CHAPTER 1

INTRODUCTIONINTRODUCTION TO INVESTMENTSThere are many different definitions of what investment and investing actually means. One of the simplest ways to describing it is using your money to try and make money. This can happen in many different ways.

All investors are different. The common factor is that you could like to invest money to aim to make it grow or to receive income from it. We would like to show you that choosing the most suitable investment for you does not need to be difficult. All you need is the right help along the way.

The act committing money or capital to an endeavour with the expectation of obtaining an additional income or profit is known as investment. Investing means putting your money to work for you.

Investment has different meanings in finance and economics. Finance investment is putting money into something with the expectation of gain, that upon through analysis, has a high degree of security for the principal amount, as well as security return, within an expected period of time. In contrast putting money into something with an expectation of gain without thorough analysis, without security of principal, and without security of return is speculation or gambling. As such, those shareholders who fail to thoroughly analyze their stock purchases, such as owners of mutual funds, could well be called speculators. Indeed, given the different market hypothesis, which implies that a thorough analysis of stock data is irrational, all rational shareholders are, by definition, not investors, but speculators.Investment is related to saving or deferring consumption. Investment is involved in many areas of the economy, such as business management and finance whether fir households, firms, or governments.To avoid speculation, an investment must be either directly backed by the pledge of sufficient collateral or insured by sufficient assets pledged by a third party. A thoroughly analyzed loan of money backed by collateral with greater immediate value than the loan amount may be considered an investment. A financial instrument that is insured by the pledge of assets from a third party, such as a deposit in a financial institution insured by a government agency may be considered an investment. Examples of these agencies include, in the United States, the Securities Investor Protection Corporation, Federal Deposit Insurance Corporation, or National Credit Union Administration, or in Canada, the Canada Deposit Insurance Corporation.Promoters and news sources reports on speculative financial transactions such as stocks, mutual funds, oil and gas leases, commodities and futures often inaccurately or misleadingly describe speculative schemes as investment.

NEED AND INPROTANCE OF STUDY

Essentially, Investment Planning involves identifying your financial goals throughout your life, and prioritizing them. For example, if you want to invest for funding your vacation next year, dont choose an investment that has a three-year lock-in. Similarly, if you want to invest for your daughters marriage after 10 years, dont invest in 1 year bonds for the next 10 years. Instead, choose an option that matches your investment horizon.

Investing Planning is important because it helps you to derive the maximum benefit from your investments. Your success as an investor depends upon your ability to choose the right investment option. This, in turn, depends on your requirements, needs and goals. The choice of the best investment option for you will depend on your personal circumstances as well as general market conditions. For example, a good investment for a long-term retirement plans may not be a good investment for higher education expenses.SCOPE OF THE STUDY

You can take investment decision only after analyzing entire process of investment that starts with funds contribution and ends with getting expectations fulfilled. The investment decision rules allow you to formalize the process and specify what condition or conditions need to be met to accept the project You will take decision only after ensuring that the required expectations in terms of returns are ensured at any cost.

The study is conducted to understand the functioning of Equities in India Equity market.

The choice of location for the study is based on the responses given by the investors who are operating the stock market in twin cities.

This study will help in understanding the behaviour and risk preferences of investors.

OBJECTIVE OF THE STUDYThe primary objective of the project is to make an analysis of various investment decisions. The aim is to compare the returns given by various investment decisions. To cater the different needs of investors, these options are also compared on the basis of various parameters like safety, liquidity, risk, entry/exit barriers etc.

The project work was undertaken in order to have a reasonable understanding about the investment industry. The project work includes knowing about the investment DECISIONS like equity, bond, gold and mutual fund. All investment DECISIONS are discussed with their types, workings and returns.

METHODOLOGYEquities, Bonds, Gold, Mutual Funds and life Insurance were identified as major types of investment decisions.The primary data for the project regarding investment and various investment DECISIONS were collected through interactions had with the employees in the organization i.e. ICICI.The secondary data for the project regarding investment and various investment DECISIONS were collected from websites, textbooks and magazines.

Primary method: This method includes the data collected from the personal interaction with authorized members of ICICI BANK Ltd.

Secondary method: The secondary data collection includes:

The lecturers delivered by the superintendents of respective departments.

The brochures and material provided by ICICI BANK Ltd. The data collected from the magazines of the NSE, economic times, etc.

Various books relating to the investments, capital market and other related topics.

The averages of returns over a period of 11 years are considered for the purpose of comparison of investment options. Then, critical analysis is made on certain parameters like returns, safety, liquidity, etc. Giving weight-age to the different type of needs of the investors and then multiplying the same with the values assigned.LIMITATIONS OF THE STUDY

The study was limited to only five investment options.

Most of the information collected is secondary data.

The data is compared and analyzed on the basis of performance of the investment options over the past five years.

While considering the returns from mutual funds only top performing schemes were analyzed.

It was very difficult to obtain the data regarding the returns yielded by others and hence averages were taken.

CHAPTER II

INDUSTRY PROFILE

&

COMPANY PROFILE

INDUSTRY PROFILE

A bank is a financial institution that accepts deposits and channels those deposits into lending activities. Banks primarily provide financial services to customers while enriching investors. Government restrictions on financial activities by banks vary over time and location. Banks are important players in financial market and offer services such as investment funds and loans. In some countries such as Germany, banks have historically owned major stakes in industrial corporations. While in other countries such as the United States, banks are prohibited from owning non-financial companies. In Japan, banks are usually the nexus of a cross-share holding entity known as the keiretsu.The level of government regulation of the banking industry varies widely, with countries such as Iceland, having relatively light regulation in the banking sector, and countries such as China, having a wide variety of regulations.

The oldest bank still in existence is Monte dei Paschi di Siena, headquartered in Siena, Italy, which has been operating continuously since 1472.

History

Origin of the word

The name bank derives from the Italian word banco desk/bench, used during the Renaissance by Jewish Florentine bankers, who used to make their transactions above the desk covered by a green tablecloth. However, there are traces of banking activity even in ancient times, which indicates that the word bank might not necessarily come from the word banco.

In fact, the word traces its origin back to the Ancient Roman Empire, where moneylenders would set up their stalls in the middle of enclosed courtyards called macella on a long bench called a bancu, from which the words banco and bank are derived. As a moneychanger, the merchant at the bancu did not so much invest money as merely convert the foreign currency into the only legal tender in Rome that of the Imperial Mint.The earliest evidence of money-changing activity is depicted on a silver drachm coin from ancient Hellenic colony Trapezus on the Black Sea, modern Trabzon, c. 350 325 BC, presented in the British Museum in London. The coin shows a bankers table (trapeze) laden with coins, a pun on the name of the city.In fact, even today in Modern Greek the word Trapeza means both a table and a bank.

Traditional banking activitiesBanks act as payment agents by conducting checking of current accounts for customers, paying checks 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 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 instalment 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 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 to.Entry regulations

Currently in most jurisdictions commercial banks are regulated by government entities and require a special bank license to operate.Usually the definition of the business of banking for the purposes of regulation is extended to include acceptance of deposits, even if they are not repayable to the customers order- although money lending, by itself is generally not included in the definition.

Unlike most other regulated industries, the regulator is typically also a participant in the market, i.e. a government-owned (central) bank. Central bank also typically has a monopoly on the business of issuing banknotes. However, in some countries this is not the case. In U.K, for example, the financial services Authority Licenses banks and some commercial banks (such as the Bank of Scotland) issue their own banknotes in addition to those issued by the Bank of England, the U.K governments central bank.DefinitionThe definition of a bank varies from country to country.

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.

In most English common law jurisdictions there is a Bills of Exchange Act that codifies the law in relation to negotiable instruments, including cheques, and this Act contains a statutory definition of the term banker: banker includes a body of persons, whether incorporated or not, who carry on the business of banking. Although this definition seems circular, it is actually functional, because it ensures that the legal basis for the bank transactions such as cheques do not depend on how the bank is organised or regulated.The business of banking is in many English common law countries not defined by statue but by common law, the definition above. In other English common law jurisdictions there are statutory definitions of the business of banking or banking business. When looking at these definitions it is important to keep in mind, that they are defining the business of banking for the purposes of the legislation and not necessarily in general. In particular, most of the definitions are from legislation that has the purposes of entry regulating and supervising banks rather than regulating the actual business of banking. However, in many cases the statutory definition closely mirrors the common law. Examples of statutory definitions: banking business means the business of receiving money on current or deposit account, 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 business means the business of either or both of the following:1. Receiving from the general public money on current, deposit, saving 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.Since the advent of EFTPOS (Electronic Funds Transfer at Point of Sale), direct credit, direct debit and internet banking, the cheque has lost its primary importance in most banking systems as a payment instrument. This has led legal theorists to suggest that the cheque based definition should be broadened to include financial institutions that conduct current accounts for customers and enable customers to pay and be paid by third parties, even if they do not pay and collect cheques.Accounting for bank accountsBank statements are accounting records produced by banks under the various accounting standards of the world. Under GAAP and IFRS there are two kinds of accounts: debit and credit. Credit accounts are Revenue, Equity and Liabilities. Debit accounts are Assets and Expenses.This means you credit a credit account to increase its balance, and you debit a debit account to decrease its balance.This is also means you debit your savings account every time you deposit money into it (and the account is normally in deficit), while you credit your credit card account every time you spend money from it (and the account is normally in credit).However, if you read your bank statement, it will say the opposite that you credit your account when you deposit money, and debit it when you withdraw funds. If you have cash in your account, you have a positive (or credit) balance; if you are overdrawn, you have a negative (or deficit) balance.The reason for this is that the bank, and not you, has produced the bank statement. Your savings might be your assets, but the banks liability, so they are credit accounts (which should have a positive balance). Conversely, your loans are your liabilities but the banks assets, so they are debit accounts (which should also have a positive balance).Where bank transactions, balances, credits and debits are discussed below, they are done so from the viewpoint of the account holder which is traditionally what most people are used to seeing.Economic functions1. Issue of money, in the form of banknotes and current accounts subject to cheque or payment at the customers order. These claims on banks can act as money because they are negotiable and/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 interbank clearing and settlement systems to collect, present, be presented with, and pay payment instruments. This enables banks to economise 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 also high quality borrowers. The improvement comes from diversification of the banks 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, bank can do 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).Law of bankingBanking law is based on a contractual analysis of the relationship between the bank (defined above) and the customer- defined as any entity for which the bank agrees to conduct an account.

The law implies rights and obligations into its relationship as follows:

1. The bank account balance is the financial position between the bank and the customer: when the account is in credit, the bank owes the balance to the customer; when the account is overdrawn, the customer owes the balance to the bank.2. The bank agrees to pay the customers cheque up to the amount standing to the credit of the customers account, plus any agreed overdraft limit.3. The bank may not pay from the customers account without a mandate from the customer, e.g. a cheque drawn by the customer.

4. The bank agrees to promptly collect the cheques deposited to the customers account as the customers agent, and to credit the proceeds to the customers account.

5. The bank has a right to combine the customers account, since each account is just an aspect of the same credit relationship.6. The bank has a lien on cheques deposited to the customers account, to the extent that the customer is indebted to the bank.7. The bank must not disclose details of transactions through the customers account unless the customer consents, there is a public duty to disclose, the banks interests require it, or the law demands it.8. The bank must not close a customers account without reasonable notice, since cheques are outstanding in the ordinary course of business for several days.These implied contractual terms may be modified by express agreement between the customer and the bank. The statutes and regulations in force within a particular jurisdiction may also modify the above terms and/or create new rights, obligations or limitations relevant to the bank-customer relationship.Some types of financial institution, such as building societies and credit unions, may be partly or wholly exempt from bank license requirements, and therefore regulated under separate rules.The requirements for the issue of a bank license vary between jurisdictions but typically include:1. Minimum capital

2. Minimum capital ratio

3. Fit and Proper requirements for the banks controllers, owners, directors, and/or so senior officers

4. Approval of the banks business plan as being sufficiently prudent and plausible.

Types of banks

Banks activities can be divided into retail banking dealing directly with individuals and small business; 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.Central banks are normally government-owned and charged with quasi-regulatory responsibilities, such as supervising commercial banks, or controlling the cash interest rates. They generally provide liquidity to the banking system and act as the lender of last resort in event of a crisis.Types of retail banks

Commercial Banks: 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 banks no longer have to be under same 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-served markets or populations. Postal savings Banks: savings banks associated with national postal systems. Private Banks: banks that manage the assets of high net worth individuals. Offshore Banks: banks located in jurisdictions with low taxation and regulation. Many offshore banks are essentially private banks. Savings Banks: in Europe, savings banks take their roots in the 19th or sometimes even 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 decentralised network, providing local and regional outreach and by their socially responsible approach to business and society. Building societies and lands Banks: 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. Islamic Banks: banks that transact according to Islamic principles.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 are traditional banks which are 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 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 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 extended to customers.COMPANY PROFILE

ICICI Bankis an Indian multinationalbankingandfinancial servicescompany headquartered inVadodara,Gujarat,India. As of 2014 it is the second largest bank in India in terms of assets andmarket capitalization.It offers a wide range of banking products and financial services for corporate andretail customersthrough a variety of delivery channels and specialized subsidiaries in the areas ofinvestment banking,life,non-life insurance,venture capitaland asset management.

The bank currently subsidiaries in the United Kingdom, Russia and Canada, branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established branches in Belgium and Germany.

ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depository Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).Corporate ProfileICICI Bank is Indias second-largest bank with total assets of Rs. 5,946.42 billion (US$ 99 billion) at March 31, 2014 and profit after tax Rs. 98.14 billion (US$ 1,637 million) for the year ended March 31, 2014. The bank has a network of 4,050 branches and 12,517 ATMs in India, and has a presence in 19 countries, including India.

Board Members

Mr. K. V. Kamath, ChairmanMr. Sridar IyengarMr. Homi R. Khusrokhan

Mr. Lakshmi N. Mittal

Mr. Narendra Murkumbi

Dr. Anup K. Pujari

Mr. Anupam Puri

Mr. M.S. Ramachandran

Mr. M.K. Sharma

Mr. V. SridarProf. Marti G. SubrahmanyamMr. V. Prem Watsa

Ms. Chanda D. Kochhar, Managing Director & CEO

Mr. Sandeep Bakhshi, Deputy Managing Director

Mr. N.S. Kannan, Executive Director & CFO

Awards ICICI Bank has been adjudged theBest Retail Bank in Indiaby The Asian Banker. It has also emerged winners in the categories of Best Internet Banking Initiative and Best Customer Risk Management Initiative awards given by The Asian Banker.

ICICI Bank was awarded the Certificate of Recognition as one of the Top 5 Companies in Corporate Governance in the 14th ICSI (The Institute of Company Secretaries of India) National Awards for Corporate Governance.

ICICI Bank won the award for the Best Bank - Global Business Development (Private Sector) in the Dun & Bradstreet - Polaris Financial Technology Banking Awards 2014.

ICICI Bank has won The Corporate Treasurer Awards 2013 in the categories of 'Best Cash Management Bank in India' & 'Best Trade Finance Bank in India'.

IDRBT (Institute for Development and Research in Banking Technology) has given awards to ICICI Bank in the categories of Social Media and Mobile Banking and Business Intelligence Initiatives.

ICICI Bank ranks 10th in Fortune India's list of 50 most admired companies in India.

ICICI Bank was awarded a "Special IT Innovation Award" by Lenovo - NASSCOM and CNBC-TV18.

ICICI Bank received the "Gram Samvad" service for Low cost/Small budget marketing initiative Award by Rural Marketing Association of India (RMAI).

ICICI Bank Canada received the prestigious Canadian Helen Keller Award at the Canadian Helen Keller Centres fifth Annual Luncheon in Toronto. The award was given to ICICI Bank for its long-standing support towards unique centre for people who are deaf-blind.

ICICI Bank has been honoured as The Best Service Provider - Risk Management, India at The Asset Triple A Transaction Banking, Treasury, Trade and Risk Management Awards 2014.

ICICI Foundation for Inclusive Growth (ICICI Foundation) was founded by the ICICI Group in early 2008 to give focus to its efforts to promote inclusive growth amongst low-income Indian households.We believe our fundamental challenge is to create just society one where everyone has equal opportunity to develop and grow. Towards this end, ICICI Foundation is committed to making Indias economic growth more inclusive, allowing every individual to participate in and benefit from the growth process.

We hold a set of core beliefs and value that defines our pathway towards inclusive growth and guides our five strategic partnerships.

Vision

Our vision is a world free of poverty in which every individual has the freedom and power to create and sustain a just society in which to live.

Mission

Our mission is to create and support strong independent organizations which work towards empowering the poor to participate in and benefit from the Indian growth process.As a key partner in Indias economic growth for more than five decades, the ICICI Group endeavours to promote growth in all sectors of the nations economy. To give focus to its efforts, to promote inclusive growth amongst low-income Indian households, the ICICI Group founded ICICI Foundation for inclusive Growth in January 2008.

The foundation of ICICI Groups approach towards human and social development was established with the Social Initiative Group (SIG), a non-profit resource group within ICICI Bank, in 2000.20