Sip_project Sunita Shivnath Gupta

“COMPARATIVE ANALYSIS OF MUTUAL FUNDS AND BANK DEPOSITS”

A PROJECT SUBMITTED IN PARTIAL COMPLETION OF MASTER OF MANAGEMENT STUDIES

TO THAKUR INSTITUTE OF MANAGEMENT STUDIES AND RESEARCH BY SUNITA SHIVNATH GUPTA

UNDER PROF. PAYAL MOGRE

TIMSR FULL TIME – BATCH – 2017-2019

Shyamnarayan Thakur Marg, Thakur Village, Kandivali (East), Mumbai 400101 THAKUR INSTITUE OF MANAGEMENT STUDIES AND RESEARCH

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“COMPARATIVE ANALYSIS OF MUTUAL FUNDS AND BANK DEPOSITS” A PROJECT SUBMITTED IN PARTIAL COMPLETION OF MASTER OF MANAGEMENT STUDIES

TO THAKUR INSTITUTE OF MANAGEMENT STUDIES AND RESEARCH BY SUNITA SHIVNATH GUPTA

UNDER PROF. PAYAL MOGRE

TIMSR FULL TIME – BATCH – 2017-2019

Shyamnarayan Thakur Marg, Thakur Village, Kandivali (East), Mumbai 400101 THAKUR INSTITUE OF MANAGEMENT STUDIES AND RESEARCH

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1. DECLARATION

I hereby declare that the project report entitled, “COMPARATIVE ANALYSIS OF MUTUAL FUNDS AND BANK DEPOSITS”is submitted to Thakur Institute of Management Studies & Research, Mumbai, is a record of the original work done by me under the guidance of Prof Payal Mogre, and this project work is submitted in partial fulfilment of the requirements for the degree of Post Graduate Masters in Management Studies. The results embodied in this thesis have not been submitted to any other Institute or University for the award of any other degree or diploma.

Place: Mumbai Date:

Sunita Shivnath Gupta MMS - finance

Roll No.: 72

Faculty Mentor: PROF. PAYAL MOGRE Asst professor TIMSR

THAKUR INSTITUE OF MANAGEMENT STUDIES AND RESEARCH

Director TIMSR

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CERTIFICATE

This is to certify that the study presented by Ms. Sunita Shivnath Gupta to Thakur Institute of Management Studies And Research in partial completion of MMS (Finance) has been done under my guidance in year 2017-2019. The project is in the nature of original work that has not so far been submitted for any other course in this institute or any other institute. Reference of work and relative source of information have been given at the end of the project

Signature of Mentor Prof. Payal Mogre

Signature of Student Ms.Sunita Shivnath Gupta

Place: - Mumbai, Maharashtra Date:-

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3. ACKNOWLEDGEMENT

I would like to express my deep gratitude to all the people who were involved both, directly and indirectly in the preparation of this project. Firstly, I thank my Institute Thakur Institute of Management studies and Research for giving me an opportunity to undertake my summer internship“Comparative analysis of mutual funds and bank deposits.” I express my warm thanks to Mr.Abhishek kumar for the support and guidance at Karvy Stock Broking Ltd. Finally, I would express my heartfelt gratitude to my academic Prof. Payal Mogre, whose valuable advice; suggestions and perspectives have encouraged me to incorporate a different dimension to this project.

Sincerely,

Sunita Shivnath Gupta

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Table of Contents 1. EXECUTIVE SUMMARY................................................................................................................. 7 2.1 STATEMENT OF PROBLEM ......................................................................................................... 8 2.2 OBJECTIVES ............................................................................................................................... 8 2.3 LIMITATIONS OF THE STUDY .................................................................................................... 9 3. GLANCE OF THE COMPANY....................................................................................................... 10 4. INDUSTRY PROFILE ..................................................................................................................... 14 5. RESEARCH METHODOLOGY ...................................................................................................... 16 6. REVIEW OF LITERATURE ........................................................................................................... 17 7. INTRODUCTION ............................................................................................................................ 19 MUTUAL FUNDS IN INDIA .......................................................................................................... 20 7.2TYPES OF MUTUAL FUNDS ................................................................................................... 22 7.3DETAILS OF THE MUTUAL FUND SCHEME ........................................................................... 27 8. DATA ANALYSIS ON BASIS OF RETURNS .............................................................................. 38 8.1RISK MEASURES OF THE MUTUAL FUND SCHEMES .......................................................... 40 BANK DEPOSITS................................................................................................................................ 44 9.1DETAILS OF THE TOP FIVE BANKS ......................................................................................... 46 11. COMPARATIVE STUDY OF MUTUAL FUNDS AND BANK DEPOSITS .............................. 52 13. LEARNING OUTCOMES ............................................................................................................. 55 14. CONTRIBUTION TO THE COMPANY....................................................................................... 55 15. CONCLUSION ............................................................................................................................... 56 16. BIBLOGRAPHY ............................................................................................................................ 57

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1. EXECUTIVE SUMMARY

People invest there savings in different investment avenues to receive handsome returns on there maturity. Traditionally people in India are used to invest their savings in different avenues like gold, real estate, banks, etc.The phase is changing now, people have started investing their savings in share market, bonds and debt securities.The mutual fund industry in India was only in the starting year which has now become. The mutual fund industry has emerged as a very attractive investment avenue for the people. The banking industry has also shown a very fast growth in the recent years. The research has been done to compare the average returns received from various mutual funds and various bank deposits. To standarised the study top five performing mutual fund schemes and top five performing banks are selected. The selection criteria are based on the average returns received from the investments. Mutual funds have various advantages like diversification, professional management, liquidity and tax benefits.The advantages of bank deposits are risk free investment, no need on professional practice, extra.Mutual funds have better returns as to bank deposits. Mutual funds have high risk, whereas bank deposits are almost considered to be risk free. There are tax relief option is number of mutual funds. However in bank deposits an individual can‟t receive any tax relief, he has to pay the tax on the returns earned as per the tax slabs. For the study of the performance of the mutual fund average returns of the scheme for the period of one year and three years are collected. The mutual fund selected are SBI Banking & Financial Services -DP (G),Aditya Birla Sun Life Bank & Financial Services -DP (G),DSP Black rock Natural Recourses - Direct (G), L&T Emerging Businesses Fund-DP (G) and SBI Banking & Financial Services -RP (G).The mutual funds are of different category and of different asset management company. The mutual funds are compared on their investing profile and the types of companies in which they invest their money. The NAV of the funds are taken into consideration for the study. The banks selected for the study are HDFC bank, SBI bank, ICICI bank, Axis bank and Bank of Baroda. The interest receivables on the various bank deposits are compared. Savings account, current account, fixed deposits and recurring deposits are compared in the study. The findings of the research are that the average returns from the mutual funds are more as compared bank deposits. The difference in returns of investments which are done for less than one year and those done for three years.the interest rates for senior citizen, NRIs and general public is different. The interest rates are dependent on the amount of money invested and the tenure of investment.

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2.1 STATEMENT OF PROBLEM  Mutual fund are the investment avenue for the common investor to reap the benefits of the share market  People are not able to benefit from share market as they are still not aware about the mutual fund scheme and its benefits. There is a necessity of creating awareness about the benefits of mutual funds.  People still invest in their traditional avenues (banks) as they are more secured than the mutual funds. They forego the inflation adjusted returns from the mutual funds. 2.2 OBJECTIVES  To study about the various bank deposit options available to individual for investment.  To study about the working of mutual funds in India.  To evaluate the performance of top mutual fund scheme and bank deposits in India.  To compare the returns from bank deposits and mutual funds .

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2.3 LIMITATIONS OF THE STUDY  Mutual fund schemes are considered for the period of three years. Hence the findings may not be generalised for the same mutual fund scheme for different periods.  The bank deposits study is based only on time deposits and demand deposits.  The top 5 performing mutual fund schemes and banks are compared on the basis of the average returns only.

2.4 SCOPE OF THE STUDY  The mutual fund industry in India is growing in folds as well as the banking industry is growing in a fast pace.  For the study we have chosen active mutual funds belongings to growth, income, balanced.  For this study we have taken into account the period of study is three years from 2016 to 2018.  In such a fast growing phase investor are always confused, where to invest there savings – in banks or in mutual funds.

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3. GLANCE OF THE COMPANY

Karvy‟s financial services business is ranked among the top-5 in the country across its business segments. The Group services over 70 million individual investors in various capacities, and provides investor services to over 600 corporate houses, comprising the best of Corporate India. The Group offers stock broking, depository participant, distribution of financial products (including mutual funds, bonds and fixed deposits), commodities broking, personal finance advisory services, merchant banking & corporate finance, wealth management, NBFC (loans to individuals, micro and small businesses), Data management, Forex & currencies, Registrar & Transfer agents, Data Analytics, Market Research among others. Karvy prides itself on remaining customer centric as all times through a combination of leading edge technology, Professional management and a wide network of offices across India.

FINANCIAL SERVICES

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Equity Broking Services

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Depository Participant Services

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Distribution of Financial Products

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Currency Derivatives

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Wealth Management Services

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Portfolio Management Services

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Karvy Fortune

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

Investment Banking

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Commodities Broking

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Non - Banking Financial Service

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Realty Services

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Registry Services

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Forex & Currencies

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Insurance Repository

NON FINANCIAL PRODUCTS

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Data Management Services

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International Business

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Market Research

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Analytics

Products of KarvyTrading 1. Equity trading 2. Derivative trading 3. Currency trading 4. Priority account- Minimum 5 lakhs investment 5. Portfolio management service (PMS)- 25 lakhs

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Alternative investment products1. IPO 2. Mutual funds 3. NC ds 4. Bonds 5. Portfolio management service Flagship research report1. Wealth max 2. Value max 3. Value invest Other research- Smart trader a. Morning moves. b. Daily raga.

AWARDS WON BY THE COMPANY

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Won the prestigious "NSDL Star Performer Award 2014 for Highest Asset Value". Organized by the National Securities Depository, the NSDL Star Performers Awards recognize the best performers in the securities and depositories space.

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"Largest E-Broking House in India" at BSE Equity Broking Awards 2010 by Dun & Bradstreet held in ITC Grand Maratha, Mumbai.

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"Largest E-Broking House in India" at BSE Equity Broking Awards 2010 by Dun & Bradstreet held in ITC Grand Maratha, Mumbai.

PROMOTER AND MANAGEMENT TEAM  Chairman & Managing Director - Mr. C. Parthasarathy  Managing Director - Mr. M. Yugandhar  Director - Mr. M. S. Ramakrishna

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HIERARCHY OF THE COMPANY

Business head

Zonal broking head

Area managers

Cluster manager

Financial advisor/ relationship manager/interns

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4. INDUSTRY PROFILE

BANKING AND FINANCIAL SECTOR The Indian banking sector is well regulated and well capitalized. The economy conditions of the country are doing very well as compared to economies of other company. Numbers of innovative banking models have been announced and practiced in the banking sector now. The Indian banks are generally strong and have withstood the global market downturn well. The Indian banking sector has a compounded annual growth rate (CAGR) of 11.71 percent in last ten years. The digital payments system in India has developed among 25 countries with India‟s Immediate Payment Service (IMPS) - the only system in Faster Payments Innovation Index (FPII) at level 5. In Indian banking sector there are 22 private sector banks, 27 public sector banks, 56 regional rural banks, 44 foreign banks, 93550 rural cooperative banks and 1,589 urban cooperative banks. The bank credit grew to Rs.85.511 lakh crore (may 2018) from Rs.75.91 lakh crore (May 2017). The financial service sector of India is growing very rapidly. New entrants and existing entities have shown a massive growth in last few years. The mutual fund sector has grown rapidly in last few years. The assets under management were Rs. 23.26 lakh crore as on April 2018.The mutual fund industry has a compouned annual growth rate (CAGR) OF 15.5 percent in last ten years.The rise in the mutual fund has led to increase of the revenues of the brokerage industry. The IPOs market has also witnessed rapid growth. The total IPO market has increased to Rs 84,357 crore by the end of Financial Year 2018.India‟s leading exchange house BSE is going to set a joint venture with Ebix Inc. to new insurance and mutual fund distribution network in the country

Government Initiatives Government has undertaken various schemes and programmes to strengthen the Indian banking sector. Government has launched a new portal „Udaymi mitra‟ to improve credit availability of Micro, Small and Medium Enterprises in the country. Pradhan mantri vava vandana yojna (PMVVY) in march 2018 for the elderly people . Government allocated Rs. 3 trillion for mudra scheme to strengthen the banks and to ensure their smoothen functioning. Rajya sabha has passed the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017. SEBI has planned to make mutual funds transactions allowable through digital wallet up to limit Rs.50000 per month. This would help in immediate credit to customer‟s bank accounts. It would also help to digitise the distribution channel for all financial products.

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Rs. 244000 crore has been fixed as the lending target for 2018. Government has now allowed small merchants to pay 6 per cent of deemed profit in tax through digital means which used to be 8 per cent earlier. It will encourage cashless transactions in the country. Launch of „Bharat 22‟ exchange traded fund (ETF) , managed by ICICI Prudential Mutual Fund, and is looking ahead to raise Rs 8,000 crore initially. For financial companies engaged in „fund based activities‟ and turnover of US$ 2 million for unregistered financial companies engaged in „non-fund based activities‟ government of India has issued minimum FDI capital requirements( April 2018)

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5. RESEARCH METHODOLOGY

Source of Data The data for this study is mainly collected from Secondary Sources like Books, Journals, Magazines, and various websites like BSE site, Nse site, clear fund, etc.

Statistical Tools The simple statistical techniques like risk and average rate of returns are used. The study is simply based on returns ascept of mutual funds and bank deposits. The interest rate is compared with one another for understanding of normal person.

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6. REVIEW OF LITERATURE

1. Author Satheesh Kumar Rangasamy; Dr. Vetrivel T and Athika M (May 2016) in research paper "A Comparative Study on Performance of Selected Mutual Funds with reference to Indian Context" compared various mutual funds available in India. They measured the returns of various mutual funds by different evaluation technique like Ranking, Average Return, Standard Deviation, Sharpe Ratio method. They concluded that TATA balanced fund stood first by ranking method. BNP Paribas Overnight Fund stood first by Sharpe ratio method.

2. Author Bilal pandow (March 2017) in research paper “Risk and Return Analysis of Mutual Fund Industry in India” measured the risk associated by various mutual fund scheme availed in India. He measured the risk by different evaluation methods like standard deviation method, Sharpe ratio method, etc. In his study he concluded that mutual fund industry in India has grown rapidly after 1997-98. The fund houses which were just 31 in number 199798; have grown to 44 funds as on 2013. 3. Author „Dr. Binod Kumar Singh‟ (March 2012) in research paper “A study on investors‟ attitude towards mutual funds as an investment option” concluded that various demographic factors has an effect on the investment pattern of an individuals. Age and occupation are the vital factors that affect the investment pattern of an individual. In India people are still not aware about mutual funds as Investment Avenue. He has also compared bank deposits and mutual funds on various parameters. 4. Author balaji bysani (2010) in the project “Analysis on Performance Of Mutual Fund Companies in India” studied various mutual funds scheme available in India, the risk associated to them. He used Sharpe method to measure the risk of various scheme. He reported various factors that have led to the growth of mutual funds in India. The role of an AMC, trustees, custodians and board of directors in Mutual Fund Company. The study is based on two analyses namely investors need form mutual fund and what are the returns form mutual funds to unit holders.

5. In the project named “Pros and cons in investment in mutual funds as compared to bank deposits” by Prashantha Poojary and team (2015), compared the returns of the mutual fund scheme available in India. The risk factor and other factors which affects the investment behaviour and perception of investors. The returns which an individual can avail through the bank deposits. They did a comparison of the both and concluded that the mutual funds are better as compared to the traditional way of investment; banking deposits.

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6. Author „Dr N. Subrahmanyam‟ (2008) „in the research paper “Mutual funds and banking: India and global experience” , had an overall view as how the mutual funds are working on the global approach as compared to India. He has broadly focused on the mutual fund structure in USA and UK. He measured the mutual funds by various ratios like Sharpe‟s ratio, Treynor‟s ratio and Jensen‟s ratio. He concluded that in India the mutual funds are based on retail market and the products and services are served through brokers and traders. 7. Author „Amarjeet‟ (2014) in his research article “Mutual funds vs. fixed deposits: compare which is better” concluded that an individual with higher risk appetite and young age should invest in mutual funds, as they can bear the market risk. Whereas an individual with lesser risk appetite and aged should invest in bank deposits as they are risk free and have a guaranteed return after particular date.

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7. INTRODUCTION

Mutual funds and bank deposits comparison have been a long debate since mutual funds came into existence. Even today, conservative and risk averse investor would think investing in bank fixed deposits than in mutual funds. Nevertheless, the market scenario has changed a lot in the last few years, and many AMC have come up with interest debt mutual fund schemes with guaranteed returns and capital appreciations. This had made it more difficult for the investors to choose between mutual fund and bank deposits. Nowadays there are various mutual fund scheme that offer different facilities as per an investors wants. It‟s no more a easy choice between mutual funds and bank deposits for investment as it used to be years ago. Depending on your risk appetite, minimum expected returns, and investment horizons and various other factors can help an investor in deciding as in which investment avenue he should invest in. Bank deposits are for the segment of the investor class who are looking out for safe and relatively lower returns as compared to mutual funds. Mutual Funds are for those, investors who have higher risk appetite and are looking out for higher returns and capital appreciation. Even today Indian investors invest heavily in the debt funds and not in equity market. The main reason being no awareness among the people. Most of the household savings don‟t circulate in the market; only 10% of household income is invested in the market again. In bank deposits the investor guaranteed repayment of principal and interest on the principal amount invested in the bank (pre decided interest rates). If anything goes wrong in the market or with the bank, the risk has to be borne by the bank only.. The depositor has a contractual commitment from the bank to pay. Whereas on other hand, in mutual funds there is no guaranteed returns by the AMC. If the market goes down the ultimate loss has to be borne by the investor only. The AMC can‟t be held liable for such losses. There is no contractual guarantee for repayment of principal or interest to the investor in mutual funds. There are no bank portfolio of investments, as there are in mutual fund company. While investing in a bank deposits an individual needs to check the soundness of the bank, the past performance, if the bank is held in judicial issued or not and the credit rating of the bank. On the other hand while investing in a mutual fund scheme an individual needs to check the ratings of the scheme rated by Credit Rating Agency. If the scheme are rated then it becomes easy for the investor to decide as to invest or not, but in some cases the mutual funds are not rated, in such cases the investor himself has to access the risk of the portfolio.

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In mutual funds the investor needs to know where his money is invested, in blue-chip company stocks or in small cap companies. In bank deposits the investor need not know where is money is invested. The expected returns are in the same proportion with the level of risk assumed by the mutual fund scheme. The bank deposits are not totally free from risk, as there is always a risk associated with a return. However the risk is negligible in the bank deposits.

MUTUAL FUNDS IN INDIA

INTRODUCTION

A mutual fund can be termed as a mechanism to pool funds from various investors and invest those funds in securities like stocks, bonds, debt instruments and similar assets. The primary role of mutual fund is to assist the investors in earning good returns form their investment. It helps in wealth creation by investing in various opportunities available in the market for the investors. Mutual funds are just like a basket of investment. There are various types of securities, stocks and bonds in each basket. When an investor buys a particular mutual fund he does not actually own the underlying asset but only a part of it, namely units. Therefore a mutual fund investor is called unit holder. Mutual funds have made the investment option interesting, as they have a scheme for every type of investor. The main factors which play a vital role while deciding as in which securities to invest ,are the risks and returns associated with the investment. In mutual funds every other scheme has a different risks and returns, for example debt mutual fund scheme has less risk and returns as compared to equity mutual funds. The higher the risk more will be the returns and vice versa in any investment.

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7.1MUTUAL FUND STRUCTURE

MUTUAL FUND

SPONSOR

TRUSTEES

AMC

CUSTODIAN

R&T AGENTS SEBI Mutual Fund Regulations, 1882 acts a regulatory body for the mutual funds in India. A mutual fund is formed as public trust under the regulation of Indian Trusts Act, 1882. a) Sponsor A mutual fund sponsor is the promoter of the company i.e. a person who establishes a mutual fund himself or with association of other body corporate. SEBI has some regulations to check whether the person is of integrity or not, whether he has enough experience in financial sector. Once the SEBI is convinced, the sponsor creates a public trust. b) Trustee In India a mutual fund need to be constituted in form of trust. The trust is created through a document called as trust deed. The trust deed is executed by the fund sponsor in the favour of trustees. They act as an internal regulator of a mutual fund. The major role of trustee is protecting the interest of the investors. All key personnel like Auditors, fund manager, Custodian,etc are appointed by him. c) Asset management company (AMC) AMC are appointed by the Trustees to manage the investors‟ money through an agreement called „Investment Management Agreement‟. The primary role of an AMC is to structure the scheme, launch the scheme and mobilizes the initial amount, manage the funds and give various services to the investors. AMC are paid small fees for the management of the funds.

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d) Custodian In mutual funds, AMC buys different securities in the form of shares, bonds, gold, and etc.in different schemes. Though these securities are bought in the name of Trust but they are not kept with the trust. The securities are kept with the custodians. Custodian has the responsibility of safe keeping the securities. They collect and account for the dividends and interest receivables on the mutual fund investments. Custodian are accountable for various corporate actions like bonus issue, rights issue, and stock split; buy back offers, open offer extra and accordingly act on these as per the instructions of the investment manager. e) Registrar and Transfer Agents (RTA) Asset Management Company cannot provide their services across the country. Instead, they use entities called as Registrar and Transfer agents, which perform the important role of maintaining investor‟s records. How many units an investor get, at what pice, what is the applicable NAV, how much money will he get in case of redemption, exit loads,etc is all taken care by the RTA.

7.2TYPES OF MUTUAL FUNDS

MUTUAL FUNDS

ASSET CLASS

INVESTMENT OBJECTIVE

STRUCTURE

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SPECIALIZED FUNDS

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1. Mutual Funds Based on Asset Class a. Equity Funds As the name says, these are the funds that invest only in the stock of the company. They invest the investors‟ money into shares of different companies. Equity funds aim to grow faster than money market and fixed interest instruments. These funds are considered as high risk and high return funds. The NAV of the funds are determined by the performance of the shares. The NAV appreciates when the shares perform good and vice versa. These funds have less tax liability in long run. b. Debt Funds In debt funds the total funds are invested in the fixed-income securities (bonds, securities and treasury bills) other investment options are Fixed Maturity Plans (FMPs), Gilt Fund, Liquid Funds, Short Term Plans, Long Term Bonds and Monthly Income Plans among others – with fixed interest rate and maturity date. It is ideal for investors looking out for regular income through mutual funds and are small investors. c. Money Market Funds Just as some investors trade in stocks in the stock market, some traders trade money in the money market, also known as capital market or cash market. It is usually run by the government, banks or corporations by issuing money market securities like bonds, T-bills, dated securities and certificate of deposits among others. The fund manager invests your funds and distributes regular dividends to you in return. If you opt for a short-term plan i.e. 13 months max, the risk is relatively less. d. Hybrid Funds Hybrid funds are the funds which have a optimum mix of equity and stocks in them. They act as a bridge between equity based funds and debt based funds. The ratio of equity and debt can be fixed or else variable as predefined in the fund scheme. These funds are suitable for the investors who want to gain more returns than debt funds but less than equity funds. The fund has less risk than equity fund but more than debt funds. 2. Mutual Funds Based On Structure Mutual funds can be differentiated based on different attributes like risk involved in the profile, asset class of investment made etc.). On the basis of the structural classification mutual funds are classified as open-ended funds, close-ended funds, and interval funds. The funds are of different nature. a. Open-Ended Funds Open ended funds are the funds that don‟t have any time constraints or the number of units to be held by an investor. An investor can enter and exit the fund at any time period as per his/her convenience. Most of the mutual funds traded are of this type. The unit in such mutual fund constantly keeps changing due to the new entry and exits from the fund. The NAV is THAKUR INSTITUE OF MANAGEMENT STUDIES AND RESEARCH

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calculated using the current market value of the underlying securities. The new entrant has to pay the current NAV value of the units to own the units. b. Closed-Ended Funds Open ended funds are the funds that have any time constraints or the number of units to be held by an investor. An investor can enter and exit the fund at the specific time period as per the opening and maturity period of the fund. Most of the mutual funds traded are not of this of this type. An investor can buy the units only during the NFO period, after that the units are not traded in the market. SEBI regulates such mutual funds on prior basis. c. Interval Funds This fund is a mix of open ended funds and close ended funds. The unit of such funds can be purchased and sold within a pre-determined time period. Interval funds are open for buying and selling at specific intervals as per defined in the mutual fund scheme. This fund is suitable for investors who have a lump sum to invest. Such funds are very rarely traded. 3. Mutual Funds Based on Investment Goals a. Growth Funds Growth funds are those funds whose large portion of investment is invested in shares of growth sectors. The main aim of the funds is to provide capital appreciation and returns to the investors. The investors are those who have large amount of idle cash and have a risk taking capability. These funds are normally holded for long period of time. These funds provide the maximum profit among all other mutual funds. b. Income Funds Income funds are similar to the debt mutual funds. They invest the amount in bonds, debt and other securities of the debt market. Skilled fund manager play a very important role in such funds, they have to arrange the securities as per the market fluctuations. They are better investmet option as compared to bank deposits. These funds are sutitable for risk averse investors. The returns are less as compared to growth funds. c. Liquid Funds Liquid funds are same like Income funds. They belong to debt mutual fund category, wherein they invest in various debt instruments and money market. The period of investment is limited upto 90 days. One can invest upto 10 lakhs in liquid funds. One can benefit from such funds if he doesn‟t wish to invest for a longer period of time. In liquid funds the NAV is calculated including all days i.e. 365 days. d. Tax-Saving Funds Tax- saving funds are those funds which have a dual benefit of wealth creation as well as tax benefits. The minimum investment period in Equity linked saving scheme (ELSS) is 3 years.

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These funds have a average returns of 14 – 16%. Salaried investors and long term investors are best suited for this scheme. e. Aggressive Growth Funds Aggressive growth funds invest in the stock which has high volatility. Typically the stock are selected on the basis of higher beta, like if the market beta is 1 then these stock will have beta 1.05 or above. These funds are very risky and ideal for investors having high risk capability. f. Capital Protection Funds As the name suggests, these funds protect your capital. They invest in mostly bonds, govt securities and little bit in equities. The average returns are upto 12% only. In such funds an investor never bears a loss. This is ideal for old aged investors who can‟t bear market risk. The minimum lock in period is 3 years. g. Fixed Maturity Funds Fixed maturity funds are the funds which get mature at a fixed period. The investors who are uncomfortable with debt market invest in such funds. These funds invest in bonds, securities and money market. These are close ended funds which range from 1 month to 5 years. the average return earned is less than 20 percent. h. Pension Funds Pension funds are like investing small portion of the income into funds for long time to secure familys future financially. These funds act as insurance to the family. They are helpful in the case of future happenings. These funds are usually as a protection fund to the family and not as a profit oreinted fund. These funds have medium returns. Most of the investment is done in large cap companies.

4. Specialized Mutual Funds a. Sector Funds Sector funds are the funds where the fund manager invests the money in one specific sector. The sector may be IT, pharma, Oil and gas, extra. One must be constantly aware of the various sector-related trends, and in case of any decline, just exit immediately. However, sector funds also deliver great returns. Some areas of banking, IT and pharma have witnessed huge and consistent growth in recent past and are predicted to be promising in future as well. These funds carry high risk. b. Index Funds Suited best for passive investors, index funds put money in an index. It is not managed by a fund manager. In index funds the investor himself observes the market and identifies the best market index to invest in the index in porportion as in the matket index. Even if they cannot outdo the market (which is the reason why they are not popular in India), they play it safe by mimicking the index performance.

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c. Funds of Funds Funds of funds are the funds in which there are many other funds. An investor invests the money in funds of funds in which his money is alloted in many other funds under the scheme. These funds are less risky as compared to other funds. They invest the money in every possible mutual fund. These funds are ideal for the investors who find it difficult to select a particular fund. d. Emerging market Funds India itself a dynamic and emerging market and investors to earn high returns from the domestic stock market, they are prone to fall prey to market volatilities. However, in a longer-term perspective, it is evident that emerging economies will contribute to the majority of global growth in the coming decade as their economic growth rate is way superior to that of the US or the UK. e. International/ Foreign Funds These mutual funds invest in the foreign market securities and stocks. It is ideal for the time span when the Indian markets are not performing well. Investors can investor proportionately in Indian market as well as intenational markets. The returns are good if the international markets are performing very well. f. Global Funds Aside from the same lexical meaning, Global Funds are quite different from International Funds. Global funds are different from international fund as thses funds invest in foreign market as well as in home market. These funds are very complicated and risky as they comply with different policies of different country. An ivestor can gain returns against inflation, market fall, and extra. These funds are very volatile owing to different markets. g. Real Estate Funds In spite of the real estate boom in India, many are wary about investing in such projects due to multiple risks. Real Estate Fund can be a perfect alternative as the investor is only an indirect participant by putting their money in established real estate companies/trusts rather than projects.Real estate funds A long-term investment, it negates risks and legal hassles when it comes to purchasing a property as well as provide liquidity to some extent. h. Commodity - focused Stock Funds Commodity focused funds are those funds in which the underlying assests are selected commodities. The commodities can be gold, goods or any other tradable commodity. The NAV of the mutual funds fluctuates at a very high pace. These funds are ideal for investor with high risk appetite. As of today, mutual funds can directly invest in only commodity, gold in India. The returns are relatively high in such funds

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i. Market Neutral Funds As the name suggests, these are the mutual funds which are not affected by the market fluctuations. They have better risk adaptability. The returns of such funds are high over a long period of time. These are ideal for small investors who don‟t have large portfolios. They are similar to defensive stocks. j. Inverse/leveraged Funds Inverse or leveraged funds are the mutual fund which acts in opposite direction of the normal mutual funds. In these funds the fund managers sells the stocks, debt or securities at higher price and then buy at lesse price. The difference between the selling price and buying price is the profit. This act is similar to the short sell option in the stock market. k. Asset Allocation Funds Asset allocation funds are the mutual funds in which the total investment money is allocated in a specific ratio in all types of assets. The assets can be equity, debt or any commodity. They are similar to hybrid funds. These funds have average risk and average returns. These mutual funds are ideal for every type of investors. .m. Exchange-traded Funds Exhange traded fund belongs to the Index Funds family and the funds is bought and sold on exchanges. It bets the difference between the pricing of two different exchanges. These funds invest in home market as well as foreign market. An ETF is like a Mutual Fund that can be traded at a price that may rise or fall many times a day in real time. .

7.3DETAILS OF THE MUTUAL FUND SCHEME

1. SBI BANKING & FINANCIAL SERVICES -DP (G) Category – Equity Sector - Financial Services Total Assets -509 Cr Turnover Ratio - 124.00% Expense Ratio - 1.29% Exit Load - 1.00%

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ADDITIONAL INFO Fund Manager - Sohini Andani Fund Family - SBI P/E Ratio - 28.89 Launch Date - February 26, 2015 Benchmark for the scheme - IISL Nifty Financial Services PR INR, S&P BSE bankex IR

ASSET ALLOCATION OF THE FUND

percentage 5%

equity debt 95%

Total 95 percent of the fund collected through the investors are invested in equities of various companies and 5 percent is invested in various debt funds available in the market.

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EQUITY ALLOCATION OF THE SCHEME

45% 40% 35%

30% 25% 20% 15% 10% 5% 0% GAINT

LARGE

MEDIUM

SMALL

The fund manager of this scheme invests 95 percent of the money in equity market. Out of this 95 percent he invests 38.48 percent in gaint companies, 30.28 percent in large cap companies, 19.48 percent in medium cap companies and 11.75 percent in small cap companies.

2. ADITYA BIRLA SUN LIFE BANKING & FINANCIAL SERVICES DIRECT GROWTH Category – Equity Sector - Financial Services Total Assets - 1,532 Cr Turnover Ratio - 70.00% Expense Ratio -1.35% Exit Load - 1.00%

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ADDITIONAL INFO Fund Manager - Satyabrata Mohanty Dhaval Gala Fund Family - Aditya Birla Sun Life P/E Ratio - 26.71 P/B Ratio - 2.97 Launch Date - December 14, 2013 Benchmark for the scheme - IISL Nifty Financial Services PR INR, S&P BSE bankex IR

ASSET ALLOCATION

percentage 4.55

Equity Debt 95.45

Total 95.45 percent of the fund collected through the investors are invested in equities of various companies and 4.55 percent is invested in various debt funds available in the market.

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EQUITY DISTRIBUTION 45% 40% 35% 30% 25%

20% 15% 10% 5% 0% Gaint

Large

Medium

Small

The fund manager of this scheme invests 95.45 percent of the money in equity market. Out of this 95.45 percent he invests 41.76 percent in gaint companies, 33.44 percent in large cap companies, 19.23 percent in medium cap companies and 5.57 percent in small cap companies.

3. DSP BLACKROCK NATURAL RESOURCES AND NEW ENERGY FUND DIRECT PLAN – GROWTH

Category - Equity Total Assets - 412 Cr Turnover Ratio - 52.00% Expense Ratio - 2.12% Exit Load - 1.00 %( if redeemed within 12 Months)

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ADDITIONAL INFO Fund Manager - Rohit Singhania Jay Kothari Fund Family - DSP BlackRock P/E Ratio - 9.09 P/B Ratio - 1.58 Launch Date - December 31, 2012 Benchmark - S&P BSE Metal INR S&P BSE Oil and Gas INR MSCI World/Energy NR USD

ASSET ALLOCATION 

percentage 4.65

equity 95.35

debt

Total 95.35 percent of the fund collected through the investors are invested in equities of various companies and 4.65 percent is invested in various debt funds available in the market.

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EQUITY DISTRIBUTION

percentage 70% 60% 50% 40% 30% 20% 10% 0% Gaint

Large

Medium

Small

Micro

The fund manager of this scheme invests 95.35 percent of the money in equity market. Out of this 95.35 percent he invests 28.54 percent in gaint companies, 57.28 percent in large cap companies, 12.06 percent in medium cap companies, 0.28 percent in small cap companies and 1.83 in micro companies.

4. L&T EMERGING BUSINESS FUND DIRECT GROWTH

Category – Equity (Small-Cap) Total Assets - 4,934 Cr Turnover Ratio - 38.94% Expense Ratio - 1.46% Exit Load - 1.00% (if redeemed within 1 Years

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ADDITIONAL INFO Fund Manager - S.N. Lahiri Karan Desai Fund Family - L&T Finance P/E Ratio - 24.55 P/B Ratio - 3.01 Launch Date - May 12, 2014 Benchmark - S&P BSE Smallcap TR INR

ASSET ALLOCATION

Percentage 4.94%

Equity 95.06%

Debt

Total 95.06 percent of the fund collected through the investors are invested in equities of various companies and 4.94 percent is invested in various debt funds available in the market.

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EQUITY DISTRIBUTION

percentage 60

50

40

30

20

10

0

Gaint

Large

Medium

Small

Micro

The fund manager of this scheme invests 95.06 percent of the money in equity market. Out of this 95.06 percent he invests less than 1 percent in gaint companies, 2.44 percent in large cap companies, 50.28 percent in medium cap companies, 36.22 percent in small cap companies and 11.06 in micro companies. 5. SBI Banking & Financial Services Direct Dividend Reinvestment

Category - Equity: Sector - Financial Services Total Assets - 509 cr Turnover Ratio - 124.00% Expense Ratio - 1.29% Exit Load - 1.00% (if redeemed within 12 Months)

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ADDITIONAL INFO Fund Manager - Sohini Andani Fund Family - SBI P/E Ratio - 28.89 P/B Ratio - 3.41 Launch Date - February 26, 2015 Benchmark - IISL Nifty Financial Services PR INR, S&P BSE small cap IR

ASSET ALLOCATION

Percentage 4.94%

Equity 95.06%

Debt

Total 95.06 percent of the fund collected through the investors are invested in equities of various companies and 4.94 percent is invested in various debt funds available in the market.

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EQUITY DISTRIBUTION

percentage 45 40 35 30

25 percentage

20 15 10 5 0 Gaint

Large

Medium

Small

The fund manager of this scheme invests 95.06 percent of the money in equity market. Out of this 95.06 percent he invests 38.48 percent in gaint companies, 30.28 percent in large cap companies, 19.48 percent in medium cap companies and 11.75 percent in small cap companies.

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8. DATA ANALYSIS ON BASIS OF RETURNS

For the study of the returns on mutual funds and bank deposits we have selected the top five performing mutual funds and the top five performing banks in India. The average returns of the top five mutual funds are given in the below table ( As on 15/8/18) TABLE NO 1 SCHEME NAME SBI Banking & Financial Services DP (G) ABSL Bank & Financial Services D(G) DSP BR Natural Recourses - DP(G) L&T emerging business fund – D (G) SBI Banking & Financial Services – Direct DR

NAV (in Cr)

1 YEAR RETURN (in %)

17.984

32.040

34.465 27.579

16.071

21.15% 15.58%

3.59% 12.48%

21.15%

3 YEAR RETURN (in %) 22.23%

21.44%

23.45% 21.56%

22.24%

ANALYSIS OF THE MUTUAL FUND SCHEMES The above mentioned mutual funds are selected on the basis of their returns in one year and three years.  The NAV of DSP BR Natural Recourses - Direct (Growth) scheme (Rs.34.46) is the highest among all the other schemes whereas the lowest NAV is of SBI Banking & Financial Services -RP (Growth) scheme (Rs. 16.071)  The NAV of DSP BR Natural Recourses - Direct (Growth) is approximately 114.43 percent higher than the NAV of the SBI Banking & Financial Services -RP (G) scheme.  The NAV of other scheme are mostly above Rs.30 crore.  From this we can infer that an individual can acquire more number of units in SBI Banking & Financial Services -RP (G ) as the NAV is less and less number of units in DSP BR Natural Recourses - Direct (G) as the NAV is more as compared to other schemes.

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 The number of units acquired does not matter till the percent of retuns are same and the scheme are identical.  The NAV value of a scheme is a mere indication of the net present value of the scheme at market value.  In the above table all the mentioned schemes are so different structure and of different investment objective.

One year returns  In mutual funds returns play a very crucial role. As today there are various schemes that are identical to other scheme, so the only measure to differentiate is the returns.  The 1 year return of SBI Banking & Financial Services -DP (G) scheme is 21.15 percent, ABSL Bank & Financial Services -DP (G) scheme is 15.58 percent, DSP BR Natural Recourses - Direct (G) is 3.59 percent, L&T Emerging Businesses Fund-DP (G) is 12.48 percent and SBI Banking & Financial Services -RP (G) scheme is 21.15 percent.  The highest return is of SBI Banking & Financial Services -DP (G) scheme and SBI Banking & Financial Services -DP (G) i.e. 21.15 percent.  The lowest return is of DSP BR Natural Recourses - Direct (G) scheme i.e. 3.59 percent  There is approximately difference of 18 percent between the highest return and the lowest return; whereas the returns of two other schemes are 6 percent and 9 percent lower.  From this we can infer that if an individual buys same amount of units in the entire scheme he will get the maximum returns within one year from SBI Banking & Financial Services -DP (G) scheme and SBI Banking & Financial Services -DP (G) scheme i.e. a return of 21.15 % on the NAV of the units.  At the same time he will receive the lowest returns from DSP BR Natural Recourses - Direct (G) scheme i.e. 3.59% on the NAV of the units.

Three years return  From the investment period of three years the highest return is gained from DSP BR Natural Recourses - Direct (G) scheme i.e.23.45 percent.  The lowest return is gained from DSP BR Natural Recourses - Direct (G) scheme i.e. 21.44 percent  From the above table we can infer that in the investment period of three years there is no huge difference between the retuns from the schemes.  The returns are approximately above 20 percent for the time period of three years  There is a minute difference of approximately 3 percent between the highest return and lowest return among the above mentioned table no 1.

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Overall  Form above table we can say that the returns of DSP Blackrock Natural Recourses - Direct (G) scheme is lowest when one year returns are considered and it becomes the scheme with highest return when the three years return is considered. The reason being that the fund invest in natural resources.  It indicates that the scheme has more holdings in large cap companies, which provide good returns after 1 year.  The scheme is good for long holding period and not for short term holding.  SBI Banking & Financial Services -DP (G) and SBI Banking & Financial Services -DP (G)) have almost the same retuns for one year and three year. The returns are above 20 percent for both one year and three year.  From this we can say that the scheme is good for short term holding as well as long term holding.  ABSL Bank & Financial Services -DP (G) and ABSL Bank & Financial Services -DP (G) schemes have below 20 percent return for one year and above 20 percent return for three years.  This indicates that this scheme have an average return for short term holding as well as long term holding. 8.1RISK MEASURES OF THE MUTUAL FUND SCHEMES

As of 31/7/2018 Table no 2 Scheme SBI Banking & Financial Services -Direct (G) ABSL Bank & Financial Services -Direct (G) DSP BR Natural Recourses and new energy fund - Direct (G) L&T emerging business fund – D (G) SBI Banking & Financial Services -DP (G))

Standard deviation

Alpha Beta 8.73

0.85

Treynor ratio 19.86

Sharpe’s ratio 1.00

6.46

0.92

17.07

0.80

20.14 19.14

1.69

0.81

19.10

0.91

18.56

8.07

0.91

19.43

0.95

17.76

8.74

0.85

21.23

1.00

17.76

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Risk interpretation of the mutual funds

1. SBI Banking & Financial Services -DP (G)  The fund has same standard deviation as of SBI Banking & Financial Services -DP (G) scheme. This means that both the funds are at par volatile as compared to their benchmark.  The standard deviation of this fund is 17.73 which mean that the returns of the funds are more volatile. The returns of the fund are more spread out from its mean return.  The standard deviation of the fund is approximately 3 points lower as compared to the benchmark S&P BSE bankex IR (19.40).  It indicates that the fund returns are more volatile as compared to the returns of its benchmark index.  The alpha of the fund is 8.73 which indicate that the fund is very much volatile as compared to its benchmark. If the benchmark index gives a return of 100 percent then the fund will give a return of 108.73 percent.  The beta of the fund is 0.85 which means that the fund is less volatile as compared to the market. If the market goes up by 100 percent then the fund will go high by only 85 percent and vic versa.  The Treynor ratio of the fund is 19.86 which indicate that the fund has better risk adjusted return.  The Sharpe ratio of the fund is 1 whereas that of the benchmark index is 0.54. It is approximately 0.46 points more than the benchmark index. It indicates that the fund has performed better than expected returns. 2. ABSL Bank & Financial Services -DP (G)  The standard deviation of the fund is highest as compared to other funds. It is approximately higher by 3 percent by the lowest standard deviation of the scheme in the above table.  The standard deviation of the fund is 20.14 which mean that the returns of the funds are more volatile. The returns of the fund are more spread out from its mean return.  The standard deviation of the fund is approximately 1 points higher as compared to the benchmark benchmark S&P BSE bankex IR ( 19.40). It indicates that the fund returns are very close to the returns of its benchmark index.  The alpha of the fund is 6.46 which indicates that the fund is very much volatile as compared to its benchmark. If the benchmark index give a return of 100 percent then the fund will give a return of 106.46 percent.

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 The beta of the fund is 0.92 which means that the fund is less volatile as compared to the market. If the market goes up by 100 percent then the fund will go high by only 92 percent and vice versa.  The Treynor ratio of the fund is 17.07 which indicate that the fund has better risk adjusted return  The Sharpe ratio of the fund is 0.80 whereas that of the benchmark index is 0.54. It is approximately 0.26 points more than the benchmark index. It indicates that the fund has performed better than expected returns. 3. DSP BR Natural Recourses - Direct (G)  The standard deviation of the fund is 19.14 which means that the returns of the funds are more volatile. The returns of the fund are more spread out from its mean return.  The standard deviation of the fund is approximately one percent less as compared to the highest standard deviation of scheme in the above tavle.  The alpha of the fund is 1.69 which indicates that the fund is not very volatile as compared to its benchmark. If the benchmark index gives a return of 100 percent then the fund will give a return of 101.69 percent.  The beta of the fund is 0.81 which means that the fund is less volatile as compared to the market. If the market goes up by 100 percent then the fund will go high by only 81 percent and vice versa.  The Treynor ratio of the fund is 19.10 which indicate that the fund has better risk adjusted return  The Sharpe ratio of the fund is 0.91 whereas that of the benchmark index is 0.33. It is approximately 0.58 points more than the benchmark index. It indicates that the fund has performed better than expected returns. 4. L&T emerging business fund – D (G)  The standard deviation of the fund is 18.56 which means that the returns of the funds are more volatile. The returns of the fund are more spread out from its mean return.  The standard deviation of the fund is approximately 0.65 percent less than the highest standard deviation of the scheme in the above table.  The standard deviation of the fund is approximately 1.00 points lower as compared to the benchmark benchmark S&P BSE small cap IR ( 19.52). It indicates that the fund returns are close to the returns of its benchmark index.  The alpha of the fund is 8.07 which indicates that the fund is very much volatile as compared to its benchmark. If the benchmark index give a return of 100 percent then the fund will give a return of 108.07 percent.  The beta of the fund is 0.91 which means that the fund is less volatile as compared to the market. If the market goes up by 100 percent then the fund will go high by only 91 percent and vice versa. THAKUR INSTITUE OF MANAGEMENT STUDIES AND RESEARCH

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 The Treynor ratio of the fund is 19.43 which indicate that the fund has better risk adjusted return  The Sharpe ratio of the fund is 0.95 whereas that of the benchmark index is 0.54. It is approximately 0.41 points more than the benchmark index. It indicates that the fund has performed better than expected returns. 5. SBI Banking & Financial Services –Direct DR  The standard deviation of the fund is 17.76 which mean that the returns of the funds are more volatile. The returns of the fund are more spread out from its mean return.  The standard deviation of the fund is approximately 1.67 points lower as compared to the benchmark benchmark S&P BSE small cap IR ( 19.40). It indicates that the fund returns are close to the returns of its benchmark index.  The alpha of the fund is 8.74 which indicate that the fund is very much volatile as compared to its benchmark. If the benchmark index gives a return of 100 percent then the fund will give a return of 108.74 percent.  The beta of the fund is 0.85 which means that the fund is less volatile as compared to the market. If the market goes up by 100 percent then the fund will go high by only 85 percent and vice versa.  The Treynor ratio of the fund is 21.23 which indicate that the fund has better risk adjusted return.  The Sharpe ratio of the fund is 1 whereas that of the benchmark index is 0.54. It is approximately 0.46 points more than the benchmark index. It indicates that the fund has performed better than expected returns.

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BANK DEPOSITS

Bank can be termed as an financial institute where an individual can deposits money and lend money .Accepting deposits is the main function that differentiates banks form other financial insitutions. The main function of an bank is to lend money to the needy individual. The bank charges intersect rate for the loan facilated by them. The other function of the bank is to accept deposits for the people. There are various kind of deposits available with the bank like term deposits, saving account, current account,etc.the brief information about deposits is provided below.

9. TYPES OF BANK DEPOSITS

Bank deposits Time deposits Fixed deposits

Recurring deposits

Demand deposits Savings accounts

Current account

Time Deposits

Time deposits are the called as time deposits because these deposits get mature after a specific fixed period of time, which is pre determined. The deposits cannot be withdrawn for the pre determined time, if an investors withdraws his money before the predetermined time then a penalty is levied on the investor. The interest to be received at the time of maturity depends on the tenure and the amount of deposits.the rate of interest keeps on changing from bank to bank .on the basis of time and nature time deposits can be differentiated in two types, they are as follows; THAKUR INSTITUE OF MANAGEMENT STUDIES AND RESEARCH

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Fixed deposits Fixed deposits are the deposits in which a lumpsum amount is deposited for a specific perios of time. Depending on the tenure and the amount deposited the depositor is liable to receive certain interest plus principal amountat the time of maturity of the deposit. The rate of interest is pre decided. Recurring deposits In recurring deposits, unlike fixed deposits a specific sum of amount is deposited at regular intervals. These deposits are ideal for fixed income people. The rate of interest is usually the same as the fixed deposits. Banks provide various products which are similar to recurring deposits examples – flexible FDs, special term deposit account, etc.

Demand deposits Demand deposits are called as demand deposits because in such deposits a depositor can withdraw his funds at any time without any prior notice to the bank. The funds can be withdrawn through cheque, ATM or online applications. No penalty is levied on the depositor in these types of deposits. Marginal interest is paid or credit to the depositors account to annual basis or as per the banks regulations in some demand deposits. These deposits are highly liquid and can be encashed as per ones convienence.on the basis of nature demand deposits can be broadly differentiated in two types, they are as follows; Current Account A cuurent account is a demand deposit in which the bank is obliged to pay the demanded money to the depositor, whenever demanded. There is no interest paid by the bank on such deposits. Current accounts are ideal for the people who have to do a lot of transactions everyday. Mostly all business men own a current account. A minimum balance is to be maintained in these accounts. Banks charge certain money to maintain this account Saving Accounts Savings account is a demand deposit in which the bank pays ceratin rate of interest on the amount deposited in the account. The rate of interest is lower as compared to term deposits or time deposits. There are restrictions on the number of withdrawals during the specified time. The rate of interest currently is between 3.50 percent to 4 percent in India.

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9.1DETAILS OF THE TOP FIVE BANKS

1. HDFC BANK Type - Public Industry - Banking, financial services Founded - August 1994 Headquarters - Mumbai, Maharashtra, India Area served - India Key people - Aditya Puri Products - Credit cards, consumer banking, corporate banking, finance and insurance, investment banking, mortgage loans, private banking, private equity, and wealth management Interest rates for the bank deposits in HDFC bank Table no 3 Period Less than 1 year 1-3 year

Saving account 3.50 – 4.00%

Current account nil

Term deposits 7.25-7.75%

Recurring deposits 7.25 – 7.75%

7.10-7.60%

7.10-7.60%

Analysis  The interest rate for savings accounts is same for all time duration, let it be 90 days or three years (3.50 – 4 percent). If the saving amount is less than 50 lakh then an individual is liable to receive a interest of 3.50 percent on the total amount, and if the amount of savings is more than 50 lakh than an individual is liable to receive interest of 4 percent on the total savings amount.  There is no interest charged on the current account holders.  The interest paid on fixed term deposits varies from 7.25 percent to 7.75 percent for one year whereas for three years it varies between 7.10 percent to 7.60 percent. The interest rates are higher in the initial years as compared to later years. Only seniors are applicable to receive higher rates of interest rates.  The interest rates paid for recurring fixed deposits are same as compared to the fixed term deposits in HDFC bank. However the interest received from recurring deposits

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2. SBI BANK Type - Public Industry - Banking, financial services Founded -2 June 1806, Bank of Calcutta 27 January 1921, Imperial Bank of India 1 July 1955, State Bank of India Headquarters - Mumbai, Maharashtra Area served - Worldwide Key people - Rajnish Kumar (Chairman) Product - Consumer banking, corporate banking, finance and insurance, investment banking, mortgage loans, private banking, private equity, savings, securities, asset management, wealth management and credit cards Interest rates for the bank deposits in SBI bank Table no 4 Period

Saving account

Current account

Term deposits

Less than 1 3.50 – 4.00% nil 6.40 – 6.90 % year 1-3 year 6.75- 7.25 % *TDR- term deposits rates, STDR – special term deposits rates.

Recurring deposits As per bank TDR/STDR

Analysis  The interest rate for savings accounts is same for all time duration, let it be 90 days or three years (3.50 -4 percent). If the saviing amount is less than 1 crore then an individual is liable to receive a interest of 3.50 percent on the total amount, and if the amount of savings is more than 1 crore than an individual is liable to receive interest of 4 percent on the total savings amount.  There is no interest charged on the current account holders.  The interest paid on fixed term deposits varies from 6.40percent to 6.90 percent for one year whereas for three years it varies between 6.75 percent to 7.25 percent. The interest rates are higher in the latter years as compared to initial years. The main factor being the time value of the money.

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 The interest rates paid for recurring fixed deposits are as per banks TDR/STDR in SBI bank. The rates keeps on changing as per the deposit period opted by the investor. Higher the investment period higher will be the interest.

3. ICICI BANK Type - Public Industry - Banking, Financial services Founded - 1994 Headquarters - Mumbai, Maharashtra, India Area served- Worldwide Key people - Girish Chandra Chaturvedi (Non-Executive Chairman) Chanda Kochhar (MD & CEO) Sandeep Bakhshi (COO) Products - Credit cards, consumer banking, corporate banking, finance and insurance, investment banking, mortgage loans, private banking, wealth management, personal loans, payment solutions, Trade and Retail Forex. Interest rates for the bank deposits in ICICI bank Table no 5 Period Less than 1 year 1-3 year

Saving account 3.50 – 4.00%

Current account nil

Term deposits 6.75-7.25%

Recurring deposits 6.75 – 7.25%

7.25-7.75%

7.25-7.75%

Analysis  The interest rate for savings accounts is same for all time duration, let it be 90 days or three years(3.50 – 4 percent). If the saving amount is less than 50 lakh then an individual is liable to receive a interest of 3.50 percent on the total amount, and if the amount of savings is more than 50 lakh than an individual is liable to receive interest of 4 percent on the total savings amount  There is no interest charged on the current account holders.

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 The interest paid on fixed term deposits varies from 6.75 percent to 7.25 percent for one year whereas for three years it varies from 7.25 percent to 7.75 percent. The interest rates are higher in the latter years as compared to initial years.  The interest rates paid for recurring fixed deposits are approximately same as the interest rates are for fixed deposits. However the interest received from recurring term deposits may be sometimes higher as compared to normal term deposits interest.

4. AXIS BANK Type - Public Industry - Banking, Financial services Founded - 1993(as UTI Bank) Headquarters - Mumbai, Maharashtra, India[1] Area served - Worldwide Key people - Shikha Sharma (MD & CEO) Sanjiv Misra (Chairman) Products - Credit cards, consumer banking, corporate banking, finance and insurance, investment banking, mortgage loans, private banking, private equity, wealth management

Interest rates for the bank deposits in Axis bank Table no 6 Period Less than 1 year 1-3 year

Saving account 3.50 – 4.00%

Current account nil

Term deposits 7.10- 7.30%

Recurring deposits 7.10- 7.30%

7.00-7.25%

7.00-7.25%

Analysis  The interest rate for savings accounts is same for all time duration, let it be 90 days or three years (3.50 – 4 percent). Only seniors are applicable to receive higher rates of interest rates as compared to others.  There is no interest charged on the current account holders. THAKUR INSTITUE OF MANAGEMENT STUDIES AND RESEARCH

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 The interest paid on fixed term deposits varies from 7.10 percent to 7.30 percent for one year whereas for three years it varies between 7.00 percent to 7.25 percent. The interest rates are higher in the later years as compared to initial years.  The interest rate paid for recurring fixed deposits is same as compared to fixed term deposits in Axis bank. However the interest received from recurring term deposits may be sometimes higher as compared to normal term deposits interest.

1.BANK OF BARODA Type - Public Industry - Banking, Financial services Founded - 20 July 1908 Founder - Maharaja H. H. Sir Sayajirao Gaekwad III Headquarters - Vadodara, Gujarat, India Area served - Worldwide Key people - Ravi Venkatesan (Chairman) P. S. Jayakumar (Managing Director & CEO Bharat Dangar (Director) Products - Consumer banking, Corporate banking, Credit cards, Finance and insurance, Investment banking, Mortgage loans, Private banking, Private equity, Wealth management

Interest rates for the bank deposits in Bank of Baroda Table no 7 Period Less than 1 year 1-3 year

Saving account 3.50 – 4.00%

Current account nil

Term deposits 6.60- 7.05%

Recurring deposits 6.60-7.05%

6.50 – 6.60 %

6.50- 6.60 %

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Analysis  The interest rate for savings accounts is same for all time duration, let it be 90 days or three years (3.50 – 4 percent). Only seniors are applicable to receive higher rates of interest rates as compared to others.  There is no interest charged on the current account holders.  The interest paid on fixed term deposits varies from 6.60 percent to 7.05 percent for one year whereas for three years it 6.50 - 6.60 percent. The interest rates are lower in the later years as compared to initial years.  The interest rates paid for recurring fixed deposits is same as compared to fixed term deposits in bank of baroda. However the interest received from recurring term deposits may be sometimes higher as compared to normal term deposits interest.

10. RISK FACTORS IN BANK DEPOSITS

Though we say that the bank deposits are risk free, they are actually not. Every investment carry some percent of risk in it. Even in banking sector where the government is the main regulator we cant say that the bank deposits are fully risk free. There are various types of risk factors while investing in a bank deposits. Some of the risk factors are as below;

1) Default risk In this growing economy there are number of fraunds and scandals that take place in various financial institutions and banks. Due to such frauds and scandals it may happen that the suffering company or bank has to close down all its functions. In such cases an investor‟s money is at a toss, he may get the money invested back or else not. Only upto 1 lakh is receivable as it is secured by Deposit Insurance and Credit Guarantee Corporation (DICGC) . In most of the cases due to unbearable loss made by the bank, the investors usually losses all his investment.

2) Interest rate risk The interest rates of the banks keep fluctuating due to the affect of various changes in the working environment. The average inflation rate since last five years is 7.75 percent. In August 2000 the interest rate were at record high(14.50 percent), whereas in April 2009 it was only 4.25 percent. The current interest rates IS 4 percent. The interest rates keep on fluctuating as per the inflation rates. An investor losses the value of money virtually if the rate of interest increases in near future. THAKUR INSTITUE OF MANAGEMENT STUDIES AND RESEARCH

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3) Taxation on FD’s The interest earned from the bank deposits are not tax free but they are tax adjusted. TDS is deducted from our account with every payment that bank transfers to an account earning interest above Rs.10000. The deducted TDS is yet to be paid to the account holder.the amount invested of tax saving fixed deposit is eligible for the tax deduction uner section 80C. However such interest is taxable as it is from the tax savin FD.

11. COMPARATIVE STUDY OF MUTUAL FUNDS AND BANK DEPOSITS

WHAT IF WE INVEST Rs. 10000 ? Returns on investment in mutual funds Table no 8 SCHEME

1 YEAR RETURN ( in Rs)

3 YEARS RETURN ( in Rs)

SBI Banking & Financial Services -DP (G)

12,115

12,223

ABSL Bank & Financial Services -DP (G)

11,558

12,144

DSP BR Natural Recourses Direct (G)

10,359

12,345

L&T Emerging Businesses Fund-DP (G)

11,248

12,156

SBI Banking & Financial Services -RP (G)

12,115

12,224

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Returns on investment in bank deposits Table no 9 BANK

SAVING ACCOUNT

CURRENT ACCOUNT

FIXED DEPOSITS

RECURRING DEPOSITS

1 YEAR RETURN

3 YEARS RETURN

1 YEAR RETURN

3 YEARS RETURN 10,760

HDFC BANK

10,400

NIL

10,775

10,760

10,775

SBI BANK

10,400

NIL

10,690

10,725

As per TDR/ STDR

ICICI BANK

10,400

NIL

10,725

10,775

10,725

10,775

AXIS BANK

10,400

NIL

10,730

10,725

10,730

10,725

BANK OF BARODA

10,400

NIL

10,705

10,660

10,705

10,660

DATA INTERPRETATION As per the data in the above table the returns form three years investment is higher than that from one year investment. Investors can receive returns as high as two thousand three hundred and fourty five (DSP BR Natural Recourses - Direct (G), if he invests ten thousand in nutual fund scheme. On the other side, an iivestors can get the highest return of seven hundred and seventy five only (HDFC BANK). There is approximately a difference of one thousand five hundred and seventy rupees. The lowest return that an investor can receive from the mutual fund is three hundred and fifty nine rupess whereas in bank deposits it is six hundred and sixty rupees. Here we can see that the lowest return of mutual funds is approximately three hundred rupees lower than the lowest income from the bank deposits. This indicates that the returns from mutual funds are more spread out as compared to the returns of bank deposits.The average return from investing in mutual fund is approximately thirteen hundred. The average return from bank is seven hundred.An investor can gain above twenty percent returns from investing in mutual funds whereas in bank deposits he can gain only upto eight percent returns.. The returns from the bank deposits are relatively low as compared to returns from mutual funds. The returns from mutual funds is high as they include market risk , on the other side the returns from bank deposits are risk free. An investor don‟t have to worry about the market movements,global market impacts and all other factors that affect the market while investing in a bank deposits.However the returns from bank deposits are not totally risk free as they do carry some percent of risk factor( default risk of the banks). THAKUR INSTITUE OF MANAGEMENT STUDIES AND RESEARCH

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12. COMPARISON OF BANK DEPOSITS AND MUTUAL FUNDS ON THE BASIS OF DIFFERENT PARAMETERS. Table no 10 PARAMETERS

BANK DEPOSITS

MUTUAL FUND

1.risk rate

Low

medium to high

2.liquidity

medium to low

high

3.pre mature withdrawal

allowed with penalty

allowed with exit load charges

4.cost

no cost

management cost

5.tax

Tax exemption is offered

tax as per slab rate

6.inflation adjusted returns

low potential for inflation adjusted returns

high potential for inflation adjusted returns

7.rate of returns

assured rate of returns

no assured rate of return

FINDINGS As per the above table we can say that the mutual funds have higher risk as compared to bank deposits. The risk involved in mutual fund is all because of the market undulations, the market can go high and low due to various factors which directly affect the NAV of the mutual funds. The rates of returns are assured in the bank deposits and in mutual fund rate of return in not assured. An investor may receive a very low rate of return if the market goes low and vice versa.thus we can also say that returns in mutual funds are inflation adjusted as they are impacted by the inflation rates going on in the country. In bank deposits there is no potential for inflation adjustment as the rate of interest are pre determined and cant be changed .Mutual funds have a higher liquidity as compared to bank deposits as we can withdraw our money from mutual funds as per our conditions but in bank deposits (fixed deposits)we have to wait for a certain period of time to withdraw our cash from the bank. In of pre maturity withdrawal bank charges penalty as per the rules whereas in mutual funds exit load is charged which is never more than 2 percent. When an investor invest money in bank he don‟t have to bear any cost on his part, on ther hand in mutual fund an investor has to bear the management cost as there is a fund manager( professional person) who manages the investments. There are various mutual funds which are tax exempted like ELSS, tax saving scheme, etc.The bank interest are always taxed as per the tax slab, and hence there is no scope of tax relief from bank deposits.

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13. LEARNING OUTCOMES  From the research it is clear that mutual funds have a higher return earning capacity as compared to the bank deposits.  Bank deposits are a good investment avenue for the people who don‟t have risk bearing ability. People who are satisfied with low returns and low risk are best suited for bank deposits.  The return of the mutual funds depends on the fund manager. The fund manager is the one who takes the investment decision of the mutual funds.  Equity based mutual funds have more returns as compared to the other mutual fund scheme.

14. CONTRIBUTION TO THE COMPANY  Build a good communication and co operation among the employees throughout the in ternship period  Created continuous learning environment  Full attention towards work assigned and able to produce a maximum output during the internship period  Added new clients to the business of the company.

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15. CONCLUSION

Now a day in our country, India various changes are taking place. Our country is changing from the outmoded phase to the technological phase. There has been a significant change in investment pattern of the people, buying behaviour, thinking pattern of the public. The mutual fund industry was Rs. 6,700 crores (assets under management) at the end of year 1988 which has increased to Rs 21.36 lakh crore at the end of March 2018. The mutual fund industry has a great scope in India as still most of the population is still not aware about the mutual funds or benefits of the investing in mutual funds. The Association of Mutual Funds in India (AMFI) is targeting nearly five fold growth in assets under management (AUM) to Rs 95 lakh crore (US$ 1.47 trillion) . Mutual funds can provide higher returns as compared to bank deposits over a long period of time. Bank deposits are almost risk free therefore risk averse individual should invest in bank deposits. Investors who want higher returns in less period of time should invest in mutual fund schemes (equity mutual funds). Mutual funds have tax benefits whereas bank deposits don‟t have any tax benefits. Thus we can conclude that mutual funds are a better investment avenue as compared to bank deposits.

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16. BIBLOGRAPHY

BOOKS  Indian Mutual Funds Handbook: - Sundar Sankaran  16 Personal Finance Principles Every Investor Should Know - Manish Chauhan

Webliography  https://www.researchgate.net  https://clearfunds.com/mutual-fund-explorer  http://morningstar.com  https://www.ibef.org/  www.proquest.com/  https://www.sbi.co.in/  https://www.hdfcbank.com/  https://www.axisbank.com  https://www.icicibank.com  https://www.bankofbaroda.com/

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