A REPORT ON WEALTH MANAGEMAENT APPROACH OF STANDARD CHARTERED BANK IN INDIA

SUBMITTED BY: (VIDUSHI DORA) (PGB1042)

STANDARD CHARTERED BANK DEHRADUN

1

A REPORTON

WEALTH MANAGEMENT APPROACH OF SCB IN

INDIA

SUBMITTED BY: (VIDUSHI DORA) (PGFB1042)

A report submitted in the partial fulfillment of the requirement of MBA program of Jaipuria Institute of Management)

COMPANY GUIDE: FACULTY GUIDE:Mr. NITIN AVASTHI Dr. SWATI AGARWALBranch Manager Faculty MemberDEHRADUN JIM, Noida.

2

A C K N O W L E D G E M E N T

The summer project at Standard Chartered Bank offered both a learning

experience, as well as, a glimpse into the daily management functions of an

organization. During the tenure of this project, I was fortunate to have

interacted with people, who in their own capacities have encouraged and

guided me. For their unstinted and invaluable guidance, I wish to express my

heartfelt gratitude to my guides Mr. Nitin Avasthi, StanC Bank without

whom this project could not have been completed successfully. For sharing

his insights and knowledge, derived from the years of experience in

particular areas of expertise, I would like to express my deepest gratitude

towards Mr. Vikas Mohan (Branch Manager, Dehradun) who has shared

his experience to increase my knowledge and encouraged me at every stage.

I am also highly grateful to my faculty guide Dr. Swati Agarwal, for her

valuable inputs kind support and encouragement throughout this time.

Besides I am grateful to my seniors and all members of the HRD, sales and

office team for their co-operation and good wishes.

3

Executive Summary

Standard Chartered Bank was formed in 1969 through a merger of two

banks: The Standard Bank of British South Africa, founded in 1863, and the

Chartered bank of India, Australia and China, founded in 1853.

This project deals with the analyzing the wealth management business for

Standard Chartered Bank, Dehradun.

I have started off with brief introduction of StanC, its history, & its

operation in India. This constitutes as major part of literature survey of this

project.

Thereafter, I have discussed an overview of wealth management process and

strategic asset allocation. I classified different types of investor, as per their

risk-return profile & prepared ideal investment mix.

(Psychological analysis of investors mind) in this I have classified the

decision making into six sequential points.

After study on investor decision making, I have done analysis of “consumer

banking & finding potential in Dehradun and nearby region” In this I have

surveyed through in various elite clubs, hospital etc. along with their contact

and details.

In the end I have made some conclusions & recommendations.

Sample design: Stratified random sampling.

Data collection: Survey Method

Questionnaire

4

Table of content1. Certificate from the Mentor 2. Summer Internship Completion Certificate from the Organization3. Acknowledgement4. Executive summary5. Contents: these are as follows:

Chapter-1 Bank

1.1. History.1.2. Definition.1.3. Banking.1.4. Risk and Capital1.5. Banks in the Economy.1.6. Regulation1.7. Types of banks

Chapter-2 About of SCB:2.1. About the bank2.2. History of the bank

2.3. Values of the bank 2.4. Key milestones in development 2.5. Board of SCB

Chapter-3 SCB in INDIA:3.1. Investment Advisory Services

Chapter-4 Research Design:4.1. Research Topic.4.2. Sampling Used.4.3. Data Used In Study.4.4. Tools And Techniques Used In Study

Chapter-5 Literature Review:5.1. Wealth Management.5.2. Strategic asset allocation.5.3. Types of investor.5.4. Ideal investment mix.

5

5.5. Fund selection process.5.6. Investor decision making process.5.7. Criterion for evaluation of SCB.

Chapter-6 Data Analysis and Interpretation: 6.1. Diagrammatical Representation of Data.

Chapter-7 Research Findings and Recommendations.

References:

Bibliography

Appendices:Questionnaire

6

           

Chapter 1:About banks

7

History

A bank is a financial institution that serves as a financial intermediary. The term "bank"

may refer to one of several related types of entities:

A central bank circulates money on behalf of a government and acts as its

monetary authority by implementing monetary policy, which regulates the money

supply.

A commercial bank accepts deposits and pools those funds to provide credit,

either directly by lending, or indirectly by investing through the capital markets.

Within the global financial markets, these institutions connect market participants

with capital deficits (borrowers) to market participants with capital surpluses

(investors and lenders) by transferring funds from those parties who have surplus

funds to invest (financial assets) to those parties who borrow funds to invest in real

assets.

A savings bank (known as a "building society" in the United Kingdom) is similar

to a savings and loan association (S&L). They can either be stockholder owned or

mutually owned, in which case they are permitted to only borrow from members of

the financial cooperative. The asset structure of savings banks and savings and loan

associations is similar, with residential mortgage loans providing the principal assets

of the institution's portfolio.

Because of the important role depository institutions play in the financial system, the

banking industry is highly regulated, and government restrictions on financial activities

by banks have varied over time and by location. Current global bank capital requirements

are referred to as Basel II. In some countries, such as Germany, banks have historically

owned major stakes in industrial companies, while in other countries, such as the United

States, banks have traditionally been prohibited from owning non-financial companies.

In Japan, banks are usually the nexus of a cross-share holding entity known as the

"keiretsu". In Iceland, banks followed international standards of regulation prior to the

recent global financial crisis that began in 2007.

The oldest bank still in existence is Monte dei Paschi di Siena, headquartered

in Siena, Italy, which has been operating continuously since 1472.

8

Definition Under English common law, a banker is defined as a person who carries on the

business of banking, which is specified as:

conducting current accounts for his customers

paying cheques drawn on him, and collecting cheques for his customers

"Banking business" means the business of receiving money on current or deposit account, paying and collecting cheques drawn by or paid in by customers, the making of advances to customers, and includes such other business as the Authority may prescribe for the purposes of this Act; (Banking Act (Singapore), Section 2, Interpretation).

"Banking business" means the business of either or both of the following:

1. receiving from the general public money on current, deposit, savings or other

similar account repayable on demand or within less than [3 months] ... or with a

period of call or notice of less than that period;

2. paying or collecting cheques drawn by or paid in by customers

9

Banking

Standard activities

Banks act as payment agents by conducting checking or current accounts for customers,

paying cheques drawn by customers on the bank, and collecting cheques deposited to

customers' current accounts. Banks also enable customer payments via other payment

methods such as telegraphic transfer, EFTPOS, and automated teller machine (ATM).

Banks borrow money by accepting funds deposited on current accounts, by accepting

term deposits, and by issuing debt securities such as banknotes and bonds. Banks lend

money by making advances to customers on current accounts, by making installment

loans, and by investing in marketable debt securities and other forms of money lending.

Banks provide almost all payment services, and a bank account is considered

indispensable by most businesses, individuals and governments. Non-banks that provide

payment services such as remittance companies are not normally considered an adequate

substitute for having a bank account.

Banks borrow most funds from households and non-financial businesses, and lend most

funds to households and non-financial businesses, but non-bank lenders provide a

significant and in many cases adequate substitute for bank loans, and money market

funds, cash management trusts and other non-bank financial institutions in many cases

provide an adequate substitute to banks for lending savings too

Channels

Banks offer many different channels to access their banking and other services:

ATM is a machine that dispenses cash and sometimes takes deposits without the

need for a human bank teller. Some ATMs provide additional services.

10

A branch is a retail location

Call center

Mail: most banks accept check deposits via mail and use mail to communicate to

their customers, e.g. by sending out statements

Mobile banking  is a method of using one's mobile phone to conduct banking

transactions

Online banking  is a term used for performing transactions, payments etc. over the

Internet

Relationship Managers , mostly for private banking or business banking, often

visiting customers at their homes or businesses

Telephone banking  is a service which allows its customers to perform transactions

over the telephone without speaking to a human

Video banking  is a term used for performing banking transactions or professional

banking consultations via a remote video and audio connection. Video banking can be

performed via purpose built banking transaction machines (similar to an Automated

teller machine), or via a videoconference enabled bank branch.

Products

Retail

Business loan

Cheque account

Credit card

Home loan

Insurance advisor

Mutual fund

Personal loan

Savings account

Wholesale

Capital raising (Equity / Debt / Hybrids)

Mezzanine finance

11

Project finance

Revolving credit

Risk management (FX, interest rates, commodities, derivatives)

Term loan

Risk and capital

Banks face a number of risks in order to conduct their business, and how well these risks

are managed and understood is a key driver behind profitability, and how much capital a

bank is required to hold. Some of the main risks faced by banks include:

Credit risk : risk of loss arising from a borrower who does not make payments as

promised.

Liquidity risk : risk that a given security or asset cannot be traded quickly enough

in the market to prevent a loss (or make the required profit).

Market risk : risk that the value of a portfolio, either an investment portfolio or a

trading portfolio, will decrease due to the change in value of the market risk factors.

Operational risk : risk arising from execution of a company's business functions.

The capital requirement is a bank regulation, which sets a framework on how banks and

depository institutions must handle their capital. The categorization of assets and capital

is highly standardized so that it can be risk weighted.

12

Banks in the economy

Economic functions

The economic functions of banks include:

1. Issue of money, in the form of banknotes and current accounts subject

to Cheque or payment at the customer's order. These claims on banks can act as

money because they are negotiable or repayable on demand, and hence valued at

par. They are effectively transferable by mere delivery, in the case of banknotes,

or by drawing a cheque that the payee may bank or cash.

2. Netting and settlement of payments – banks act as both collection and paying

agents for customers, participating in inter bank clearing and settlement systems

to collect, present, be presented with, and pay payment instruments. This enables

banks to economize on reserves held for settlement of payments, since inward

and outward payments offset each other. It also enables the offsetting of payment

flows between geographical areas, reducing the cost of settlement between them.

3. Credit intermediation – banks borrow and lend back-to-back on their own account

as middle men.

4. Credit quality improvement – banks lend money to ordinary commercial and

personal borrowers (ordinary credit quality), but are high quality borrowers. The

improvement comes from diversification of the bank's assets and capital which

provides a buffer to absorb losses without defaulting on its obligations. However,

banknotes and deposits are generally unsecured; if the bank gets into difficulty

and pledges assets as security, to raise the funding it needs to continue to operate,

this puts the note holders and depositors in an economically subordinated

position.

5. Maturity transformation  – banks borrow more on demand debt and short term

debt, but provide more long term loans. In other words, they borrow short and

lend long. With a stronger credit quality than most other borrowers, banks can do

13

this by aggregating issues (e.g. accepting deposits and issuing banknotes) and

redemptions (e.g. withdrawals and redemptions of banknotes), maintaining

reserves of cash, investing in marketable securities that can be readily converted

to cash if needed, and raising replacement funding as needed from various

sources (e.g. wholesale cash markets and securities markets).

Types of banks

Banks' activities can be divided into retail banking, dealing directly with individuals and small businesses; business banking, providing services to mid-market business; corporate banking, directed at large business entities; private banking, providing wealth management services to high net worth individuals and families; and investment banking, relating to activities on the financial markets. Most banks are profit-making, private enterprises. However, some are owned by government, or are non-profit organizations.

Types of retail banks

Commercial bank : the term used for a normal bank to distinguish it from an

investment bank. After the Great Depression, the U.S. Congress required that

banks only engage in banking activities, whereas investment banks were limited

to capital market activities. Since the two no longer have to be under separate

ownership, some use the term "commercial bank" to refer to a bank or a division

of a bank that mostly deals with deposits and loans from corporations or large

businesses.

Community banks : locally operated financial institutions that empower employees

to make local decisions to serve their customers and the partners.

Community development banks : regulated banks that provide financial services

and credit to under-served markets or populations.

Credit unions : not-for-profit cooperatives owned by the depositors and often

offering rates more favorable than for-profit banks. Typically, membership is

restricted to employees of a particular company, residents of a defined

neighborhood, members of a certain labor union or religious organizations, and

their immediate families.

Postal savings banks : savings banks associated with national postal systems.

14

Private banks : banks that manage the assets of high net worth individuals.

Historically a minimum of USD 1 million was required to open an account;

however, over the last years many private banks have lowered their entry hurdles

to USD 250,000 for private investors.

Offshore banks : banks located in jurisdictions with low taxation and regulation.

Many offshore banks are essentially private banks.

Savings bank : in Europe, savings banks took their roots in the 19th or sometimes

even in the 18th century. Their original objective was to provide easily accessible

savings products to all strata of the population. In some countries, savings banks

were created on public initiative; in others, socially committed individuals created

foundations to put in place the necessary infrastructure. Nowadays, European

savings banks have kept their focus on retail banking: payments, savings

products, credits and insurances for individuals or small and medium-sized

enterprises. Apart from this retail focus, they also differ from commercial banks

by their broadly decentralized distribution network, providing local and regional

outreach—and by their socially responsible approach to business and society.

Building societies  and Landesbanks: institutions that conduct retail banking.

Ethical banks : banks that prioritize the transparency of all operations and make

only what they consider to be socially-responsible investments.

A Direct or Internet-Only bank is a banking operation without any physical bank

branches, conceived and implemented wholly with networked computers.

Types of investment banks

Investment banks  "underwrite" (guarantee the sale of) stock and bond issues,

trade for their own accounts, make markets, and advise corporations on capital

market activities such as mergers and acquisitions.

Merchant banks  were traditionally banks which engaged in trade finance. The

modern definition, however, refers to banks which provide capital to firms in the

form of shares rather than loans. Unlike venture capital firms, they tend not to

invest in new companies.

Both combined

15

Universal banks , more commonly known as financial services companies, engage

in several of these activities. These big banks are very diversified groups that,

among other services, also distribute insurance— hence the term bancassurance,

a portmanteau word combining "banque or bank" and "assurance", signifying that

both banking and insurance are provided by the same corporate entity.

Other types of banks

Central banks  are normally government-owned and charged with quasi-regulatory

responsibilities, such as supervising commercial banks, or controlling the

cash interest rate. They generally provide liquidity to the banking system and act

as the lender of last resort in event of a crisis.

Islamic banks  adhere to the concepts of Islamic law. This form of banking

revolves around several well-established principles based on Islamic canons. All

banking activities must avoid interest, a concept that is forbidden in Islam.

Instead, the bank earns profit (markup) and fees on the financing facilities that it

extends to customers.

16

Chapter 2:About standard chartered bank

17

About the bank

Standard Chartered’s principal activity is providing banking and other financial services.

The Group’s operation are carried out through two divisions, Consumer banking provides

credit cards, personal loans, mortgages, deposit taking and wealth management services

to individuals and small and medium-sized enterprises. Wholesale Banking provides

corporate and institutional clients with services in trade finance, cash management,

lending, custody, foreign exchange, debt capital markets and corporate finance.

Standard faces different changes in the political, economic, social and technological

spheres that affect its businesses. In the political arena, Standard Chartered face changes

in government regulations and policies in countries where it operates. The economic

downturn that was experienced worldwide also affects the company. Changing consumer

demands because of changes in demography and lifestyle affect the organization.

Technological developments make business operations more efficient.

Standard Chartered PLC, listed in both the London and Hong Kong stock exchanges, ranks among the top 25 companies in the FTSE 100 by market capitalization. The Bank has grown substantially in recent years, primarily as a result of organic growth, supplemented by acquisitions. Standard Chartered aspires to be the best international bank for its customers. The Bank derives more than 90 percent of its operating income and profits from Asia, Africa and the Middle East, generated from its Wholesale and Consumer Banking Business. The Group has over 1,600 branches and outlets located in over 70 countries.

18

History

Standard Chartered was formed in 1969 through a merger of two banks: The Standard

Bank of British South Africa, founded in 1863, and the Chartered Bank of India,

Australia and China, founded in 1853.

Both companies were keen to capitalize on the huge expansion of trade and to earn the

handsome profits to be made from financing the movement of goods between Europe,

Asia and Africa.

The Chartered Bank

Founded by James Wilson following the grant of a Royal Charter by Queen

Victoria in 1853.

Chartered opened its first branches in Mumbai (Bombay), Kolkata and Shanghai

in 1858, followed by Hong Kong and Singapore in 1859.

Traditional trade was in cotton from Mumbai (Bombay), indigo and tea from

Kolkata, rice from Burma, sugar from Java, tobacco from Sumatra, hemp from Manila

and silk from Yokohama.

Played a major role in the development of trade with the East which followed the

opening of the Suez Canal in 1869 and the extension of the telegraph to China in 1871.

In 1957 Chartered Bank bought the Eastern Bank together with the Ionian Bank's

Cyprus Branches. This established a presence in the Gulf.

19

The Standard Bank

Founded in the Cape Province of South Africa in 1862 by John Paterson.

Commenced business in Port Elizabeth, in January 1863.

Was prominent in financing the development of the diamond fields of Kimberley

from 1867 and later extended its network further north to the new town of

Johannesburg when gold was discovered there in 1885.

Expanded in Southern, Central and Eastern Africa and, by 1953, had 600 offices.

In 1965, it merged with the Bank of West Africa, expanding its operations into

Cameroon, Gambia, Ghana, Nigeria and Sierra Leone.

From the early 1990s, Standard Chartered has focused on developing its strong

franchises in Asia, Africa and the Middle East. It has concentrated on consumer,

corporate and institutional banking and on the provision of treasury services - areas in

which the Group had particular strength and expertise.

Since 2000 the Bank has achieved several milestones with a number of strategic

alliances and acquisitions, which have extended the customer and geographic reach

and broadened the product range that Standard Chartered offers.

Principles and values

Leading by example to be the right partner for its stakeholders, the Group is committed to building a sustainable business over the long term that is trusted worldwide for upholding high standards of corporate governance, social responsibility, environmental protection and employee diversity. It employs over 75,000 people, nearly half of whom are women, The Group's employees are of 125 nationalities, of which about 70 are represented among senior management.

Standard chartered stands for

20

Strategic intent

To be the world's best international bank

Leading the way in Asia, Africa and the Middle East

Brand promise

Here for good

Values

Courageous

Responsive

International

Creative

Trustworthy

Approach

Participation

Focusing on attractive, growing markets where we can leverage our relationships and

expertise

Competitive positioning

Combining global capability, deep local knowledge and creativity to outperform our

competitors

Management Discipline

Continuously improving the way we work, balancing the pursuit of growth with firm

control of costs and risks

Commitment to stakeholders

Customers

Passionate about our customers' success, delighting them with the quality of our

service

Our People

Helping our people to grow, enabling individuals to make a difference and teams to

win

Communities

Trusted and caring, dedicated to making a difference

Investors

A distinctive investment delivering outstanding performance and superior returns

21

Regulators

Exemplary governance and ethics wherever we are

Key milestones in development

Date Location  

Jun 2010 China The Bank becomes an investor in Agricultural Bank of China, one of the top commercial banks in China

May 2010 India We launched our first ever Indian Depository, allowing investors in India to participate in our growth

Jul 2009 Africa Standard Chartered completes acquisition of First Africa Holdings Limited

Feb 2009 Asia Standard Chartered completes acquisition of Casenove Asia

Dec 2008 India Standard Chartered increases its investment in UTI Securities to 74.9%

Dec 2008 Taiwan Standard Chartered acquires the 'good bank' portion of Asia Trust and Investment Corporation

Nov 2008 Brazil Standard Chartered announces plans to acquire Lehman Brothers team in Brazil

May 2008 Vietnam Standard Chartered announces raising strategic stake in Vietnam's Asia Commercial Bank to 15%

Feb 2008 South Korea

Standard Chartered to acquires South Korea's Yeahreum Mutual Savings Bank

22

Feb 2008 Global Standard Chartered completes acquisition of American Express Bank, a wholly owned subsidiary of American Express Company, with operations in 47 countries

Jan 2008 South Korea

Standard Chartered First Bank Korea Ltd acquires an 80% stake in South Korea's A Brain, a funds administration company

Jan 2008 India Standard Chartered acquires a 49% strategic stake in India's UTI Securities, a leading local broking firm.

Dec 2007 Global Standard Chartered completes acquisition of Harrison Lovegrove, a leading global oil and gas M&A advisory boutique

Oct 2007 Global Standard Chartered acquires Pembroke, an aircraft leasing, financing and management firm

End 2006 Taiwan Launched tender offer for 100% in Hsinchu International Bank (USD1.2bn)

Sep 2006 Pakistan Acquisition of 95.37% Union Bank (USD487m)

Sep 2006 Indonesia Acquisition of 26% stake in PermataBank by the consortium of Standard Chartered Bank & PT Astra International Tbk (USD193m). Total stake held in PermataBank by consortium today is 89%.

Jun 2006 Africa Acquisition of 25% in First Africa Group Holdings Ltd

23

Board of SCB

Chairman

John PeaceChairman

In 2002 John was appointed Chairman of Burberry in advance of its successful flotation. GUS demerged its remaining businesses in 2006 and he became Chairman of Experian.

Executive Directors

Peter SandsGroup Chief Executive Officer (CEO)

Peter Sands was appointed Group Chief Executive of Standard Chartered PLC in November 2006. Immediately prior to this Peter had been Group Finance Director of Standard Chartered PLC since his appointment as a Group Executive Director in May 2002.

24

Richard MeddingsGroup Finance Director

Richard Meddings was appointed as Group Finance Director of Standard Chartered PLC in November 2006, having joined the Board as a Group Executive Director in November 2002. He is based in London and is responsible for Finance, Group Corporate Treasury, Risk and Group Corporate Development.

Steve BertaminiGroup Executive Director and CEO, Consumer Banking

Steve Bertamini joined Standard Chartered as Group Executive Director & Chief Executive Officer, Consumer Banking on 19 May 2008 and was appointed to the Board of Standard Chartered PLC on 1 June 2008.

Mike ReesGroup Executive Director and CEO, Wholesale Banking

Mike Rees was appointed to the Board of Standard Chartered PLC on 4 August 2009. He is based in London and is Chief Executive Officer, Wholesale Banking.

Jaspal Singh BindraGroup Executive Director and CEO, Asia

25

Jaspal Singh Bindra, Group Executive Director and a member of the Board of Standard Chartered PLC, is based in Hong Kong as Chief Executive Officer, Asia. He was appointed to the Board of Standard Chartered PLC on 1 January 2010.

Independent Non-Executive Directors

Richard DelbridgeIndependent Non-Executive Director

Richard Delbridge joined the Board of Standard Chartered PLC as an Independent Non-Executive Director on 1 January 2010.

Jamie DundasIndependent Non-Executive Director

Jamie Dundas joined the Board of Standard Chartered PLC as an Independent Non-Executive Director on 15 March 2004.

Val GoodingIndependent Non-Executive Director

Val Gooding was appointed as an Independent Non-Executive Director of Standard Chartered PLC on 1 January 2005.

Rudy MarkhamIndependent Non-Executive Director

26

Rudy Markham joined the Board of Standard Chartered PLC as an Independent Non-Executive Director on 19 February 2001. He is also Senior Independent Director.

Ruth MarklandIndependent Non-Executive Director

Ruth Markland joined the Board of Standard Chartered PLC as a Non-Executive Director on 3 November 2003.

John PaynterIndependent Non-Executive Director

John Paynter joined the Board of Standard Chartered PLC as an Independent Non-Executive Director on 1 October 2008.

Dr Han Seung-sooIndependent Non-Executive Director

Dr Han Seung-soo, KBE, former Prime Minister of the Republic of Korea joined the Board of Standard Chartered PLC as an Independent Non-Executive Director on 1 January 2010.

Paul SkinnerIndependent Non-Executive Director

27

Paul Skinner joined the Board of Standard Chartered PLC as an Independent Non-Executive Director on 3 November 2003.

Oliver StockenIndependent Non-Executive Director

Oliver Stocken joined the Board of Standard Chartered PLC as a Non-Executive Director on 1 June 2004.

Simon LowthIndependent Non-Executive Director

Simon Lowth joined the Board of Standard Chartered PLC as an Independent Non-Executive Director on 1 May 2010.

Group Company Secretary

Annemarie DurbinGroup Company Secretary

Annemarie was appointed Group Company Secretary in September 2007 and is a non-executive director of Fleming Family and Partners Ltd.

28

Chapter 3:Investment advisory services by scb

29

Investment advisory services

Investment Advisory Services are offered by many institutions which include

banks as well. These services are provided to their respective clients after analysing the

client's financial health, which includes various kinds of analysis of the person. Basically

the client's actual net worth is calculated by deducting al\ his liabilities and major

expenses. Then the person's till date investments are looked into plus the yield they'll be

giving. After all these calculations, and looking at the amount of investment, the motive

of the investment, what kind of returns the person wants and the age of the person, the

client is accordingly advised where to invest how much amount of money.

Different Types of Investments

DEBENTURES A debenture is a document that either creates a debt or acknowledges it. The term

is used in corporate finance for a medium to long-term debt instrument used by large

companies to borrow money. In some countries the term is used interchangeably with

bond, loan, stock or note.

30

Debentures are generally freely transferable by the debenture holder. Debenture

holders have no voting rights and the interest paid to them is a charge against profit in the

company's financial statements.

Different types of debentures are as follows:

Convertible debentures can be converted into equity shares of the issuing

company after a predetermined period of time. "Convertibility" is a feature that

corporations may add to the bonds they issue to make them more attractive to

buyers. In other words, it is a special feature that a corporate bond may carry. As

a result of the advantage a buyer gets from the ability to convert; convertible

bonds typically have lower interest rates than non-convertible corporate bonds.

Non-convertible debentures , which are simply regular debentures, cannot be

converted into equity shares of the liable company. They are debentures without

the convertibility feature attached to them. As a result, they usually carry higher

interest rates than their convertible counterparts.

BONDS

A bond is a debt security, in which the authorized issuer owes the holders a debt

and, depending on the terms of the bond, is obliged to pay interest (the coupon) and/or to

repay the principal at a later date, termed maturity. A bond is a formal contract to repay

borrowed money with interest at fixed intervals.

Thus a bond is like a loan: the issuer is the borrower (debtor), the holder is the

lender (creditor), and the coupon is the interest. Bonds provide the borrower with external

funds to finance long-term investments, or, in the case of government bonds, to finance

current expenditure. Certificates of deposit (CDs) or commercial paper are considered to

be money market instruments and not bonds. Bonds must be repaid at fixed intervals over

a period of time.

Different types of bonds are as follows:

Government Bonds

31

Municipal Bonds Corporate bonds

Zero Coupon Bonds

EQUITY Equity investments generally refers to the buying and holding of shares of stock

on a stock market by individuals and firms in anticipation of income from dividends and

capital gain as the value of the stock rises. It also sometimes refers to the acquisition of

equity (ownership) participation in a private (unlisted) company or a startup (a company

being created or newly created). When the investment is in infant companies, it is

referred to as venture capital investing and is generally understood to be higher risk than

investment in listed going concern situations.

DEBT Debt is that which is owed; usually referencing assets owed, but the term can also

cover moral obligations and other interactions not requiring money. In the case of assets,

debt is a means of using future purchasing power in the present before a summation has

been earned. Some companies and corporations use debt as a part of their overall

corporate finance strategy.

Equity v/s Debt

Debt Equity

Must be repaid or refinanced Can usually be kept permanently

Requires regular interest payments. Company must generate cash flow to pay.

No payment requirements. May receive dividends, but only out of retained earnings.

Collateral assets must usually be available.

No collateral required.

Debt providers are conservative. They cannot share any upside or profits. Therefore, they want to eliminate all possible loss or downside risks.

Equity providers are aggressive. They can accept downside risks because they fully share the upside as well.

Interest payments are tax deductible. Dividend payments are not tax deductible.

32

Debt has little or no impact on control of the company.

Equity requires shared control of the company and may impose restrictions.

Debt allows leverage of company profits. Shareholders share the company profits.

Right Mix of debt and equityThe optimal mix of debt and equity has to be tailored for each situation. This

requires some sophistication in financial modeling. The trick is to prepare financial

projections under different scenarios and with different assumptions. The goal is to find

the debt/equity mix that provides the highest expected long-term shareholder value.

Investments into companies usually require both debt and equity. The optimal

ratio needs to be carefully determined for each individual situation. It is unlikely that this

ratio will consist of 100% equity. If the long-term prospects are so poor that a company

can never make sufficient profits to benefit from leverage then the opportunity is

probably not worth pursuing. Conversely, relying on 100% debt financing often places a

heavy cash drain on companies and leads to sub-optimal growth.

Debt and equity financing should not be seen as substitutes for each other.

Instead, they are very different in nature and complement each other. Debt needs to be

repaid in cash. Equity needs to be rewarded with long-term profits. Depending on

individual circumstances and opportunities the trick for each investment is to find the-

best mix of both.

When a banker, venture capitalist, or angel investor is considering giving you

money, they will look at your debt to equity ratio. This is the amount of debt you have

compared to the amount of equity you have. To lenders, this ratio is important because it

tells the amount of money available for repayment in the case of default. It also shows if

your business is being run in a sensible way, without too much dependence on anyone

source.

33

MUTUAL FUNDS A mutual fund is a professionally managed type of collective investment scheme that

pools money from many investors and invests typically in investment securities (stocks,

bonds, short-term money market instruments, other mutual funds, other securities, and/or

commodities such as precious metals). The mutual fund will have a fund manager that

trades (buys and sells) the fund's investments in accordance with the fund's investment

objective.

Types of mutual funds

Open-ended fund

The term mutual fund is the common name for what is classified as an open-end

investment. Being open-ended means that, at the end of every day, the fund continually

issues new shares to investors buying into the fund and must stand ready to buy back

shares from investors redeeming their shares at the then current net asset value per share .

Closed-end funds are like open end except they are more like a company which

sells its shares a single time to the public under an initial public offering or "IPO.

Exchange-traded funds

A relatively recent innovation, the exchange-traded fund or ETF, is often structured as an

open-end investment company. ETFs combine characteristics of both mutual funds and

closed-end funds. ETFs are traded throughout the day on a stock exchange, just like

closed end funds, but at prices generally approximating the ETF's net asset value.

Exchange-traded funds are also valuable for foreign investors who are often able to buy

and sell securities traded on a stock market, but who, for regulatory reasons, are limited

in their ability to participate in traditional U.S. mutual funds.

Equity funds

Equity funds, which consist mainly of stock investments, are the most common type of

mutual fund. Equity funds hold 50 percent of all amounts invested in mutual funds in the

34

United States. Often equity funds focus investments on particular strategies and certain

types of issuers.

Growth vs. value Funds

Another distinction is made between growth funds, which invest in stocks of companies

that have the potential for large capital gains, and value funds, which concentrate on

stocks that are undervalued. Value stocks have historically produced higher returns;

however, financial theory states this is compensation for their greater risk. Growth funds

tend not to pay regular dividends.

Index funds versus Actively managed funds

An index fund maintains investments in companies that are part of major stock (or bond)

indexes, such as the S&P 500, while an actively managed fund attempts to outperform a

relevant index through superior stock-picking techniques. The assets of an index fund are

managed to closely approximate the performance of a particular published index.

Bond funds

Bond funds account for 18% of mutual fund assets. Types of bond funds include term

funds, which have a fixed set of time (short-, medium-, or long-term) before they mature.

Municipal bond funds generally have lower returns, but have tax advantages and lower

risk. High-yield bond funds invest in corporate bonds, including high-yield or junk

bonds. With the potential for high yield, these bonds also come with greater risk.

Money market funds

Money market funds hold 26% of mutual fund assets in the United States. Money market

funds entail the least risk, as well as lower rates of return. Unlike certificates of deposit

(CDs), money market shares are liquid and redeemable at any time.

Savings

Saving is income not spent, or deferred consumption. Methods of saving include putting

money aside in a bank or pension plan. Saving also includes reducing expenditures, such

35

as recurring costs. In terms of personal finance, saving specifies low-risk preservation of

money, as in a deposit account, versus investment, wherein risk is higher.

Chapter 4:Research design

36

Research design

What is research design?

The description of research procedure is called research design. It is simply a

framework for a study that is used as a guide in collecting and analyzing the

data. It consists of three parts:

1. Exploratory Research

2. Descriptive Research

3. Casual Research

EXPLORATORY RESEARCH:

An exploratory research focuses on the discovery of idea and is generally

based on secondary data. It is preliminary investigation that does not have a

37

rigid design. This is because a researcher engaged in an exploratory study

that may have to change his focus as a result of new ideas and relationship

among the variables.

DESCRIPTIVE RESEARCH

A descriptive study is undertaken when the researcher wants to know the

characteristics of certain group such as age, sex, educational level, income,

and occupation etc.

CAUSAL RESEARCH:

A casual research is undertaken when the researcher is interested in knowing

the cause and effect relationship between two or more variables. Such

studies are based on reasoning along well-tested lines. This project is based

on descriptive research because questionnaire is filled by the respondent of

different education and age group people.

Research topic

As a part of the project a comparative analysis as well as a survey on the

customer’s investing behavior has been conducted. For Customer’s

Investing Behavior a survey was conducted for the same. Questions have

been asked from the target respondents.

DATA COLLECTION

What is data collection?

The task of data collection begins after a research problem has been defined

and research design/plan chalked out.

Data is generally of two types:

1. Primary data

2. Secondary data

38

Primary Data:

Primary data are those data specially collection for problem in hand. In this

study data were collection from primary source in personal interview of

employee and interaction with employee by survey method.

These methods of data collection are quite popular. These are the major

methods data collection in the research study. I have used the questionnaire

to find out the customers investing behavior.

Secondary Data:

Secondary data are those data, which are collected for some purpose other

than helping and solving the problem in hand.

Source of secondary data are:

Old reports

Company records

Company web site

Sampling used: Convenience sampling has been used for this project.

Sample size: 50

Data used in study

In this study data has been collected from primary source from personal

interview of customers and interaction with customers by survey method.

39

These methods of data collection are quite popular. These are the major

methods of data collection in the research study. The questionnaire was used

to find out the customers investing behavior.

Also the secondary data is used from company website, books and from

other secondary sources.

TOOLS AND TECHNIQUES USED IN RESEARCH

SURVEY METHOD:

The term survey is used for the technique of investigation by direct

observation of phenomena or systematic gathering of data from population

by applying personal contact and interviews when adequate information

about a certain problem is not available in records files and other sources. It

is currently being used in those investigations also where published data is

used.

A survey is conducted for collecting general information of any population

institution or phenomena without any hypothesis while specific surveys are

conducted for specific problem or testing the validity of some theory or

hypothesis.

Survey deals with the investigation of entire population. Under this the

information is collected from each and every unit of the universe. Money

material time and labor required for carrying out a census survey are

bounded to be extremely large but its results are more accurate and reliable.

The researcher has to come in close and direct contact of the people whom

he wants to study. A survey brings the researcher in a position to come with

the realities of life and see things personally. Thus the inferences drawn

40

under this are not based upon any theory or principle but upon the actual

facts of life.

In this method we use questionnaire and with this questionnaire we used to

go in the market. The main purpose of the analysis is to summaries the

complete observation in such a way that they yield specific answers to the

research questions.

OBSERVATION

Different locations were visited for conducting the research. Different age

group consumers were selected so that the overall finding and preference of

each and every individual can be ascertained.

41

Chapter 5:

Literature design

42

Wealth management It is an investment advisory discipline that incorporates financial planning,

investment portfolio management and a number of aggregated financial services. High

net worth individuals, small business owners and families who desire the assistance of a

credentialed financial advisory specialist call upon wealth managers to coordinate retail

banking, estate planning, legal resources, tax professionals and investment management.

Wealth managers can be independent certified financial planners, MBAs, CFA Charter

holders or any credentialed professional money manager who works to enhance the

income, growth and tax favored treatment of long-term investors.

Wealth management helps people determine their monetary goals and develop

actionable strategies that could help them realize their goals. It also defends their finances

against risks. Wealth management is a service designed specifically for high net worth

individuals.

Need of Wealth Management

Wealth management helps people determine their monetary goals and develop

actionable strategies that could help them realize their goals. It also defends their finances

against risks. Wealth management is a service designed specifically for high net worth

individuals. The threshold for high net worth varies by country and institution, but the

most common definition is individuals who have more than US $ l million in assets, not

including their home. Some high net worth individuals have done well in growing their

assets from a low base to their current levels, and may feel that they can continue to

manage their own portfolios. However, as a person's wealth grows and/or the markets get

more challenging, it becomes increasingly difficult to realize the expected returns.

With greater wealth comes greater investment options as well as more complex

risks and threats in terms of legal regulations, taxation issues and opportunities for loss.

The level of fear or even outright panic that can be experienced grows with the size of the

43

investment involves. Greater diversification is needed than in earlier stages of investing.

This is where independent financial advisers or large corporate entities help their clients

through professional wealth management.

Wealth management offers the following services:

Investment planning: assists you in investing your money into various investment

markets, keeping in mind your investment goals.

Insurance planning: assists you in selecting from various types of insurances, self

insurance options and captive insurance companies.

Retirement planning: is critical to understand how much funds you require in your

old age.

Asset protection: begins with your financial advisor trying to understand your

preferred lifestyle and then helping you deal with threats, such as taxes, volatility,

inflation, creditors and lawsuits, to maintaining this lifestyle.

Tax planning: helps in minimizing tax returns. This might include planning for

charity, supporting your favorite causes while also receiving tax benefits.

Estate planning: helps in protecting you and your estate from creditors, lawsuits

and taxes. This service is critical for every person whose net worth is high.

Business planning: This service aims at optimizing the tax free advantages of

running your own business.

Business succession planning: assists in planning for the inevitable to maximize

returns.

Wealth transfer: helps you pass on your wealth to your dependents

.

44

Benefits of Wealth ManagementWealth management helps in:

Reducing taxes associated with income, capital gains and estate.

Protecting assets from misjudgments and creditors.

Improving yields with more diversification and less risk.

Managing liabilities such as mortgages and college funding.

Finical wealth management solution is a modular, fully scalable, integrated core

banking and investment management system designed for the specific needs of retail and

private banks. It offers a unique combination of an extensive portfolio of functions with

impressive flexibility that enables end-to-end processing of investment products from

diverse asset classes including structured deposits, structures notes, equities, mutual

funds and insurance.

Financial institutions can leverage the solution's rule-based definitions to launch

new products - such as dual currency deposits, principal protected deposits, and range

accrual deposits - with a distinct time-to-market advantage. Integrated with Finacle core

banking and CRM solutions, the wealth management solution ensures unique customer

definition, a single, unified view of the customer's portfolio across asset classes and

seamless flow of transactions. This helps banks capitalize on their customer base to create

additional revenue streams, by offering the mass affluent extended products and services.

Business Benefits

Leverage the Opportunity

Finical wealth management solution enables financial institutions to derive rich

integrated insights about the client's investment portfolio. Sophisticated analytics,

relevant financial planning and asset allocation tools can be deployed, to leverage the

opportunities presented by hot listed clients to explore prospects for cross-selling and fee-

based personalized advice.

45

Ease of Enhancing Product Portfolio

The user-friendly solution provides never-before flexibility to tailor solutions and

create new product flavors for emerging customer segments. It enables business users at

the bank to add innovative functionalities and features to their offerings, without

changing the source code of the application. The solution also interfaces seamlessly with

satellite and specialized systems, easily supporting faster roll out of new products at the

bank.

Higher Operational Efficiency

Finical wealth management solution provides complete Straight Through

Processing (STP) and is fortified with a powerful integration framework to interface with

the bank's core banking solution and external data sources. This plays a crucial role in

minimizing operational delays and ensuring seamless transaction flows at the bank.

Every financial operation is processed identically. Execution either ensures a

successful update of all related data or a complete rollback in case of a technical problem.

Consistency and reliability are guaranteed. Fully integrated and component - based, the

solution also ensures consistency of data.

Access rights are rigorously managed, every transaction request is checked and

systematic records are maintained as audit trails, ensuring robust security. The solution

allows users belonging to different legal entities to work on a single system and database.

This directly results in significantly lower implementation costs and ease of centralized

reporting for the bank.

Lower TCO

The solution allows users, belonging to different legal entities, to work on a single

system and database. This directly results in significantly lower implementation costs and

ease of centralized reporting for the bank.

Some of these typical services include:

46

Investment portfolio management,

Tax management and advisory

Cash flow management and budgeting

Multigenerational wealth transfers

Family business and financial advisory

Donations to nonprofits and major gift plans

Political donations

Family offices also offer superior expertise on constructing or selecting

alternative investment portfolios and products. Many have invested heavily in systems,

reporting and institutional consultants to help select the most appropriate alternative

investment managers and products for their high-net-worth clients.

.

47

Objectives of wealth management in scb

To build a strategic asset allocation

What is it?

48

A strategic asset allocation is the appropriate response to

the need for both long term capital growth and preservation. It

serves as the key building block of one’s investment strategy

emphasizing a long term investment horizon.

5.2.Why is Strategic Asset Allocation is so important ?

According to the ground-breaking research study by Brinson, hood &

beebower, asset allocation accounts for 91.5% of the variation in portfolio

returns. Significantly more than security selection or market timing.

Following is the pie-diagram which reflects the significance of strategic

asset allocation.

Source: investment advisory, standard chartered bank.

49

5.3. Types of investors in wealth management (How SCB classifies them).

A self directors: They have their own ideas about the market &

require little information or ideas. They make most active investment

decisions on their own, but leave passive decision making to the

professionals.

A participator: They like to be kept in touch with the market with the

views and pro-active sharing of ideas. They also likes to retain some

decision making powers of their investments.

A delegator: They leave most of the decisions regarding their

investment to professionals and not are too concern about pricing.

However, they expect good performance & confidentiality.

5.4.Ideal investment mix:

Self directors Participator Delegators

Investor typePercentage in

Core

Acceptable

Range

Percentage in

Satellites

Acceptable

Range

Self-Directors 60% +/- 10% 40% +/- 10%

50

Participators 75% +/- 15% 25% +/- 15%

Delegators 90% +/- 10% 10% +/- 10%

Source: investment advisory, standard chartered bank

DIVERSIFICATION OF WEALTH MANAGMENT

(HOW RBS BANK DIVERSIFIES ITS WEALTH MANAGMENT

FUNDS)

1. Geographical diversifications

Indian funds: in Indian funds RBS invests in the different mutual

funds of Indian companies.

International funds: these funds prove to be feeder funds & RBS

BANK cannot directly invest in the international funds.

2. Asset allocation

Gold: RBS diversifies & invests its funds in gold, due to its

speculative nature & good returns.

Properties: RBS BANK invests its customer’s funds in real estate

& properties. Investment in Indian properties has always proven to

be fruitful

51

Art: wealth of customers is invested in various arts like paintings,

antiques etc.

Equity: RBS invests in the listed companies in India through share

trading, mutual funds etc.

Private equity: equity is the investment in the companies which

are not listed.

3. Market capitalisation:

Market capitalisation= market value of shares* number of shares

Large-cap : if the market capitalisation of a company is high, then

company is called as large-cap Company. It is a relative concept.

Large Cap Company can be defined as a company whose market

capitalisation is more than the market capitalisation of the highest

valued stock on the mid cap index or lowest valued stock of a large

cap index. Higher the market capitalisation, greater the liquidity in

the stock.

Mid-cap : These can be understood as mid-sized companies. It can

be defined as a company having a value between the highest

valued company and the lowest valued company of a mid- cap

index.

Small - cap : These are relatively smaller companies. It can be

defined as having a market capitalisation lower than the least

valued company of a mid-cap index.

5.INVESTOR DECISION MAKING PROCESS FOR WEALTH MANAGMENT

(PSYCHOLOGICAL ANALYSIS OF INVESTOR’S MIND)

52

Investor Decision

Making Process

NEED RECOGNITION

INFORMATION SEARCH

ALTERNATIVE EVALUATION

PURCHASE DECISION

POST PURCHASE

DISPOSITION

The investor decision making process is a road map of investor’s

mind that marketer & manager can use to help guide product mix,

communication & sales strategies.

THE PROCESS

Investor decision making process for wealth management in SCB India:

1. Need Recognition :

Needs can be defined as “result of imbalance between actual &

desired states”

Basic needs of wealth management services are:

Professional Management of wealth of the investor.

Growing per capita income in India.

Lack of time with Investor to manage his own wealth.

Lack of product and market knowledge with the Investor.

53

Dedicated Wealth Relationship Manager for managing wealth

providing customized wealth solutions to the investor.

Research based advisory.

“Marketing helps costumers recognize an Imbalance between present state &

desired state’’

Preferred State

Present state

Present state:

Still large per cent age of domestic savings in India is invested in

traditional investment products like

o Bank Deposits 47.40 Per Cent

o PF & Pensions 10.00 Per Cent

o Insurance 14.20 Per Cent

o Claim on Government 14.70 Per Cent

o Currency 08.80 Per Cent

o Shares & Debentures 04.90 Per Cent

Source : BSE, Kotak Instt. Equities RBI

Annual Report 2005 - 06

54

Preferred state: if something new being offered triggers the decision

making process, the offering that SCB can give to its customers are:

Personalised Services, Dedicated Wealth Relationship manager

Team of Specialists for Wealth Advisory

Experience and Expertise in managing wealth

Wide range of Wealth management products

Customer Delight and satisfaction through meeting the

expectations of the customer.

2. INFORMATION SEARCH: information search begins when an

investor perceives a need that might be satisfied by purchase or usage of the

product.

INTERNAL SEARCH: process of recalling past information based on

past experiences stored in memory.

In case of SCB the decision to choose the branch & purchasing the bank

product is based on past need satisfying experience of the customer.

If any customer wants sophisticated, expertise, experienced wealth

management services they would choose SCB or if in the past the need

has been satisfied by going to SCB.

EXTERNAL SEARCH: process of seeking information in the outside

environment. Outside environment marketing & non-commercial

information.

55

Many consumers decision are based on a combination of past

experience (internal source) & marketing & non-commercial

information (external source)

In case of banking external source of information for customer can be

information from the relatives, friends, co-workers, newspaper, TV,

radio, advertisement.

3. ALTERNATIVE EVALUATION: when evaluating potential

alternatives, consumer tends to use two types of information.

a) A list of Banks from which they plan to make their selection

(evoked set).

b) The criterion they will use to evaluate each bank.

EVOKED SET: Group of brands resulting from an information

search from which a buyer can choose.

Other competitor’s consumers consider for wealth management can

be:

Banks:

CITI Bank

HSBC

BARCLAYS Bank

ICICI Bank

HDFC Bank

KOTAK MAHINDRA Bank

Private Banks

56

5.9. CRITERION FOR EVALUATION OF SCB

Customer approach

Customer charter

Location

Complaint data

Easy accessibility

Three factors create credibility of brand.

Perceived quality of brand: some people consider services & quality

of SCB to be excellent, some consider it to be very good but very few

in fact negligible people knows about SCB & its services.

(Based upon questions asked from 50 people)

Perceived risk associated with brand: Strong compliance and

stringent group policies help the Bank to minimise the financial / legal

risk to the bank. Each and every investor is required to complete client

investment profiler for better understanding of client’s expectations /

risk appetite.

There is less financial risk involved risk because of good services &

value for money invested aspect, as well less time & effort cost

because SCB has a wide network of managers & experts & has branch

at a very convenient location.

Information cost saved with that brand (time + effort)

57

PURCHASE: TO BUY OR NOT TO BUY

Once the customer have evaluated the alternatives to RBS bank

(HDFC, SBI, ICICI) on the basis

Of various evaluative criterions mentioned above the consumer makes

the purchase decision.

Customer may prefer SCB because of their sophistication in banking,

dedicated team of relationship managers (RM’s) and investment

counsellor suit of privileges for their clients, phone banking etc.

The branch also plays an important role in purchase decision.

It makes it a branch/outlet based purchase

a) Branch image: cheerful, friendly warm place that reminds

customers of good times, & it ambience gives youthful & warm

feeling.

b) Branch advertising: Branch managers may also take initiative of

advertising branch separately & offers something different from

other bank branches.

c) Branch location & size: branch should be located at easily

accessible & convenient location. Branch size should be enough so

that normal operations can take place easily.

d) Branch atmosphere: when it comes to banking in India, banks

atmosphere are always messy (take e.g. of SBI, PNB etc.) but now

customers expects clean, good environment in the bank.

5) POST PURCHASE- SATISFACTION OR DISSATISFACTION:

58

Post purchase is a stage where client has already invested his money into

different wealth solutions through the Bank and has started expecting

returns.

Reasons of customer satisfaction.

a) Profitable returns

b) Excellent service

c) Suite of privileges

d) Invitation to exclusive events, concerts

e) Banking by phone, door banking

59

Chapter 6:Data analysis and interpretation

DATA ANALYSIS

60

Investment decision

Sr. NO. PARTICULARS RESPONDENT

1 SELF 20%

2 PROFESSIONAL WEALTH MANAGER 40%

3 JOINT ADVICE OF PROFESSIONAL AND SELF 40%

RESPONDENT

20%

40%

40%1 SELF

2 PROFESSIONAL WEALTHMANAGER

3 JOINT ADVICE OFPROFESSIONAL AND SELF

Concept: Everybody wants to invest the money in a safe place so that they

take advice of Professional managers or joint advice of professional and

self.

Analysis: From the above pie chart it is clear that before investing the

money people take the advice of professional managers and the joint

advice of professional and self to invest the money in the best place so that

they can get a better return at low risk.

Bank preferred by customers for wealth management

61

Sr.

NO. PARTICULAR RESPONDENT

1 HDFC 30%

2 ICICI 25%

3 STANDARD CHARTED BANK 20%

4 OTHERS 25%

Concept: With which bank people want to do their investment or they

already have invested.

Analysis: This pie chart shows that most of the investors (25%) invest in

HDFC Bank then (25%) in ICICI and standard charted bank (20%) rest of the

people invest in other banks. So HDFC and ICICI are the main competitors

of SCB bank.

62

Investment service preferred by customer

Sr. NO. PARTICULAR RESPONDENT

1   Mutual Fund Schemes 17%

2   Portfolio Management Services 13%

3   Direct Equities 26%

4 Structured Investment Products 30%

5   Real Estate Funds 14%

RESPONDENT

17%

13%

26%

30%

14%

1   Mutual Fund Schemes

2   Portfolio ManagementServices

3   Direct Equities

4 Structured InvestmentProducts

5   Real Estate Funds

Concept: The customer invests the money in such a scheme so that they

can earn a better return on minimum risk.

Analysis: This pie chart shows that most of the customers (30%) invest in

structured investment products, 26% of the investor invest in direct

equities they can take high risk the lowest investment service is portfolio

management (13%). The high income people invest in portfolio

management services

The information for deciding the financial institution for wealth management

63

SR.NO. PARTICULAR RESPONDENT

1      Newspaper 7%

2     Magazine 16%

3      Internet 25%

4      Direct marketing 34%

5       Any other, please specify 18%

RESPONDENT

7%16%

25%34%

18%     Newspaper

    Magazine

      Internet

     Direct marketing

      Any other, please specify

Concept: Customer gets the information from different sources to choose

the institution for investing money.

Analysis: Most of the customers get the information through direct

marketing i.e. 34% after that 25% customer give preference to the internet,

18% of the customer get the information from word of mouth rest of the

people get information from newspaper and magazines. So direct

marketing is the best way to provide information to the customers. The left

18% of the customers get the information from television and word of

mouth.

Basis of evaluating various Banks for wealth management

64

SR.NO. PARTICULAR RESPONDENT

1   Risk 27%

2 Services 23%

3 Past return 25%

4 Location 14%

5 Other 11%

RESPONDENT

27%

23%25%

14%

11%

1   Risk

2 Services

3 Past return

4 Location

5 Other

Concept: Customers choose the different bank on the basis of different

parameters like risk, services, returns, and location.

Analysis: From the above pie chart it is clearly defined that most of the

customers (27%) are invest on the basis of risk, customer wants low risk

high return and also 25% customers look at the past return of the bank,

they would like to invest in such a place where the past return is too high

also 23% customer invests on the basis of services provided by the bank

Mutual fund you would like to invest

65

SR.NO. PARTICULAR RESPONDENT

1    Money market funds 21%

2 Debt funds 19%

3      Fixed maturity plans 25%

4      Equity funds 26%

5      Any other 9%

RESPONDENT

21%

19%

25%

26%

9%

1    Money market funds

2     Arbitrage funds

3      Fixed maturity plans

4      Equity funds

5      Any other

Concept: Different customer invests in different type of funds.

Analysis: 26% of the customers invest in equity funds. These types of

customers take more risk and high potential. 25% of the customers invest

in fixed maturity plans; they do not want to take risk.

How do you keep yourself updated on market events?

66

SR.NO. PARTICULAR RESPONDENT

1       Daily market flash 37%

2    Weekly market newsletter 24%

3      Monthly newsletter 15%

4      Market event report 11%

5      Any other 13%

RESPONDENT

37%

24%

15%

11%

13%1       Daily market flash

2    Weekly market newsletter

3      Monthly newsletter

4      Market event report

5      Any other

Concept: The customers keep themselves updated from different ways.

Analysis: Above chart is showing that majority of the customers updated

themselves from daily market flash so the bank should provide the

information on daily basis and also provide information on weekly

newsletter.

Return with the past year investment

67

SR.NO. PARTICULAR RESPONDENT

1     5% to 10% 37%

2   10% to 20% 24%

3    20% to 30% 15%

4     More than 30% 13%

5      negative returns 0%

RESPONDENT

37%

24%

15%

13% 0%

1     5% to 10%

2   10% to 20%

3    20% to 30%

4     more than 30%

5      negative returns

Concept: Different types of customer invest in different services and

accordingly get the returns.

Analysis: Above chart shows that most of the customers invest in low risk

low return service because they do not want to take risk and invest the

money in structured investment plan. There is not a service which gives

negative returns.

Why do you want your wealth managed?

68

SR.NO. PARTICULAR RESPONDENT

1        Return potential 43%

2       Tax benefits 27%

3       Diversification 12%

4      Professional management 18%

RESPONDENT

43%

27%

12%

18%

1        Return potential

2       Tax benefits

3       Diversification

4      Professional management

Concept: Everyone has a purpose of investing money. It depends on the

customer where he wants to invest.

Analysis: The main objective of the customer of investment is to get the

maximum return on investment. This graph shows that the customer’s

second objective is to save tax.

The best wealth management services

69

SR.NO. PARTICULAR RESPONDENT

1    HDFC 28%

2   Standard Chartered 19%

3    ICICI 23%

4    Citi Bank 18%

5 Others 12%

Concept: All banks have their images in customers mind for their services.

Analysis: According to this chart most of the customers feel that HDFC

bank provides the best services rather than others, and on the third

position comes SCB where 19% of the customers say that RBS provides

the best service.

Percentage of invested income

70

SR.NO. PARTICULAR RESPONDENT

1      5% to 10% 14%

2     10% to 20% 26%

3     20% to 30% 27%

4     more than 30% 33%

Concept: How much percentage of the income customers invest or how

much savings they do.

Analysis: This pie chart shows that investment is very much important in

everyone’s life so that most of the customer invest more than 30% of their

income then 10% to 30% income is invested by customers. Only 14%

people invest 5%-10% part of their income.

71

Chapter 7:

Research findingsand

recommendations

72

Findings

After analyzing all the data given by potential existing and non existing

consumer I found certain key findings that are very important for my project.

I have divided findings into two parts

1. Findings from data analysis and

2. General findings. General findings are basically an overlook of the

markets.

Findings from data analysis:

1. HDFC is the prime competitor of SCB.

2. For investing the money customer takes the advice of professional

managers.

3. Most of the respondent wanted to invest in low risk investment plan.

4. Direct marketing is the most popular way to provide information to

the customer.

5. Risk is the most important factor which is considered while investing.

6. Return potential and Tax benefits are two main purpose of investment.

7. Most of the customers invest more than 30% of their income, so they

want a good return at low risk.

8. The service provided by the bank is also very important to attract the

customers.

9. Many of the respondents wanted to invest in equity funds because

they wanted high return.

General findings:

1. HDFC was at the top of the player and SCB was at third Position

2. There were few people who wanted to take high risk and high return.

73

3. Most of the customers are not aware of the different types of mutual fund.

recommendations

SCB needs to expand its branch network in Dehradun & nearby areas

as it has only 1 branch compared to others banks.

Most of the individuals were not the customer of SCB bank but were

showing interest while asking about either for Account or investment.

Company should contact them so that they may become the potential

customer.

SCB bank should design more attractive “promotional schemes” to

attract the attention of consumers.

On asking have you been contacted by any of the respective agent or

person regarding Investment or for account opening or for any service

apart from few people mostly told that they had not been contacted by

RBS bank but by other player. If market developers and agent having

daily visit in the market and has to contact the new people then it

become their responsibility to contact these people to ask what is their

need and want. If not possible, then company should do monthly basis

74

survey to find out such people and try to make them company’s

potential customer.

Also company should provide daily market flash and the different

types of schemes so the customer may keep themselves updated.

limitations

The study limits to some part of the Delhi.

Due to unavailability of proper conveyance facility, it was really hard to

cover the market under a scorching sun.

In many areas it was really tough to get respondent as they were lacking

of time and was not willing to support or share their view.

The time duration of two months was short for the completion of all

activities.

The sample size is 50 because of time constraints.

Conclusion

75

It was a pleasant experience to have a summer project in a big company

like Standard Chartered Bank. It has given me an opportunity to know all

dimensions of the market and how to tackle problems of it .I have learned

various functions carried out at all the level of organization especially of

middle level and lower level. After a rigorous period of my project I

come to know that how practical knowledge is different from the

theoretical concepts.

I was supposed to do project in Dehradun where Standard Chartered

Bank is operating its business and playing a major role for providing

financial product and services. Other players are HDFC and ICICI Bank

has a large market size and it is increasing day by day.

Bibliography

76

1. BOOKS.

Private Banking, Investment Decisions and Structured Financial

Products

Author(s): Dimitris N.Chorafas

Published by : Elsevier Ltd.

2. INTERNET.

www.standardchartered.co.in

www.google.com

www.msnsearch.com

www.wikipedia.com

Appendix

77

Questionnaire

Sample size: 50

1. Do you know about the wealth management?o Yeso No

2. Have you ever done your wealth management through any financial institution?

o Yeso No

3. How you take your investment decisiono Selfo Professional wealth managero Joint advice of professional and self

4. In which bank have you done your wealth management?o HDFCo Standard Charteredo ICICIo Citi Banko Others

5. In which investment service you invest more?o Mutual Fund Schemeso Portfolio Management Serviceso Direct Equitieso Structured Investment Productso Real Estate Funds

6. From where you got the information for deciding on the financial institution for wealth management?

o Newspapero Magazineo Internet

78

o Televisiono Direct marketingo Any other, please specify

7. On what basis you evaluate various Banks for wealth management?o Risko Serviceso Past returno Locationo Other

8. In which type of Mutual fund you would like to invest?o Money market fundso Arbitrage fundso Fixed maturity planso Equity fundso Any other

9. You get the information and reports from:o Daily market flasho Weekly market newslettero Monthly newslettero Market event reporto Any other

10. How much return have you got with the past year investment?o 5% to 10%o 10% to 20%o 20% to 30%o more than 30%

11. Why do you want your wealth managed?o Return potentialo Tax benefitso Diversification o Professional management

79

80