A project

on

“A study of Wealth management practices with reference to Indian Overseas Bank”

Submitted to:

Rashtrasant Tukadoji Maharaj, Nagpur University, in partial fulfillment of the degree of Master of Business

Administration. (MBA)

Academic Session:[2009-2011]

Submitted by:

Manasi N. Ramteke

Guide:

Prof. Hemant Deshmukh

Supervisor:

Dr. Vivek Pimplapure

Dr. Ambedkar Institute of Management Studies and Research, Deekshabhoomi, Nagpur.

2009-11

1

C E R T I F I C A T E C E R T I F I C A T E

This is to certify that this project titled “A study of Wealth management

practices with reference to Indian Overseas Bank” is a bonafide work carried

out & developed by Manasi Ramteke, in partial fulfillment for the award of

degree of Master of Business Administration during the academic session

2009-11, submitted to Rashtrasant Tukadoji Maharaj, Nagpur University,

Nagpur, under my guidance and supervision.

This is also to certify that project is the result of candidate’s own work and is of

sufficiently high standard to warrant its submission to the University for the

award of the said Degree. To the best of my knowledge the matter presented in

this project report has not been submitted earlier for any other degree/ diploma to

any university. The assistance and help rendered to him during the course of his

project work in the form of basic source material and information have been duly

acknowledged.

Project Guide

(Prof. Hemant Deshmukh)

Supervisor Director

(Dr. Vivek Pimlapure) (Dr.Sujit G.Metre)

Place: Nagpur

Date :

2

D E C L A R A T I O ND E C L A R A T I O N

I hereby declare that this project titled “A study of Wealth management

practices with reference to Indian Overseas Bank”is a bonafide and authentic

record of work done by me under supervision of Dr. Vivek Pimlapure

The work presented here is not duplicated from any other source & also not

submitted earlier for any other degree/diploma to any university. I understand that

any such duplication is liable to be punished in accordance with the university

rules.

Manasi Ramteke

Place: Nagpur

Student

Date: ___/___/_____

3

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

With immense pride & sense of gratitude, I take this opportunity to

express my sincere regards to Dr. Sujit G.Metre, Director, Dr. Ambedkar

Institute of Management Studies & Research, Deeksha Bhoomi, Nagpur for

his outstanding support, guidance and encouragement throughout which helped

me complete this project. I also would like to express my sincere gratitude

towards the guidance & cooperation extended by Dr. Vivek Pimplapure my

project supervisor. I would also thank our project guide Prof. Hemant

Deshmukh for the help and cooperation extended.

I take this moment to thank our Director Dr. Sujit Metre for providing the entire

infrastructure which could make this project possible.

I thank all supporting staff members at my college for their assistance.

I also thank my parents & all my friends for their support during the project

completion.

Place: Nagpur Manasi Ramteke

Student

Date: ___/___/_____

4

Sr. No Contents Page no

1 EXECUTIVE SUMMARY

2 OBJECTIVE OF STUDY

3 RATIONAL FOR STUDY

4 INTRODUCTION

5 WEALTH MANAGEMENT INDUSTRY

6 EVOLUTION OF WEALTH MANAGEMENT

5

EXECUTIVE SUMMARY

6

EXECUTIVE SUMMARY

Indian Overseas Bank provides discretionary wealth management service, in

which wealth managers give recommendations to customers and invest according

to customer discretion

Indian Overseas Bank (IOB or the Bank) provides various banking services,

including saving bank, current accounts, credit facilities and other services. The

Bank's services also include personal banking services, non-residential Indian

(NRI) accounts, corporate banking services, foreign exchange reserves (FOREX)

collections services, Agri business consultancy and e-banking services. During

the fiscal year ended March 31, 2010 (fiscal 2010), IOB had 13 establishments

abroad, consisting of six branches (two branches in Hong Kong and one each in

Singapore, South Korea, Sri Lanka and Bangkok), four representative offices, two

remittance centers and one extension counter.

IOB reported a 10.13 per cent rise in net profit at Rs 638 crore for the quarter

ended December 2010.

Fitch Ratings has today affirmed Indian Overseas Bank's (IOB) Individual Rating

at 'C/D' and Support Rating at '3'.

IOB's Individual Rating draws comfort from the quick turnaround in the

bank's financial performance in FY11, following a cyclical deterioration in

7

asset quality in FY10. Fitch expects the rating to remain stable through the

current period of strong loan growth that is backed by equity infusion by

the government and the bank's strong retail funding profile.

IOB's gross NPL ratio declined to 3.26% at end-December 2010

(9MFY11) from a high of 4.49% at end-March 2010, as incremental NPLs

slowed down in Q3FY11 due to improving economic performance. The

bank has revamped its risk management systems and processes, and is

increasingly focusing on better appraisal and monitoring of loan accounts.

The bank is also focusing on better rated corporates and mortgage loans to

ensure stable asset quality.

IOB's profitability stabilized in 9MFY11 after being negatively impacted

in FY10 by lower interest margins and higher credit costs. Incremental

credit costs are reducing gradually and net interest margin stabilized at

around 3% in 9MFY11. The bank's cost-to-income ratio declined to 51%

in 9MFY11 (FY10: over 55%) due to improving productivity and growing

operating income. Fitch is of the view that the ratio could improve further

relative to peer government banks' as IOB has already provided for

INR32bn of its total estimated pension liabilities of INR44bn.

One of the best NIMs in the PSU banking space due to its focus on

the high yielding assets

Well managed Asset quality

Consistent performer by efficient utilization of Assets

8

Reasonable CASA ratio

The study helps in understanding the wealth management practices, global wealth

management industry, wealth management in India, wealth management

undertaken by banks and comparative study of various banks

The present study is purely an exploratory study, dependent on both the

Primary and the Secondary sources of data. The primary sources of data

constitutes the interaction (both formal and informal) with the managers of

Bank and other officials who are directly associated with the wealth

management industry in India. The Annual Reports of Bank and the

relevant literature and facts and figures available on the problem of the

study in various books, journals and magazines constitute the Secondary

sources of data.

9

OBJECTIVE FOR STUDY

10

OBJECTIVES

1. To study existing wealth management industry in India

2. To study existing wealth management procedures and practices

undertaken by Indian Overseas Bank

3. To have comparative study of wealth management practices followed by

public, private and foreign banks in India

4. To derive the potentiality and the future prospect of the wealth

management industry in India

5. To have a conceptualized view on wealth management services

11

SCOPE OF STUDY

12

SCOPE OF STUDY

India represents one of the greatest opportunities to wealth managers over the

coming decades. Even in today’s financial environment, the wealthy population in

India is large and growing.

India has the tenth highest number of dollar millionaires in the world and their

rate of growth is higher than in any other country

A relaxed regulatory framework and financial sector reforms are gradually

allowing wealth generation in India to become more open and competitive

Wealth Management services in India are under-developed and there are

immediate opportunities for organizations who understand the market to capture

business there

Wealth Management will need to spread beyond the largest cities and to adapt

with and educate its clients on the changing business environment

Indians are increasingly looking beyond their own borders for investments;

foreign banks must therefore leverage their global expertise

Non-Resident Indians represent a large asset to foreign banks

13

RATIONAL FOR STUDY

14

RATIONAL FOR STUDY

Wealth management now a days having very importance. Evidences prove

that the wealth management industry in Asia pacific region is emerging

into massive opportunity.

In India, wealth management is evolving along with a positive regulatory

environment, changing demographics and income. 

With increasing number of HNWI’s, financial services institutions now

offer a wider range of product portfolios targeted at wealthy customers in

the form of investments in art, structured finance and insurance.

Considering long-term high value business proposition, number of banks

and niche players has started offering full range of wealth management

services targeted to HNWIs and emerging affluents.

Banks play important role in providing premium services to affluent

clients.

15

INTRODUCTION OF TOPIC

16

CONCEPT OF WEALTH MANAGEMENT

The term Wealth management formed with two words Wealth & Management. 

The meaning of Wealth is – Funds, Assets, investments and cash it means the

term Wealth management deft with funds Asset, instrument, cash and any other

item of similar nature.  “Wealth Management is an all inclusive set of strategies

that aims to grow, manage, protect and distribute assets in a much planned

systematic and integrated manner”.

Wealth management is an investment advisory discipline that incorporates

financial planning, investment portfolio management and a number of aggregated

financial services. High Net Worth Individuals (HNWIs), small business owners

and families who desire the assistance of a credentialed financial advisory

specialist call upon wealth managers to coordinate retail banking, estate planning,

legal resources, tax professionals and investment management. It is an advanced

type of financial planning that involves private banking, asset management, estate

planning, legal resources and investment resources. These all factors have a

common goal which is sustaining and growing long-term wealth. Wealth

managers are professional money manager who works to enhance the income,

growth and tax favored treatment of long-term investors. Wealth management is

often referred to as a high-level form of private banking for the especially

affluent. A wealth management company provides many services like portfolio

management and portfolio rebalancing, investment management, trust and estate

17

management, private management and financing solutions, tax advice etc. They

can provide you personal banking and insurance advices. Their purpose is to

ensure that you do not make any wrong choice as far as investment decisions are

concerned.

The study points out that wealth management service provider categorize the

market on the basis of investable of the customers. The Indian market has been

segmented by Wealth management service providers into five categories, namely:

Ultra-high net worth, or Ultra-HNW (in excess of US$30 million), will have a

total population of 10,500 households by 2012.

Super high net worth (between US$10 and $30 million) will have a total

population of 42,000 households by 2012.

High net worth (between US$1 million and $10 million) will have a total

population of 320,000 by 2012.

Super affluent (between US$125,000 and $1 million) will have a total population

of 350,000 households by 2012.

Mass affluent (between US$25,000 and $125,000) will have a total population of

1.8 million households by 2012.

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WEALTH MANAGEMENT INDUSTRY

19

STATE OF WORLD WEALTH

HNWI (high net worth individuals) SECTOR GAINS IN 2007

10.1 million individuals worldwide held at least US$1 million in financial

assets, an increase of 6.0% over 2006.

Global HNWI wealth totaled US $ 40.7 trillion, a 9.4% gain from 2006,

with average HNWI wealth surpassing US $ 4 million for the first time

The Ultra-HNWI “wealth band” experienced the strongest growth, gaining

8.8% in population size and 14.5% in accumulated wealth

Emerging markets, especially those in the Middle East and Latin America,

scored the greatest regional HNWI population gains

HNWI financial wealth is projected to reach US $ 59.1 trillion by 2012,

advancing at an annual growth rate of 7.7%

For the global economy, 2007 was a transitional year that began and ended

with sharply opposing macroeconomic environments: Momentum that was

carried over from 2006 sustained unabated growth in the early months. By

the latter end, heightened uncertainty and instability marked the deep

change that was underway.

Overall, market performances were solid in 2007. However, closer

analysis of the key drivers and inhibitors of wealth reveals how the many

fundamental changes that took place over the course of the year led to

deteriorating economic conditions in key markets, including the United

States and several mature European nations. Evenly split, the two halves

of the year tell very different stories: steady global growth in the first six

months, followed by sharply diverging paths between mature and

emerging economies in the second half.

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In early 2007, strong economic gains spurred impressive performances in

equity markets and various investment products, reflecting high levels of

investor confidence. Robust growth in emerging markets, driven by high

commodity prices and rising domestic demands, supported solid growth in

mature economies. Stock markets worldwide performed well into the

summer, led by Latin America and Emerging Asia, which saw roughly

25% and 17% growth, respectively, through July.1 A variety of

investment products performed well during the first half of the year; for

instance, total announced private equity deals worldwide were on pace to

shatter their 2006 record.

The second half of 2007, however, revealed a distinct and growing

divergence between mature and emerging economies—with the advantage

going to emerging nations. Whether hobbled by the downturn taking hold

in the United States or challenged by the slowed growth of a major trading

partner, with few exceptions, the

performances of mature economies weakened significantly in the closing

months of the year. In the European Union, for example, growth was

dampened by a confluence of key market forces: slowing domestic

consumer spending, a result of high levels of personal debt amid

tightening credit conditions; a drop-off in exports brought on

by easing demand in the United States, which received nearly 24% of E.U.

goods and services shipped abroad; and an appreciating euro. Growth

slowed among other global powers as well: In Japan—the world’s second-

largest economy—a decline in housing investment and low levels of

consumer confidence took their toll.4 In essence,

a long period of “easy money” in mature economies was routed by

financial and credit market turmoil.

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By contrast, emerging markets proved resilient and posted robust gains in

the second half of 2007, even as uncertainty grew in mature markets.

Building on their core competency, export-driven growth, many emerging

economies converted sharp increases in energy and commodity prices into

sources of high profitability and significant growth. Both GDP and market

capitalization gains, particularly in

Brazil, Russia, India and China—the BRIC nations—were strong, capping

another impressive year for HNWI growth and investment opportunity.

Given these nations’ more stable consumption habits, rising domestic

demand and healthy business environments, the slowing United States

economy, which accounts for 21% of global

GDP, did not appear to significantly compromise their economic growth

in 2007

The State of Asia-Pacific’s Wealth

The number of HNWIs grew by8.7% in 2007,to 2.8 million, exceeding

global HNWI population gains of 6.0%.

Asia pacific HNWI wealth expanded by 12.5% in 2007,to US $ 9.5 trillion

,exceeding both the 10.5% rate posted a year earlier and total world wealth

growth in 2007 of 9.4%.

Asia pacific is home to 27.8% of the world’s HNWI population and

23.3%of global HNWI wealth.

India ,China , South Korea experienced the highest HNWI population

growth with in the region ,gaining 22.7%,20.3% and 18.8% respectively.

Together Japan and China accounted for 68.8% of the pacific HNWI

population and 62.4% of its wealth.

22

Over the past five years, HNWI wealth has soared in the Asia- Pacific

region. In 2007, five of the world’s 10 fastest-growing HNWI populations

were concentrated in Asia-Pacific markets, with India and China posting

the largest gains. However, the slow growth of some of the larger Asia-

Pacific HNWI populations, such as the 2.2% rate posted in Japan, kept

overall regional growth levels at or near global averages. As a result, Asia-

Pacific HNWI gains exceeded global averages but fell short of advances

made in the very highest growth regions, namely the Middle East and

Latin America.

Real GDP and market capitalization continued to be key drivers of Asia-

Pacific wealth generation, despite mixed results relative to 2006

performances. Two-thirds of the markets reported on2 boasted real GDP

growth above the 5.1% global average,3 while market capitalization in all

of the Asia-Pacific economies analyzed, with the exception of Japan’s,

experienced strong, positive growth throughout 2007.

The global “story of two halves,” as told in the 2008 World Wealth

Report, accurately reflects 2007 trends evident in Asia-Pacific as well:

Steady growth across the region defined the first half of 2007 whereas

heightened volatility and a sharp divergence between mature and

emerging economies characterized the second. Unlike some other

parts of the world, the economic slowdown in the United States did not

dampen overall 2007 Asia-Pacific gains. However, deteriorating global

conditions over the course of the year heightened uncertainty regarding the

global economic outlook and cast a shadow on many of the region’s

primary export markets. Further, while some Asia-Pacific economies were

faced with slowing growth, high—and steadily rising—inflation became

the most pressing challenge for the entire region. This issue grew more

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pronounced in 2008, amid severely weakened Asia-Pacific equity markets,

and drew attention to related policy-action decisions. Nonetheless, in

2007, rapidly rising domestic demand and improving socioeconomic and

political fundamentals within the region, particularly among the emerging

markets, buoyed growth in most Asia-Pacific economies.

The net result of strong growth in emerging markets and weak

performances in mature markets was above-global-average gains for

HNWIs in the Asia-Pacific region. In 2007, the number of HNWIs in the

region grew by 8.7%, to 2.8 million. With those gains, Asia- Pacific ended

the year hosting 27.8% of the world’s 10.1 million wealthiest individuals,

with the nine key markets studied accounting

for 93.1% of the region’s HNWIs. During the same period, HNWI wealth

in Asia-Pacific expanded by 12.5%, to US$9.5 trillion, significantly

exceeding gains of 10.5% in 2006. By year-end 2007, Asia-Pacific HNWI

financial holdings accounted for 23.3% of the US $ 40.7 trillion held by

HNWIs globally.

In 2007, the Ultra-HNWI4 population in Asia-Pacific grew by 16.4%, to

20,400 individuals—nearly double the 8.8% growth of the global Ultra-

HNWI population and significantly higher than the 12.2% growth

witnessed in the region a year earlier. Notably, Asia- Pacific’s Ultra-

HNWI segment accounted for only 0.7% of its entire

HNWI population, less than in any other region. This trend has been

consistent over the past few years and reflects how the Asia- Pacific

HNWI population is weighted more heavily in the lower wealth bands

than HNWI populations in other regions

24

25

EVOLUTION OF WEALTH

MANAGEMENT

26

EVOLUTION OF WEALTH MANAGEMENT

The term 'Wealth Management' traces its origin in the 90s in the United States

through Insurance Companies, banks, and Broker Dealers. The evolution of

wealth management traces to high-net worth monetary consulting for people who

happen to be topmost clients of any of the firms, to high level private banking

which makes provisions for different kinds of investment, bank products, and

insurance.

Wealth Management is used to serve the affluent community, along with

Chartered Monetary analysts, certified managers of wealth, Public Accountants,

government-licensed lawyers, insurance professionals, etc.

Wealth management in India was historically conducted in a relatively

disorganized way – with accountants, lawyers and other trusted adviser providing

the advice, rather than bankers.

Only in recent years have formal wealth management and private banking

offerings started to take a larger share of the market. There are two key reasons

for this: first, the amount of wealth created in India, initially post-1991 as a result

of various deregulation, and especially in 1999 to 2000 on the back of the IT

boom; and secondly, the changing nature of wealthy individuals – rather than

there only being wealth in the form of old money, a lot of new wealth was

created.

27

The more formal wealth management landscape began with banks selling mutual

funds and insurance products to their customers, starting around 2000. Since then

it has developed into an industry where a large variety of products is distributed

by third-party banks. This has been the mainstay of the industry, generating the

majority of the revenue.

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INDIAN WEALTH MANAGEMENT LANDSCAPE

29

The Indian Wealth Management Landscape

India is one of the most exciting markets in the world with respect to wealth

management. ‘The success of entities in Wealth Management will depend

primarily on the client segment they choose to cater to and how focused they are

in this area’.

According to published reports the assets of dollar millionaires was around 477

billion spread across 1,26,700 households and is expected to grow to a trillion by

2012. Typically a private wealth client is defined as one with a minimum of 1

million USD of investible surplus excluding primary residence and consumables.

The market for wealth management in India is significant and the growth rate is

the second highest in the world. The success of entities in Wealth Management

will depend primarily on the client segment they choose to cater to and how

focused they are in this area. For entities catering to the 'mass wealth' client

segment the presence of a large branch network as also 'feet on street' is certainly

a distinct advantage since 'reach' is critical. However, for entities where, the

business model clearly targets only ultra HNIs and the offer is holistic end to end

investment management, and the structuring of vehicles for routing these

investments, a distribution led model with large man power is not at all relevant

According to a recent report, the wealth management market in India will be

having a target size of 42 million households by 2012, as against only about 13

million in 2007.

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New Delhi: Indians will be having one trillion dollars worth investable wealth by

year 2012, indicating the country's robust economic growth that drives a four-fold

surge from just about 250 billion dollars in 2007.

In a report by international consultancy firm Celent, the number of potential

clients for wealth managers and size of manageable wealth are both expected to

grow four-times through 2012. India is all set to become a huge hunting ground

for wealth managers across the globe.

The report titled 'Overview of the Wealth Management Market in India' noted that

the wealth management market will be having a target size of 42 million

households by 2012, as against only about 13 million in 2007.

The wealth management sector in India is poised to witness tremendous growth.

The country's economic growth is making larger sections of its population

prospective customers of wealth management providers.

The growth will be seen across all income-levels. However, the lower-income

segment is the one that would record maximum growth in terms of volume, while

high-net worth households would be contributing the most in terms of wealth size.

Celent has defined the lowest end of the target market for wealth managers as a

household with a minimum income of $5,000 (Rs2 lakh), while the ones with at

least $30 million (Rs120 crore) of investable income has been added in the

category of ultra-high net worth.

The wealth management revenues are expected to contribute nearly 32-37% of the

total revenue of full-service financial institutions by 2012.

31

The mass-market (having Rs. 2-10 lakh of disposable income) would be the key

driver, accounting for nearly 40% of the overall growth in number of households.

Except the niche players, majority of wealth managers would target the mass

market owing to its youth-dominance and this market would be seeing more

service providers entering the fray with an 'own them young' policy.

The ultra-high net worth households [having wealth in excess of $30 million]

would have a total population of around 10,500 households by 2012, while the

super high net worth households ($10-30 million) would grow to 42,000.

The count of high net worth households ($1-10 million) will grow to 3, 20,000,

while there would be 3, 50,000 households in the super-affluent category (Rs. 50-

400 lakh).

Also, 10 lakh new households would be joining mass-affluent category (Rs10-50

lakh), taking their total population to 18 lakh by 2012. However, a vast majority

of 39 million households, out of the total 42 million target market population in

2012, would belong to the mass market (Rs 2-10 lakh).

Private Banks, full service brokerages & independent financial advisors would

serve the high net worth segment, while ultra high net worth households would be

served by private banks & family offices.

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CONCEPT OF ASSET

CLASSES

33

CONCEPT OF ASSET CLASSES

Asset Mix Asset mix is the allocation of a portfolio between asset classes, it

balances return and risk. Returns are a combination of the income from an

investment and the price appreciation over the period. Risk is usually provided by

the “standard deviation” of returns, how much the return changes about the long-

term average.

List of Different Asset Class

1. Fixed deposit

2. Mutual Fund

3. Equity

4 Commodities

5. Art Fund

6. Real-Estate Fund

7. Insurance product

8. Structured product

9. Gold

10.Currency

11.Oil

34

FIXED DEPOSITS

FDs, are the most popular today. With FDs you deposit a lump sum of money for

a fixed period ranging from a few weeks to a few years and earn a pre-determined

rate of interest. FDs are offered by both banks and companies though putting your

money with the latter is generally considered riskier.

Merits and Demerits

The main advantage is that FDs from reputed banks are a very safe investment

because such banks are carefully regulated by the Reserve Bank of India, RBI, the

banking regulator in India.

Company FDs isn’t as safe as bank FDs because if the company goes bankrupt

you may lose your money. Make sure you check the credit rating of a company

before investing in its FDs. You should be especially wary of companies which

offer interest rates significantly higher than the average to attract your money.

The other advantage of FDs is that you have the option of receiving regular

income through the interest payments that are made every month or quarter. This

option is especially useful for retirees. On the flip side, a fixed deposit won’t give

you the same returns that you may get in the stock markets. For instance a stock-

portfolio may rise 20-30 per cent in a good year whereas a fixed deposit typically

earns only 7-10 per cent.

35

A fixed deposit also doesn’t offer protection against inflation. If inflation rises

steeply during the maturity of the FD your inflation adjusted return will fall.

The rate of interest on FDs varies according to the maturity with longer deposits

generally earning a higher interest rate. Interest paid on a fixed deposit is paid

either monthly or quarterly according to the investor’s choice.

Interest rates on FDs

The rate of interest on FDs varies according to the maturity with longer deposits

generally earning a higher interest rate.

Effective Return

Before one invests in FDs one need to understand the concept of effective return

which is higher than the rate of interest on the FD.  Effective return is relevant if

you choose to reinvest your interest every year which means that you will be

earning compound interest.

MUTUAL FUND

A mutual fund is a professionally managed firm of collective investments that

collects money from many investors and puts it in stocks, bonds, short-term

money market instruments, and/or other securities. The fund manager, also known

as portfolio manager, invests and trades the fund’s underlying securities, realizing

capital gains or losses and passing any proceeds to the individual investors.

Currently, the worldwide value of all mutual funds totals more than $26 trillion.

36

Since 1940, there have been three basic types of investment companies in the

United States: open-end funds, also known in the US as mutual funds; unit

investment trusts (UITs); and closed-end funds. Similar funds also operate in

Canada. However, in the rest of the world, mutual fund is used as a generic term

for various types of collective investment vehicles, such as unit trusts, open-ended

investment companies (OEICs), unitized insurance funds, and undertakings for

collective investments in transferable securities (UCITS).

Types of mutual funds

1. Open-end fund

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

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

fund issues new shares to investors and buys back shares from investors wishing

to leave the fund. Mutual funds must be structured as corporations or trusts, such

as business trusts, and any corporation or trust as an investment company if it

issues securities and primarily invest in non-government securities. An investment

company will be classified as an open-end investment company if they do not

issue undivided interests in specified securities (the defining characteristic of unit

investment trusts or UITs) and if they issue redeemable securities. Registered

investment companies that are not UITs or open-end investment companies are

closed-end funds. Neither UITs nor closed-end funds are mutual funds (as that

term is used in the US).

37

Exchange-traded funds

The exchange-traded fund or ETF, is often structured as an open-end investment

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

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

end funds, but at prices generally approximating the ETF’s net asset value. Most

ETFs are index funds and track stock market indexes. Shares are issued or

redeemed by institutional investors in large blocks (typically of 50,000). Most

investors purchase and sell shares through brokers in market transactions.

Because the institutional investors normally purchase and redeem in in kind

transactions, ETFs are more efficient than traditional mutual funds (which are

continuously issuing and redeeming securities and, to effect such transactions,

continually buying and selling securities and maintaining liquidity positions)

Equity funds

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

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

mutual funds in the United States. Often equity funds focus investments on

particular strategies and certain types of issuers.

Bond funds

A bond fund is a collective investment scheme that invests in bonds and other

debt securities.Bond funds typically pay periodic dividends that include interest

payments on the fund's underlying securities plus periodic realized capital

38

appreciation. Types of bond funds include term funds, which have a fixed set of

time (short-, medium-, or long-term) before they mature. Municipal bond funds

generally have returns, but have tax advantages and risk. High-yield bond funds

invest in corporate bonds, including high-yield or junk bonds. With the potential

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

Money market funds

Money market funds entail the least risk, as well as rates of return. Unlike

certificates of deposit (CDs), money market shares are liquid and redeemable at

any time. The interest rate quoted by money market funds is known as the 7 Day

SEC Yield.

Funds of funds

These are mutual funds which invest in other underlying mutual funds (i.e., they

are funds comprised of other funds). The funds at the underlying level are

typically funds which an investor can invest in individually. A fund of funds will

typically charge a management fee which is smaller than that of a normal fund

because it is considered a fee charged for asset allocation services. The fees

charged at the underlying fund level do not pass through the statement of

operations, but are usually disclosed in the fund’s annual report, prospectus, or

statement of additional information. The fund should be evaluated on the

combination of the fund-level expenses and underlying fund expenses, as these

both reduce the return to the investor.

39

Most FoFs invest in affiliated funds (i.e., mutual funds managed by the same

advisor), although some invest in funds managed by other (unaffiliated) advisors.

The cost associated with investing in an unaffiliated underlying fund is most often

higher than investing in an affiliated underlying because of the investment

management research involved in investing in fund advised by a different advisor.

Recently, FoFs have been classified into those that are actively managed (in

which the investment advisor reallocates frequently among the underlying funds

in order to adjust to changing market conditions) and those that are passively

managed (the investment advisor allocates assets on the basis of on an allocation

model which is rebalanced on a regular basis).

Hedge funds

Hedge funds in the United States are pooled investment funds with loose SEC

regulation and should not be confused with mutual funds. Some hedge fund

managers are required to register with SEC as investment advisers under the

Investment Advisers Act. The Act does not require an adviser to follow or avoid

any particular investment strategies, nor does it require or prohibit specific

investments. Hedge funds typically charge a management fee of 1% or more, plus

a “performance fee” of 20% of the hedge fund’s profits. There may be a “lock-

up” period, during which an investor cannot cash in shares. A variation of the

hedge strategy is the 130-30 fund for individual investors.

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EQUITY

It refers to the buying and holding of shares of stock on a stock market by

individuals and funds in anticipation of income from dividends and capital gain as

the value of the stock rises. It also sometimes refers to the acquisition of equity

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

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

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

risk than investment in listed going-concern situations.

COMMODITIES MARKET

Commodity markets are markets where raw or primary products are exchanged.

These raw commodities are traded on regulated commodities exchanges, in which

they are bought and sold in standardized contracts. It covers physical product

(food, metals, electricity) markets but not the ways that services, including those

of governments, nor investment, nor debt, can be seen as a commodity. Articles

on reinsurance markets, stock markets, bond markets and currency markets cover

those concerns separately and in more depth. It gives relationship between simple

commodity money and the more complex instruments offered in the commodity

markets.

ART FUND

Wealth management now includes art, real estate investments.

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With prices of paintings rising 10 times in the last two years, three new financial

entities have launched ‘art advisory’ services as part of Wealth management

services.Citibank has been providing art advisory services like art insurance, art

storage and using art as a tradable collateral for some time.

The works of M.F. Hussain, Jatin Das or Anjolie Ela Menon are sought after by

art lovers not only for their aesthethic value but also as an asset. Art galleries are

involved in art valuations, i.e. mapping the pricing history of an artist or research

on art.

Art is now being treated as an investment and high net worth individuals are

prompting banks to look at alternative asset classes, such as art or real estate, for

investment as a part of Wealth management products.

REAL ESTATE FUND

India Real Estate Fund is a significant component of the Indian realty market

flooded with Indian and foreign financial institutions. The growing increase in the

industrial, commercial and residential projects have boosted the real estate market

in India. This has thrown open unlimited scope for the incoming of the India Real

Estate Funds. The profits have encouraged financial assistance from not only

domestic funds but also lured many foreign investors to participate in the India

Real Estate Fund.

The cooperating assistance from the government has further encouraged liquidity

flow into the India real estate market sector. The foreign contributions in the India

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Real Estate Fund have been witnessing a steady rise of 40%-45% per year. The

domestic financial institutions have also build up their investments like their

foreign counterparts. This combined participations from both along with

contributions of the corporate houses has accelerated the growth of India Real

Estate Fund.

INSURANCE

The modern concept of insurance practices in India started during the British rule

in 1818 when Oriental Life Insurance Company was established in Calcutta. Life

Insurance Corporation of India was created by combining almost 245 private life

insurance companies; 107 private non-life companies combined in 1973 to form

the General Insurance Corporation. But since the very purpose of nationalizing

the insurance sector got sidelined due to the monopolistic power it enjoyed,

coupled with the bureaucratic mindset of LIC and GIC, insurance again was

opened to private players in 1999. The order of the day will be to refocus on

micro insurance in India to capture the huge potential of rural customers Unit

Linked Insurance Plan (ULIP) provides for life insurance where the policy value

at any time varies according to the value of the underlying assets at the time.

ULIP is life insurance solution that provides for the benefits of protection and

flexibility in investment. The investment is denoted as units and is represented by

the value that it has attained called as Net Asset Value (NAV).

The popularity of ULIP is because of the transparency and the flexibility which it

offers. In today’s times, ULIP provides solutions for insurance planning, financial

43

needs, financial planning for children’s marriage planning also can be done with

this.

STRUCTURED PRODUCT

A structured product is generally a pre-packaged investment strategy which is

based on derivatives, such as a single security, a basket of securities, options,

indices, commodities, debt issuances and/or foreign currencies, and to a lesser

extent, swaps. The variety of products just described is demonstrative of the fact

that there is no single, uniform definition of a structured product. A feature of

some structured products is a “principal guarantee” function which offers

protection of principal if held to maturity. Theoretically an investor can just do

this themselves, but the costs and transaction volume requirements of many

options and swaps are beyond many individual investors.

As such, structured products were created to meet specific needs that cannot be

met from the standardized financial instruments available in the markets.

Structured products can be used as an alternative to a direct investment, as part of

the asset allocation process to reduce risk exposure of a portfolio, or to utilize the

current market trend.

GOLD

Today, like all investments and commodities, the price of gold is ultimately

driven by supply and demand, including hoarding and disposal. Unlike most other

commodities, the hoarding and disposal plays a much bigger role in affecting the

price, because most of the gold ever mined still exists and is potentially able to

44

come on to the market for the right price. Given the huge quantity of hoarded

gold, compared to the annual production, the price of gold is mainly affected by

changes in sentiment, rather than changes in annual production.

Central banks and the International Monetary Fund play an important role in the

gold price. At the end of 2004 central banks and official organizations held 19

percent of all above-ground gold as official gold reserves. Although central banks

do not generally announce gold purchases in advance, some, such as Russia, have

expressed interest in growing their gold reserves again as of late 2005. In early

2006, China, which only holds 1.3% of its reserves in gold, announced that it was

looking for ways to improve the returns on its official reserves. Many bulls hope

that this signals that China might reposition more of its holdings into gold in line

with other Central Banks.

CURRENCY

The global foreign-exchange (FX) market can be considered by far the largest

marketplace in the world, not only geographically but also with reference to

trading volume. The daily turnover is growing constantly and has long ago

surpassed the $1 trillion mark: forty times the size of world trade.

An important difference between currencies and other markets is that currency

prices allow us to analyse also their reciprocal values. A falling dollar/yen is

synonymous with a rising yen because the dollar can be expressed in yen and,

vice versa, the yen in dollars. By comparison, the dollar is never measured in

units, as the Dow Jones for example.

For the same reason the expression ‘short sale’ – so much maligned in equity

trading – does not exist in currency trading because the short sale of a currency is

equivalent to a purchase of the other currency.

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For similar reasons, the currency market cannot suffer a ‘crash’ (such as the stock

market crashes of 1929 or 1987) through which the wealth of all market

participants dwindles. In the currency market eachloss is matched by an

equivalent gain of the counter-party.

Another unique feature of the currency market is that it is active without

interruption ‘round-the-clock’.

46

WEALTH

MANAGEMENT BY

BANKS

47

WEALTH MANAGEMENT BY BANKS

Wealth management are provided by banks, financial institutions, large corporate

entities, independent financial advisers or multi-licensed portfolio managers

whose services are designed to focus on high-net worth customers. Large banks

and large brokerage houses create segmentation marketing-strategies to sell both

proprietary and nonproprietary products and services to investors designated as

potential high net-worth customers. Independent wealth managers use their

experience in estate planning, risk management, and their affiliations with tax and

legal specialists, to manage the diverse holdings of high net worth clients. Banks

and brokerage firms use advisory talent pools to aggregate these same services.

Key Elements of Wealth Management Services

Wealth management services involve fiduciary responsibilities in

providing professional investment advice and investment management services to

a client. Depending on the mandate of the services given to the Wealth Manager,

wealth management services could be packaged at various levels:

a) Advisory

b) Investment Processing (transaction oriented)

c) Custody, Safekeeping and Asset Servicing

d) End-to-end Investment Lifecycle Management

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Wealth management services comprises of following key function areas of:

Financial Planning

Portfolio Strategy Definition/ Asset Allocation / Strategy Implementation

Portfolio Management –Administration, Performance Evaluation and Analytics

Strategy Review and Modification.

Wealth management services offered by banks are:

Investment planning: assists in investing money into various investment

markets, keeping in mind investment goals of individuals.

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

insurance options and captive insurance companies.

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

old age.

Asset protection: begins with financial advisor trying to understand preferred

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

creditors and lawsuits, to maintaining this lifestyle.

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

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

Estate planning: helps in protecting estate from creditors, lawsuits and taxes.

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

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

running your own business.

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

returns.

Wealth transfer: helps in passing on your wealth to your dependents.

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WEALTH MANGEMENT STRATEGY-THE SUM OF MANY

PARTS

51

ELEMENTS OF WEALTH

MANAGEMENT SERVICES

52

CORE ELEMENTS OF WEALTH MANAGEMENT SERVICES

Wealth management services involve fiduciary responsibilities in providing

professional investment advice and investment management services to

Institutions, funds (Pension/mutual/Hedge), corporations, trusts as well as

HNWIs. Some of analogous terms used for wealth management could be

considered as Portfolio Management, Investment Management and many times

Fund Management or Asset Management.

Key function areas are:

a) Financial Planning

b) Portfolio Strategy Definition / Asset Allocation

c) Strategy Implementation

d) Portfolio Management

e) Strategy Review and Alignment

a) Financial Planning

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Client Profiling

Client profiling takes in account multitude of behavioral, demographic and

investment characteristics of a client that would determine each client’s wealth

management requirements. Some of key characteristics to be evaluated for

defining client’s investment objective are:

Current and future Income level

Family and life events

Risk appetite / tolerance

Taxability status

Investment horizon

Asset Preference /restriction

Cash flow expectations

Religious belief (non investment in sin sector like - alcohol, tobacco, gambling

firms etc)

Behavioral History (Pattern of past investment decisions)

Level of client’s engagement in investment management (active / passive)

Present investment holding and asset mix

Investment Objective

Based on the client profile, investment expectations and financial goals of the

client could be clearly outlined. Defining investment objectives helps to identify

investment options to be considered for evaluation. Investment objective for most

of the investors could be generally considered amongst the following:

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Current Income

Growth (Capital Appreciation)

Tax Efficiency (Tax Harvesting)

Capital Preservation (often preferred by elderly people to make sure they don’t

outlive their money.)

b)Portfolio Strategy Definition / Asset Allocation

Defining Portfolio Strategies and Portfolio Modeling

After establishing investment objectives, a broad framework for harnessing

possible investment opportunities is formulated. This framework would factor for

risk-return trade-off of considered options, investment horizon and provide a clear

blueprint for investment direction.

Investment strategy helps in forming broad level envisioning of asset class

(Securities, Forex, Commodity, Real State, Reference and Indices, Art/Antique

and Lifestyle Assets (Car, Boat, Aircraft)), market, geography, sector and

industry. Each of these asset classes is to be comprehensively evaluated for

inclusion in portfolio model, in view of defined investment objectives.

While defining the strategy, consideration of client preference or avoidance for

specific asset class, risk tolerance, religious beliefs is the key element, which

would come into picture. Thus, for a client with a belief of avoidance of

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investment in sin industries (alcohol, tobacco, gambling etc.) is to be duly taken

care of.

Determination of Portfolio Constituents and Allocation of Assets

Guided with the investment strategy, constituents in portfolio model are

determined, which would directly and efficiently contribute towards client’s

investment objectives. Thus, a broad level investment guidance of – “investment

in fixed income in emerging market” would further determine classification

within Fixed Income such as Govt. or corporate bonds, fixed or variable rate

bonds, Long or short maturity bonds, Deep discounted or Par bonds, Asset backed

or other

debt variants. Return profile, risk sensitivity and co-relation of constituents within

portfolio model would help to determine the size (weightage) of each individual

constituent in the portfolio.

c) Strategy Implementation

Having decided the portfolio constituents and its composition, transactions to

acquire specific instruments and identified asset class is initiated. As acquisition

cost would be having bearing on overall performance of the portfolio, many times

process of asset acquisition may be spread over a period of time to take care of

market movement and acquire the asset at favorable price range.

d) Portfolio Management

Portfolio Administration

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Portfolio Administration involves handling of investment processes and asset

servicing. This would also require tax management, portfolio accounting, fee

administration, client reporting, document management and general

administration relating with portfolio and client. This function would involve

back office administration and custodial services to manage

transaction processes (trading and settlement) - interfacing with

brokers/dealers/agents, Fund managers, Custodians, Cash Agent and many other

market intermediaries.

Performance Evaluation and Analytics

Performance evaluation of the portfolio is an ongoing process. Portfolio return is

continuously monitored and analyzed with respect to defined portfolio objectives.

Analysis dimension could be varied – simple and complex. These may include -

absolute return, relative return (in comparison to chosen benchmark), trend,

pattern, cost impact, tax impact, concentration, lost opportunity and other form of

sensitivity and what-if analysis. Any deviation of portfolio performance observed

during performance evaluation would lead to strategy review and any possible

alignment of portfolio strategy.

e)Strategy Review and Alignment

Recalibration of Portfolio Strategy

Based on performance evaluation and future outlook of the investment, portfolio

strategy is evaluated on periodic basis. To keep it aligned with the defined

investment objectives, portfolio strategy is suitably re-calibrated from time to

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time. Many times, review of portfolio strategy would be necessitated due to

change in client profile or expectations.

Rebalancing, Reallocation and Divestment of Assets

Any re-calibration of strategy and consequent change in portfolio model would

require rebalancing of the assets in portfolio. This would be achieved through

rebalancing the asset(divesting over-allocated part and acquiring under allocated),

relocation (from one sector the other or from one instrument to other instrument

in the same class) or complete divestment.

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SERVICES PROVIDED BY WEALTH MANAGEMENT

INSTITUTIONS

(1) Custodian Services

(A) Securities Safekeeping

(B) Income collection from Securities

(C) Settlement of Securities trades as directed

(D) Payment of fund when directed

(E) Timely settlement delivery

(2)  Trust Services

(A) Charitable Trust

(B) Revocable Trust

(C) Irrevocable life Insurance Trust

(D) Special Need Trust

(E) Institutional Trust

(3)  Retirement Plan Services

(A) IRA’s Custodian Or Trustee

(B) Defined Benefit Plans

(C) Defined Contribution Plans

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WEALTH MANAGEMENT VALUE CHAIN

60

INDIAN OVERSEAS BANK

Indian Overseas Bank (IOB; established 1937) is a major bank based in Chennai

(Madras), with 2018 domestic branches and six branches overseas. Indian

Overseas Bank has an ISO certified in-house Information Technology department,

which has developed the software that 2018 branches use to provide online

banking to customers; the bank has achieved 100% networking status as well as

100% CBS status of branches with a total number of 2018 CBS branches and

Extension Counters. IOB also has a network of about 771 ATMs all over India

and IOB's International VISA Debit Card is accepted at all ATMs belonging to

the Cash Tree and NFS networks. IOB offers internet Banking (E-See Banking)

and is one of the banks that the Govt. of India has approved for online payment of

taxes. The bank's business more than doubled in the last four years. According to

"A profile of banks (2009-10)" published by RBI, the bank's deposits increased

from Rs.50529 crore as on 31.03.06 to Rs.110795 crore as on 31.03.10 and

advance from Rs.34756 crore to Rs.79004 crore.

Indian Overseas Bank (IOB or the Bank) provides various banking

services, including saving bank, current accounts, credit facilities and

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other services. The Bank's services also include personal banking services,

non-residential Indian (NRI) accounts, corporate banking services, foreign

exchange reserves (FOREX) collections services, agri business

consultancy and e-banking services. During the fiscal year ended March

31, 2010 (fiscal 2010), IOB had 13 establishments abroad, consisting of

six branches (two branches in Hong Kong and one each in Singapore,

South Korea, Sri Lanka and Bangkok), four representative offices, two

remittance centers and one extension counter. During fiscal 2009, the

Bank launched an rural development project aiming at total village

development called IOB-Sampoorna in Kuthambakkam and Padur villages

in Tiruvallur District, Kameshwaram village in Nagapattinam District,

Dhaliyur village in Coimbotore District and Innambur village in

Thanjavur, Tamil Nadu.

CONSTITUTION:

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The Constitution of the Board of the Bank is governed by “The Nationalized

Banks (Management and Miscellaneous Provisions) Scheme, 1970, formulated by

the Central Government, after consultation with the Reserve Bank of India, in

exercise of the powers conferred by section 9 of “The Banking Companies

(Acquisition and Transfer of Undertakings) Ac t 1970”.

COMPOSITION:

The Composition of the Board of Directors of a Bank is governed by “The

Nationalised Banks (Management and Miscellaneous Provisions) Scheme 1970”

read with “The Banking Companies (Acquisition and Transfer of Undertakings)

and Financial Institutions Laws (Amendment) Act 2006” and amendment to

the vide Extraordinary Gazette Notification dated 19.02.2007 of the Central

Government.

CONTRIBUTION:

In terms of The Banking Companies (Acquisition and Transfer of Undertakings

Act 1970, the General Superintendence, Direction and Management of the affairs

and business of the Bank vests in the Board of Directors which is entitled to

exercise all such powers and do all such acts and things as the Bank is authorized

to exercise and do.Presently, there are 12 Directors on the Board of the Bank.

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Wealth Management Services at Indian Overseas Bank

1. PRODUCTS

2. ASSET CLASSES USED

3. ASSET SIZE

4. INVESTMENT PHILOSPHY

PRODUCTS

Personal Banking

Saving bank

Current account

Term deposit

Retail loans

Home loans and mortgages

Depository services

IOB Fine GoldInternational

VISA Cards

Any Branch BankingMulti city cheque facility

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Insurance and mutual fund

Corporate Banking

Micro Small and Medium Enterprises (MSME)

IT & ITes BPOCash management services -IOB STARS

Rural

IOB's commitment for social causes

Agricultural short time loans

Financial inclusion

Agri business consultancy

 

NRI Accounts

Non-Resident Ordinary (NRO)

Resident Foreign Currency Account (RFC)

Foreign Currency Non-Resident Accounts (Banks)

NRI home loan scheme

NRI remittances

Remittances procedures

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Tracking cell

Forward cover

IOB NRI shield

IOB Expo Gold Card

Forex

SWIFT centers

Authorized dealer branches

Forex collection services

Overseas cash

Government Business

E-Payment of direct taxes

E-Payment of indirect taxes

Pension payment scheme

Sales tax collections

Provident Fund Scheme

88 percent savings taxable bond scheme

Senior citizen scheme 2004

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ASSET CLASSES USED NRI Accounts

Depository services

IOB fine gold

Mutual Funds

Insurance

SBI WEALTH MANAGEMENT

State bank of India is the largest banking and financial services company

in India, by almost every parameter - revenues, profits, assets, market

capitalization etc. SBI provides a range of banking products through its

vast network in India and overseas, including products aimed at NRIs. The

State Bank Group, with over 16000 branches, has the largest branch

network in India.

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State Bank of India, the country’s largest lender, offers wealth

management services to its affluent clients

The bank has more than 10 crore customers and Rs. 8,04,116 crore

deposits from more than 12,000 branches across India.

"We plan to introduce wealth management services in a phased manner in

2010-11 to help the high net-worth clients to preserve and grow their

wealth,chairman Om Prakash Bhatt said at the bank’s annual meeting of

shareholders.

1. PRODUCTS

2. ASSET CLASSES USED

3. ASSET SIZE

4. INVESTMENT PHILOSPHY

PRODUCTS

Personal banking

Agricultural/Rural

NRI services

International banking

Corporate Banking

SME

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Domestic Treasury

Government Business

ASSET CLASSES USED

Deposits

Insurance

Mutual Funds

Demat

NRI services

Merchant Banking

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ICICI WEALTH MANAGEMENT

INTRODUCTION

In India ICICI bank is a very well known banks in the field of Wealth

management.  ICICI Bank will float subsidiary for the purpose of WM activities

in Canada & other market even as ICICI has rolled out ICICI Group Global

Private Clients for those with net worth of $ 1 million or more.  ICICI GCPC

launched their business in Dubai very recently in the month of April-08 and

caught 2500 clients.  They are going to add another 1000 high network clients this

year.

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ICICI Bank is using the services of global players like Merrill Lynch, City group,

and UBS for catching the clients for Wealth Management business.  ICICI Bank

and its subsidiaries are engaged in the development of various attractive products

(services) for the clients with net worth of $ 1 million.

The eyes of ICICI Group Global Pvt. Clients on the rising number of dollar

millionaires at present they are 100,000 in number in few year the number will

definitely increase.  India’s No.2 lender banker ICICI expects to sustain the 70%

growth in its private Wealth management business. ICICI has 150,000 customers

with investible surplus of at least Rs. 10 lakhs equity, real estate and private

equity is driving the private banking business in India. India has market of Wealth

management about $ 600 billion.

PRODUCTS

Private Banking

ASSET CLASSES USED

1. Online Trading : They also bring to you the best value for money through

competitively priced brokerage charges for online share trading services from

www.icicidirect.co. With a 3-in-1 account consisting of a trading account, ICICI

Bank savings account and demat account, you can stay connected to the market at

all times. To add to this, They give you waiver on the account opening charges

too.

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With a 3-in-1 account consisting of trading, ICICI Bank account and demat

account, you can enjoy:

Competitive priced brokerage rates

Reduced account opening charges

Online share trading services

2. Mutual Funds :

They offer you advice on the entire universe of mutual funds. So be it equity

funds, where you look for growth and capital appreciation or debt funds for

capital preservation, They can help you select the right mix to suit you. Choose

from an array of more than 15 fund houses with innumerable schemes.

3. Customised Products

Structured Products : Their Structured Product offerings are tailor-made to suit

your investment objective and risk appetite. Their services include Portfolio

Management Services and specially designed products that are Equity or Index-

linked in nature.

Alternate Asset Products : They offer products which complement your existing

investments eg. Art Funds, Private Equity Funding, Realty Funds. So, if you’re

looking beyond the stock market, you’ll find us there too

4. Life and General Insurance

5. IPO

6. ICICI Bank Pure Gold

7. ICICI Bank Bonds

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ASSET SIZE Rs.1230 Cr.

INVESTMENT PHILOSPHY

Our approach emphasizes a globally diversified investment strategy designed to

provide above average performance, at below average risk.

AXIS BANK & WEALTH MANAGEMENT

One of India’s leading private sector banker Axis bank also combined with

Banque Privee Edmond de Rothschild Europe based Wealth management

expertise institution & is going to make new standard for the NRI’s Wealth

management.

The LCF Rothschild group has based its reputation in the area of Wealth

management on its big banking experience.  Actually the institution is engaged in

the task of providing financial advise to the Europe’s leading families,

Government and various corporations for the last ‘7’ generations.

The Axis Bank 5th largest bank by market capitalization in India provides payroll

services to over 12000 corporates across 2.8 million salary accounts.  The market

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capitalization of Axis Bank was 235 million in the last year 2007 is engaged in

the business of Wealth management, with its international presence in Dubai,

Singapore Hong Kong, Shanghai and so on.

PRODUCTS

Private banking

ASSET CLASSES USED

Deposits

Insurance

Mutual Funds

Demat

Online trading

Bonds

NRI services

Depository services

Advisory Services

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ASSET SIZE Rs.181.20 Cr.

INVESTMENT PHILOSPHY

Axis Bank Wealth Management provides discretionary wealth management

service, in which wealth managers give recommendations to customers and invest

according to customer discretion.

HSBC WEALTH MANGEMENT

INTRODUCTION

HSBC Holdings plc serves over 128 million customers worldwide through around

10,000 international offices in 83 countries and territories in Europe, the Asia-

Pacific region, the Americas, the Middle East and Africa. With global assets of

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US$2,354 billion at 31 December 2007, HSBC is one of the world’s largest

banking, investment and financial services organizations.

The Hongkong and Shanghai Banking Corporation Limited in India offers a full

range of banking, investment and financial services to over 2.8 million customers

through its presence across 26 cities

Launched in India in November 2002, HSBC Investments manages assets of over

INR 10,684 crores, spread across 21 schemes and plans under the HSBC Mutual

Fund umbrella, as of end August 2006. HSBC Investments has also soft-launched

HSBC Alpha Account, the Portfolio Management services (PMS) Business to

manage wealth for High Net worth Individuals.

PRODUCTS

Private Banking

HSBC Premier

HSBC Advance

ASSET SIZE US $ 297 billion

ASSET CLASSES USED

Traditional investments :

Direct Equity Advisory : Customized advice on direct equity portfolios based on

your risk profile and specific requirements. The proposition, backed by

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comprehensive in-house research, entails building portfolios with fresh funds or

restructuring legacy portfolios to provide better risk adjusted returns.

Mutual Funds : Our open architecture philosophy and ‘Best of Breed’ selection

of debt and equity mutual funds allows you to buy the top performing mutual

funds available in the market.

Insurance

NRI services

Non - traditional Investments:

Structured Products : Combinations of derivatives and financial instruments

create structures that have significant risk/return features that may not be

otherwise available in the marketplace. Structured products are designed to

provide investors with highly targeted investments tied to their specific risk

profiles, return requirements and market expectations.

Real Estate Venture Funds : To provide you with diversification avenues which

reduce the overall portfolio risk, we seek to bring to you opportunities in real

estate space through venture capital funds available in the market.

INVESTMENT PHILOSPHY

Need-based sales approach with innovation

Our team works to suggest financial solutions based on your risk appetite, profile

and needs. Using customer insight, we have developed a financial planning tool.

It analyses and generates a comprehensive financial plan based on your existing

77

financial position, expected future cash flows, inflation and identified financial

objectives. Our Relationship Managers extensively use this tool to do financial

planning for you taking into account your long-term objectives and / or medium

to short term requirements.

For consistent and uniform delivery of financial planning as per the defined

customer need centric process, there is a dedicated, independent Sales Quality

team to conduct regular quality checks close to the point-of-sale

White-listed funds

The concept of white listed funds lies in the bank’s open architecture model,

which lays emphasis on meritocracy. We carefully look at various products

available in the market and after thorough due diligence select product providers /

schemes which adequately correspond to the needs of our customers. White listed

funds are selected based on various proprietary models that are used for intense

quantitative analysis. These funds help our clients build a long-term portfolio and

in achieving long-term financial goals.

Technology is a potent weapon

For consistency in the manner in which our Relationship Managers identify

customer needs and suggest suitable solutions, we extensively leverage

technology to support our sales process. Our indigenously developed systems like

Wealth Management System, Financial Planning System and Customer

Relationship Management System have been built basis customer insights. We

constantly look at evolving these systems to address sales process requirements

arising out of dynamically changing market conditions and customer needs. We

78

therefore treat technology as a vital ally in executing our philosophy of customer

need centricity in a structured and uniform fashion.

Sharing the knowledge

We frequently organise wealth management events and investment seminars,

where you can interact with investment experts and fund managers. This provides

us a platform to know and understand the market and economic developments and

trends.

CITI BANK WEALTH MANGEMENT

INTRODUCTION

Citi has the largest footprint among wealth managers in the Asia Pacific with

more than 20 offices across the region. Over 2,000 wealth management

professionals, including 600-plus private bankers, financial advisors and

investment specialists, serve 6000 high net worth individuals and families,

including half of all billionaires in Asia ex-Japan. Citi Global Wealth

Management is a top-tier global wealth manager providing some of the best

institutional capabilities available today. Serving both private and institutional

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clients, Citi Global Wealth Management taps the strength and resources of

Citigroup to maximize value and service.

The Global Wealth Management division at Citi comprises three of the most

respected brands in wealth management

PRODUCTS

Citi Private Bank

Citi Smith Barney

Citi Investment

ASSET SIZE Rs.530Cr.

ASSET CLASSES USED

1. Deposits

2. Demat

3. Mutual Funds

4. NRI services

5. Insurance products

6. Structured products

7. Art advisory services :

In today’s market, art presents an attractive investment option. To assist you with

advice on various art investments, or to help you in buying or selling art, Citigold

has tied up with a reputed art house, Osians - Connoisseurs of Art Private

Limited.

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Osians is based in Mumbai and possesses the expertise, archival infrastructure and

professional capacity to systematically cohere various services of knowledge and

provide Citigold clients objective information on purchasing, preserving, valuing

and selling art for seasoned connoisseur and emerging collectors.

Citigold together with Osians will help in strengthening investments in art by

providing you the following services:

Documentation and Archiving

Authentication, Certification and Valuation

Preservation and Restoration

Insurance and Custodial Services.

Publication and Design Services

Art and Cultural Events Management

Corporate Gifting

Museum and Collection Building Services.

Estate Planning

Citi bank Time Deposits

Deposits held in units of Rs. 1000 for easy liquidity.

Flexible tenures from 15 days to 5 years.

Overdraft facility of up to 90% against your deposit to fund another investment

opportunity.

Automatic roll over facility to renew your deposit when it matures.

An exclusive set of structured products like market linked products.

INVESTMENT PHILSPOHY

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Citi bank is investing customers portfolio according to which stage of life they are

Young adult

Married and yet to have kids

Parent with young kids.

Parent with settled child.

And according to expenses they are thinking of :

Buying a house

Going on a holiday

Getting married

Going abroad

RESEARCH

MEDHODOLOGY

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RESEARCH DESIGN

1. Sampling Methodology:

The design of the sample is as follows:

Sample technique: - Convenience sampling.

Sample Size: 1

2. Type of Research:

Research type of my project will be exploratory research.

3. Method of Data Collection:

Primary data collection: Primary data are collected by interaction

(both formal and informal) with the managers of Bank and other officials

who are directly associated with the wealth management industry in India

Secondary data collection: Secondary data are collected from the

various Annual reports of banks, websites, magazines, journals, books.

4. Hypothesis:

Banking sector is successful at wealth management practices.

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DATA ANALYSIS AND

INTERPRETATION

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FINDINGS

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CONCLUSIONS

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RECOMMENDATION

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BIBLOGRAPHY

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