INTENATIONAL

INSTITUTE OF PLANING & MANAGEMENT

- NEW DELHI-

PR OJ EC T REP ORT

A Research Study
on
Investment & Wealth Management Business
A Portfolio Analysis
For HSBC Bank Jodhpur

SUBMITTED BY:- PROJECT

GUIDED BY:-
RAJAT CHOUDHARY Mrs. NIRMAL JAIN

Session – SS-2008-2010

Mail-id- rajatchoudhary_59@yahoo.co.in

Cell no.- +91-9350776359

ACKNOWLEDGEMENT

On this threshold of my life when I look back to thank a few people who
helped me immensely in completion of my tasks, a few word seem to less.
May be I should thank a many people who have made me what I am today.

For completion of this project I would very sincerely thank my project

coordinator Mrs. Nirmal jain (Financial Planning Manager). Without whom

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 the completion seemed - Mission Impossible. His guidance gave me a great
insight about the ways of data collection and the sources of data collection.

I would also like to thank-

Mr. Ravindra Sarda (Branch Manager, Jodhpur HSBC)
Mr. Bhupendra kr. Khatri (Sales Manager PFA, Jodhpur HSBC)
Mr. Amul Mehta (Premier sales officer PFA , Jodhpur HSBC)
Mr. Deepak Bherwani (Assistant sales manager PFA, Jodhpur HSBC)
for their sincere help.

I would also like to thank to all the HSBC Jodhpur Staff Members,
Specially for CAT team for their support & co-operation.

Finally I express my regards to my college staff especially Dr. C.S

SHARMA (FACULTY OF FINANCE IN IIPM ) for their immense help
and support in completion of my project.

CONTENTS: PAGE NO:

• Introduction
-Organization structure 4
3
 - Company milestones 5
• Financial Services
 Personal Financial Services 10
 Commercial Banking 12
 Corporate Banking 15
Investment Banking
a) Fixed Deposits 17
b) Mutual funds 18
c) SIP 31
d) Insurance 33
• HSBC Tie-Up with TATA-AIG 38
• Research Methodology 43
• SWOT Analysis 45
• Analysis & interpretation 46
• Findings 67
• Limitation 70
• Recommendation 71
• Questionnaire 72
• Bibliography 75
• Abbreviation 77

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 • Conclusion 78

PREFACE

Practical part is an essential part of management studies as it helps

one to visualize the management practices in the field and the
theoretical aspects of which we have learnt in the classroom.

This research study of investment & wealth management business

analysis is based on financial market (wealth maximization options) ,
I have completed this research by collecting past quantitative dataof
financial market and about the financial instruments performance in
the market. This research study has done on Several type of
investment options which are very popular in the market (MF, SIP,
TMD, INS). This research provides us knowledge of investment
options and the a way to managing our wealth in a profitable way .
This training constitutes an integral part of my master of business
administration at
INTERNATIONAL INSTITUTE OF PLANNING & MANAGEMENT

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(NEW DELHI).

The training period consist of 30 days from January 29nd to 28th

Febraury 2009

It was very challenging as well as interesting for me to work on

this kind of topic investment & wealth management business
analysis.I have learnt practical & theoretical aspects which has
implemented by the company in its business practices.

INTRODUCTION

HSBC

Company History:

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The HSBC Group is named after its founding member, The Hongkong and
Shanghai Banking Corporation Limited, which
was established in 1865 to finance the growing
trade between Europe, India and China.
The inspiration behind the founding of the bank
was Thomas Sutherland, a Scot who was then
working for the Peninsular and Oriental Steam
Navigation Company. He realized that there
was considerable demand for local banking
facilities in Hong Kong and on the China coast
and he helped to establish the bank, which
opened in Hong Kong in March 1865 and in Shanghai a month later.
Soon after its formation the bank opened agencies and branches around the
world. Although that network reached as far as Europe and North America,
the emphasis was on building up representation in China and the rest of the
Asia-Pacific region. HSBC was a pioneer of modern banking practices in a
number of countries. In Japan, where a branch was established in 1866, the
bank acted as adviser to the government on banking and currency. In 1888, it
was the first bank to be established in Thailand, where it printed the
country’s first banknotes.
From the outset trade finance was a strong feature of the local and
international business of the bank, an expertise that has been recognized
throughout its history. Bullion, exchange, merchant banking and note issuing
also played an important part. By the 1880s, the bank was acting as banker
to the Hong Kong government and also participated in the management of
British government accounts in China, Japan, Penang and Singapore. In
1874 the bank handled China’s first public loan and thereafter issued most of
China’s public loans.

What is HSBC?

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We are the world’s local bank.
Headquarters in London, HSBC is one of the largest banking & financial
services organization in the world.
HSBC’s international network comprises over 9500 offices in 76 countries
& territories in Europe, the Asia-Pacific region, the Americas, the Middle
East & Africa.
With listings on the London, Hongkong, New York, Paris & Bermuda stock
exchange shares in HSBC holdings places are held by nearly 200,000
shareholders in some 100 countries & territories. The shares are traded on
the New York stock exchange in the form of American Depository Receipts.
Through an international network linked by advertisement techniques,
including a rapidly growing e-commerce capability, HSBC provides a
comprehensive range of financial services like-

1. Personal financial services

2. Commercial Banking
3. Corporate Banking
4. Investment Banking

THE HSBC GROUP IN INDIA

Year of commencement of operations in India

The Mercantile Bank of India, China & London : 1853

The Hongkong & Shanghai Banking Corporation Limited (HBAP) : 1867
HSBC Securities & Capital Markets (India) Private Limited (HBAP) : 1995
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HSBC Private Equity Management (Mauritius) Limited
(Indialiaison Office) (PEIN) : 1995
HSBC Electronic Data Processing India Private Limited (HDPI) : 2000
HSBC Primary Dealership (India) Private Limited (HCPD) : 2001
HSBC Professional Services (India) Private Limited (HPSI) : 2001
HSBC Software Development (India) Private Limited (HSDI) : 2002
HSBC Asset Management (India) Private Limited (ISIN) : 2002
HSBC Insurance Brokers (India) Private Limited (ININ) : 2003
HSBC Operations & processing enterprise(India) Pvt. Ltd. (HOPE) : 2003
Canara HSBC Oriental bank of commerce Life insurance co. Ltd. : 2008

Offices in india Number Of employees

as at 31st july 2008
HBAP : 57 8,532
HSCI : 2 109
PEIN : 1 13
HDPI : 8 16,650
HPSI : 1 54
HSDI : 4 5,882
ININ : 5 20
HOPE: 13 3,274
AMIN : 18 168

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HFHI : 01 01

TOTAL : 110 34,307

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THE HONGKONG & SHANGHAI BANKING CORPORATION
LIMITED (HSBC)

Zone Branch Location No. of Branches

East
Kolkata 7
Bihar 1
Chhattisgarh 1

West Mumbai 9
Ahmedabad 1
Pune 2
Thane 1
Vadodara 1
Indore 1
Nagpur 1

North New Delhi 5

Gurgaon 1
Chandigarh 1
Noida 1
Jaipur 1
Jodhpur 1
Ludhiana 1

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 Lucknow 1

South Chennai 2
Kochi 1
Co’atore 1
Banglore 2
Hyderabad 1
Trivandrum 1
Visakhapatnam 1
Mysore 1
TOTAL 47

The HSBC Group commenced operations in India in 1867 with a branch in

Calcutta. They claim an earlier commencement, as the Mercantile Bank of
India, China & London, which the group acquired in 1959, was established
in 1853, with a branch in Bombay.

The Bank has relocated some branches in Mumbai, New Delhi, Chennai,
Banglore, Kolkata & Visakhapatnam from what were once important trade
centres to more appropriate present day locations that hold our target
customer base.

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13
 PERSONAL FINANCIAL SERVICES (PFS)
HSBC India offers a wide range of competitively priced services & products
to over 1.75 million individual resident Indians as well a Non-resident
Indian customers across India, USA, UK, Middle East & South East Asia.
HSBC’s 150 year presence in India allows it to enjoy the advantage of deep
rooted knowledge of local markets & customs. This has lead to development
of products & services, which are attuned to the financial needs of Indians in
the cities where HSBC operatives. The HSBC brand is associated with core
values such as transparency, trust & honesty. These factors enable HSBC
India to remain highly competitive & at the leading edge of the retail &
commercial banking market in the country.
The distribution network in India consists of 47 branches in 26 cities
supported by 170 ATMs at 142 locations. In addition, self service banking
channels, such as Internet Banking & a 24 hour centralized all India Call
Centre provide a strong backbone to the distribution capabilities. A second
load balancing Call Centre became operational in January 2005 at HSBC
Operations & Processing Enterprise (India) Private Limited, Chennai.
Customers can apply for all products & services online at www.hsbc.co.in
The bank offers a complete suite of products & services including HSBC
Premier International, HSBC Premier, Power Vantage, Savings & Current
Accounts, International Debit Cards & Term Deposits in addition to
consumer loan products like International Credit Cards, Mortgage, Personal
Loans, Educational loans & Overdrafts. HSBC is the 6th largest Credit Card
issuer in India with over 1.3 million cards in force.

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Premier & mid market customers have access to comprehensive Financial
Planning & HSBC is a market leader in the provision of Wealth
Management services. In 2005,HSBC was the largest distributor of Retail
Mutual Funds in India, & the biggest sales channel for Banc assurance
partner TATA AIG.
Non-Resident Indians (NRI’s) constitute 56% of the Bank’s deposit base.
The banking a needs of NRIs are fulfilled from branches in India & 11 NRI
centres abroad. We have over 84,000 NRI Customers, & have started
referring customers to Financial Planning Managers & the Private Bank in
the host countries, to address their needs for investment products. A free
remittance service is offered between accounts held by NRIs with HSBC

overseas & onshore. In 2006, an International Banking Centre was

established facilitate cross border business referrals.
In October 2005, HSBC launched an onshore Private Banking proposition
branded HSBC Private Banking. The proposition targets clients with
minimum assets of INR 25 M & encompasses asset classes such as Real
Estate, Equity Derivatives & Commodities. This is an addition to Fixed
Income & Equities, which are already being offered. The proposition uses
“Active Advisory” as its cornerstone & key differentiator.
The Bank has sought RBI approval to establish a separate consumer finance
branch network under a non banking financial institution, which will
distribute personal loans
& ancillary products to a broader segment of the Indian consumer base than
is currently

15
served by the Bank’s existing product portfolio. The personal loan product is
being piloted through the bank branch network & initial results are
promising.

Wealth Management & Branch Banking

HSBC has 47 branches Pan-India across 26 locations. Wealth

Management services are delivered to customers through qualified Wealth
Management across each of these branches.
Wealth Management helps customers develop & execute a realistic &
practical long term savings, investments & protection plans by investing in
mutual funds, bonds & purchase of insurance products manufactured by
TATA AIG.
Qualified, trained & accredited Wealth Management assist customers in
charting a road map to achieve their individual financial goals & protect
their family from unforeseen eventualities keeping in mind their available
resources & based on each customers independent risk profile. Wealth
Management services is currently offered to HSBC Premier & Power
Vantage customers

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 COMMERCIAL BANKING

HSBC is a leading provider of financial services to small, medium-sized and

middle-market enterprises. The Group has over 43,000 such customers in
India, including sole proprietors, clubs and associations, incorporated
businesses and publicly quoted companies. Commercial Banking provides a
full range of banking services to these customers including multi-currency
business accounts, payment and cash management, trade services, factoring
and a range of borrowing solutions.

In India, Commercial Banking has a presence in 47 branches covering 26

key cities and for the convenience of our customers, a multi channel service
including Internet and Phone banking. For SME customers, HSBC offers the
complete range of transaction baking services as well as unsecured loans and
loans for and against property. The services are supported by a large Sales
and Relationship Management team in key locations across the country.
India is the first country in the HSBC Group where Commercial Banking
lends to Microfinance Institutions, thus providing indirect funding to
hundreds of small business owned and run by members of underprivileged
sections of society. A dedicated unit has been formed to focus on
Microfinance and other Priority Sector institutions, with a view to further
reach out to the marginalized and under banked.

Factoring
HSBC India offers a comprehensive range of Factoring and Supply Chain
Finance Solutions, which include the following products:

For Vendors/Suppliers/Purchase Channel of our corporate customers

➢ Payables Financing
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 ➢ Purchase Order Financing

For the Sales Channel of our corporate customers

➢ Factoring (With or Without Credit Protection)
➢ Export Factoring (With or Without Credit Protection)
➢ Portfolio Invoice Discounting (With partial credit protection)
➢ Distributor Finance

Payables Financing: HSBC India’s Payable Financing product enables

companies to finance their payables to vendors. This helps companies to
provide immediate liquidity to vendors against their supplies at competitive
rates and will enable the company to negotiate better pricing terms with
vendors.

It also enables the vendors to improve their cash flow by providing

continuous liquidity against their receivables. Our payables financing
products can be structured either against Bills of Exchange or Accepted
Invoices.

Purchase Order Financing: is a facility to suppliers of our Corporate

Banking Clients to finance their pre shipment working capital requirements.
Pre shipment working capital lines are sanctioned to the supplier’s against
Purchase Orders issued to the suppler.

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Factoring: This is a service that covers the financing and collection of
account receivables in domestic trade. Receivables are factored, by HSBC
with added service of credit protection, collection and sales ledges
administration. Thus the management of the company may concentrate on
production and sales and need not concern itself with non-core activities like
collection and sales ledger administration.

Export Factoring: enables companies to finance their open account export

sales at competitive rates either in Rupees or Foreign Currency. Through a
network of overseas based correspondent factors, HSBC provides credit
protection against buyer default and collection services.

Portfolio Invoice Discounting: Essentially covers purchase of receivables

with partial credit protection based on a First Loss Deficiency Guarantee.
The portfolio should be well spread with acceptable levels of concentration
and the debtors must have had a satisfactory track record with the company.
A field audit will be conducted to determine portfolio quality based on
which a First Loss Deficiency Guarantee percentage will be agreed.
Collection remains the responsibility of the Corporate with repayments
either on a pre-agreed schedule or based on actual collections.

Distributor Finance: is currently offered to the distribution channel of

Large Corporate Banking Clients and can be structured to suit the specific
requirements of each corporate and its distribution channel. Through the
Distribute Finance Program, HSBC finances company’s dealers, which will
assist the company in providing steady, assured credit to its distribution
chain.

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 Payments and cash management
Integrated domestic and regional cash management solutions are provided to
corporate and institutional customers in India. The suite of offerings under
the cash management umbrella includes comprehensive Receivables
Management solutions, with an endeavor to completely integrate with the
customer’s back-end operating systems and processes. HSBC is the leading
foreign bank in India in providing capital market solutions, which include
Bankers to Issue, Escrow account Services and Dividend payments
solutions. Six Sigma measurement practices are followed for our operational
capabilities. HSBC net, the HSBC Group’s online real time web-enabled
corporate banking platform, allows customers to execute financial
transactions, obtain international financial market information and review
details of their domestic and international accounts form anywhere in the
world, 24 hours a day.

Trade (international and domestic) service

HSBC offers a wide range of international and domestic Trade products. In
India, we offer one of the largest trade processing capabilities among peer
banks, spread across 5 cities. Each of our Trade processing centers is ISO
9001-2000 certified. We work closely with Group Offices overseas and
leverage our extensive global network to offer structured, tailor made
solutions to a wide range of customers. Our clients in India include large
India and multinational companies, Mid Market companies as well as
customers in the Small and Medium Enterprises segment.

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 CORPORATE AND INSTITUTIONAL BANKING

Corporate Banking (CB) is an integral part of the Global Banking structure,

which focuses on offering a full range of service to multinationals, large
domestic corporate and institutional clients.
Provides a wide range of banking and financial services provided to
domestic and international operations of large local corporate and local
operations of multinationals corporations. Services include access to
commercial banking products, including working capital facilities such as
domestic and international trade operations and funding, channel/distributor
financing, and overdrafts, as well as domestic and international collections
and payments, INR and Foreign currency term loans (external commercial
borrowing in foreign currency), letters of guarantee etc.

Institutional Banking drives the Group’s relationship with banks, financial

institutions, securities houses, insurance companies, and asset management
companies and other non-banking companies, non-government and
development organizations operating in India. Market leadership position
based on strong relationships with major financial institutions.

Investment Banking and Markets brings together the advisory and financing,
equity
Securities, equity linked transactions, asset management, treasury and
capital markets, and private equity activities of the Groups to complete the

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Global Banking structure and provide a complete range of financial products
to our clients.

Clients are serviced by sector based client service teams that combine
relationship managers, product specialists and industry specialists to develop
customized financial solutions. These form the relationship team along with
the Investment Banking structure and provide a complete range of financial
products to our clients.
Clients are serviced by sector based client service teams that combine
relationship managers, product specialists and industry specialists to develop
customized financial solutions. These form the relationship team along with
the Investment Banking & Advisory division. Each team supports the

client’s local and global needs, ensuring a full understanding of the

company’s business and financial needs. Based on our client’s requirement,
HSBC assigns Global Relationship Management teams to provide structured
solutions for all its needs.

Our Global Relationship Management teams are tasked with understanding

in depth the sectors in which our clients operate with the aim of adding value
through detailed industry knowledge and structured financial solutions.

Focus on overseas acquisition financing, corporate finance and advisory

roles, overseas cash management opportunities, cross border funding, project
& export finance through concerted marketing with all product providers.

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The Corporate Bank (CB) in India was top ranked (1st overall) in the 2005
Greenwich Survey with a Greenwich Quality Index (GQI) of 647. Currently
CB manages approx. 470 CB relationships with total advances of approx.
USD 1.08Bn as at end of Dec05 and total deposits of USD .98Bn.

Sectoral account management- Improved industry knowledge andsector4

expertise. The CB portfolio is largely spread within the following sectors
divided as under:

Corporates Institutional

Consumer Brands Banks

Industrials &Technology
Energy and Utilities
Telecommunications
Automotive
Healthcare
Transport and Logistics
Media
Financial Institutions
Securities
MutualFunds/AssetManagement Companies
Insurance
Financial Sponsors
Business Process Outsourcing (BPO’s)
Broker and Dealers

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 INVESTMENT BANKING

1. HSBC FIXED DEPOSITS

When it comes to assured returns, choosing the right type of savings

scheme makes all the difference. HSBC Fixed Deposits let you make the
most of value-added benefits as you create wealth at low risk.

Features & Benefits

➢ The superior Fixed Deposit to invest in, for a secure future
• You can now open a Fixed Deposit with Rs.
10,000 only
• Enjoy high rate of returns on your HSBC Fixed
Deposits
• Choose from a wide range of tenors as per your
convenience
• Avail of our special rates for select tenors
➢ Interest Rates
Fixed Deposit Period Interest Rate Senior
Citizen’s Interest
(% p.a.) Rate**
(% p.a.)
7 days 3.00 3.25
8 to 14 days 3.00 3.25

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15 to 29 days 3.50 3.75
30 to 59 days 4.25 4.50
60 to 89 days 5.25 5.50
90 to 179 days 5.25 5.50
180 to 269 days 5.50 5.75
270 to 12 months 8.00 8.25
366 to 399 days 8.00 8.25
400 days 8.75 9.00
401 to less than 18 months 7.25 7.50
18 months to 730 days 7.50 7.75
731 days 7.50 7.75
732 to less than 36 months 7.50 7.75

➢ Certificate of Deposit

Earn interest for funds invested from 15 days to one year, with HSBC’s
Certificate of Deposit (CDs).
CDs can be availed by individuals (other than minors), corporations,
banks, companies, trusts, funds, associations etc. Non-Resident Indians
(NRIs) may also subscribe to CDs on a non-repatriable basis only.

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➢ Advantage

• Tenure – A Certificate of Deposit is issued for a period not less

than 15 days & not exceeding 1 year from the date of issue.
• Transfer Mechanism – Certificate of Deposit held in a
physical form are freely transferable by endorsement &
delivery. Those in demat form can be transferred as per the
procedure applicable to other demat securities.

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 2. MUTUAL FUNDS

It is a type of investment where a number of investors money is pooled

together & used by the fund manager(referred to as the Asset
Management Company or AMC) to invest in underline securities inline
with the objectives of the scheme.
By this method you can achieve a much wider spread of investments than
if you were investing directly in the underlying investments. It is
generally accepted that by spreading your investment you are spreading
your risk, therefore investing in mutual funds is considered to be lower
risk than direct investment.
When you invest in mutual funds you do not own the underlying
investments but have a claim to a number of units in the fund
representing the size of your investment. The value of each unit of the
mutual fund scheme, calculated based on the market value of the
underlying investments after deducting expenses and liabilities, is
referred to as the ’Net Asset Value’ or NAV.
The first time a mutual fund scheme is available for purchase is referred
to as a New Fund Offering or NFO.

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Important Characteristics Of A Mutual Fund

1- A mutual fund actually belongs to the investors who have

pooled their funds is in the hands of the investors.
2- Investment professionals and other service providers, who earn
a free for their services, from the fund, manage a mutual fund.

3- The pool of funds invested in a portfolio of marketable

investments. The value of the portfolio is updated every day.
4- The investor’s share in the fund is denominated by “units”. The
value of the units changes in the portfolio’s value, every day.
The value of one unit of investment is called as the net asset
value of NAV.
5- The investment portfolio of the mutual fund is created
according to the stated investment objectives of the fund.

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Types of Mutual Funds

There are thousands of different mutual funds offered on the market. They
range from funds that include a broad variety of investments to funds that
invest exclusively in single securities or narrow sectors of the market. With
the many different investment styles and objectives, there’s bound to be a
number of mutual funds that are suited to your investing profile. Each of
these funds has expense, risk, and return characteristics. Be sure you
understand these characteristics before you invest. There are 15 principal
types of funds. We have listed them according to their primary objectives:
growth, income, and specialized.

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Balanced Funds
Balanced funds seek to obtain the highest return consistent with a low-risk
strategy. They hold a mix of common and preferred stocks, bonds and cash
reserves. The mix can vary according to current market conditions. Balanced
funds usually offer higher yields than pure stock funds. Balanced funds are
generally the least risky of growth-oriented mutual funds.

Growth and Income Funds

Growth and income funds attempt to achieve both long-term growth and
current income. They invest primarily in high-yield common stock, preferred
stock, and convertible debt (bonds) to generate both growth and income.
30
Because they include a mix of investments, these funds are typically less
risky than growth funds.

Growth Funds
Growth funds seek long-term appreciation by investing in the stocks of
established companies that may be poised for growth. These companies
typically pay low dividends yet offer the potential for long-term capital

appreciation. Some growth funds limit their investments to specific sectors

of the economy. Growth funds are generally less risky than aggressive
growth funds.

International and Global Growth Funds

International and global mutual funds offer diversification into international
stock markets. International funds invest only in foreign securities. Global
funds, on the other hand, can invest in foreign and U.S. securities. The risks
associated with investing on a worldwide basis include differences in
regulation of financial data and reporting, currency exchange differences, as
well as economic and political systems that may be different that those in the
United States

Aggressive Growth Funds

Aggressive growth funds, sometimes known as "small-cap" funds, seek
maximum capital gains. They invest primarily in the stock of smaller, less
established companies. Since these companies generally pay little or no

31
dividends, aggressive growth funds rely on capital growth for returns. These
funds tend to be the riskiest of growth-oriented mutual funds.

Money Market Funds

Money market funds seek current income while maintaining a stable $1.00
per share net asset value by investing in short-term debt securities, including
T-bills, certificates of deposit, commercial paper, and other highly liquid and
safe securities. They offer modest current income and no potential for capital
gains. They generally offer the lowest returns but the most safety of all fund
types. Some money market funds also offer tax-free income. Money market
funds are neither insured nor guaranteed by the Federal Deposit Insurance
Corporation or any other government agency. Although the fund seeks to
preserve the value of your investment at $1.00 a share, it is possible to lose
money by investing in the fund.

Government Securities Funds

Government securities funds invest primarily in Treasury and government
agency securities. Because they are issued or guaranteed by the U.S.
government, they are considered the credit worthiest alternatives available

Government securities offer moderate current income and high safety.

Treasury securities are backed by the full faith and credit of the U.S.

32
government as to the timely payment of principal and interest. Government
agency securities are not considered government obligations and therefore
are not backed by the full faith and credit of the government. The principal
value of these funds will fluctuate due to changes in interest rates.

Municipal Bond Funds

Municipal bond funds seek tax-free income by investing in the bonds of
state and local governments. In many cases, it may be wise to consider
municipal bond funds issued by your state because they may offer double or
even triple tax-free income. In some states you will have to pay income tax
if you buy shares of a municipal bond fund that invests in bonds issued by
other states. In addition, while some municipal bonds in the fund may not be
subject to regular income taxes, they may be subject to federal, state, or local
alternative minimum tax. If you sell a tax-free bond fund at a profit, there
are capital gains taxes to consider. As with all types of bond funds, the
principal value will fluctuate with changes in interest rates.

Corporate Bond Funds

Corporate bond funds invest in debt securities issued by corporations. The
risk of corporate bond funds may vary depending on the objectives of the
fund. Because credit risk is somewhat higher, these funds may offer higher
returns than funds specializing in government securities. Principal will
fluctuate with changes in interest rates.

High-Yield Bond Funds

High-yield bond funds seek to maximize current income by investing in
lower-quality — high-yielding — corporate bonds. The bonds held by these
funds are generally rated BB or lower by rating agencies. They offer the high
current yields to compensate for the greater risk of default. Since they are
more volatile than and pay higher yields than investment grade bonds, they
tend to be suited to investors with a high degree of risk tolerance.
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Sector Funds
Sector funds invest in specific industries or sectors of the economy, such as
communications, aerospace and defense, or health care. While they may be
diversified within a particular sector, they lack broad diversification. This
increases their investment risk. These funds typically seek long-term capital
appreciation.

Growth-Income Funds
Growth-income funds are specialists in blue chip stocks. These funds invest
in utilities, Dow industrials, and other seasoned stocks. They work to
maximize dividend income while also generating capital gains. These funds
are suitable as a substitute for conservative investment in the stock market.

Income Funds
Income funds focus on dividend income, while also enjoying the capital
gains that usually accompany investment in common and preferred stocks.
These funds are particularly favored by conservative investors.

Asset Allocation Funds

Asset allocation funds don't invest in just stocks. Instead, they focus on
stocks, bonds, gold, real estate, and money market funds. This portfolio
approach decreases the reliance on any one segment of the marketplace,
easing any declines. A plus factor is limited by this strategy as well.

34
Precious Metal Funds
Precious metal funds invest in gold, silver, and platinum. Gold and silver
often move in the opposite direction from the stock market, and thus these
funds can provide a hedge against investments in common stocks.

Bond Funds
Bond funds invest in corporate and government bonds. A common
misunderstanding among investors is that the return on a bond fund is
similar to the returns of the bonds purchased. One might expect that a fund
that owns primarily 8 percent-yielding bonds would return 8 percent to
investors. In fact, the yield from the fund is based primarily on the trading of

bonds, which are extraordinarily sensitive to interest rates. Thus, one could
find a bond fund that was earning double-digit returns as the prime rate
climbed from 4 percent to 6 percent.
In addition to mutual funds, there are money market funds, which are
essentially mutual funds that invest solely in government-insured short-term
instruments. These funds nearly always reflect the current interest rates, and
rarely engage in interest-rate speculation.

Mutual funds available through HSBC

 AIG Global Investment Group Mutual Fund
 Birla Sun Life Mutual Fund
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  DSP Merrill Lynch Investment Managers
 Fidelity Mutual Fund
 Franklin Templeton Mutual Fund
 HDFC Mutual Fund
 HSBC Mutual Fund
 ICICI Prudential Mutual Fund
 JPMorgan Mutual Fund
 Kotak Mahindra Mutual Fund
 Reliance Mutual Fund
 Standard Chartered Mutual Fund
 Sundaram BNP Paribas Mutual Fund
 Tata Mutual Fund

Benefits of Mutual Fund

Reduction in risk:
Mutual funds invest in a portfolio of securities. This means that all funds are
not invested in the same Investment Avenue. Holding a portfolio that is
diversified across investment avenues is a wise way to manage risk. When
such a portfolio is liquid and marked to market, it enables investors to
continuously evaluate the portfolio and manage their risks more efficiently.

Reduction in transaction costs:

36
Through the individual investor’s contribution may be small; the mutual
fund itself is large enough to be able to reduce costs in its transactions.
These benefits are passed on to the investors.

Portfolio Diversification:
By offering readymade diversified portfolios, mutual fund enables investors
to hold diversified portfolios. Through investors can create their own
diversified portfolios, the costs of creating and monitoring such portfolios
can be high, apart from the fact that investors may lack the professional
expertise to manage such a portfolio.

Liquidity:
Open-ended funds are very liquid as the Mutual Fund companies offer an
open window for redemption on all working days. The redemption proceeds
are normally dispatched within three to four working days.

Professional fund management:

Investing in markets requires both knowledge and expertise. Experienced
fund managers are able to trade or negotiate better deals, manage the price
risk effectively, exploit trends and opportunities and constantly monitor the
environment.

37
 Tax efficiencies:
Investing in mutual funds is tax efficient. If investors choose the growth
option and stay invested for a year, they only pay long term Capital Gains of
20.4% of indexed returns or 10.2% of un indexed returns (whichever is
lower).

Diversification:
Diversification is the core of any investment strategy. It allows you to
minimize the risks associated with any investment. However, it is very
difficult for individuals to have the requisite diversification for your
investment given smaller portfolios and transaction costs. Mutual Funds can
pool in the investments of thousands of investors and achieve the desired
level of diversification for each.

FAQ’s

Do all mutual funds carry the same investment risks?

No, they do not. Some mutual funds have been designed for investors who
are cautious, while others for investors who are aggressive in their outlook to
risk. There are also funds designed for investors having a balanced outlook
on risk. You therefore need to decide what level of investment risk you are
happy to accept and then choose a mutual fund scheme, which matches your
appetite for risk.

How do I know which mutual fund scheme is right for me?

38
This will depend upon the level of risk you are prepared to take, your
investment horizon, what your investment objectives are and whether you
have a particular preference in the type of securities you would like to invest
in. However before you invest you need to ensure you fully understand the
features and risks relating to the mutual fund scheme you ultimately decide
to invest in.

What charges are involved?

Charges do vary between different types of mutual fund schemes to reflect

the level of management and the type of underlying security involved.
However there are three main types of charges involved but you must refer
to the offer document of the fund to find out exactly what charges are
involved and their amounts.

Initial charges – these expenses are incurred by the fund house for the
scheme(s) before/during its launch towards marketing, publicity, advertising,
registrar’s expenses, broker’s /agents’ commission etc. Subject to an overall
limit (as a percentage of the corpus mobilized), these are subsequently
amortized to the scheme over a few years.

39
 Annual Recurring Expenses (ARE) – These are charges towards the
annual management of the scheme, including investment management,
marketing, investor communication, registrar’s expenses and other expenses
and other expenses directly attributable to the scheme.

• Entry load
This is a charge that is levied on investors at the time of investment into a
scheme. Entry loads are typically restricted to equity funds and balanced
funds and have the impact of reducing the net amount that is available for
investment by the scheme.

• Exit Charges/ Exit loads

Although described as a charge it is really a penalty for early encashment.
Not all mutual funds include this charge. This tends to be expressed as a
percentage of the amount to be encashed. Some fund managers use this type
of charge where the underlying securities are illiquid in nature or where they
do not charge an initial charge or to discourage premature redemptions from
close-ended funds. A variant of the exit loads is a Contingent Deferred Sales
Charge (CDSC) where the exit load is charged on graded basis and declines
with increasing time period.

What is the effect of these charges?

40
The effect of the initial charge is to immediately reduce the amount available
to purchase units. This means immediately after you invest the value of your
investment will be below the amount you invested. This is one reason why
you should be happy to leave your capital invested for the medium to long
term to allow possible future growth to overcome the effect of the initial
charge.

The ARE will have the effect of reducing the overall returns you receive
either in the income you receive or the capital growth you experience. This
ARE is deducted from the overall value of the fund irrespective of whether
the fund has made a profit or not therefore deduction of the ARE can also
increase the loss the fund may have made.

The effect of Entry Load would be to reduce the net amount available for
investment by the fund.

The effect of an Exit Load will be to reduce the actual amount you receive
on encashment, which means you will receive less than market value of the
underlying investment. Such a charge acts as a deterrent to early
encashment.

If I invest what am I committing to?

You are committing to invest at least the minimum amount, which varies
from fund to fund. In case of funds designed for a medium or long term
horizon, you should also be prepared to commit your investment for the
appropriate time horizon and not use capital that you might need in the short
term, especially. With regard to close-ended funds, you should be prepared
to commit funds for the complete tenor of the specific scheme.

41
Any investment in mutual funds means that you are happy to take a degree
of investment risk in return of the potential for superior returns than can be
obtained from fixed deposits, in the full knowledge that this outcome is not
guaranteed and that it is possible you could make a loss on your investment.

You should also consider carefully how much you want to commit to any;
one type of investment, as over exposure to any particular investment is not
recommended.

Can I change my mind and encash my investments at any time?

Yes you can. You will however incur any exit loads / CDSC as may be
applicable and if the price of the units has moved against you, then you will
experience a capital loss. In case of close-ended funds, premature exit costs
can be especially steep.

How do I keep track of my investment?

Very easily, the price of units is available through a variety of sources

including newspapers, the internet (at www.amfiindia.com), statements

42
received from the AMC or direct enquiry to your HSBC Relationship
Manager.

What about tax?

You should refer to the specific fund documentation for a full appreciation of
the tax consequences of both the fund itself and any effect this will have on
you personally. HSBC does not give tax advice and we recommend you
consult your usual tax adviser for fuller details as to how you will be
personally affected. The tax benefits and implications mentioned in any
marketing material provided by the fund house are as per currently
applicable tax laws and are subject to change in future.

3. SYSTEMATIC INVESTMENT PLAN (SIP)

43
What is SIP?

An SIP is a regular investment plan for purchasing units of a mutual fund

scheme. Offered by mutual funds to help you save regularly.When investing
in mutual funds, you would normally identify a scheme & invest a
predetermined amount in it at its prevailing net asset value (NAV). If you
invest a sum of Rs.10,000 at an NAV of Rs.10, you will receive 1,000 units.
The timings of your investment in such a case may turn out to be favourable
or unfavourable.

Under SIP, however, your investment is staggered over a period. Instead of

investing Rs.10,000 at one go, you might consider investing specified
amounts in a scheme at pr-specified intervals. For instance, you could spread
out the Rs.10,000 investment over 10 months, with Rs.1,000 being invested
each month. The number of units that accrue to you on each periodic
investment would depend on the NAV of the scheme prevailing at the time
of your purchase. By doing this, you would have done away with the need to
time the market. SIP’s also in calculate some much needed discipline into
your investing habits. .

It is just like a recurring deposit with the post office or bank where you put
in every month. The difference here is that the amount is invested in a
mutual fund.

The minimum amount to be invested can be as small as Rs.500 & the

frequent investment is usually monthly or quarterly.

44
How an SIP works?
An SIP allows you to take part in the stock market without trying to second
guess movements.
An SIP means you to commit yourself to investing a fixed amount every
month. Let Rs.1000
When the NAV is high, you will get fewer units. When it drops, you will get
more
Date NAV Approx number of units you
will get at Rs.1000
Jan 1 10 100
Feb 1 10.5 95.23
Mar 1 11 90.90
Apr 1 9.5 105.26
May 1 9 111.11
Jun 1 11.5 86.95

Within six months, you would have 5,894 units by investing just Rs.1000
every month.

45
How an SIP scores?
It makes you disciplined in your savings. Every month you are forced to
keep assured amount. This could either be debited directly from your
account or you could give mutual fund post-dated cheques. As you see
above, it helps you make money over the long term. Since you get more
when the NAV drops & fewer when it rises, the cost average out over time.
So over all the ups & downs of the market without any drastic losses.

Also, a number of mutual funds do not charge an entry load if you opt for an
SIP a percentage of the amount you are investing. & if you do not exit (sell
your units a year of buying the units, you do not have to pay an exit load)
(same as an entry load, except this is charged when you sell your units).
If, however, you do sell your units within a year, you would be charged an
exit low pays to stay invested for the long-run.
The best way to enter a mutual fund is via an SIP. But to get the benefit of an
SIP at least a three-year time frame is needed when you won’t touch your
money.

4. INSURANCE
Insurance, in law and economies, is a form of risk management primarily
used to hedge against the risk of a contingent loss. Insurance is defined as
the equitable transfer of the risk of a potential loss, from one entity to
another, in exchange for a premium. Insurer, in economics, is the company
that sells the insurance. Insurance rate is a factor used to determine the
amount, called the Premium, to be charged for a certain amount of
insurance coverage. Risk management, the practice of appraising and
controlling risk, has evolved as a discrete field of study and practice.
46
1. A large number of homogeneous exposure units. The vast
majority of insurance policies are provided for individual members
of very large classes. Automobile insurance, for example, covered
about 175 million automobiles in the United States in 2004
(http://www.economicinsurancefacts.org/economics/state/insuredc
ars/). The existence of a large number of homogeneous exposure
units allows insurers to benefit from the so-called “law of large
numbers,” which is effect states that as the number of exposure
unit’s increases, the actual results are increasingly likely to become
close to expected results. There are exceptions to this criterion.
Lloyds of London is famous for insuring the life or health of
actors, actresses and sports figures. Satellite Launch insurance
covers events that are infrequent, large commercial property
policies may insure exceptional properties for which there are no
‘homogeneous’ exposure units. Despite failing of this criterion,
many exposures like these are generally considered to be insurable

a. Definite Loss. The event that gives rise to the loss that is
subject to insurance should, at least in principle, take placed at a
known time, in a known place, and from a known cause. The
classic example is death of an insured on a life insurance policy.
Fire, automobile accidents, and worker injuries may all easily
meet this criterion. Other types of losses may only be definite in
theory, Occupational disease, for instance, may involve
prolonged exposure to injurious conditions where no specific
time, place or cause is identifiable , Ideally, the time, place and
cause of a loss should be clear enough that a reasonable person,
with sufficient information,could objectively verify all three
elements.

47
2. Accidental Loss. The event that constitute the trigger of a claim
should be fortuitous, or at least outside the control of the
beneficiary of the insurance. The loss should be ‘pure,’ in the sense
that it results from an event for which there is only the opportunity
for cost. Events that contain speculative elements, such as ordinary
business risks, are generally not considered insurable.
3. Large Loss. The size of the loss must be meaningful from the
perspective of the insured. Insurance Premiums need to cover both
the expected cost of losses, plus the cost of issuing and
administering the policy, adjusting losses, and supplying the capital
needed to reasonable assure that the insurer will be able to pay
claims. For small losses these latter costs may be several times the
size of the expected cost of losses. There is little point in paying
such costs unless the protection offered has real value to a buyer.
4. Affordable Premium. If the likelihood of an insured event is so
high, or the cost of the event so large, that the resulting premium is
large relative to the amount of protection offered, it is not likely
that anyone will buy insurance, even if on offer. Further, as the
accounting profession formally recognizes in financial accounting
standards (See FAS 113 for example), the premium cannot be so
large that there is not a reasonable chance of a significant loss to
the insurer. If there is no such chance of loss, the transaction may
have the form of insurance, but not the substance.
5. Calculable Loss. There are two elements that must be at least
estimatable, if not formally calculable exercise, while cost has
more to do with the ability of a reasonable presented under that
policy to make a reasonably definite and objective of the amount
of the loss recoverable as a result of the claim.
6. Limited risk of catastrophically large losses. The Essential risk
is often aggregation. If the same event can cause losses to
numerous policyholders of the same insurer, the ability of that
insurer to issuer policies becomes constrained, not by factors
48
 surrounding the individual characteristics of a given policyholder,
but by the factors surrounding the sum of all policyholders so
exposed. Typically, insurers prefer to limit their exposure to a loss

from a single event to some small portion of their capital base, on the order
of 5%. Where the loss can be aggregated, or an individual policy could
produce exceptionally large claims, the capital constraint will restrict an
insurer’s appetite for additional policyholders. The classic example is
earthquake insurance, where the ability of an underwriter to issue a policy
depends on the number and size of the policies that it has already
underwritten. Wind insurance in hurricane zones, particularly along coast
lines, is another example of this phenomenon. In extreme cases, the
aggregation can affect the entire industry, since the combined capital of
insurers and reinsures can be small compared to the needs of potential
policyholders in areas exposed to aggregation risk. In commercial fire
insurance it is possible to find single properties whose total exposed value is
well in excess of any insurers, or are insured by a single insurer who
syndicates the risk into the reinsurance market.

Insurer’s business model

Profit = earned premium + investment income - incurred loss -

underwriting expenses.

Insurers make money in two ways: (1) through underwriting, the

process by insurers selects the risks to insure and decide how much in
49
premiums to charge for accepting those risks and (2) by investing the
premiums they collect from insured’s.

The most difficult aspect of the insurance business is the underwriting

of policies. Using a wide assortment of data, insurers predict the
likelihood that a claim will be made against their policies and price
products accordingly. To this end, insurers use actuarial science to
quantify the risks they are willing to assume and the premium they
will charge to assume them. Data is analyzed to fairly accurately
project the rate of future claims based on a based on a given risk.
Actuarial science uses statistics principles aura used to determine an
insurer’s overall exposure. Upon termination of a given policy, the
amount of premium collected and the investment gains thereon minus
the amount paid out in claims is the insurer’s underwriting profit on
that policy. Of course, from the insurer’s perspective, some policies

are winners (i.e., the insurers pays out more in claims and expenses
than it receives in premiums and investment income)

Types of insurance

Any risk that can be quantified can potentially be insured. Specific

kinds of risk that may give rise to claims are known as “perils”. An
insurance policy will set out in details which perils are covered by the
policy and which are not.

50
Below is a (non-exhaustive) list of the many different types of
insurance that exist. A single policy may cover risks in one or more of
the categories set forth below. For example, auto insurance would
typically cover both property risk (covering the risk of theft or
damage to the car) and liability risk (covering legal claims form
causing an accident). A homeowner’s insurance policy in the U.S.
typically includes property insurance covering damage to the home
and owner’s belongings, liability insurance covering certain legal
claims against the owner, and even a small amount of health insurance
for medical expenses of guests who are injured on the owner’s
property.

 Automobile insurance, know in the UK as motor insurance, is

probably the most common from of insurance and may cover
both legal liability claims against the driver and loss of or
damage to the insured’s vehicle itself. Throughout most of the

 United States an auto insurance policy is required to legally

operate a motor vehicle on public roads. In some jurisdictions,
bodily injury compensation for automobile accident victims has
been changed to a no-fault system, which reduces or eliminates
the ability to sure for compensation but provides automatic
 eligibility for benefits.

51
 Aviation insurance insures against hull, spares, deductible, hull
war and liability risks.

 Business insurance can be any kind of insurance that protects

businesses against risks. Some principal subtypes of business
insurance are (a) the various kinds of professional liability
insurance, also called professional indemnity insurance, which
are discussed below under that name; and (b) the business
owners policy (BOP), which bundles into one policy many of
the kinds of coverage that a business owner needs, in a way
analogous to how homeowners insurance bundles the
coverage’s that a homeowner needs.

 Casualty insurance insures against accidents, not necessarily

tied to any specific property.

 Credit insurance repays some or all of a loan back when

certain things happen to the borrower such as unemployment,
disability, or death. Mortgage insurance (which sees below) is a
form of credit insurance, although the name credit insurance
more often is used to refer to policies that cover other kinds of
debt.

 Crime insurance insures the policyholder against losses from

the criminal acts of third parties. For example, a company can

52
 obtain crime insurance to cover losses arising from theft or
embezzlement.

 Crop insurance “Farmers use crop insurance to reduce or

manage various risks associated with growing crops. Such risks
include crop loss or damage caused by weather, hail, drought,
frost damage, insects, or disease, for instance.

 Health insurance policies will often cover the cost of private

medical treatments if the National Health Service in the UK
(NHS) or other publicly-funded health programs do not pay for
them. It will often result in quicker health care where better
facilities are available.

HSBC TIE-UP WITH TATA AIG

Tata AIG Life Insurance Company limited(Tata AIG life) is a joint venture
company, formed by the Tata Group and American International Group, Inc.
(AIG). Tata AIG life combines the Tata Group’s pre-eminent leadership
position in India and AIG’s global presence as the world’s leading
international insurance and financial services organization. The Tata Group
holds 74 percent stake in the insurance venture with AIG holding the balance
26 percent. Tata AIG life provides insurance solutions to individuals and
corporates. Tata AIG life insurance company was licensed to operate in India
on February 12,2001 and started operations on
April 1,2001

53
 A. UNIT LINKED INSURANCE PLAN (ULIP)

Unit linked insurance products are different from the traditional insurance
products and are subject to the risk factors of fluctuations in investment
returns and possibility of increase in changes.

The performance of the managed portfolios and funds is not guaranteed and
the fund value may increase or decrease in accordance with the future
experience of the managed portfolios and managed funds. The fund value
during the period of continuance of policy and at maturity may be more or
less than the premiums invested depending on market performance. Past
returns are not necessarily a guide to future performance.

The premium paid in unit linked life insurance policies are subject to
investment risks associated with capital markets and the NAVs of the units
may go up or down based on the performance of the funds and factors
influencing the capital market and the insured is responsible for his/her
decisions.

Buying a life insurance policy is a long-term commitment. An early

termination of the policy usually involves high costs and the surrender value
payable may be less than the total premiums paid.

Tata AIG Life Insurance Company Limited is only the name of the insurance
company. Invest Assure II is only the name of the Unit Linked Life
54
Insurance Contract and does not in any way indicate the quality of the
contract, future prospects or returns.

The various funds offered under this contract are the names of the funds and
do not any ways indicate the quality of the contract, future prospects and
returns.

B. Invest Assure II

An inspirational that translates into a host of innovative products for you.

Tata AIG Life introduces Invest Assure II, a unique investment linked
insurance plan for flexibility and protection. Given a choice, many people
would like to increase the earning potential of their insurance premium by
deciding their own investment and risk limitations. Invest Assure II, a
unique, flexible insurance plan combines to exploit the upside of market
returns by investing in different kinds of securities through multiple fund
options.

What's more, you can direct the investments by creating your own
investment fund portfolio from a range of options to suit your needs and
preferences.

Enjoy Multiple Benefits-INVESTASSURE II

➢ Provides security to your family in case of the Life Insured’s

unfortunate demise.
➢ Gives you the flexibility to choose your funds based on your risk
profile.

55
 ➢ Enables you to enjoy marked-linked returns with a potential for higher
growth.

C. Invest Assure Gold

Invest Assure Gold, a non-participating whole Life Unit Linked Plan, which
offers you the unique advantage of combining the protection and tax
advantages of life insurance with the attractive prospects of investing in
different kinds of securities through multiple fund options.
And you can keep reaping the benefits for a lifetime!
What’s more, you can direct the investments by creating your own
investment fund portfolio from a range of options to suit your needs and
performances.

Key Benefits
➢ Choose your premium payment term; five years or for the entire
duration of the policy
➢ Entry age: 30 days to 70years

56
➢ Benefit period: for the entire life till 100 years of age
➢ Facility to increase the premium through Top-Up Premium
➢ Provides security to your family in case of your unfortunate death
➢ Facility to increase the Sum Assured through Top-Up Premium
➢ Gives you the flexibility to choose your fund based on your risk
profile – whole Life Mid Cap Equity, whole Life income, and whole
life Short Term Fixed Income. You may choose to switch between the
Funds, anytime

➢ Enables you to enjoy market-linked returns with a potential for higher

growth
➢ Opportunity to bring you additional income on funds that might have
otherwise given you minimum returns in your savings account,
subject to market performance
➢ Loyalty benefit: Additional 0.25% of units under the Regular
Premium Account every five years, provided the policy is in force.

57
Invest Assure Gold Offers you

• Flexibility of Choosing The Amount of Death Cover

• Flexibility of Increasing Sum Assured

• Cover For the Whole of Life

• Loyalty Additions

• Flexibility in Paying Premiums

• Flexibility of Choosing your Investment Fund

• Flexibility of Switching Between Funds

• Flexibility of Topping-Up your premium

• Discontinuance of Premium within Three Years From Inception

• Flexibility of a Premium Holiday
• Flexibility of Partial withdrawal

• Flexibility of Policy Reinstatement

• Flexibility of Premium Mode

• Flexibility of Adding Rider

D. MahaLife: The Whole Life Plan

Tata AIG Life’s MahaLife plan is truly one of a kind. For a start, it
offers you way too many benefits:
 Only a 12 year premium paying period for lifetime coverage.

58
 Guaranteed annual payment for life from the 12th policy anniversary
onwards. Tax –free.
 On death or at maturity at age 100, the entire sum assured will be
paid. Tax-free.
 Cash dividends from the 6th policy anniversary onwards. Tax-free.

 Premiums paid eligible for tax exemption benefit. As per current tax
laws.

Who is eligible for this policy?

The minimum age of eligibility for this policy is 30 days, which means, if
you buy this policy for your child you only have to pay premiums for 12
years, after which the child gets an income as well as coverage for his
entire life. The maximum age if eligibility is 50 years, which makes it
ideal for you as well, because it provides both a pension and lifetime
coverage.

59
60
 RESEARCH METHODOLOGY

The study undertaken by me was regarding a detailed analysis of

MARKETING AND PROMOTION of HSBC products, studying its current
scenario and studying the challenges and difficulties faced by HSBC bank.

Research Objective

The main objective of my study is to find the main strategies, policies used
& various sales promotional activities of HSBC bank in & Jodhpur sector.
The data source being used under such type of study are mainly of 2 types:
1. Primary Data
2. Secondary Data

Among which the former is being taken through the research undergone
within the organizational level itself & various other organizing reforms
only. While the latter had been taken through different statistical
approaches or we can say through different marketing reforms.

SAMPLE PLAN:

Data Source:

Primary Data:

61
The primary data are which are collected afresh and for the first time, and
thus happen to be original in character. A primary survey was conducted at
JODHPUR city. The survey was carried out at various levels & the target
group was retail investors, business men, builders, industrialists, exporters,
doctors etc. Questionnaires were used as an instrument to collect the primary
data.

This data was obtained by various promotion schemes like-

CANNOPIES- we put canopies in front of various financial

institutions like banks, commercial places, and entertainment places
like Agarwal tower, Shastri circle, Corporate hub etc. There people
approach us and we give them the questionnaire to fill and provide
the details of HSBC products.

APPROACHING TO INDUSTRIAL UNITS - We approach to

industrial areas like MIA, BASNI, HIA, Boranada industrial area
and give the questionnaire to fill and explain the details of various
HSBC products.

Secondary sources:
The Secondary data are those, which have already been collected and
being processed through the statistical process.
62
 We got the secondary data through

PREVIOUS TRANSACTION RECORDS-

i. We got the records of those people who have already

invested in HSBC.
ii.Through directory- We got the records of Exporters,
Businessmen, architects etc.

Marketing Approach:

○ Directly meeting them

○ Through telephonic calls
○ Through Canopies

Population Definition

• Element: Retail Investors, Business Men,

Builders, Industrialists, Exporters, Senior
Citizens, and others.
• Sample Unit- JODHPUR City
• Sampling Method- Simple Random Sampling

• Sampling Size- Based on ages, income area etc.

• Data collection- through directories, Previous
records through friends and relatives

63
Modes of Marketing & Promotion

Directly Approaching:-
We directly approach people to invest like builders, investors, exporters,
businessmen,
& even general mass.

Telephonic Calls:-
We approach them through telephones and take appointments & then
directly contact them for investment.

Canopies:-
We put canopies in front of Banks, Financial Institutions & other public
gathering places. There we approach people and take their telephone
numbers. & contact them or even in canopies itself make them invest.

Through Distribution Houses:-

Even most of our funds are promoted through distribution houses viz. Bajaj
Capital, RR Investors, Alliance Capital, Reliance mutual funds etc.

Through Brokers:-
Major part of our promotion & marketing is done through brokers, because
they are more reliable for knowledgeable. Thus people trust them.

64
 SWOT ANALYSIS
STRENGTHS:-
1. Brand Name:

The biggest strength is the tag of HSBC is going to be the largest

group of MNC’s.
65
 2. Compatible Price:

Prices of different schemes of HSBC are much more compatible than

others.

3. Diversified Schemes:
We have diversified schemes, which is an exception case of HSBC.

4. Less Risk:

Our debt schemes are 100% free form market risk. Even as our
portfolio is that diversified so equities are also less risky than others.

5. Easy procedures for account opening too:

We have an easy system for opening the account as it includes
investment & being named as saving account for the costumer future
benefits.

6. Debit cum ATM card facility:

The main advantage of HSBC’s Debit cum ATM card is that you can
access this card through any VISA supported ATM’s & withdraw your
amount, without any single charge to be paid.

WEAKNESS:-
1 Prone to Market Risk:
Mutual Funds depend on overall macro economic condition and
market scenario.

66
 2 Tough Competitions:
There is a very tough competition because of large number of Asset
Management Companies.

3 Incapability of Customers:
HSBC only provides 2 types of account opening of which one is PVA
(Power Vantage Account) under which an aqb of 1 lakh is to be
maintained & the second one is Premier Account , under which an
aqb of 25 lakh is to be maintained. This is sometimes beyond the
reach of a middle class person.

OPPORTUNITIES:-
1 Hoarding:
Most of the Indians have black money that too in huge amount i.e.
the do not have money in banks, so approaching them is beneficial,
so that through the opening of this account they can make further
investment.

2 Indian Capital Market is Growing:

So more & more new investors are interested in investments.

3 Tailor Made Products:

67
 We have tailor made products like sector specified schemes & even
diversified schemes.

4 Branch Expansion:
Large no. of branches are opening day by day and even we are traping the
countries having almost same type of socio-economic condition & even same
culture etc.

THREATS:-
1 Tough Competition:
As there are so many banks having almost same kind of schemes, so
it’s tough to compete with.

2 Unawareness:
Majority of population is not aware of HSBC brand name and even
because of other banking facilities which are much cheaper than
HSBC’s services, so it’s hard to convince people.

68
3 Changing Scenario:
Our market scenario is changing day-by-day i.e. our market is
fluctuating, so this makes investor hard to invest.

69
 INTERPRETATION & ANALYSIS

Equity 75
Debt 60
Cash 15

In the above table 75 investors in Equity, 60 in Debt, & 15 in Cash.

Debt instruments are- Company fixed deposits, bonds, Government
Securities fund, and Govt. Saving schemes, Pension Schemes
Equity Instruments are- Equity funds diversified, Equity funds Sectoral Plan,
Balanced Fund (Equity Portion), Equity IPO.
Cash Instruments- Liquid Funds, Government Securities, Income Funds long
Term (Including MIP).
Aggressive investors comprises of 50% in Equity, 10% in Cash, 40% in
Debt.

70
Debt 90
Equity 45
Cash 15

In the above table 45 investors invest in Equity, 90 in Debt, & 15 in Cash.

Debt instruments are- Company fixed deposits, bonds, Government
Securities fund, and Govt. Saving schemes, Pension Schemes.
Equity Instruments are- Equity funds diversified, Equity Funds Sectoral
Plan, Balanced Fund (Equity Portion), Equity IPO.
Cash Instrument- Liquid Funds, Government Securities, Income Funds Long
term (including MIP)./
Moderate investor comprises of 60 % in Debt, 10% in cash, and 30% in
Equity.

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Debt 70
Cash 10
Equity 20

In the above table 20 investors invest in Equity, 70 in Debt, &10 in Cash

Debt Instruments are- Company fixed deposits, bonds, Government

Securities fund, and Govt. Saving Schemes, Pension Schemes.
Equity Instruments are- Equity funds diversified, Equity funds Sectoral Plan,
Balanced Fund (Equity Portion), Equity IPO.
Cash Instruments- Liquid Funds, Government Securities, and Income Funds
Long Term (including MIP).
Conservative Investors comprises of 70% in Debt, 10% in Cash, and 20% in
Equity.

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Debt 120
Cash 15
Equity 15

In the above table 15 investors invest in Equity, 120 in Debt, &120 in Cash.

Debt Instruments are- Company fixed deposits, bonds, Government

Securities Fund, and Govt Saving Schemes, Pensions Schemes.
Equity Instruments are- Equity Funds diversified, Equity Funds Sectoral
Plan, Balanced Fund (Equity portion), and Equity IPO.
Cash Instruments- Liquid Funds, Government Securities, and Income Funds
Long Term (including MIP)
Very conservative investors comprises of 80% in debt, 10% in Cash & 10
% in Equity

60K-1LAKH 62
1LAKH-
2LAKH 48
2LAKH- 24
73
3LAKH
3LAKH-
ABOVE 16

In the above table 62 investors are those who fell in the income slab from 60
thousand to 1 lakh, 48 investors fell in the income slab form 1 lakh-2lakh, 24
Investor’s fell in the income slab from 2 lakh-3lakh, 16 investor’s fell in the
income slab of above 3 lakhs.

Aggressive Investors 18
Moderate Investors 60
Conservative
Investors 47
Very Conservative
Investors 25

18 investors are found Aggressive, 60 investors are found Moderate, and 47

Investors are found Conservative & 25 Investors are found very conservative
in the survey.

74
 Investment made in % by the Investors

25%
29%

46%

Upto 5% 5%-10% More Than 10%

up to 5% 38
5%-10% 69
More Than 10% 43

75
In the above table 38 Investors up to 5% of their income, 69 investors invest
up to 5%-10% of their income & 43 investors invest more than 10% of their
income.

In the above graph 25% of total surveyed investors invest up to 5% monthly.

46% of the total surveyed investors invest up to 5%-10% monthly.
29% of the total surveyed investors invest more than 10% monthly.

1-5 Years 24
5-10 Years 55
10 Years &
Above 71

16% of the investors were investing since last 1-5 years.

37% of the investors were investing since last 5-10 years.
43% of the investors were investing since last 10 years & above.

76
Steadily 20
At
average 92
Fast 38

In the above table 20 investors expected their investment to grow steadily.

92 investors expected their investment to grow at a average rate.

38 investors expected their investment to grow at a fast rate.

77
In the above graph 13% of the surveyed investors expected their investments
to grow steadily 62% of the surveyed investors expected their investments to
grow at an average rate. 25% of the surveyed investors expected their
investments to grow at a fast rate.

Safety of Principal 22
Earning return above
inflation rate 96
Earning High returns 32

In the above table 22 surveyed investors gave more importance to safety of

principal, 96 investors gave more importance to earning returns above
inflation rate, 32 investors gave more importance to earning high returns.
15% of the surveyed investors had a primary motive of the safety of
principal, 64% of the surveyed investors were more concerned about earning
returns above inflation rate. 21% of the surveyed investors were more
concerned about earning high returns.

78
Nil 12
Averag
e 104
Good 34

In the above table 12 investors were found with no knowledge about various
investment schemes, 104 investors were found with average knowledge
about various investment schemes, 34 investors were found with good
knowledge about various investment schemes.
In the above graph out of total surveyed investors 8% were found with nil
investment knowledge, 69% were found with average investment
knowledge, 23% were found with good investment knowledge.

79
Above 50 76
Between 30-50 48
Between 20-30 26

In this above table out of the total surveyed investors 76 investors are above
50 years, 48 are between 30-50 years & 26 investors are between 20-30
years.
In the above graph 51% were above 50 years 17% were between 20-30, &
32% were between 30-50.

80
Secured 98
Not
Secured 28
Doesn't
affect 24

In the above table out of the total surveyed investors 98 investors were
found with job security, 28 investors were found with unsecured jobs & 24
investors were found in a no affect status.
In the above graph 65% of the investors were in a state of secured jobs, 19%
of the investors were in the state of unsecured jobs & 16% of the investors
were in the state where this factor doesn’t affect them.

81
More than 2 98
1-2
dependents 32
None 20

In the above table out of the total surveyed investors 98 investors were those
who are having more than 2 dependents, 32 investors were those who are
having 1-2 dependents, 20 investors were those who didn’t had any
dependent.
In the above graph 66% investors were those who are having more than 2
dependents, 21% investors were those who are having 1-2 dependents &
13% investors are those who having no dependents.

82
Educated
View 22
Friendly
Advice 73
Guess Work 55

In the above table out of the total surveyed investors 22 investors took
educated view before investment, 73 took friendly advice before investment
& 55 made guess work.
In the above graph 48% took friendly advice, 15% took educated view &
37% made guess work.

83
Withdra
w 28
Wait 79
Invest 43

Out of the total surveyed investors 28 investors were found in a state of

withdrawal of money, 79 investors were found out in the state of wait &
watch & 43 investors were found out in the state of more investment in the
market if the market crashes down.
In the above graph 52% will wait & watch 29% will invest more & 19%
investors will withdraw their money.

84
 STAR QUESTION MARK

(F.D.) (M.F.)

CASH COW DOG

(SIP) (INSURANCE)
M
A
R
K
E
T

G
R
O
W

85
 T
H
MARKET SHARE

STAR CATEGORY PRODUCT: These are the products that are not
only market leaders but are also growing fast. By this study it can be
analysed that FD is a product of STAR CATEGORY. If we analyse the
current status of investments, then all respondents have their investments &
if they are provided with Rs.10,00,000 then too they will invest a part of it in
FD. Hence presently FD has a large Market Share & in future also its market
share will increase but not decrease.

CASH COW PRODUCT: Such products are weak in both the factors
i.e., low growth & low market share. The investment avenues coming in this
category are SIP’s.
Professional have invested in SIP, but this is restricted to their future & SIP
is best option for the businessmen. Rather people would like to invest money
in post office.

DOG CATEGORY PRODUCT: Products of this category are

categorized by Dominant share & Low growth. The investments avenues
coming in this category is INSURANCE. It is among today’s growing
sector. But if we point our consideration towards professionals, as it is in this
study, then Insurance comes under Cash Cow. Its market share is large, but
86
at the same time these people are less interested in it as a future investment
avenue.

QUESTION MARK CATEGORY PRODUCT: High growth &

Subordinate Share characterize these products. SHARES, MUTUAL
FUNDS & BONDS comes under this category. At present they have low
market share but growth prospectus of these products are very high.

87
 FINDINGS

The basic thrust of the research is to find out types of investors & their
portfolio & their profile.

On the basis of questionnaire certain points are given to the investors.

1. Those investors who obtained between 160-260 are very conservative.

2. Those investors who obtained between 261-340 are conservative
investors.
3. Those investors who obtained between 341-410 are moderate
investors.
4. Those investors who obtained between 411-480 are aggressive
investors.

88
A. In the survey 18 investors were found aggressive out of the total of 150
surveyed investors. The asset allocations of aggressive Investors are as
follows;
They invest 50% in equity instruments, 40% in debt instruments & 10% in
cash instruments.

B. 60 investors were found to be moderate Investors. The asset allocations of

these investors are as follows;
60% of the surveyed investors invest in debt & 30% of the them invest in
equity & remaining 10% of them invest in cash instruments.

C. 47 investors found to be conservative investors out of the total 150

surveyed investors. The asset allocations of conservative investors are as
follows;
70% of them invest in debt instrument,20% of them invest in equity
instruments, & 10% of them invest in cash instruments.

D. 25 investors were found to be very conservative out of the total 150

surveyed investors. Their asset allocations are as follows;
80% of them invest in debt instruments, 10% of them invest in equity
instruments, & 10% of them invest in cash instruments.

E. In the survey the data was obtained regarding the investment capacity of
the investors also in order to get the purchasing power and financial
efficiency of the investors.

89
25% of the total surveyed investors invested up to 5% of their monthly
income.
46% of the total surveyed investors invested up to 5% to 10% of their
monthly income.
29% of the total surveyed investors invested more than 10 to their monthly
income.

F. The investment made for the last number of years is also taken into
consideration to take into account their investment periods.
16% of the total surveyed investors were investing since last 1-5 years.
37% of the total surveyed investors were investing since last 5-10 years.
43% of the total surveyed investors were investing since last 10 years and
above.

G. Expectations of the investors regarding their investments to grow were

also found out because on its basis we can make out consumer’s investment
decisions and consumer’s mind setup it was all psychological based.
Out of the total surveyed investors only 13% expected their investment to
grow steadily.
Out of the total surveyed investors only 62% expected their investment to
grow at average rate.
Out of the total surveyed investors only 25% expected their investment to
grow at a fast rate.

H. The most important part of this survey was to know about the perception
of the investors with respect to returns. The following results were obtained.
15% of the total surveyed investors had a perception that safety of principal
is their primary area of concern.

90
64% of the total surveyed investors had a perception that earning returns
above inflation rate is their primary area of concern.
21% of the total surveyed investors had a perception that earning high
returns is their primary area of concern

I. As far as investor’s knowledge part regarding various investment schemes

is concerned it was found that

69% of the total surveyed investors had average knowledge about various
investment schemes.
8% of the total surveyed investors had no knowledge about various
investment schemes
23% of the total surveyed investors had good knowledge about various
investment schemes.

J. Age group was also a rational issue to know while carrying out the
research.
It was found that 17% of the total surveyed investors were between 20 to 30
years.
It was found that 32% of the total surveyed investors were between 30 to 50
years.
It was found that 51% of the total surveyed investors were above 50 years.

91
K. Occupation status is also a great factor to know because it affects
consumer buying behavior and buying decisions.
65% of the total surveyed investors had secured occupation.
19% of the total surveyed investors were in the state of non-security of
occupation.
16% of the total surveyed investors were in that state where occupation
doesn’t affect them.

L. To know about investment approach in making investment decisions

gives significance to the research as by knowing this aspect we can conclude
to a great extent about the type of investors.
37% of the total surveyed investors relied on guesswork.
15% of the total surveyed investors relied on the educated view.
48% of the total surveyed investors relied on the friendly advice.

LIMITATIONS

UNCERTAINITY OF MARKET:-

92
HSBC’s securities investments are subject to market risks and there is no
assurance or guarantee that the objectives of the Scheme will be achieved.
As with any investment in securities, the NAV of the units issued under the
Scheme can go up or down depending on the factors and forces affecting the
capital markets.

LACK OF PUBLIC AWARENESS:-

In JODHPUR, HSBC has just completed 3 years & is in infantry stage so
people are unaware of it. So people are afraid to invest & they only trust of
some govt funds like UTI, SBI, Govt. securities.Which give assured returns?

HIGH COMPETITION:-
Due to the existence of large number of AMC’s & banks the competition is
high. Investors are confused that where they have to invest and where not.
Other banks also offers the same type of product/schemes which diversified
the investors.

RIGID AND TRADITIONAL STRUCTURE:-

The people believe investing in Bank FD’s and Post Office saving and are
reluctant to invest in Mutual Fund. People like to secure money in terms of
lending to the people on high interest they meant their amount is safe, or
further to invest in their own business which will give them high return
obviously.

93
SOCIO- ECONOMIC FACTOR:-
The standard of living is low and people have low saving so investment in
HSBC’s schemes is low & beyond their capability. The most of the people of
this country are agriculture dependent.so, they have less to invest.

POLITICAL FACTOR:-
Due to volatile govt & their policies regarding investor & investment, the
stock market is not integrated which in turn affects the mutual fund industry.

RECOMMENDATIONS

1. The investors above the age of 50 years must be taken into

consideration as they are having great potential regarding investment.

94
2. HSBC must lay down some sound strategies to trap more customers
by giving them more commission in comparison to other investment
centers.

3. HSBC must use marketing tools like point of purchase, advertisement

through Mass Media like loading Newspapers, Magazines, Television,
Exhibition, Fairs, SMS on Mobiles, advertisement on the internet.

4. The organization is lacking on the parameters of motivation. It is

recommended that the organization must adopt the concept of
motivation.

5. HSBC should organize programs for customer awareness in

developing areas and establish a confidence and belief among the
customers residing there.

QUESTIONNAIRE

95
1. NAME:

2. ADDRESS:

3. PHONE NO: (R)

(O)

4. AGE:
 20-30
 30-50
 Above 50

5. PROFESSION:

Entrepreneur  Private Job Government Job

Industrialist Exporter

6. INCOME LEVEL:

 60,000 – 1, 00,000  2, 00,000 – 3, 00,000

 1, 00,000 – 2, 00,000  Above 3, 00,000
96
7. FAMILY STATUS:

 Dependents  Non-Dependents

8. Have you ever invested in the market?

 Yes  No

If Yes, What is your Portfolio?

a. Mutual Fund
b. Insurance
c. Shares
d. Others

9. Are you aware of various HSBC’s investment schemes?

97
  Nil  Average  Fully

10.Have you ever invested in HSBC?

 Yes  No

If yes, you’re Diversification (Mention your preferences)

1. Equity:
2. Debt:
3. Cash:

11.Please tick, I Am

First time Investor Regular

98
12.How long you are investing in market?

a. 1-5 years
b. 5-10 years
c. Above 10 years

13.You made invested through:

 Your own  Through Distribution house

 Through broker  others

14.Are you:

Long-term investor
Short-term investor

15.What would you take into account while investing?

a. Safety principle
b. Earning high returns

99
 c. Earning return above inflation rate

16.Views of the investor – if the stock market crashes down:

a. Wait and Watch

b. State of withdrawal
c. State of more investment

17.What % of your income would you like to invest?

a. Up to 5%
b. 5%-10%
c. Above 10%

BIBLIOGRAPHY

BOOKS:
.
100
 1. Kotler Philip: Marketing in New Millennium, Millennium Edition
Prentince Hall of India, New Delhi.
2. C.R Kothari: Research Methodology; Wishva Publication, New
Delhi.
3. M.J Methew : Risk & Insurance Management

MAGAZINES:-

1 Business world.
2 Invest one
3 Business Today
4 Invest time by TATA-AIG
5 Fund Fact Sheets of Reliance Mutual Fund.
6 Offer Documents of Different Schemes.

NEWSPAPERS:-

1. Financial Time.
2. Economic Times.

WEBSTIES:

www.reliancemutualfund.com
www.hsbc.co.in
www.google.com
www.yahoo.com
101
www.indiainfiline.com
www.bse.com

ABBREVIATION

SIP: Systematic investment plan

TMD: Term deposit

AMFI: Association of mutual funds of India

AMC: Asset management company

BSE : Bombay stock exchange

102
MF: Mutual fund

CONCLUSION

103
From the analysis of the responses received from the investors in JODHPUR
City, a majority of investors are found to be conscious and enlightened
regarding their investments, return & growth.

We have very good market in JODHPUR which comprises potential

investors but due to lack of basic promotion & publicity these investors are
not fully aware of our company & whosoever is aware of our company their
investment decisions are done on the basis of security, analysis of risk yield
& return few parameters like Demographic, Physiological, Income, etc.

So my findings are that HSBC market should make little more efforts to trap
the potential investors, like Media Advertisement, Paper Advertisement,
Seminars & Business Meets & building a good relationship with potential
business, moreover friendly guidance.

A ga in I wou ld l ik e t o s ay than ks t o al l staf f m em ber s

of H SBC jodh pu rbra nc h f or there co-oper at ion &
su ppo r t in du ring m y tra ining per iod.

RAJ AT C HO UDH ARY

SS-2008 -1 0
I.I. P.M NE W DE LHI

104