—15 years b) Interest—8% c) Mode of payment- Lumpsum/Installments d) Minimum amount—Rs 500 e) Maximum amount—Rs 70,000 f) Loan benefit –Yes 16

g) Tax Benefits—Yes Advantages:•

Money is paid in installments.

•

People mostly invest in it for tax benefit.

•

Loan facility is available.

•

Deposits in this account are not subject to attachment under an order or a decree of Court and are also free of Wealth Tax.

Disadvantages:• • •

Return interest is less. People invest only for tax. Maturity period is high.

Product Availability:•

Through agents, Nationalize bank and all post offices

Marketing of the product:•

Through agents, advertisements, Word of mouth and internet

4. Post Office Monthly Income Scheme (POMIS) a) Maturity Period—6 years b) Interest—8% c) Mode of payment- Lumpsum d) Minimum amount—Rs 1500 e) Maximum amount—Rs 4, 50,000 f) Loan benefit –no g) Tax Benefits—no

Advantages:17

•

Money is paid monthly, acc. to investment and interest.

•

Deposit may be made in cash or cheque or demand draft

•

Mostly liked by old age people.

Disadvantages:• •

To get good monthly income, we have to invest high lumpsum amount. No tax benefits.

Product Availability:•

Through agents and all post offices

Marketing of the product:•

Through agents, advertisements, Word of mouth and internet

5. Post Office Term Deposits (POTD) a) Maturity Period—1-5 years b) Interest—6.25-7.5% c) Mode of payment- Lumpsum d) Minimum amount—Rs 50 e) Maximum amount—No limit f) Loan Facility –no g) Tax Benefits—no Advantages:• •

Maturity period is less. Amount is less, so affordable for every category.

Disadvantages:• •

Return interest is less, so liked by people whose income is more. No tax and loan facility.

Product Availability:18

•

Through agents and all post offices

Marketing of the product:•

Through agents, advertisements, Word of mouth and internet

6. Post Office Recurring Deposits (PORD) a) Maturity Period—5 years b) If Rs10 is invested for 5 years than Rs600 becomes Rs728.90 c) Mode of payment- Lumpsum/Installments d) Minimum amount—Rs 10 e) Maximum amount—No limit f) Loan Facility –Yes g) Tax Benefits—no Advantages:• • •

Loan facility is available. Payments are also through installments. Low investment, so liked by daily earning wage people.

Disadvantages:• •

Less interest acc. to maturity period. Only popular among low earning people.

Product Availability:•

Through agents and all post offices

Marketing of the product:•

Through agents, advertisements, Word of mouth and internet

7. Post Office saving Account (POSA) a) Maturity Period—min 1 year b) Interest—3.5% c) Mode of payment- any type of payment d) Minimum amount—20 e) Maximum amount—1, 00,000 f) Loan benefit –no 19

g) Tax Benefits—Yes Advantages:• •

Tax facility is available so people prefer it. Payments are through any mode.

Disadvantages:•

People do not use it as the investments.

Product Availability:•

Through agents sand all post offices

Marketing of the product:•

Through agents, advertisements, Word of mouth and internet

8. Senior Citizen Saving Scheme (SCSS) a) Maturity Period—5 year (can be extended for 3 years) b) Interest—9%(compounded quarterly) c) Mode of payment- Lumpsum d) Minimum amount—1000 e) Maximum amount—15, 00,000 f) Loan benefit –no g) Tax Benefits—no Advantages:•

Money can be taken back before maturity period.

Disadvantages:•

Less interest acc. To maturity period.

Product Availability:•

Through agents and all post offices 20

Marketing of the product:•

Through agents, advertisements, Word of mouth and internet.

9. Systematic Investment Plan (SIP) a) Maturity Period—min. 6 months b) Interest—depends on market c) Mode of Payment-- Installments d) Minimum amount—1000 e) Maximum amount—No Limit f) Loan benefit –no g) Tax Benefits—On Tax Saver Plan Advantages:• • •

Payments are through installments. Good returns when the market is down. Least Risky

Disadvantages:• •

Variable return because of market dependable. More transparency.

Product Availability:•

Through agents, Distributors and mutual fund offices.

Marketing of the product:•

Through agents, advertisements, Word of mouth and internet

10. Fixed Deposits (FD) a) Minimum amount:• Nationalize Banks—Rs 5000/10000 • Private Bank—Rs 10000 • Co-operative Bank—Rs 500/1000 b) Loan—Yes (Bank Overdraft) 21

c) Tax Benefit—No d) Mode of payment- Lumpsum e) Minimum maturity period —15 days f) Maximum maturity period —10 years h) Maximum amount—No limit I) Interest— for all banks the interest is same, there is a slightly change in the Interest rate. It is different for the different banks. There may be difference in the maturity period and returns. The main difference is between the amounts invested. Amount invested in the co-operative bank is least; Nationalize bank has less investment than private. So, private bank has highest investments.

Below is the interest rate of HDFC Bank.It can be taken as the for other banks also. They have same pattern as HDFC Bank. Days/years Interest/annum 7-15 days 3.00% 15-29 days 3.50% 30-45 days 4.00% 46-60 days 4.50% 61-90 days 5.00% 91-180 days 5.50% 180-195 days 7.00% 196—285 days 7.00% 286.365Days 7.25% 22

286-365 days (1 year) 7.25% 1-5 year 8.00% >5 years 8.00% Advantages:• • •

Loan facility is available (Bank overdraft). Maturity period is very less. Mostly liked by every category of people, they take it as safe side.

Disadvantages:• •

Return interest is acc. to maturity period. To get good return investment must be high.

Product Availability:•

Through agents, Nationalize banks and all post offices

Marketing of the product:•

Through agents, advertisements, Word of mouth and internet

11. Pay Roll Savings Scheme Under this scheme, any monthly salaried person can voluntarily authorize his appointing authority or employer to deduct monthly contributions from his salary and to remit into anyone of the savings schemes like Post Office Recurring Deposit, Post Office Time Deposit, National Savings Certificate (VIII issue) and Public Provident Fund Scheme. The group leader appointed in each organization for collection purpose is paid 2% commission for his service who implements the scheme in the respective concern. 23

Advantages:•

Collection is through a concern person, so money investment is good.

Disadvantages:•

People do not refer it because they want to do personally and acc. to their requirements.

12. RBI Bonds a) Maturity Period-- 5 years b) Interest—8% (compounded half yearly) c) Mode of payment- Lumpsum d) Minimum amount—Rs 1000 e) Maximum amount—Rs 2, 00,000 f) Loan benefit –Yes g) Tax Benefits—yes (on returns only) Advantages:• •

Loan and tax facility is available. Good return due to half yearly compounded interest.

Disadvantages:•

To get good monthly income, we have to invest high lumpsum amount.

Product Availability:•

Authorized Branches of State Bank of India, Associate Banks, Nationalized Banks, four private sector banks and SHCIL

Marketing of the product:24

•

Through advertisements, Word of mouth and internet

Objective of the project: •

To know whether they have good knowledge of these plans.

•

To know about the relationship between age and investment of the people. 25

•

To know which age group is inclined towards future reinvestment.

•

To know which plan is suitable for them to get maximum return.

•

Analyzing their way of investments in these plans.

•

Analyzing the inclination of SEC (social economic class) towards the investments.

Methodology for Project In this project I will go through following methods:1. Primary data: Designing the questionnaire to know the customer

preference towards the small savings plans. For e.g. 26

a) Their preference acc. to their requirement and their age. b) Do they look for fixed or variable returns? c) Do they invest for I. Tax saving II. Safe and quite return

2. Secondary data: knowledge about these plans ,their rate of interest,

minimum and maximum balance , maturity periods and their way of marketing through Private ,PSU bank, co-operative bank and post office. In this I will take help of internet, factsheets of company, documents and pamphlets provided. 3. Sample plan: Sampling size: - 105 people and 50 from distributors/agents from Ahmedabad. Sampling method: simple Random sampling

Limitations of project: 1. Limited areas- As due to limited area covering, so behavior of of 2.

3.

4. 5.

investors is different at other regions. Limited samples- Each investor has different psychology so study becomes biased and sample may not help to gather depth knowledge. Lack of time- Due to limited time it is not possible to make depth study of these plans. Investor’s behavior is affected. Market condition also effect the survey i.e. investment depends on market condition.

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PLAN ANALYSIS OF CUSTOMER SURVEY

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Analysis of project: •

Survey from customer

1. Formation of social economic class(SEC) Total respondents--105 SEC A B C

•

46 42 17

Interpretation 1. Survey shows that people has more qualification and are more professional, also take keen interest in small saving plans. 2. Small saving plans are not for the one category, it is for every category.

2. Type of return Investment preference of customer Fixed sec

Variable

return 13

Return 10

A 29

Both 2 3

sec

21

3

17

sec

8

2

4

B C

•

Interpretation 1. SEC A wants to invest in both type of return because of good knowledge of financial investments. 2. Due to low investment by SEC C, their respondents are also low.

3. What type of investment customer prefer acc. to small saving option.

fixed return kisan vikas patra public provident fund national saving certificate fixed deposits post office saving account post office monthly income post office term deposits senior citizen saving scheme 30

variable return

Both

12

1

8

16 22

5 3

29 21

25 9

4 0

28 11

10

1

15

3

1

2

3

0

3

recurring deposit account RBI bonds pay roll saving scheme SIP

11

3

10

3 2

1 0

10 0

13

12

40

•

Interpretation 1. Mostly respondents believe in both type of return. 2. Highest no. of respondents is from SIP. 4. Saving plans investment in accordance to social economic class (SEC)

kisan vikas patra public provident fund national saving certificate fixed deposits post office saving account post office monthly income post office term deposits senior citizen saving scheme recurring deposit account RBI bonds pay roll saving scheme SIP

SEC A SEC B SEC C 4 12 5 30 22

14 18

6 6

26 5

26 13

5 2

9

14

3

1

2

3

4

1

1

9

11

4

8 1

5 1

1 0

36

24

5

31

•

Interpretation 1. SEC A is more inclined towards the SIP because they believe quick and good return. 2. Respondent take FD as the safe investment. 3. Kisan vikas patra has fewer respondents because of long time investment.

5. Income wise small saving investment

kisan vikas patra public provident fund national saving certificate fixed deposits post office saving account post office monthly income post office term deposits senior citizen saving scheme recurring deposit account RBI bonds pay roll saving scheme SIP

•

<1 1-2 2-5 >5 LAKH LAKH LAKH LAKH 8 9 4 0 7 9

12 15

26 20

5 2

8 6

20 9

26 4

3 1

5

13

6

2

2

3

1

0

1

1

2

2

5

10

8

1

1 0

4 1

7 1

2 0

2

26

31

6

Interpretations 1. Respondents having income less than <1 lakh have least investment.

32

2. Respondents having income 1-2 lakh are more interested in fixed

returns. 3. Respondents having income 2-5 lakh are more inclined towards the SIP,NSC and PPF(for tax saving). 4. Respondents having income >5 lakh are more inclined to equity market and SIP. 6. Saving investment acc. to age group kisan vikas patra public provident fund national saving certificate fixed deposits post office saving account post office monthly income post office term deposits s senior citizen saving scheme recurring deposit account RBI bonds pay roll saving scheme SIP

•

19-30 31-50 51-72 5 12 4 34 19

15 23

1 4

31 9

23 7

3 4

9

16

1

3

2

1

1

3

3

14

8

2

4 2

8 0

2 0

41

21

3

Interpretation 1. SIP is the best investment for the youth. 2. Highest investment is upto the age of 40.

7. Money invested acc. to income of customer 33

5-10 thous <1 lakh 1-2 lakh 2-5 lakh >5 lakh % age

•

10-20 thous

20-40 thous

>40 % age of thous customer 0 0 18.81

15

4

6

7

18

4

34.65

7

5

11

18

40.59

0

1

0

5

5.94

27.72

16.83

28.71

26.73

Interpretation 1. Respondent having income 2-5 lakh has invested upto 40%. 2. More income more investment. 3. More than 50% investment is from respondent who invest around 40 thousand.

8. Small saving plans related to money invested from income

5-10 thous kisan vikas patra public provident fund national saving certificate fixed deposits post office saving account post office monthly income post office term deposits

10-20 thous

20-40 thous

>40 thous

8

4

6

3

14 11

7 8

12 15

17 12

12 8

10 1

18 6

17 5

8

3

8

7

3

0

3

0

34

senior citizen saving scheme recurring deposit account RBI bonds pay roll saving scheme SIP

3

0

1

3

6

3

7

8

1 0

2 1

5 0

6 1

12

11

21

21

•

Interpretation 1. Customer who invests more is inclined towards the SIP. 2. They invest in FD (for safe side) and in NSC &PPF (for tax saving). 3. Time of return plays an important role in investment. 9. Sources for knowledge about these plans.

newspape rs agents word of mouth others

•

custom % age ers 21 20.79 40 72

39.6 71.28

8

7.9

Interpretation 1. Word of mouth and agents plays an important role for investment by the customer.

35

10.Customer consults whom for investment. Consu custom % age lt ers Agent 46 45.54 Famil 20 19.8 y Friend 44 43.56 s Other 19 18.81 s

•

Interpretation 1. For consultation agent and friends plays an important role. 2. People consult agent because of knowledge and experience.

11. No. of respondents invested in small savings option.

kisan vikas

21 36

patra public provident fund national saving certificate fixed deposits post office saving account post office monthly income post office term deposits senior citizen saving scheme recurring deposit account RBI bonds pay roll saving scheme SIP

•

50 46 57 20 26 6 6 24 14 2 65

Interpretation 1. SIP has highest investment because of good return. 2. Other investment is acc. to the customer income and preference.

12. Schemes in which customer has invested in past and willing to reinvest

in future fixed deposits SIP equity market recurring deposit account public provident fund national saving certificate 37

42 58 10 15 29 29

kisan vikas patra Life insaurance post office monthly income post office term deposits ULIP senior citizen saving scheme

•

7 26 18 2 2 0

Interpretation 1. If their income is same than they want to continue with that only, otherwise they want their investment to extended. 2. Respondent are more inclined to market dependent investment .i.e. SIP. 3. They are interested in small time return.

13.Schemes in which customer has invested in past and willing to reinvest in future and its relation with age group.

fixed deposits SIP equity market recurring deposit account public provident fund national saving certificate kisan vikas patra Life insaurance

19-30 31-50 51-72 yrs yrs yrs 27 13 37 29 7 3 8 5

38

2 2 0 2

17 13

8 13

1 3

1 13

5 12

1 1

post office monthly income post office term deposits ULIP senior citizen saving scheme

•

7

10

1

0

1

1

1 0

1 1

0 1

Interpretation 1. Age play an important role on future investment. 2. Customer up to age of 40 is inclined to the variable and market dependent investment. 3. Age group 31-50 takes everything into mind while investing i.e. return, tax and services.

14.Effect of income on future reinvestment <1 1-2 2-5 >5 LAKH LAKH LAKH LAKH fixed deposits 3 15 22 2 SIP 1 25 28 4 equity market 0 3 4 3 recurring deposit 5 6 3 1 account public provident fund 4 6 11 5 national saving 6 11 12 0 certificate kisan vikas 3 3 1 0 patra Life 5 8 12 1 insaurance post office monthly 2 9 4 3 income post office term 1 1 0 0 deposits ULIP 0 2 0 0 39

senior citizen saving scheme

•

0

1

0

1

Interpretation 1. Inclination towards SIP is more. 2. If their income is same than they want to continue with that only, otherwise they want their investment to extended.

15.Comparative analysis of present invested amount with future reinvestment. Present Future

•

Interpretation

1. For their future reinvestment people are willing to invest acc. to their present situation. Their present income plays a crucial role for their future investment. 2. For fixed return plan they want to continue but for short time.

• From Distributor 1. Financial products in which distributor deal mutual fund saving plans insurance bank financial

37 45 40 30 40

others

•

2 Data from survey:-

Interpretation 1. Mostly agents work on all type of investments. 2. Market condition also made their investment way.

2. The profession time of distributor related to the factors while suggesting for investment products. 1-2 2-5 5-10 > 10 yrs yrs yrs yrs time frame 0 4 5 3 risk appetite 0 5 16 20 tax savings 0 5 11 14 return 0 8 17 22 other 0 0 2 3 s

41

•

Interpretation 1. Distributors who are working for more than 5 years will put suggest for returns and risk appetite. 2. More experience more expose for the customer to invest.

3. Small saving products in which distributor deal kisan vikas patra public provident fund national saving certificate fixed deposits post office saving account post office monthly income post office term deposits senior citizen saving scheme recurring deposit account RBI bonds pay roll saving scheme SIP

•

31 37 37 44 30 31 30 32 33 15 3 39

Interpretation 1. From graph distributor is working with all type of investment.

42

4. Saving plans advice by distributor Life insurance SIP fixed deposits post office monthly income recurring deposit account national saving certificate public provident fund equity market kisan vikas patra ULIP

•

19 34 18 23 26 18 9 2 7 6

Interpretation 1. Distributor advice on the basis of customer interest, amount of investment and what type return he wants.

5. Why distributor advice customer to invest in saving plan and how this related to the year of profession of distributor. 1-2 2-5 5-10 > 10 yrs yrs yrs yrs returns 0 10 18 22 service 0 7 7 16 43

credibili ty simplici ty others

•

0

1

7

4

0

3

8

15

0

0

1

0

Interpretation 1. Mostly distributor suggests return and service.

6. . Plans in which customer has invested in past and now customer is

willing to reinvest in future through distributors. SIP 33 national saving 24 certificate recurring deposit 26 account Life insurance 17 public provident fund 14 fixed deposits 20 ULIP 10 post office monthly 17 income kisan vikas 3 patra equity market 2 senior citizen saving 5 44

scheme

•

Interpretation 1. Acc. to customer income investment depends. 2. Customer income will suggest distributor to invest in saving plans. 3. In variable return SIP is the best option.

Interpretation from all graphs made: For Customers 1) People having annual income between 2-5 lakh are mostly interested in schemes

which are of less maturity period. They want fast return so that they can reinvest. 2) People are preferring FDs,Insaurance more, because they take them as the safe side of Investment. 3) People with income <1 lakh prefer to invest in post office savings like recurring deposits and LIC. 4) People with income 2-5 lakh prefer to invest in FDs ,POMIS ,SIP and somewhat in Shares. 45

5) People with income >5 lakh prefer to invest in stock, mutual fund, NSC and PPF. 6) Word of mouth and agents play important role in getting knowledge about small saving plans. 7) People mostly consult agents and friends before investing. 8) All people are aware of these saving plans i.e. there is good knowledge of these

plans. 9) People likely to invest 30-40% of their income. 10) People having income up to 1.5 Lakh are interested in fixed return. 11) People having income >1.5 lakh are interested in either variable return or in both (fixed and variable) returns. 12) For their future reinvestment people are willing to invest acc. to their present situation. Their present income plays a crucial role for their future investment. 13) If their income is same than they want to continue with that only, otherwise they want their investment to extended. 14) People are taking interest in investment in ULEP policies

For Distributors/Agents 1) Mostly agents deal in all type of financial products. 2) They mainly look at the factors like risk appetite and returns while suggesting for the investments. 3) Their suggestions for investment are according to the customers need. 4) Customers having income less than 1 lakh, than agent will suggest for recurring deposits and LIC policies. 5) Customers having income up to 2 lakh than Agent will suggest for NSC, POMIS and SIP. 6) Customers having income more than 2 lakh than Agent will suggest for mutual fund, equity market and long term high investments. 46

Conclusion: Small saving options are not just like a small savings only but a high investment can be made. It is a safe and right type of investment. The plans which are described state that how the small savings are useful to the developing country like India. Addition of rupee to rupee makes a huge amount and it is very useful to the country’s economy.

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After losing their investments in stock markets in the past, small investors prefer risk-free small savings schemes, which saw 27.33 per cent surge in collection of money. Customer prefers these small savings plan because the return is fixed and there is no risk.

Finally the reports concludes that how customer invest taking every aspect of current scenario into consideration. In this every type of saving plans has been taken into account. Through this analysis a customer can understand where to invest the money looking current scenario.

References 1. Internet • www.tnsmallsavings.com • www.finance.mapsofworld.com • www.mutualfundindia.com • www.kotakmutual.com • www.wikipedia.org • www.savingwala.com 48

• • • •

www.hinduonnet.com www.mpsmallsavings.nic.in www.thehindu.com www.timesofindia.indiatimes.com

2. Search engines

www.google.com

3. Other sources:• Pamphlet of Indian post office containing saving plans. • Investment knowledge about financial products from •

distributor/agents. Market survey.

Executive Summary Today saving plans play an important role in the econmy. India's high savings rate has been a crucial driver of its economic boom, providing productive capital and helping to fuel a virtuous cycle of higher growth. Indian mutual fund market has high 49

proportion and about 5-10% of the Indian population is in mutual fund investment. A person from any category intends to invest in small saving options. Person having income from thousands to lakhs invest in these plans for return, tax or future savings. These for every type of people in agricultural country like India. Today around 27% of total investment is covered by small saving plans. This project will help to know about the small savings options and how customer prefers these plans. After the analysis done it shows people invest acc. to the market condition. In this condition they take interest in fixed return and SIP (mutual fund). This methodology used in the reports is primary and secondary data sources. Sample size is of 105 respondents. Out of which 4 has not invested. The parameters which included in collection of secondary data is Maturity Period, rate of interest, mode of payment, maximum and minimum amount, tax and loan facility, advantages and disadvantages, product availability and marketing of products. Finally the analysis part which is made through SPSS and through excels and graphs were being plotted from data collected and interpreting from graph. Through this analysis part we concludes that how customer invest taking every aspect of current scenario into consideration. Through this project customer get know where to invest money whether in fixed or variable type of investment.

Attachments:50

Questionnaires for customer and distributors 1. For customer

Questionnaire Sir/madam, I am student of ICFAI Business School, Ahmedabad.I am doing a project on ‘Small Saving Options available and the customer preference about these options’. The Project is purely academic and this project will help us in analyzing the customer preferences towards these plans. I need your co-operation and your precious time. Are you from Ahmedabad? a) Yes b) No 2) You are into which profession? a) Business b) Government Service c) Private Job d) Others specify:____________ 3) In which range does your Annual income lie? a) <1 lakh c) 2 - 5 lakh b) 1-2lakh d) > 5 lakh 4) Do you invest? a) Yes b) No 5) How much you invest from your income? a) 5-10 thousand/year c) 20-40 thousand/year b) 10-20 thousand/year d) > 40 thousand/year 1)

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6) Whom do you consult before investing? a) Agent b) Friends specify___________ 7) Are you aware of small savings plans? a) Yes

c) Family d) other

b) No

8) Which of the following small saving plans have you ever invested ina) Kisan Vikas Patra

h) Public Provident

Fund(PPF) b) National Savings Certificate c) Post office saving Account Income Scheme d) Post Office Term Deposit saving Schemes

i) Fixed Deposits j) Post Office Monthly j) Senior Citizen

l) RBI Bonds

e) Recurring Deposit Account

f) Pay Roll Saving Scheme g) Systematic Investment plan (SIP) 9) What type of investment you do? a) Fixed Return c) Variable Return b) Both 10) From where did you get knowledge about these plans? a) Newspaper c) Agents b) Word of mouth d) others specify:_______ 52

11) Of the schemes you have invested in past, which are the schemes where you are willing to reinvest in future, give your preferences accordingly: a) __________ b) __________ c) __________ d) __________ e) __________ Personnel Details:a) Name:-___________________________ b) Address:_____________________________________________________ _____________________________________________________________ _ c) Age:-_____ d) Family Members:-_____ e) Contact Number:-__________________ f) Education:-_______________________

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2. For distributor

Questionnaire Sir/madam, I am student of ICFAI Business School, Ahmedabad.I am doing a project on ‘Small Saving Options available and the customer preference about these options’. The Project is purely academic and it will help in analyzing the distributor’s preference towards these plans for their customers. I need your co-operation and your precious time. 1) Since how many years you are in this profession? a) 1-2 years c) 5-10 years b) 2-5 years d) >10 years 2) Which of the financial products you deal in: a) Mutual Fund d) Saving plans b) Insurance e) Bank financial products c) Other specify:____________ 3) What are the factors which you look in, while suggesting the investment products to customer? 54

a) Time frame d) Risk appetite b) Tax savings e) Return c) Other: specify_____________ 4) Which of the following small saving plans you deal with: a) Kisan Vikas Patra

h) Public Provident

Fund(PPF) b) National Savings Certificate c) Post office saving Account Income Scheme d) Post Office Term Deposit saving Schemes

i) Fixed Deposits j) Post Office Monthly j) Senior Citizen

l) RBI Bonds

e) Recurring Deposit Account f) Pay Roll Saving Scheme Investment plan (SIP)

g) Systematic

5) Do you suggest that each of customers should invest in small saving plans? a) Yes b) No 6) Which of the small saving plans, you prefer to advise customer, give your preferences accordingly. a) _________________ b) _________________ c) _________________ d) _________________ e) _________________ 7) Why you advise them to invest in above plans? a) Returns d) Simplicity 55

b) Services e) other specify:____________ c) Credibility 8) Which are the plans in which customer had invested in past and now they are thinking for reinvestment, give your preference accordingly. a) _____________ b) _____________ c) _____________ d) _____________ e) _____________

Personnel Details:a) Name:-___________________________ b) Address:_____________________________________________________ _________________________________________________________ c) Age:-_____ d) Contact Number:-__________________ e) Education:-_______________________

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