CHAPTER-1

INTRODUCTION

THE INDIAN BANKING SECTOR REVIEWTHE INDIAN BANKING SECTOR REVIEW

Without a sound and effective banking system in India it cannot have a healthy economy. The
bankingsystem of India should not only be hassle free but it should be able to meet new
challenges posed by thetechnology and any other external and internal factors. For the past three
decades India's bankingsystem has several outstanding achievements to its credit. It is no longer
confined to only metropolitansor cosmopolitans in India; in fact, Indian banking system has
reached even to the remote corners of thecountry. This is one of the main reasons of India's
growth process. The government's regular policy forIndian bank since 1969 has paid rich
dividends with the nationalisation of 14 major private banks of India. Not long ago, an account
holder had to wait for hours at the bank counters for getting a draft orfor withdrawing his own
money. Today, he has a choice. Gone are days when the most efficient banktransferred money
from one branch to other in two days. Now it is simple as instant messaging or dial apizza.
Money has become the order of the day.Post independenceIn 1948, the Reserve Bank of India,
India's central banking authority, was nationalized, and it became aninstitution owned by the
Government of India.In 1949, the Banking Regulation Act was enacted which empowered the
Reserve Bank of India (RBI) "toregulate, control, and inspect the banks in India."The Banking
Regulation Act also provided that no new bank or branch of an existing bank may beopened
without a license from the RBI, and no two banks could have common directors.
Liberalisation :
The new policy shook the Banking sector in India completely. Bankers, till this time,were used
to the 4-6-4 method (Borrow at 4%; Lend at 6%; Go home at 4) of functioning. In the early1990s
the then Narsimha Rao government embarked on a policy of liberalisation and gave licenses to
asmall number of private banks, which came to be known as New Generation tech-savvy banks,
whichincluded banks such as Global Trust Bank (the first of such new generation banks to be set
up)whichlater amalgamated with Oriental Bank of Commerce, UTI Bank(now re-named as Axis
Bank), ICICI Bankand HDFC Bank.

Current situation
Currently, India has 88 scheduled commercial banks (SCBs) - 28 public sector banks (that is
with theGovernment of India holding a stake), 29 private banks (these do not have government
stake; they maybe publicly listed and traded on stock exchanges) and 31 foreign banks. They
have a combined networkof over 53,000 branches and 17,000 ATMs . According to a report by
ICRA Limited, a rating agency, thepublic sector banks hold over 75 percent of total assets of the
banking industry, with the private andforeign banks holding 18.2% and 6.5% respectively. Over
the last four years, Indias economy has been on a high growth trajectory, creating
unprecedented opportunities for its banking sector. Most bankshave enjoyed high growth and
their valuations have appreciated significantly during this period. Lookingahead, the most
pertinent issue is how well the banking sector is positioned to cater to continuedgrowth. A
holistic assessment of the banking sector is possible only by looking at the roles and actions
of banks, their core capabilities and their ability to meet systemic objectives, which include
increasingshareholder value, fostering financial inclusion, contributing to GDP growth,
efficiently managingintermediation cost, and effectively allocating capital and maintaining
system stability.

BANKING STRUCTURE IN INDIA

The banking institutions in the organized sector, commercial banks are the oldest institutions,
somethem having their genesis in the nineteenth century. Initially they were set up in large
numbers, mostlyas corporate bodies with shareholding with private individuals. Today 27 banks
constitute a strongPublic Sector in Indian Commercial Banking. Commercial Banks operating in
India fall under different subcategories on the basis of their ownership and control over
management;

I.Public Sector Banks

Public Sector Banks emerged in India in three stages. First the conversion of the then existing
ImperialBank of India into State Bank of India in 1955, followed by the taking over of the seven
associated banksas its subsidiary. Second the nationalization of 14 major commercial banks in
1969and last thenationalization of 6 more commercial Bank in 1980. Thus 27 banks constitute
the Public Sector Banks.

II.New Private Sector Banks

After the nationalization of the major banks in the private sector in 1969 and 1980, no new bank
couldbe setup in India for about two decades, though there was no legal bar to that effect. The
NarasimhamCommittee on financial sector reforms recommended the establishment of new
banks of India. RBIthereafter issued guidelines for setting up of new private sector banks in India
in January 1993. Theseguidelines aim at ensuring that new banks are financially viable and
technologically up to date from thestart. They have to work in a professional manner, so as to
improve the image of commercial bankingsystem and to win the confidence of the public. Eight
private sector banks have been establishedincluding banks sector by financially institutions like
IDBI, ICICI, and UTI etc.

III.Local Area Banks

Such Banks can be established as public limited companies in the private sector and can be
promoted byindividuals, companies, trusts and societies. The minimum paid up capital of such
banks would be 5crores with promoters contribution at least Rs. 2 crores. They are to be set up in
district towns and thearea of their operations would be limited to a maximum of 3 districts. At
present, four local area banksare functional, one each in Punjab, Gujarat, Maharashtra and
Andhra Pradesh.

IV.Foreign Banks

Foreign commercial banks are the branches in India of the joint stock banks incorporated abroad.
Therenumber was 38 as on 31.03.2009.Scheduled Commercial Banks in India
The commercial banking structure in India consists of:V.
 
Scheduled Commercial Banks in India

Unscheduled Banks in India Scheduled Banks in India constitute those banks which have been
includedin the Second Schedule of Reserve Bank of India (RBI) Act, 1934. RBI in turn includes
only those banks inthis schedule which satisfy the criteria laid down vide section42 (6) a) of the
Act. "Scheduled banks inIndia" means the State Bank of India constituted under the State Bank
of India Act, 1955 (23 of 1955), asubsidiary bank as defined in the State Bank of India
(Subsidiary Banks) Act, 1959 (38 of 1959), acorresponding new bank constituted under section 3
of the Banking Companies (Acquisition andTransfer of Undertakings) Act, 1970 (5 of 1970), or
under section 3 of the Banking Companies(Acquisition and Transfer of Undertakings) Act, 1980
(40 of 1980), or any other bank being a bankincluded in the Second Schedule to the Reserve
Bank of India Act, 1934 (2 of 1934), but does not includea co-operative bank". "Non-scheduled
bank in India" means a banking company as defined in clause (c)of section 5 of the Banking
Regulation Act, 1949 (10 of 1949), which is not a scheduled bank"
.
VI.Cooperative Banks

Besides the commercial banks, there exists in India another set of banking institutions
calledcooperative credit institutions. These have been made in existence in India since long.
They undertakethe business of banking both in urban and rural areas on the principle of
cooperation. They have serveda useful role in spreading the banking habit throughout the
country. Yet, there financial position is notsound and a majority of cooperative banks has yet to
achieve financial viability on a sustainable basis.The cooperative banks have been set up under
various Cooperative Societies Acts enacted by StateGovernments. Hence the State Governments
regulate these banks. In 1966, need was felt to regulatetheir activities to ensure their soundness
and to protect the interests of depositors According to the RBIin March 2009, number of all
Scheduled Commercial Banks (SCBs) was 171 of which, 86 were RegionalRural Banks and the
number of Non-Scheduled Commercial Banks including Local Area Banks stood at 5.Taking
into account all banks in India, there are overall 56,640 branches or offices, 893,356
employeesand 27,088 ATMs. Public sector banks made up a large chunk of the infrastructure,
with 87.7 per cent of all offices, 82 per cent of staff and 60.3 per cent of all automated teller
machines (ATMs).

B
anking reforms, banks shifted their approach to the 'profit' model. ( which meant
unlike their western counterparts such

incomes. A significant improvement in recovering the NPAs, lowest ever increase inressed
sectors and problem at parent level for foreign banks. Unsecuredto repeat in coming years. The
liquidity crisis that swept theagricultural and large corporate credit. Having said that , higher
delinquency
banks had to park most of 
ownturn in the economy, credit and depositshow a moderate growth. Margin pressures due to lag
effect of rate cuts between

nalysts andas relevant as they once were. Due to nonrecurring events,

l analysis
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al analysis are:

firsthand, humans expectations are neither easily quantifiable nor predictable. If prices

ent drivers of equity prices. Even some technicians will agree to that. A good

in the private sector. The bank was incorporated with the name 'HDFC Bank Limited', with its

over the long term. I believe that thegin of safety in our Target valuation multiples. We

Bank Ltd
ICICI Bank Ltd

1.2COMPANY PROFILE

Geojit BNP Paribas today is a leading retail financial services company in India with a growing
presence in the Middle East. The company rides on its rich experience in the capital market to
offer its clients a wide portfolio of savings and investment solutions. The gamut of value-added
products and services offered ranges from equities and derivatives to Mutual Funds, Life &
General Insurance and third party Fixed Deposits. The needs of over 576,000 clients are met via
multichannel services - a countrywide network of over 540 offices, phone service, dedicated
Customer Care centre and the Internet.

Geojit BNP Paribas has membership in, and is listed on, the National Stock Exchange (NSE)
and the Bombay Stock Exchange (BSE). In 2007, global banking major BNP Paribas joined the
company’s other major shareholders - Mr. C.J.George, KSIDC (Kerala State Industrial
Development Corporation) and Mr.Rakesh Jhunjhunwala – when it took a stake to become the
single largest shareholder.

Strategic joint ventures and business partnerships in the Middle East has provided the company
access to the large Non-Resident Indian(NRI) population in the region. Now, as a part of the
BNP Paribas global network, Geojit BNP Paribas is well positioned to further expand its reach to
NRIs in 85 countries. Barjeel Geojit Securities is the joint venture with the Al Saud group in the
United Arab Emirates that is headquartered in Dubai with branches in Abu Dhabi, Ras Al
Khaimah, Sharjah and Muscat. Aloula Geojit Brokerage Company headquartered in Riyadh is
the other joint venture with the Al Johar group in Saudi Arabia. The company also has a business
partnership with the Bank of Bahrain and Kuwait, one of the largest retail banks in Bahrain and
Kuwait.

At the forefront of the many fruitful associations between Geojit BNP Paribas and BNP Paribas
is their joint venture, namely, BNP Paribas Securities India Private Limited. This JV was created
exclusively for domestic and foreign institutional clients. An industry first was achieved when
Geojit BNP Paribas became the first broker in India to offer full Direct Market Access(DMA) on
NSE to the JV’s institutional clients.A strong brand identity and extensive industry knowledge
coupled with BNP Paribas’ international expertise gives Geojit BNP Paribas a competitive
advantage.
Expanding range of online products and services

Geojit BNP Paribas has proven expertise in providing online services. In the year 2000, the
company was the first stock broker in the country to offer Internet Trading. This was followed by
integrating the first Bank Payment Gateway in the country for Internet Trading, and many other
industry firsts. Riding on this experience, and harnessing BNP Paribas Personal Investors’
expertise as the leading online broker in Europe, is helping the company to rapidly expand its
business in this segment. Presently, clients can trade online in equities, derivatives, currency
futures, mutual funds and IPOs, and select from multiple bank payment gateways for online
transfer of funds. Strategic B2B agreements with Axis Bank and Federal Bank enables the
respective bank’s clients to open integrated 3-in-1 accounts to seamlessly trade via a
sophisticated Online Trading platform.Further, deployment of BNP Paribas’ state-of-the-art
globally accepted systems and processes is already scaling up the sales of Mutual Funds and
Insurance.

Wide range of products and services

Certified financial advisors help clients to arrive at the right financial solution to meet their
individual needs. The wide range of products and services on offer includes -
Equities | Derivatives | Currency Futures | Custody Accounts | Mutual Funds | Life Insurance &
General Insurance | IPOs | Portfolio Management Services | Property Services | Margin Funding |
Loans against Shares

A growing footprint

With a presence in almost all the major states of India, the network of over 540 offices across
300 cities and towns presently covers Andhra Pradesh, Bihar, Chattisgarh, Goa, Gujarat,
Haryana, Jammu & Kashmir, Karnataka, Kerala, Madhya Pradesh, Maharashtra, New Delhi,
Orissa, Punjab, Rajasthan,Tamil Nadu & Pondicherry, Uttar Pradesh, Uttaranchal and West
Bengal.

Evolution Of The Company

It all started in the year 1987 when Mr. C.J. George and Mr. Ranajit Kanjilal founded Geojit as a
partnership firm. In 1993, Mr.Ranajit Kanjilal retired from the firm and Geojit became the
proprietary concern of Mr. C .J. George. In 1994, it became a Public Limited Company named
Geojit Securities Ltd. The Kerala State Industrial Development Corporation Ltd. (KSIDC), in
1995, became a co-promoter of Geojit by acquiring a 24 percent stake in the company, the only
instance in India of a government entity participating in the equity of a stock broking company.
The year 1995 also saw Geojit being listed on the leading regional stock exchanges. Geojit listed
at The Stock Exchange, Mumbai (BSE) in the year 2000. Company’s wholly owned subsidiary,
Geojit Commodities Limited, launched Online Futures Trading in agri-commodities, precious
metals and energy futures on multiple commodity exchanges in 2003. This was also the year
when the company was renamed as Geojit Financial Services Ltd. (GFSL). The Board consists of
professional directors; including a Kerala Government nominee. With effect from July 2005, the
company is also listed at The National Stock Exchange (NSE). Company is a charter member of
the Financial Planning Standards Board of India and is one of the largest Depository
Participant(DP) brokers in the country.On 31st December 2007, the company closed its
commodities business and surrendered its membership in the various commodity exchanges held
by Geojit Commodities Ltd. Global banking major BNP Paribas took a stake in the year 2007 to
become the single largest shareholder. Consequently, Geojit BNP Paribas has been renamed as
Geojit BNP Paribas Financial Services Ltd.

MILE STONES

Product innovation backed by a high level of domain specific knowledge and state-of-the-art
technology has helped Geojit BNP Paribas set many milestones including numerous industry
firsts.
       1986

 Membership in Cochin Stock Exchange (CSE).

       1994

 Becomes a Public Limited Company named Geojit Securities Ltd.

       1995

 Kerala State Industrial Development Corporation Ltd.(KSIDC) acquires 24 percent

equity stake.
 Membership in National Stock Exchange (NSE).
 Public Issue

       1996

 Launch of Portfolio Management Services with SEBI registration.

       1997

 Depository Participant (DP) under National Securities Depository Limited.

       1999

 Membership in Bombay Stock Exchange (BSE).

       2000

 BSE Listing.
 1st broking firm in India to offer online trading facility.
 Commences Derivative Trading with NSE.
 Integrates the 1st Bank Payment Gateway in the country for Internet Trading.
       2001

 Becomes India's first DP to launch depository transactions through Internet.

 Establishes Joint Venture in the UAE to serve NRI customers.

       2002

 1st in India to launch an integrated internet trading system for Cash & Derivatives
segments.

       2003

 Geojit Commodities Limited, wholly owned subsidiary, launched Online Futures Trading
in agri-commodities, precious metals and in energy futures on multiple commodity
exchanges.
 National launch of online futures trading in Rubber, Pepper, Gold, Wheat and Rice.
 Company renamed as Geojit BNP Paribas.

       2004

 National launch of online futures trading in Cardamom.

        2005

 NSE Listing.
 Geojit Credits, a subsidiary, registers with RBI as a Non-Banking Financial Company
(NBFC).
 National launch of online futures trading in Coffee.

       2006

 Charter member of the Financial Planning Standards Board of India.

       2007

 BNP Paribas takes a stake in the company’s equity, making it the single largest
shareholder.
 Establishes Joint Venture in Saudi Arabia to serve the Saudi national and the NRI.

       2008

 BNP Paribas Securities India (P) Ltd. – a Joint Venture with BNP Paribas S.A. for
Institutional Brokerage.
 1st brokerage to offer full Direct Market Access execution in India for institutional
clients.

       2009

 Launch of Property Services division.

 Launch of online trading in Currency Derivatives.
 Consequent to BNP Paribas becoming the largest stakeholder in Geojit BNP Paribas,
company is renamed as Geojit BNP Paribas Financial Services Ltd.

       2010

 Launch of FLIP(Financial Investment Platform), a new advanced online investment

platform.
 Launch of state of the art Mobile Trading platform to empower clients to trade from
anywhere, even while on the move through the innovative application FLIP- ME.

BOARD OF DIRECTORS

Name Designation
Mr. A. P. Kurian Non - Executive & Independent Chairman

Mr. C. J. George Managing Director & Chief Promoter

Mr.Alkeshkumar Sharma Non - Executive & Independent Director

Mr. Mahesh Vyas Non - Executive & Independent Director

Mr. Rakesh Jhunjhunwala Non - Executive Director

Mr. Ramanathan Bupathy Non - Executive & Independent Director

Mr. Punnoose George Non - Executive Director

Mr. Olivier Le Grand Non - Executive Director

Mr. Pierre Rousseau Non - Executive Director

MANAGEMENT

Name Designation

Mr. C. J. George Managing Director

Mr. Satish Menon Director (Operations)

Mr. A. Balakrishnan Chief Technology Officer

Mr. K. Venkitesh National Head - Distribution

Mr. Martin Zachmeier Director (Planning and Control)

Mr. Binoy .V.Samuel Chief Financial Officer

Mrs. Jaya Jacob Alexander Chief of Human Resources

Geojit Products

 Equity
 Derivatives
 Commodity
 Mutual Funds

CHAPTER-2
RESEARCH METHODOLOGY

Statement of problem

Investors are not aware of mutual funds, which are higher in return investment options
because of the enormous flow of foreign exchange investment aveneues in the country.Another
problem is meeting the requirement of investors,belonging to different profiles.Hence the
criterion is to analyse the p;erformance of various mutual funds.
 OBJECTIVE OF THE STUDY

1. To study about the performance analysis of various mutual funds

2. To compare the funds based on their relative performance with category average

3. To compare the funds based on their returns and voltalitys

4. To define and maintain high professional and ethical standards in all areas of
operation of mutual fund industry

SCOPE OF THE STUDY

1. The study which understand the performance of mutual fund in the market.

2. To find out the role of mutual fund in investment

NEED FOR THE STUDY

The study is important to analyse and understand various mutual funds so that it would reveal its
performance based on various factors like relative performance,return ,risk,expenses,etc,it also
reveals the quality of the services provided by each mutual fund.This study shows the
performance against market indices as benchmark and to what extend it has outperformed the
benchmark is evaluated.

SORCE OF DATA
For this study main data sources is fact sheet of various mutualfunds,news letter of the mutual
funds,brochures,reports of fund manager commentary,etc.

Primary Data

As the study is based on secondary data,there is no scope for primary data.

Secondary Data

 Data from geojit

 Data from website