Vivekanand Education Society Institute of

Management Studies & Research

SUMMER INTERNSHIP PROGRAM REPORT

ON

A Study on the Equity Research on banking sector

By
SUPRIYA KUMARI
Roll Number: 144
Faculty Mentor
Prof. K.V. RAM
MMS (Finance)
BATCH 2019 -2021

COMPANY: Future Generali India Life Insurance

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 Certification

SUMMER INTERNSHP PROGRAM REPORT

ON
A Study on the Equity Research on banking sector

By
SUPRIYA KUMARI
Roll Number: 144

A report submitted in partial fulfilment of the requirements of 2nd year MMS

Program of Vivekanand Education Society Institute of Management Studies &
Research, Mumbai.

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 DECLARATION

I, Supriya Kumari, student of Vivekanand Education Society’s Institute of Management Studies

and Research, MMS 2019-21, hereby declare that I have completed the project ‘Equity Research
in Banking sector’ in the academic year 2020-2021.

The subject matter contained in this project is a research work and most of the work carried out
is original and was done under the guidance of my project guide Mr. PUSHPENDER
KHUTETA.

The information is true and original to the best of my knowledge.

Signature of the Student

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 ACKNOWLEDGMENT

It is my sincere desire and ambition to acquire profound knowledge in the field of Management
Studies. It is my pleasure to acknowledge the help and guidance that I have received from
everyone Future Generali at and to thank them individually.

First of all, I express my sincere thanks to the Director Dr. Satish Modh for having given me a
chance to undergo the project work.

The compilation of this project is a milestone in the life of the management student and its
execution is inevitable without the cooperation of the project guide. I am deeply grateful to my
project guide Prof. K.V. Ram for his valuable ideas, required suggestions and encouragement for
refining this project study.

Signature of the Student

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 TABLE OF CONTENTS

Sr. No Topic

1 Executive Summary

2 Industry Analysis

2.1 Size of the Industry

2.2 Major players in the Industry

2.3 Market Share of major players

2.4 Industry Financials

2.5 Challenges faced by the industry

2.6 Government regulations

3 About the company

3.1 Genesis of the company and its vision and mission

3.2 Product and services

3.3 Challenges faced by the company

3.4 SWOT Analysis of the company

4 On the job training

4.1 Learning

4.2 Target Assigned

4.3 Target Achieved

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 1. Executive Summary

The main aim of this project is to do equity research in banking sector and to find out the opportunities
of investment these sectors where returns can be maximized. Indian Economy being one of the fastest
developing economies in the world, companies in India are growing at faster rate as compared to their
growth rate a decade back. Many Indian companies are expanding their business globally with mergers
and acquisitions.

As companies grow their shareholders are benefited with good dividend and capital appreciation on
investment in equity shares of such companies. Number of companies listed in stock exchange (BSE &
NSE) has been increasing every year with new IPOs coming b the market.

In India people are realizing that equity has potential to give highest return as compared to other
investment avenues however people are not aware how to do equity valuation, they just invest in
shares based on tips given by brokers, friends or family members.

Investing in equity shares based on tips is not the true investment but it is clear gambling with your
money which many of us would not like to do with our herd earned money.

Equity valuation begins with analysis of the sector in which you want make investment, if the sector
looks positive then analyze various companies in the sector. A Company is analyzed fundamentally to
check its performance and financial strength Technical analysis is used to decide the right price to buy a
stock so that higher return on investment can be generated.

This report suns from the fundamental analysis of the four banks (ICICI Bank, HDFC Bank, Kotak
Mahindra Bank & Yes Bank) is done. Economy of India and banking industry are analyzed on the basis of
various factors and indicators. Above mentioned four banks were analyzed based on the various
qualitative and quantitative factors. After analyzing these banks, stock prices estimated using relative
valuation method. The market price and P/E ratios have been taken to calculate the EPS. After the target
price was calculated with the help of sector P/E and EPS and finally the difference was taken between
the target price and market price to arrive at the best performing company.

Then the technical analysis of the top Barks his been done. Technical analysis is used to study stock chart
patterns of these banks. The observed patterns are tested with various oscillator and decision about
particular stock is made. Based on these factors, trend of a particular stock is observed and then the
target price is estimated.

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 2. Industry Analysis

Introduction:

The country’s financial services sector consists of the insurance sector, non-banking financial
companies (NBFCs) and capital markets. India’s gross national savings (GDS) as a percentage of
Gross Domestic Product (GDP) stood at 30.50 per cent in 2019. The total amount of Initial Public
Offerings increased to Rupees 84,357 crore (US$ 13,089 million) by the end of FY18. IPO’s
reached to US$ 1.94 billion in FY19 (up to Feb 2019). Ultra-High Net Worth Individual (UHNWI)
increased to 2,697 in 2018 and the population of UHNWI has grew by 118 per cent from 2013 to
2018.

The asset management industry in India is among the fastest growing in the world. In March 2019,
corporate investors Assets Under Management (AUM) stood at US$ 136.59 billion, while High
Net Worth Individuals (HNWIs) and retail investors reached US$ 107.55 billion and US$ 90.12
billion, respectively. In the Asia-Pacific, India is among the top five leading countries in terms of
HNWIs.

Bombay Stock Exchange (BSE) and National Stock Exchange of India (NSE) attained permission
from the Securities and Exchange Board of India (SEBI), to launch commodity derivatives trading
from October 1, 2018.

Bank sector

The Indian banking system consists of 20 public sector banks, 22 private sector banks, 44 foreign
banks, 44 regional rural banks, 1,542 urban cooperative banks and 94,384 rural cooperative
banks in addition to cooperative credit institutions. As on January 31, 2020, the total number of
ATMs in India increased to 210,263 and is further expected to increase to 407,000 by 2021.

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The banking sector is a key economic player. This sector has enjoyed multiple progressions since
birth. Today, individuals are deeply bankable. So many progressions and improvements have
been made in this field. We made several improvements. Actually, finance is not only held in
retail banks. Banking systems have been modernized, and with such a vast range of banking
goods people are now paying a fee. Shift in the financial field has started in such a wide number
of nations with a common goal of achieving the financial progression. Currently, the main
question is that there is a correlation between growth and change; and whether financial
developments in nation-building are boosting progress. The banking sector is taking on a crucial
job of advancing the economy of one nation.

Reserve Bank of India: India's Reserve Bank also acts as a central bank, where commercial
banks are account holders and can deposit funds. RBI maintains bank accounts of all scheduled
banks.[69] Credit is created by commercial banks. It is the RBI's responsibility to monitor the
credit through the CRR, repo rate and open market operations. As a lender, the RBI encourages
check clearing between commercial banks and helps to transfer funds inter-bankly. This will
offer financial housing for planning banks. It serves as the last resort's lender by supplying Banks
with immediate advances. The institution is also the financial system regulator and supervisor,
and prescribes wide parameters of banking operations within which the banking and financial
system of the country functions. Its aims are to preserve public trust in the scheme, protect the
interest of the depositors and provide the public with cost-effective banking services.

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Commercial bank: A commercial bank is a type of bank that provides services such as
accepting deposits, making business loans, and offering basic investment products that are
operated as a profit-making business. It may also refer to a bank or a large bank division that
deals with corporations or large / medium-sized businesses to distinguish it from a retail bank
and investment bank.

Public Sector banks: Public Sector banks (PSBs) are a big form of bank in India, where the
government owns a majority stake (i.e. over 50 percent). Those banks' shares are listed on stock
exchanges. There are 12 Public Sector banks in total in India alongside 1 state-owned Payments
Bank.

State Bank of India (61.00%)

Bank of Baroda (63.74%)

Union Bank of India (67.43%)

Punjab National Bank (92.22%)

Canara Bank (72.55%)

Punjab & Sind Bank (79.62%)

Indian Bank (81.73%)

Bank of Maharashtra (87.01%)

Bank of India (87.0535%)

Cooperative banking: Cooperative banking is a cooperatively managed retail and commercial

banking network. Cooperative financial institutions accept deposits and lend money in most parts
of the country. Cooperative lending, as discussed above, comprises retail banking conducted by
credit unions, joint savings associations, building societies and cooperatives, as well as corporate
banking services offered by community organizations.

Development bank: A construction finance institution (DFI) is a financial entity that offers non-
commercial cost funding for ventures related to economic growth. Governments or public
organizations also create and own them and provide funding for ventures that would otherwise
not be able to raise funds from commercial lenders. Eg: EXIM.

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 2.1 Size of the industry

2.2 Major players in the industry

1. HDFC Bank Ltd.

2. YES Bank Ltd.

3. ICICI Bank Ltd.

4. Kotak Mahindra Bank Ltd.

HDFC Bank Limited

Market Cap : Rs 460,021 Cr.

Management : Chairperson Mr. Shyamala Gopinath

MD Mr. Aditya Puri

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HDFC Bank Limited (HDFC Bank or Bank), a banking company based in Mumbai , India, provides
a variety of banking and financial services, including retail banking, wholesale banking and
treasury. Although all banks gave high-risk loans, HDFC complied to a low-risk loan strategy.

Sr. No Year/Ratio
1 Interest Income (%) 8.57
2 Net Interest Income 4.18
3 Net Interest Margin 3.87
4 Cost to Income Ratio 38.41
5 Net Profit 1.17
6 Return on Assets 1.69
7 Return on Equity 14.12
8 Total advances 83.95
9 Total Deposits 8.85
10 Loans to deposit ratio 6.97
11 CASA Ratio 42.37
12 Gross NPA 1.38
13 Net NPA 0.39
14 Capital Adequacy Ratio 17.11

 For banking companies, interest earned on various loans given to individuals and
corporations is the primary source of income. HDFC Bank wins Rs 1,14,812.6509 Cr.
Income for the most recent financial year. In last 3 years, it has posted outstanding
revenue growth of 18.32 %.
 The bank reported a rise of 21.27 % YOY in terms of advances. If you see growth 3 years
ahead, it is 21.46 %.
 The organization actually has a CASA rating of 42.23%. It has a total liability cost of 4.54
per cent. The total deposits from those accounts were also Rs 11,47,502.2947 Cr.
 The Bank has a track record on healthy ROA. HDFC Bank's ROA is 1.89 %.
 The Lender controls the general asset portfolio effectively. As in the last financial year,
the Gross NPA and Net NPA stood at 1.26 %and %, respectively.

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  The significant indicator of financial stability for banks is the availability of coverage
ratio. The improvement in the provision and contingencies for YoY is optimistic at
60.82%, which means it has improved from the year before.
 Non-Interest income or other income is very important for banks because it provides
the bank with a daily source of income without any added risk. HDFC Bank's other
income declined, and is currently at Rs 232.61 Cr.
 The business has an adequacy ratio of 18.52 strong money.
 The best metric that gives insight into the valuation of banks is the P / B ratio. HDFC
Bank is reportedly trading at 3.53 P / B. The historic mean PB was 3.89.

YES BANK

Market Cap : Rs. 24,850 Cr

Management : Chairman Mr. Sunil Mehta

MD & CEO Mr. Prashant Kumar

YES BANK Limited is a bank operating in the private sector. The Bank provides banking services,
including corporate and institutional banking, finance markets, investment banking, corporate
finance, branch banking, business and transaction banking, and wealth management.

Sr. No Year/Ratio
1 Interest Income (%) 8.55
2 Net Interest Income 2.83
3 Net Interest Margin 5.8
4 Cost to Income Ratio 37.05

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 5 Net Profit 7.43
6 Return on Assets 0.45
7 Return on Equity 6.39
8 Total advances 78.96
9 Total Deposits 5.19
10 Loans to deposit ratio 78.96
11 CASA Ratio 33.06
12 Gross NPA 3.22
13 Net NPA 1.86
14 Capital Adequacy Ratio 16.5

 For banking companies, the primary source of Income is interest earned on various loans
given to individuals and corporates. Yes Bank has earned Rs 29,624.7473 Cr. revenue in
the latest financial year. It has posted outstanding revenue growth of 29.84 % in last 3
Years.
 In terms of advances, the bank reported 18.65 % YOY, rise. If you see 3 years advance
growth, it stands at 34.98 %.
 Currently the company has a CASA ratio of 33.06 %. It’s overall cost of liability stands
at 5.90 %. Also, the total deposits from these accounts stood at Rs 227,610.1818 Cr.
 The Bank has a healthy ROA track record. The ROA of Yes Bank is at 0.50 %.
 The Lender is inefficiently managing its overall asset portfolio. The Gross NPA and Net
NPA stood at 3.22 % and 1.86 % respectively as on the latest financial year.
 One other important measure of banks’ financial health is provisioning coverage ratio.
The YoY change in provision and contingencies is positive at 271.83 % which means it
has increased from the previous year.
 Non-Interest income or other incomes are very important for banks as it gives a regular
source of income for bank with no additional risk. Other income of Yes Bank decreased
and is currently at Rs 45.90 Cr.
 The company has a Good Capital Adequacy Ratio of 16.50.
 The best metric which provides insights about bank’s valuation is P/B ratio. Currently
Yes Bank is trading at a P/B of 1.14. The historical average PB was 2.77.

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ICICI Bank

Market Cap: 229,125 Cr.

Management: Chairman Mr. Girish Chandra Chaturvedi

MD & CEO Mr. Sandeep Bakhshi

ICICI Bank provides a wide variety of banking and financial services from retail banking,
corporate banking, and treasury activities.

Sr.No Year/Ratio ICICI

1 Interest Income (%) 6.9
2 Net Interest Income 2.94
3 Net Interest Margin 2.8
4 Cost to Income Ratio 48.98
5 Net Profit -1.77
6 Return on Assets 0.34
7 Return on Equity 3.19
8 Total advances 75.11
9 Total Deposits 5.85
10 Loans to deposit ratio 7.77
11 CASA Ratio 49.61
12 Gross NPA 6.7
13 Net NPA 2.06
14 Capital Adequacy Ratio 16.89

 For banking companies, the primary source of Income is interest earned on various
loans given to individuals and corporates. ICICI Bank has earned Rs 63,401.1926 Cr.
revenue in the latest financial year. It has posted Poor revenue growth of 6.33 % in last
3 Years.
 In terms of advances, the bank reported 14.49 % YOY, rise. If you see 3 years advance
growth, it stands at 10.46 %.

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  Currently the company has a CASA ratio of 49.61 %. It’s overall cost of liability stands
at 4.45 %. Also, the total deposits from these accounts stood at Rs 652,919.6711 Cr.
 The Bank has an average ROA track record. The ROA of ICICI Bank is at 0.36 %.
 The Lender is inefficiently managing its overall asset portfolio. The Gross NPA and Net
NPA stood at 0 % and 2.29 % respectively as on the latest financial year.
 One other important measure of banks’ financial health is provisioning coverage ratio.
The YoY change in provision and contingencies is positive at 13.60 % which means it has
increased from the previous year.
 Non-Interest income or other incomes are very important for banks as it gives a regular
source of income for bank with no additional risk. Other income of ICICI Bank decreased
and is currently at Rs 145.12 Cr.
 The company has a Good Capital Adequacy Ratio of 16.89.
 The best metric which provides insights about bank’s valuation is P/B ratio. Currently
ICICI Bank is trading at a P/B of 2.02. The historical average PB was 1.94.

Kotak Mahindra Bank

MARKET CAP : ₹ 2,62,872.94 Cr.

Management : Chairman Mr. Prakash Apte

MD & CEO Mr. Uday Kotak

Kotak Mahindra Bank provides its customers with a full suite of banking services, including
Retail Banking, Treasury and Corporate Banking in India.

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Sr.No Year/Ratio
1 Interest Income (%) 7.66
2 Net Interest Income 1.47
3 Net Interest Margin 3.6
4 Cost to Income Ratio 38.52
5 Net Profit 25.49
6 Return on Assets 1.77
7 Return on Equity 11.47
8 Total advances 86.44
9 Total Deposits 4.73
10 Loans to deposit ratio 6.09
11 CASA Ratio 56.17
12 Gross NPA 2.14
13 Net NPA 0.17
14 Capital Adequacy Ratio 17.89

 For banking companies, the primary source of Income is interest earned on various
loans given to individuals and corporates. Kotak Mahindra Bank has earned
Rs 26,929.6142 Cr. revenue in the latest financial year. It has posted
outstanding revenue growth of 15.02 % in last 3 Years.
 In terms of advances, the bank reported 6.83 % YOY, rise. If you see 3 years advance
growth, it stands at 17.32 %.
 Currently the company has a CASA ratio of 56.17 %. It’s overall cost of liability stands
at 4.46 %. Also, the total deposits from these accounts stood at Rs 262,820.5199 Cr.
 The Bank has a healthy ROA track record. The ROA of Kotak Mahindra Bank is at 1.77 %.
 The Lender is efficiently managing its overall asset portfolio. The Gross NPA and Net
NPA stood at 2.30 % and 0.71 % respectively as on the latest financial year.
 One other important measure of banks’ financial health is provisioning coverage ratio.
The YoY change in provision and contingencies is positive at 130.28 % which means it
has increased from the previous year.
 Non-Interest income or other incomes are very important for banks as it gives a regular
source of income for bank with no additional risk. Other income of Kotak Mahindra Bank
decreased and is currently at Rs 53.72 Cr.
 The company has a Good Capital Adequacy Ratio of 17.89.
 The best metric which provides insights about bank’s valuation is P/B ratio. Currently
Kotak Mahindra Bank is trading at a P/B of 4.70. The historical average PB was 5.50.

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 2.3 Market Share of major players

2.4 Industry Financials

● Asset of public sector banks stood at Rs 72.59 lakh crore (US$ 1,038.76 billion) in FY19.
According to Reserve Bank of India (RBI), India’s foreign exchange reserve stood at
approximately US$ 490.04 billion as on May 22, 2020.
● During FY16-FY20, credit off-take grew at a CAGR of 13.93 per cent. As of FY20, total
credit extended surged to US$ 1,936.29 billion.
● During FY16–FY20, deposits grew at a CAGR of 6.81 per cent and reached US$ 1.90
trillion by FY20. Credit to non-food industries increased 3.3 per cent y-o-y, reaching Rs
89.1 billion (US$ 1.26 trillion) on February 28, 2020 and Rs 100.80 lakh crore (US$ 1.42
trillion) on March 13, 2020.
● Indian banks are increasingly focusing on adopting integrated approach to risk
management. The NPAs (Non-Performing Assets) of commercial banks has recorded a
recovery of Rs 400,000 crore (US$ 57.23 billion) in FY19, which is highest in the last
four years.
● As per Union Budget 2019-20, investment-driven growth required access to low cost
capital, and this would require investment of Rs 20 lakh crore (US$ 286.16 billion) every
year.
● RBI has decided to set up Public Credit Registry (PCR), an extensive database of credit
information, accessible to all stakeholders. The Insolvency and Bankruptcy Code
(Amendment) Ordinance, 2017 Bill has been passed and is expected to strengthen the

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 banking sector. Total equity funding of microfinance sector grew 42 per cent y-o-y to Rs
14,206 crore (US$ 2.03 billion) in 2018-19.
● Deposits under Pradhan Mantri Jan Dhan Yojana (PMJDY) increased to Rs 1.28 lakh
crore (US$ 18.16 billion) during the week ended April 8, 2020. As of November 2019,
there were a total of 19 million subscribers under Atal Pension Yojna.
● Rising income is expected to enhance the need for banking services in rural areas, and
therefore, drive the growth of the sector.
● The digital payments revolution will trigger massive changes in the way credit is
disbursed in India. Debit cards have radically replaced credit cards as the preferred
payment mode in India after demonetization. Transactions through Unified Payments
Interface (UPI) stood at 1.23 billion in May 2020, valued at Rs 2.18 lakh crore (US$
30.97 billion).
● As per Union Budget 2019-20, the Government proposed a fully automated GST refund
module and an electronic invoice system to eliminate the need for a separate e-way bill.

2.5 Challenges faced by the industry.

A Social Change

From artificial intelligence (AI)-enabled wearables that track the wearer 's wellbeing to smart
thermostats that allow you to change heating settings from internet-connected devices,
technology has been entrenched in our society — and this applies to the banking industry. In the
digital world, there's no room for manual processes and systems. Banks and credit unions need to
think of technology-based resolutions to banking industry challenges. Therefore, it's critical that
financial institutions foster a culture of creativity, in which technology is leveraged to automate
internal processes and procedures for optimal efficiency.

Regulatory Enforcement

Regulatory enforcement has been one of the most important banking sector problems as a direct
result of the substantial rise in regulatory costs compared to profits and credit risks following the
2008 financial crisis.

Rising Expectations

Today's customer is smarter, savvier, and more educated than ever before and demands a high
degree of personalization and comfort out of their banking experience. Increasing market
dynamics play a significant role in these heightened expectations: With each new wave of

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banking client comes a more intuitive awareness of technology. For each new wave of banking
consumer comes a more intuitive awareness of technology and, as a result, an growing
anticipation of digitized interactions. Millennials have led the drive to digitization, with five out
of six stating that they choose to connect with brands via social media.

Client Retention

Money related administrations clients anticipate customized and significant encounters through
basic and natural interfaces on any gadget, anyplace, and whenever. Despite the fact that client
experience can be difficult to measure, client turnover is substantial and client unwaveringness is
rapidly turning into a jeopardized idea. Client unwaveringness is a result of rich customer
connections that start with knowing the client and their desires, just as actualizing a continuous
customer driven methodology.

Security Breaches

With a progression of prominent penetrates in the course of recent years, security is one of the
main financial industry challenges, just as a significant worry for bank and credit association
clients. Money related organizations must put resources into the most recent innovation driven
safety efforts to guard delicate client

2.6 Government regulations

The banking system in India is regulated by the Reserve Bank of India (RBI), through the
provisions of the Banking Regulation Act, 1949. Some important aspects of the regulations that
govern banking in this country, as well as RBI circulars that relate to banking in India, will be
explained below.

Exposure limits

Lending to a single borrower is limited to 15% of the bank’s capital funds (tier 1 and tier 2
capital), which may be extended to 20% in the case of infrastructure projects. For group
borrowers, lending is limited to 30% of the bank’s capital funds, with an option to extend it to
40% for infrastructure projects. The lending limits can be extended by a further 5% with the

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approval of the bank's board of directors. Lending includes both fund-based and non-fund-based
exposure.

Tier 1 Capital

Primary funding source of the bank common shares. Capital reserve out of sale of assets.
Balance in P&L account (profit).

Additional Tier-1 Capital

Past crisis bail in but before liquidation in convertible securities. Preference Shares

i) Fixed dividend

ii) Preferences shares will be paid first

iii) Can be converted into normal shares.

Tier 2 Capital

Supplementary capital because it is less reliable than tier 1 capital.

i) Provisioning
ii) Revaluation reserves

All about Basel Norms

Basel is a city in Switzerland. Also, the headquarters of Bureau of International Settlement

(BIS). Basel guidelines refer to broad supervisory standards formulated by the group of central
banks called the Basel Committee on Banking supervision (BCBS). The set of agreement by the
BCBS are called Basel Accord. These agreement focuses on risk to banks and the financial
system. The main purpose of the accord is to ensure that financial institutions have enough
capital on account to meet obligations and absorb unexpected losses.

Basel 1

Introduced in 1988.It basically says that if banks have enough capital to cover the risk, they have
invested, in then the bank is safe. The minimum capital requirement (CAR in India) was fixed at
8% of risk asset (RWA) risk weighted Average. RWA means assets with different risk profiles.
India adopted Basel 1 guidelines in 1999.

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Basel 2

Introduction in 2004. It’s basically Basel 1 + 2more. First, Banks need to develop batter risk
management techniques and increase disclosure (transparency). Second, Banks need to
mandatorily disclose their risk exposure to the central bank. Hence, bi-annual financial stability
reports by the RBI.

Basel 3

Introduction in 2010 in response to financial crisis of 2008. It aims at making most banking
activities more capital – intensive 4%. A more resilient banking system by focusing on four
parameters capital, leverages, funding and liquidity. India has extended the deadline to meet all
the requirements under Basel 3 to March 2020.

1. Capital conservation buffer: To ensure that banks maintain a cash of capital that can be
drawn down as losses are incurred during a stressed period. Banks are required to maintain a
capital conservation buffer of 2.5% comprised of common equity Tier 1 capital.

2. Counter cyclical buffer: The counter cyclical capital buffer is intended to protect the banking
sector against losses that could be caused by cyclical systemic risk. It restricts the banking sector
from indiscriminate lending in the periods of excess credit growth. Counter cyclical capital
buffer requirement requires banks to add capital at times when credit is growth rapidly so that the
buffer can be reduced when the financial cycle turns. It ranges from 0 to 2.5% for different
countries. For India is1%.

3. Casa Ratio: CA- Current Account, SA- Saving Account.

Casa Ratio =Current account deposit +saving account deposit

Total Deposit

Casa ratio of a bank is the ratio of deposits in current and saving account to total deposit. A
higher CASA ratio indicates a lower cost of funds, because bank do not usually give any interest
on current account deposits and the interest on saving accounts is usually very low 3-4%.

4. Net Interest Marginal Ratio:

NIMR = Interest Earning – Interest paid,

Asset of books

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5. Cash Reserve Ratio (CRR)

NDTL (Net Demand and Time Liabilities). Cash and Equivalents. No interest. Low CRR
=Happy banks. In 2020 CRR rate-3%.

6. Statutory Liquidity Ratio (SLR): Liquid Asset – Cash Gold, Government securities. Interest
Income. Statutory Liquidity Ratio or SLR is the minimum percentage of deposits that a
commercial bank has to maintain in the form of liquid cash, gold or other securities. It is
basically the reserve requirement that banks are expected to keep before offering credit to
customers. The SLR is fixed by the RBI and is a form of control over the credit growth in India.

7. Repo Rate: Interest paid by bank to RBI. Bank provides collateral government securities.
Repurchase option agreement between bank and RBI. Bank promise to repurchase government
securities after repo period. Repo period is overnight or 7days (term repo). In the event of default
by bank, RBI can sell government securities in open market. In 2020 repo rate -4%.

8. Reserve Repo Rate: Bank deposit surplus cash to RBI. Interest paid by RBI to bank. RBI
provides collateral (government securities). Reserve repurchase option agreement between bank
and RBI. Bank promises to resell government securities after reverse repo period. Reverse repo
period overnight, 7days (term repo). In 2020 reserve repo rate- 3.35%.

9. Moratorium: A moratorium is a temporary suspension of an activity or a law until future

events warrant lifting the suspension or related issues have been resolved. A moratorium may be
imposed by a government or by a business.

•A moratorium is a temporary suspension of business as usual.

•Most of the time, moratoriums are intended to alleviate temporary financial hardship or provide
time to resolve related issues.

•In bankruptcy law, a moratorium is a legally-mandated hiatus in debt collection.

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 3. About the company

The Future Group has pioneered the growth story of the Indian retail industry. Established 31 years
ago, it operates some of India’s most popular retail chains like:

In addition to allied businesses in Life and General Insurance, the Group has presence in logistics
infrastructure, supply chain and brand development domains.
The Future Group’s core value is ‘Indianness’. Indian ideas, Indian insights, and trends of Indian
consumer expectations form the cornerstones of the Group’s businesses.
The Group aims to build novel delivery formats and profitable retail realty. Affordability for all segments
and quality-consciousness are its mainstays. With this foundation, the Group works towards bringing
about a transformation in Indian business sectors.

The Generali Group is an Italian Group, independent since 1831, with a strong international
presence. It is among the world’s leading insurers, with total premium income exceeding €68 billion
in 2017. With above 71,000 workers in the world, present in over 60 Countries, the Group has a
leading position in Western European Countries and an ever more significant presence in the
markets of Central and Eastern Europe and in Asia. In 2015, Generali was the sole insurance
company included among the 50 smartest companies of the world by the MIT Technology Review.

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Future Generali India Insurance Company Limited is a joint venture between Future Group – the game
changers in Retail Trade in India and Generali – a 187 years old global insurance group featuring
among the world’s 60 largest companies*.

The company was incorporated in September 2007 with the objective of providing retail, commercial,
personal and rural insurance solutions to individuals and corporates to help them manage and mitigate
risks.

Future Generali India has been serving the customers by leveraging upon its global Insurance
expertise in diverse classes of products of Generali Group and the Indian retail game changers Future
Group.

Having firmly established its credentials in this segment and effectively leveraging on the skill set of
both its JV partners, Future Generali India has evolved to become a Total Insurance Solutions
Company.

3.1 Genesis

Vision
Our vision is to actively protect and enhance people lives
 Actively: We play a proactive and leading role in improving people lives through
insurance.
 Protect: We are dedicated towards managing and mitigating risks of individuals and
institutions.
 Enhance: Generali is also committed to creating value.
 People: We deeply care about our customer and our employee lives and their future.
 Lives: Ultimately, we have an impact on the quality of people lives-wealth, safety,
advice and service are instrumental in improving a person chosen way of life in the long
term.

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Mission
Our mission is to be the first choice by delivering relevant and accessible insurance solutions

 First choice: Logical and natural action that acknowledges the best offer in the market
based on clear advantages and benefits.
 Delivering: We ensure achievement striving towards better performance.
 Relevant: Anticipating or fulfilling a real life need or opportunity, tailored to local and
personal needs and habits, perceived as valuable.
 Accessible: Simple and easy to find, understand and use; always available, at a
competitive value for money.
 Insurance solutions: We aim to offer and tailor a combination of protection, advice and
service.

Values
Deliver on the promise
 We tie a long-term contract of mutual trust with our people, customers and stakeholders;
all of our work is about improving the lives of our customers.
 We commit with discipline and integrity to bringing this promise to life and making an
impact within a long-lasting relationship.

Value our people

 We value our people, encourage diversity and invest in continuous learning and growth
by creating a transparent, cohesive and accessible working environment. Developing
our people will ensure our Company's long term future.

Live the community

 We are proud to belong to a global Group with strong, sustainable and long-lasting
relationships in every market in which we operate. Our markets are our homes.

Be open
 We are curious, approachable and empowered people with open and diverse mindsets
who want to look at things from a different perspective.

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 3.2 Product/service

 Term Insurance Plans

 ULIP Plans
 Health plan
 Saving Plans
 Child Plans
 Retirement Plans
 Group Plans

1. Term Insurance Plans:

This is a Non-Linked Non-Participating (without-profits) Pure Term Insurance Plan
with life insurance coverage.

MONTHLY INCOME PAYOUT

Best term insurance plans will not only offer a lump sum benefit to your dependents
but can also offer monthly income to look after their regular expenses. This is an
option you can select while buying the plan. This feature takes the burden of
investing the large sum of money from your already stressed family members and
provides them financial support when they need it most.

TAX BENEFITS
You can claim the premium paid for term life insurance plan asa deduction from
your gross-total income in the financial year under section 80C. the death benefit
payable as a lump sum is also tax exempt under section 10(10D) for your
dependents.

FLEXIBITY OF PLAN
Term insurance plans nowadays are quite flexible, unlike plan vanilla ‘insurance
cover for a small price’ plans of old. You can select from plans that will offer regular

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 income benefit to your dependents, to the plans which will return all premiums paid
for the cover if you survive the tenure of the cover.

ENTRY & MATURITY AGE

With an entry age as low as 18 years, it is not a hindrance if you are one of those
with huge responsibilities on your shoulders at an early age. Also, with the
maximum maturity age of 75, it is possible for those looking at a late retirement to
ensure life cover to their loved ones.

ADD-ON BENEFITS
It is not necessary to buy a standalone term insurance plan with death benefit as the
only cover. You can include additional benefits covering conditions like accidental
death and disability for a normal premium to the base term life insurance. These
added benefits are also called ‘insurance riders’.

2. ULIP Plans:

Unit Linked Insurance Plans or ULIPs are insurance products that combine the
benefits of saving and protection in a single instrument. While the plan offers you
risk coverage, it also introduces you to the various instrument opportunities in the
liquid investments, fixed income securities and equities.

FLEXIBILTY
With ULIPs, investors get the flexibility to:
- Switch between funds that align with their financial needs;
- Make partial withdrawals (these are subject to specific terms and cnditions)

TRANSPARENT STRUCTURE
ULIPs allow investors to keep track of their investment portfolio. You are also
regularly updated with the changes in the invested percentage of premium and the
levied charges. Further, you are also informed about the number of units that you
hold and their value.

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 ABILITY TO CHOOSE BETWEEN VARIOUS FUNDS
With a Unit Linked Insurance Plan, you can decide between various funds options
and select the one that aligns with your risk appetite. Therefore, you can choose to
invest in equity if you have a high risk tolerance. Whereas, if you are looking to
take less risk, you can invest in debt or a hybrid fund.

RIDER OPTIONS OR ADDITIONAL COVERAGE

ULIPs are one of the most proficient market-linked investment instruments. They
also allow you to opt for additional cover for your loved ones through rider options
such as accidental death rider and critical illness rider.

3. Child Plans:

 This child education enables you to save systematically until your child
turns 17 years for his/her graduation or post-graduation college fees.
 Being a type of Guaranteed Income Plan, it offers you three options to
receive the money when it is actually needed.
 Your child’s education is secured even in case of an unfortunate event in
your life.
 You can further strengthen your plan by opting for riders which covers
you against an accidental and/or accidental total and permanent disability.
 Under this child education you are eligible for tax benefits as per tax laws.

4. Retirement Plans:

 Life annuity – you receive a fixed annuity for the rest of your life; in case of
your unfortunate demise, the policy terminates.
 Life annuity with return of purchase price – you receive a fixed annuity for the
rest of your life. In case of your unfortunate demise, the purchase price paid to
the nominee and the policy terminates.
 Surrender benefit – there are no surrender benefits in this plan.
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  Maturity benefit – there are no maturity benefit in this plan.

3.3 Challenges, Issues & Strategies

A) Customer Education & Engagement:

 Still many investors are not aware about the benefits of investing in
Mutual Funds.
 Continuous engagement with the customer is required even after the
sales of the fund.
 The fund charges should not only be upfront charges and there should
be the scope of incentives for better performance of the funds.

B) Customer Centered:
 The industry is product center and not customer centered and falls
short of expectations in meeting the needs at time of economy
uncertainty and market volatility.
 A large number of mutual funds scream makes investment decision
complex and difficult. These lead them to stay away from market.
 Complicated Know Your Customer (KYC) norms, PAN card
requirement, submission of many documents, extensive paper work,
etc. restrict potential investors.

C) Focus on Retail:
 The more focus is on institutional investors.
 For the stability and long term benefit of the industry it is that the retail
segment should be more penetrated which will add more liquidity and
reduce the risk of large amount of redemptions or wrong doing by the
big players.

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  Tapping small cities like tire2 and tire3 and reaching the rural areas.

D) Innovative Products:
 There is shortage of mutual funds available in the market.
 The available products don’t meet all the requirements of the people.
 New innovative products are required according to difference in
investment and life stage needs of the investors.

E) Wide-Distribution:
 For the growth to sustain the distribution system should be made
stronger.
 To have wider, low extra cost reach the well-established and credible
distribution system of the public sector and credible distribution
system of the public sector banks, regional rural banks, cooperative
banks, FMCG companies, LIC, postal department etc. can be availed.
 Fees and pricing of the product should be having somw flexibility in
the hands of distributors linking it with fund type, objective and
performance.

F) Shrinking Margins & Consolidation:

 Global economic crises
 Increasing funds management cost.
 Upper limits on fund charges which can be levied.
 Growing competition in the industry.
 Small players are made difficult to survive and consolidation will bring
stability to the industry.

G) Liquidity:
 Depending of the global financial crisis during September 2008 and
recent Greece crisis resulted in liquidity crunch all over the world.

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 With the drying up of credit inflows from the banks and external
commercial borrowing routs.
 Mutual funds witness redemption pressure from corporate.
 Mutual funds promised immediate redemption, their assets were
relatively illiquid.
 Asset liability maturity mismatch should be kept as low as possible.
 Also funds should be available in the form of liquid assets.

H) Fund Performance:
 Consistency in fund performance and brand equity influence customer
to make relevant selection of mutual fund schemes.
 Fund management should be made accountable for their investment
decisions.
 Also decisions should match with fund objectives and the appropriate
fund management style active or passive should be employed.
 The performance should be reviewed from time to time and focus
should be surpassing the benchmark.
 Funds manager remuneration may also be linked 5with its
performance.

I) Regulatory Framework:
 The regulator, securities and exchange board of India (SEBI), has
consistently introduced several regulatory measures to protect the
interests of the small investor that is good for the long term growth of
the industry.
 The implementation of preventing of money laundering (PMLA) rules,
the risk management practices and procedures has given new
dimension to the industry.
 The current Anti-Money Laundering (AML) and Combating
Financing of Terrorism (CFT) measures cover two main aspects of
KYC.

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  Financial capability enhancement, investor protection and education
are the areas of focus.

J) Cost Management:
 The ever-increasing fund management charges cannot be allowed
when the profit margins are shrinking.
 Better cost management is required.
 Excessive churning of the investment is required.

K) Conclusion:
 The Indian mutual fund industry has a golden future ahead. But this
can be only achieved by working on the recent developments in the
industry and making strategies to deal with new challenges and issues.
 Customer awareness, customer centricity, more deeply penetrated and
retail focused distribution system, new innovative products,
constructive regulatory environment and support from the industry
bodies will be the key contributory factors in the future of the industry.

3.4 SWOT ANALYSIS:

SWOT analysis of Future Generali analyses the brand/company with its strengths, weaknesses,
opportunities & threats. Future Generali is one of the leading brands in the financial services
sector.

1. Strength:

 Known for its prudent investment management.

 Wide range of policies.

 International expertise and reputation of Generali

Group.

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  Generali group is present in over 68 countries with over
85,000 employees.

 Future group operates over 12 million square feet of

retail space in 71 cities and towns and 65 rural
locations.

2. Weakness:

 Small branch base.

 Low marketing.

 Insurance companies have a poor image when it comes

to payment of dues.

 Less emphasis on advertising causes lack of brand

visibility

3. Opportunities:

 Growing rural market.

 Earning Urban Youth.

 Cross selling through financial services such as

banking.

 More penetration into the growing cities

4. Threats:

 Stringent Economic measures by Government and RBI

 Entry of new NBFCs in the sector.

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 4. On the job training

4.1 Learning

Overview to Indian Equity Market

Much of Indian capital market trade takes place on its two stock exchanges: the Bombay Stock
Exchange (BSE) and the NSE. The BSE has existed since 1875. The NSE, on the other hand,
was founded in 1992 and began to trade in 1994. Both markets, however, follow the same system
for pricing, pricing hours and settlement process.

The BSE had 5,518 listed companies as of February 2020, while the competitor NSE had around
1,799 listed companies as of 31 Dec 2019. For all the firms listed on the BSE, only about 500
businesses make up more than 90 per cent for their market capitalization; the majority of the
crowd is extremely illiquid.

Nearly all of India's big firms are listed on both the exchanges. BSE is the newer stock market
but in terms of value the NSE is the larger stock exchange. The NSE, instead, is a more
competitive market. They are now equal in terms of market value, at around $2.3 trillion. All
exchanges compete for the flow of orders which leads to lower costs, business performance and
innovation.

Markets Index

Sensex and Nifty are the two famous Indian stock indices. Sensex is the oldest stock market
index; it includes shares of 30 BSE-listed companies that account for about 47 percent of the
free-float market capitalization of the index.6 It was founded in 1986 and provides time series
data from April 1979.

Market Regulator

The ultimate responsibility for stock market growth, control, and supervision rests with India's
Securities and Exchange Board (SEBI), which was established as an independent authority in
1992. Since then, SEBI has continuously tried to develop market rules in line with best practice
in the industry. This enjoys the overwhelming power of enforcing restrictions on participants in
the business.

Stock market Registered under SEBI:

1. BSE (Bombay Stock Exchange)

2. NSE (National Stock Exchange)

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3. Multi Commodity Exchange of India

4. National Commodity and derivative exchange

5. Calcutta Stock Exchange

6. Indian commodity Exchange

7. Metropolitan Stock Exchange

8. Indian International Exchange

9. NSE International exchange

What is Equity Share?

Equity shares are known as common stock. These are the type of fractional or part ownership in
which the shareholder takes the full business risk as a fractional owner. Equity Stock holders are
business shareholders who have voting rights. Equity shares are the vital source of long-term
capital raising. Equity shares represent a company's ownership and capital raised by issue of such
share.

Investment in Equity

Creating a portfolio idea

The investing process demands that we first pick a stock that looks promising. Upon picking the
stock, we have to refer it to the checklist to decide whether the stock satisfies all the checklist
conditions, whether we invest, then we search for other opportunities. How do we produce a list
of stocks that seems important enough to further investigate?

General Observation – This may sound simplistic, but it's one of the simplest ways to grow a
stock concept, believe me. Just keep your eyes and ears open and watch the economic activity
around you. See what people purchase and sell, see what items are being sold, take a look at the
community and see what people are thinking about.

Stock screener – A stock screener allows to test stocks depending on the metrics you specify
and thereby lets investors do better stock analysis. For example, a stock screener may be used to
classify stocks with a 25% ROE and a 20% PAT margin. A portfolio screener is a very helpful
device when you choose a few investing strategies from a large stock basket to be shortlisted. Eg
Money control.

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 Macro Trends – Maintaining a general eye on the macroeconomic pattern is an ideal way to
find strong stocks. Here's an example of the same – There's a big demand for development
schemes in India as of today. The cement firms based in India will be a clear winner of this
move. I should then look at all the cement firms and use the checklist to decide which has
potentials to take this opportunity

Sector developments – It is industry-specific. To recognize new developments and businesses

within the sector that can benefit from it, one has to map sectors. The non-alcoholic beverage
industry, for example, is a very conventional field. Three types of items are primarily marketed,
and they are coffee, tea, and bottled juice. Hence, only these three goods are manufactured and
marketed by most corporations.

The Compounding Effect

In basic words, compounding is the tendency of capital to expand as year 1 earnings are
reinvested for year 2.

1. Consider, for example, spending Rs.100 which is projected to rise at 20 percent year on year
(remember this is also called the CAGR). It's estimated the money would rise to Rs.120 at the
end of the first year. At the end of year 1 you have two options: Let Rs.20 in profits remain
invested along with the original principal of Rs.100 or
2. Withdraw the profits of Rs.20.
You decide not withdraw Rs.20 profit; instead you decide to reinvest the money for the 2nd year.
At the end of 2nd year, Rs.120 grows to Rs.144. At the end of 3rd year Rs.144 grows to Rs.173.
So on and so forth.

Compare this with withdrawing Rs.20 profits every year. Had you opted to withdraw Rs.20
every year then at the end of 3rd year the profits would have been just Rs. 60.

Understanding Fundamental Analysis.

All stock analysis attempts to assess whether security is appropriately priced in the global
market. Fundamental analysis is typically performed from a macro or a micro perspective in
order to find stocks that are not valued correctly by the market.

Analysts usually research, in order to assess the general state of the economy, and then the power
of the relevant sector, before focusing on the output of the particular company in order to obtain
a reasonable market valuation for the product.

Fundamental analysis uses public data to evaluate the value of a stock or any other type of safety.
For example, an investor may conduct a quantitative analysis of the valuation of a bond by
looking at external indicators such as interest rates and the general state of the economy.

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Study details about a bond issuer, such as future improvements in its credit rating.

Profit margins and other data to determine the underlying value and potential of the company for
future growth. Many of these documents are included in the company's financial statements
(more on that below).

Investing and Fundamental Analysis

The analyst uses work to create a model for determining the estimated value of the company's
share price on the basis of publicly available data. This value is only an estimate, the analyst's
educated opinion, of the value of the company's share price compared to the current market
price. Some analysts may refer to their estimated price as the inherent value of the company.

If an analyst estimates that the value of the stock will be substantially higher than the current
market price of the stock, he or she may publish a buy or overweight rating for the stock. This
serves as a guide to clients who obey the analyst. If the analyst calculates a lower intrinsic value
than the current market price, the stock is considered overvalued and the recommendation for
sale or underweight is considered to be overvalued.

Investors who obey these guidelines should hope to be able to buy stocks with favorable ratings,
as these securities are expected to rise over time. Likewise, stocks with unfavorable scores are
predicted to have a greater risk of dropping rates. Such stocks are candidates for removal from
existing portfolios or for addition as short positions.

This method of stock analysis is considered to be the opposite of the technical analysis, which
predicts price direction through an analysis of historical market data such as price and volume.

Quantitative and Qualitative Fundamental Analysis

The difficulty with describing the term "fundamentals" is that it can encompass something
relevant to the economic well-being of an organization. They obviously include numbers such as
revenue and profit, but they can also include anything from the market share of a company to the
quality of its management.

Quantitative – capable of being measured or expressed in numerical terms.

Qualitative – related to or based on the quality or character of something, often as opposed to its
size or quantity.

Quantitative metrics are complicated statistics in this sense. These are the measurable
characteristics of a business. That's why financial statements are the growing collection of
objective evidence. Revenue, earnings, investments and more can be calculated with
considerable accuracy.

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Qualitative Fundamentals to Consider

History of management-Who are they, their history, expertise, qualifications, have the merit of
managing the company, any criminal charges against the promoters, etc.

Business Ethics -is the prevention of fraud, misconduct and unequal market practices

Corporate governance – selection of members, organization of the company, accountability etc.

Minority shareholders-How does management treat minority shareholders in taking company

actions?

Share trading – Is handling the purchase / sale of client stock by secret promoter groups

Related party transactions – Is the business that gives financial favors to established people such
as families of investors, associates, suppliers etc.

Remuneration paid to promoters-Is the management paying a strong wage, usually a percentage
of income

Operator behavior in stocks – Does the stock price show unusual market behavior, especially at a
time when the promoter is trading in the stocks

Shareholders – who are the company's main owners, who are the individuals holding more than 1
per cent of the company's outstanding stock

Promoter Lifestyle – Are the promoters being loud and flamboyant with their lifestyle? Will they
want to show off their richness?

Quantitative Fundamentals to Consider

The Quantitative equity research is aimed at helping us understand the numbers and actually
evaluate whether the nature of the business and the financial performance of the business
complement each other. If they do not complement each other then the company will clearly not
qualify as investment grade.

4.2 Target Assigned

We were asked to timely submit the reports assigned to us on a regular basis including all the
basics about stock market, investment opportunities, strategies to reach customers in life insurance,

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sectors that might raise post Covid-19, stocks that have recently reached the circuit, various norms
to be followed by RBI, situation of Indian economy during corona virus, some basics about grey
market etc. which were to be submitted in the form of either a report or a ppt. We were also asked
to make a video creating awareness and providing information about insurance policy during this
lockdown.

4.3 Target Achieved

We successfully completed all the tasks assigned to us on time with complete dedication and hard
work and also made an effort to spread awareness about the Insurance Policy by making a video
on providing information about Insurance Policy and advantages of why one should take Insurance
Policy, which was later appreciated by the members of the company. Many customers were having
the unsolved problems which were solved as we communicated with them and passed their queries/
problems to the relationship manager so that they can solve problems and bring back the customer
interest back. We even suggested the changes that they can implant in the structure so that there is
smoother running of the business and some ideas that might help company in future to improve
their advertising.

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 Bibliography

 www.futuregenerali.com
 www.nseindia.com
 www.wikipedia.com
 www.investopedia.com

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