Executive summary

Banking in India
Banking in India was fairly mature in terms of supply, product range and reach- even though reach in rural India and to the poor still remains a challenge. Banking in India in the modern sense originated in the last decades of the 18th century .The first banks were Bank of Hindustan (1770-1829) and The General Bank of India, established 1786 and since defunct. In 1969 the Indian government nationalized all the major banks that it did not already own and these have remained under government ownership. They are run under a structure known as 'profit-making public sector undertaking' (PSU) and are allowed to compete and operate as commercial banks. The Indian banking sector is made up of four types of banks, as well as the PSUs and the state banks; they have been joined since 1990s by new private commercial banks and a number of foreign banks.

History
Post-Independence The partition of India in 1947 adversely impacted the economies of Punjab and West Bengal, paralyzing banking activities for months. India's independence marked the end of a regime of the Laissez-faire for the Indian banking. The Government of India initiated measures to play an active role in the economic life of the nation, and the Industrial Policy Resolution adopted by the government in 1948 envisaged a mixed economy. This resulted into greater involvement of the state in different segments of the economy including banking and finance. The major steps to regulate banking included: The Reserve Bank of India, India's central banking authority, was established in April 1935, but was nationalized on 1 January 1949 under the terms of the Reserve Bank of India (Transfer to Public Ownership) Act, 1948 (RBI, 2005b). In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of India (RBI) "to regulate, control, and inspect the banks in India". The Banking Regulation Act also provided that no new bank or branch of an existing bank could be opened without a license from the RBI, and no two banks could have common directors. Nationalization in the 1960s Despite the provisions, control and regulations of Reserve Bank of India, banks in India except the State Bank of India or SBI, continued to be owned and operated by private persons. By the 1960s, the Indian banking industry had become an important tool to facilitate the development of the Indian economy. At the same time, it had emerged as a large employer, and a debate had ensued about the nationalization

of the banking industry. Indira Gandhi, the then Prime Minister of India, expressed the intention of the Government of India in the annual conference of the All India Congress Meeting in a paper entitled "Stray thoughts on Bank Nationalization." The meeting received the paper with enthusiasm.

Thereafter, her move was swift and sudden. The Government of India issued an ordinance ('Banking Companies (Acquisition and Transfer of Undertakings) Ordinance, 1969')) and nationalized the 14 largest commercial banks with effect from the midnight of 19 July 1969. These banks contained 85 percent of bank deposits in the country. Jayaprakash Narayan, a national leader of India, described the step as a "masterstroke of political sagacity." Within two weeks of the issue of the ordinance, the Parliament passed the Banking Companies (Acquisition and Transfer of Undertaking) Bill, and it received the presidential approval on 9 August 1969. Liberalization in the 1990s In the early 1990s, the then Narasimha Rao government embarked on a policy of liberalization, licensing a small number of private banks. These came to be known as New Generation tech-savvy banks, and included Global Trust Bank (the first of such new generation banks to be set up), which later amalgamated with Oriental Bank of Commerce, UTI Bank (since renamed Axis Bank), ICICI Bank and HDFC Bank. This move, along with the rapid growth in the economy of India, revitalized the banking sector in India , which has seen rapid growth with strong contribution from all the three sectors of banks, namely, government banks, private banks and foreign banks. The next stage for the Indian banking has been set up with the proposed relaxation in the norms for Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights which could exceed the present cap of 10%, at present it has gone up to 74% with some restrictions. The new policy shook the Banking sector in India completely. Bankers, till this time, were used to the 4 64 method (Borrow at 4%; Lend at 6%;Go home at 4) of functioning. The new wave ushered in a modern outlook and tech-savvy methods of working for traditional banks. All this led to the retail boom in India. People not just demanded more from their banks but also received more. Current period By 2012, banking in India was generally fairly mature in terms of supply, product range and reach-even though reach in rural India still remains a challenge for the private sector and foreign banks. In terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and transparent balance sheets relative to other banks in comparable economies in its region. The Reserve Bank of India is an autonomous body, with minimal pressure from the government. The stated policy of the Bank on the Indian Rupee is to manage volatility but without any fixed exchange rate-and this has mostly been true.

With the growth in the Indian economy expected to be strong for quite some time-especially in its services sector-the demand for banking services, especially retail banking, mortgages and investment services are expected to be strong. One may also expect M&As, takeovers, and asset sales. In recent years critics have charged that the non-government owned banks are too aggressive in their loan recovery efforts in connexion with housing, vehicle and personal loans. There are press reports that the banks' loan recovery efforts have driven defaulting borrowers to suicide. Major players in the banking industry

How does the industry work?

Axis bank
Introduction of axis bank
Axis Bank is the third largest private sector bank in India. Axis Bank offers the entire spectrum of financial services to customer segments covering Large and Mid-Corporate, SME, Agriculture and Retail Businesses. The Bank has a large footprint of 1787 domestic branches (including extension counters) and 10,363 ATMs spread across 1,139 centres in the country as on 31st December 2012. The Bank also has 7 overseas branches / offices in Singapore, Hong Kong, Shanghai, Colombo, Dubai, DIFC - Dubai and Abu Dhabi. Axis Bank is one of the first new generation private sector banks to have begun operations in 1994. The Bank was promoted in 1993, jointly by Specified Undertaking of Unit Trust of India (SUUTI) (then known as Unit Trust of India),Life Insurance Corporation of India (LIC), General Insurance Corporation of India (GIC), National Insurance Company Ltd., The New India Assurance Company Ltd., The Oriental Insurance Company Ltd. and United India Insurance Company Ltd. The shareholding of Unit Trust of India was subsequently transferred to SUUTI, an entity established in 2003. With a balance sheet size of Rs.2,85,628 crores as on 31st March 2012, Axis Bank is ranked 9th amongst all Indian scheduled banks. Axis Bank has achieved consistent growth and stable asset quality with a 5

year CAGR (2007-12) of 31% in Total Assets, 30% in Total Deposits, 36% in Total Advances and 45% in Net Profit.

Business segments of axis bank

RETAIL BANKING BUSINESS BANKING CORPORATE CREDIT TREASURY INTERNATIONAL BANKING SMALL AND MEDIUM ENTERPRISES INFORMATION TECHNOLOGY AGRICULTURE FINANCIAL INCLUSION HUMAN RESOURCES Retail banking Axis Bank has developed a strong retail banking franchise over the years. Retail Banking is one of the key drivers of the Banks growth strategy and it encompasses a wide range of products delivered to customers through multiple channels. The Bank offers a complete suite of products across deposits, loans, investment solutions, payments and cards to help customers achieve their financial objectives. The Bank focuses on product differentiation as well as a high level of customer-service to enable it to build its retail business. The Bank has continued to develop its risk management capabilities in Retail business, both from a credit and operations risk standpoint. The growth areas identified by the Bank are in the areas of residential mortgages and passenger car loans. Of the total retail loans portfolio, 88.47% is in the form of secured loans (residential mortgages and auto loans). The retail business of the Bank is supported by innovative services and alternate channels. It include ATM network, internet banking, mobile banking & phone banking which provide convenience of transactions to customers.

Business banking
Business Banking leverages the Banks strengths a well distributed network of branches and a strong technology platform to offer the best in transaction banking services. The Bank offers a range of current account products and cash management solutions across all business segments covering corporates, institutions, central and state government ministries and undertakings as well as small and retail customers. The Bank is one of the top CMS providers in the country. The Bank acts as an agency bank for transacting government business offering services to various Central Government Ministries / Departments and other State Governments and Union Territories.

Corporate credit
Axis Bank has built a strong corporate banking franchise across corporate, liability and asset businesses. Axis Bank provides customized structuring and financing solutions in a timely and comprehensive manner to its corporate customers with a focus on building out a high quality credit portfolio. The Bank is a market leader in Debt Capital Markets and loan syndication business across segments, sectors and geographies. The Bank also provides full range of Treasury and Trade Finance solutions to its corporate

clients. The Bank offers technology enabled transaction banking and cash management services to customers across Government, financial institutions and corporate segments. Banks infrastructure business includes project and bid advisory services, project lending, debt syndication, project structuring and due diligence, securitization and structured finance. In October 2010, the Bank launched the Axis Infra Index. The Index, as a composite measure of investor confidence, comprises four components: flow of equity and debt funds into infrastructure sectors, project completion and commencement of operations, output related to infrastructure segments and regulatory and policy developments relevant for the sector. It is designed to capture the evolving fundamentals of the sector and is updated and disseminated on a quarterly basis.

Treasury option
The Bank has an integrated Treasury, covering both domestic and global markets, which manages the Banks funds across geographies. The Banks treasury business has grown substantially over the years, gaining market share and continuing to be among the top five banks in terms of forex revenues. The Treasury plays an important role in the sovereign debt markets and participates in the primary auctions held by RBI. It also actively participates in the secondary government securities and corporate debt market. The foreign exchange and money markets desk is an active participant in the inter-bank/ FI space. The Bank has been exploring various cross-border markets to augment resources and support customer cross-border trade. The Bank has emerged as one of the leading providers of foreign exchange and trade finance services. It provides a gamut of products for exports and imports as well as retail services. Its cutting edge technology provides comprehensive and timely customer services.

International banking
The international operations of the Bank form a key enabler in its strategy to partner with the overseas growth potential of its domestic clientele, who are venturing abroad or require non-rupee funds for domestic projects. The Bank now has a foreign network of four branches (Singapore, Hong Kong, DIFC (Dubai) and Colombo (Sri Lanka)) and three representative offices (Shanghai, Dubai and Abu Dhabi) with presence in six countries. While corporate banking, trade finance, treasury and risk management solutions are the primary offerings through the branches at Singapore, Hong Kong, DIFC (Dubai) and Colombo, the Bank also offers retail liability products from its branches at Hong Kong and Colombo. Further, the Banks Gulf Co-operation Council (GCC) initiatives in the form of representative offices in Dubai and Abu Dhabi, and alliances with banks and exchange houses in the Middle East provide the support for leveraging the business opportunities emanating from the large NRI Diaspora present in these countries.

Small and medium enterprise

The Small and Medium Enterprises (SME) segment is a thrust area of the Bank. The business approach towards this segment, which is expected to contribute significantly to economic growth in future, is to build relationships and nurture the entrepreneurial talent available. The relationship based approach

enables the Bank to deliver value through the entire life cycle of SMEs. The Bank has segmented its SME business in three groups: Small Enterprises, Medium Enterprises and Supply Chain Finance. The Bank extends working capital, project finance as well as trade finance facilities to SMEs. The Bank has launched Business Gaurav SME Awards in association with Dun & Bradstreet to recognise and award achievers in the SME space.

Information technology
The Bank continues to focus on introducing innovative banking services through investments in scalable and robust technology platforms that delivers efficient and seamless services across multiple channels for customer convenience and cost reduction. The Bank has also focused on improving the governance process in IT. The Bank has launched the Business Process Management System, a reusable system, which helps to build process efficiencies across various areas of operations. The Bank has undertaken various steps in order to align itself towards RBI guidelines on security and governance, including setting up of Board and Executive level committees and working on IT operations and other key areas.

Agriculture
The Bank continues to drive and expand the flow of credit to the agricultural sector. 401 branches of the Bank have dedicated officers for providing farm loans. Products and solutions are created specifically with simple features and offered at affordable rates to rural customers. The Bank has also adopted a value-chain approach, wherein end-to-end solutions are being provided for various stakeholders. It also offers various customized solutions to meet the regional requirements.

Financial inclusion
The Bank perceives financial inclusion (FI) not as a corporate social responsibility or a regulator driven initiative but as a large business opportunity that lies untapped in the rural and unexplored section of the urban market. Till March 2012, the Bank has opened over 4.4 million No-Frills accounts in over 7,607 villages through a network of 15 Business Correspondents and nearly 6,000 customer service points. The Bank has a strong presence in the Electronic Benefit Transfer (EBT) space and has covered around 6,800 villages across 19 districts and 9 states till date with over 3.7 million beneficiaries. The Bank also has a range of other customised products for this customer segment like different variants of Axis Uday No Frills Savings Accounts, Chhota RD, Chhota FD, and Chhota SIP. The Bank has been one of the first few banks to have tied-up with telecom companies to offer remittance led financial inclusion services on the mobile platform.

Human resources
The Bank aims in creating and developing human capital to realise its vision of nurturing a mutually beneficial relationship with its employees. Employee engagement and learning, leadership development, enhancing productivity and building multiple communication platforms thus occupied

centre stage in the Banks HR objective. The Bank continues to maintain a strong employer brand in the financial services sector especially on the campuses of the premier business schools of the country. In a major initiative, the Bank launched Axis Academic Interface Program (AAIP) with Institutions to offer youngsters an understanding about the financial services industry, and creating Axis Bankers. So far, the Bank has tied up with Manipal University, NIIT, IFBI andGuwahati University. Axis Bank has a young workforce with an average age of 29 years. The equal opportunity employer policy of the Bank contributes strongly to the Axis Bank brand.

Shareholding Pattern
As on 31/03/2011

Promoter Shareholding 1 Administrator of the Specified Undertaking of the Unit Trust of India - (SUUTI) 2 Life Insurance Corporation of India 3 General Insurance Corporation of India 4 The New India Assurance Company Limited 5 National Insurance Company Limited 6 The Oriental Insurance Company Limited 7 United India Insurance Company Limited

37.22% 23.68% 9.56% 1.85% 0.94% 0.58% 0.34% 0.27%

Domestic Shareholders 8 Indian FIs and Banks 9 Indian Mutual Funds 10 Indian bodies corporate 11 Indian residents

15.71% 1.74% 3.38% 5.59% 5.00%

Foreign Shareholders

47.07%

12 FIIs 13 FDI (GDR) 14 Foreign Bodies DR 15 Foreign Banks/Foreign Nationals 16 Non-Resident Indians

37.68% 9.19% 0.04% 0.00% 0.16%

Total

100%

Board of directors
The members of the board are:
Dr. Adarsh Kishore Smt. Shikha Sharma Shri S. K. Chakrabarti Shri J.R. Varma Dr. R.H. Patil Smt. Rama Bijapurkar Shri R.B.L. Vaish Shri M.V. Subbiah Shri K. N. Prithviraj Shri V. R. Kaundinya Chairman Managing Director & CEO Deputy Managing Director Director Director Director Director Director Director Director

Shri S. B. Mathur Shri S. K. Roongta Shri Prasad R. Menon

Director Director Director

Shri R. N. Bhattacharyya Director

Vision 2015
To be the preferred financial solutions provider excelling in customer delivery through insight, empowered employees and smart use of technology Core Values Customer Centricity Ethics Transparency Teamwork Ownership

Key milestones
1993 1994 2001 2002 1. Axis Bank (erstwhile UTI Bank) opens its Registered Office in Ahmedabad and Corporate Office in Mumbai 1. Banks first branch inaugurated at Ahmedabad by Dr.Manmohan Singh, then Hon'bleFinance Minister, Government of India. 1. Deposits base crosses Rs.10,000 crores 1. Banks 100th branch opens at Tuticorin, Tamil Nadu 2. The Bank opens an ATM at the GolDak-Khana, (New Delhi GPO), the first ATM at any post office in the country 3. Bank launches Corporate iConnect - the internet banking facility for corporate customers 1. The Banks debit card base crosses the one million mark 2. The Bank opens its ATM at Thegu near the Nathula Pass in Sikkim. This ATM is at the highest altitude in India. 3. First Indian bank to launch the travel currency card 4. The Bank opens its 1000th ATM 1. Bank gets listed on London stock exchange 2. The Bank and Visa International launch mobile refill facility for all Visa card holders in India 1. Opens it's first international branch at Singapore 2. The first Indian Bank to successfully issue foreign currency hybrid capital in

2003

2005

2006

2008 2010 2011

3. 4. 5. 1. 2. 1. 1. 2.

2012

1. 2. 3.

the international market Opens Representative Office in Shanghai Launches credit card business Opens the first of it's kind Priority Banking lounge in Pune Launches Platinum Credit Card, India's first EMV chip based card Opensits Dubai Representative Office Opens it's 1000th branch at MET Bandra Reclamation, Mumbai Launches India travel card - India's first and only Indian currency prepaid travel card for foreign nationals The Bank inaugurates Axis House, its new Corporate Office at Worli, Mumbai. Opens the 10,000th ATM - Largest ATM network amongst private sector banks in India Reached 2 lakh installed EDC machines the highest for any bank in India Becomes the first Bank in the world to reach $2 billion loading on prepaid Travel CurrencyCards

Management system of axis bank Promoters: Axis Bank Ltd. has been promoted by the largest and the best Financial Institution of the
country, UTI. The Bank was set up with a capital of Rs. 115 crore, with UTI contributing Rs. 100 Crore, LIC - Rs. 7.5 Crore and GIC and its four subsidiaries contributing Rs. 1.5 Crore each SUUTI - Shareholding 27.02%Erstwhile Unit Trust of India was set up as a body corporate under the UTI Act, 1963, with a view to encourage savings and investment. In December 2002, the UTI Act, 1963 was repealed with the passage of Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 by the Parliament, paving the way for the bifurcation of UTI into 2 entities, UTI-I and UTI-II with effect from 1st February 2003. In accordance with the Act, the Undertaking specified as UTI I has been transferred and vested in the Administrator of the Specified Undertaking of the Unit Trust of India (SUUTI), who manages assured return schemes along with 6.75% US-64 Bonds, 6.60% ARS Bonds with a Unit Capital of over Rs. 14167.59 crores. The Government of India has currently appointed Shri K. N. Prithviraj as the Administrator of the Specified undertaking of UTI, to look after and administer the schemes under UTI where Government has continuing obligations and commitments to the investors, which it will uphold.

Services offered by axis bank Accounts

EasyAccess Savings Account Prime Savings account Salary Savings Account Power salute: A salute to the defence forces

 Azaadi Senior Privilege Savings Account For the woman of today Smart Privilege Savings Account A complete banking solution for Trusts, Associations, Societies, Government Bodies, Section 25 companies and NGOs Pension Savings Bank Account, Ladies first account Youth account

Deposits
Fixed Deposits Recurring Deposits Encash 24 Tax Saver Fixed Deposit

Loans
Welcome to the wide range of Axis Bank's Loan products. Put an end to your financial troubles. Power Homes Power Drive Personal Power Study Power Asset Power Two Wheeler Loan Loan Against Security Consumer Power

Cards
Apart from Gold & Silver credit cards, Axis Bank provides Axis Bank Meal Card

Axis Bank Gift Card LIC co-branded Annuity Card

TCDC

Capital Markets
Debt Solutions Equity Solutions Private Equity, Mergers & Acquisitions Advisory Services Trusteeship Services Depository Services Capital Market Funding e-Broking

Credit
Working Capital Finance Term Loans Trade Services and Trade Finance Structured Finance Supply Chain Management Overseas Financing and Transactions SME Standard Products Power Trac

Portfolio Management

The Portfolio Management is the art and science of making decisions about investment mix and policy, matching investments to objectives, asset allocation for individuals and institutions, and balancing risk against performance. The idea of Portfolio management is to overcome the pace of change in business landscape and provide investment avenues to stay ahead of the risk return curve and generate positive returns consistently over a period of time. It is all about strengths, weaknesses, opportunities and threats in the choice of debt vs. equity, domestic vs. international, growth vs. safety, and many other tradeoffs encountered in the attempt to maximize return at a given appetite for risk.

Portfolio Management Services

Portfolio Management Services (PMS) is a sophisticated investment vehicle that offers a customized investing into stocks, fixed income products, cash, other structured products and mutual funds units etc. to meet specific investment objectives. Though, PMS is managed by a professional managers, it has potential to address the personal preferences tailored into the investment portfolio giving the freedom and flexibility required for achieving the financial goals. Financial markets today offer enormous growth potential. But managing ones own investments can be an extremely challenging task. During times of intense market volatility, it can be difficult to know what one should do. Staying calm, keeping ones sense of perspective, taking a rational look at the investments and seeking the advice of a professional are all smart strategies one can follow. Axis Bank offers PMS to address varying investment preferences. As a focused service, PMS pays attention to details, and portfolios are customized to suit the unique requirements of investors.

Benefits of PMS
PMS benefits investor in following ways: Professional Management PMS is provided by qualified and professional investment managers with the objective to deliver consistent long term performance while controlling risk. Continuous Monitoring It is important to recognize that portfolios need to be constantly monitored and periodic changes should be made to optimize the results. Risk Control The investment manager employs a qualified research team to establish the investor's investment strategy and providing the information to the investment manager. This also helps in reducing the investment related risks up to significant extent.

Asset Allocation: PMS helps in allocating savings of a client in terms of stocks, bonds or equity funds. The plan is tailor made and is designed after the detailed analysis of client's investment goals, saving pattern, and risk taking capacity. Hassle Free Operation The investment manager gives the investor a customised service. He takes care of all the administrative aspects of the investor's portfolio with a periodic reporting on the overall status of the portfolio and performance. The investment manager provides various types of reports to his investors on a regular basis. These reports are related to the transactions made on their behalf, current holdings of the investment portfolio and realized Profits and Losses to name a few. Flexibility The Portfolio Manager has fair amount of flexibility in terms of investing patterns and procedures. He can create a reasonable concentration in the investor portfolios by investing disproportionate amounts in favour of compelling opportunities. Transparency PMS provides comprehensive communications and performance reporting. Investors will get regular statements and updates from the investment manager. The account statements will give investor a complete picture regarding the securities held on his behalf. These reports help investor in understanding and measuring their tax liabilities. All kinds of direct taxes (Income Tax) have to be borne and paid by the investor. Customized Advice PMS gives select investors the benefit of tailor made investment advice designed to achieve their financial objectives. Personalized Approach In PMS, investor may gain direct personalized access to the professional investment managers who actively manage his investment portfolio.

Types of PMS
PMS is of 3 types- Discretionary, Non-Discretionary and Advisory Discretionary: This service gives the flexibility and freedom to investment manager to operate on behalf of the investor fully. The portfolio manager can choose the investment avenue and may decide the appropriate time for the transaction. Further, he implements the investment decisions. Non-Discretionary: Under this service, the portfolio manager recommends the investment ideas. Appropriate time to execute the transaction is left up to the investor. However the execution is done by the portfolio manager.

Advisory: Under this category of services, the portfolio manager only suggests the investment ideas. The choice as well as the execution of the investment decisions rest solely with the Investor. In India majority of PMS providers offer Discretionary Services.

Factors
1. 2. 3. 4. 5. Risk taking appetite. Age: At which stage of life an individual is, matters a lot. Returns: returns expected/ required Investment Objective. Time Horizon.

Amount of liquidity required. Inflation

Portfolio design
Before designing a portfolio one will have to know the intention of the investor or the returns that the investor is expecting from his investment. This will help in adjusting the amount of risk. This becomes an important point from the point of view of the portfolio designer because if the investor will be ready to take more risk at the same time he will also get more returns. This can be more appropriately understood from the figure drawn below.

From the above figure we can see that when the investor is ready to take risk of M1, he is likely to get expected return of R1, and if the investor is taking the risk of M2, he will be getting more returns i.e. R2. So we can conclude that risk and returns are directly related with each other. As one increases the other will also increase in same of different proportion and same if one decreases the other will also decrease. From the above discussion we can conclude that the investors can be of the following three types: 1. Investors willing to take low risk and at the same time are also anticipating low returns. 2. Investors willing to take moderate risk and at the same time are also anticipating moderate returns. 3. Investors willing to take high risk and at the same time are also anticipating high returns.

Age

Portfolio 80% in stocks or mutual funds

Below 30

10% in cash 10% in fixed income 70% in stocks or mutual funds

30 to 40

10% in cash 20% in fixed income 60% in stocks or mutual funds

40 to 50

10% in cash 30% in fixed income 50% in stocks or mutual funds

50 to 60

10% in cash 40% in fixed income

40% in stocks or mutual funds 60 above 10% in cash 50% in fixed income

These aren't hard and fast allocations, just guidelines to get you thinking about how your portfolio should look. Your risk profile will give you more equities or more fixed income depending on your aggressive or conservative bias. However, it's important to always have some equities in your portfolio (or equity funds) no matter what your age. If inflation roars back, this will be the portion of your investments that protects you from the damage, not your fixed income. Also, the fixed income of your portfolio should be diversified. If you buy bonds and debentures directly or if you invest in FDs, then make sure you have at least five different maturities to spread out the interest rate risk.

Impact of Portfolio Management on Indian Trading

Investment in stock markets has become such a huge passion since the past few years. In India, people want to benefit from the windfall gains which arise in this market. So, investment banking assures that the investors get some adequate advice. Apart from that, investment banking services also help companies in gaining cash through securities. They dont have to spend much on the investment operations. The companies get

help because they are able to raise capital from the market in just the right way. The growth targets of the companies, which stay unfulfilled due to the lack of the capital, get fulfilled with such investment companies. The professionals of such companies are fully trained in executing a well-planned strategy. So, such companies help targets in terms of their strategy identification. The companies have a qualified team of professionals which ensures that the clients dont face any problems in arranging capital. The capital may be required for various purposes, which include long term capital, working capital and trade finance. The capital, which is to be used for term loans, Is quite important so that projects are easily established. A company cant grow when it does not invest in the investment projects which can yield returns through production. Investment banking India has expanded because so many companies need money for financing their goals and even acquisition. So, companies can now have easy acquisition of capital for financing production. They are even provided help in the introduction of foreign currency convertible bonds in the trade. Investment banking firms also have other goals, which include their investment guidance for NRIs. Such guidance is known as NRI services. Most of the NRIs need help when it comes to making right investment decisions in the local markets. Although they have the right quantity of capital, they should know which companies could warrant them excellent gains in the end. Now, such NRIS also do not want to exclude themselves from the booming Indian markets. They need someone who can guide them through the entire investment procedure. Therefore, they are offered portfolio management services which can guide them adequately. Such services can assure them constant returns from their portfolios inspite of the changing market scenario. It is also noteworthy that such returns get them so much security. They have diversified portfolios, which imply that even inspite of a losing market, they dont suffer much. For example, portfolio management can help an investor in knowing what are the right sell and buy prices for a specific stock. This is not the case when he operates without any software. So, when the prices of certain stock, are expected to fall suddenly after rising, an investor knows when to quit buying. So, get such guidance and proceed in the stock markets without any hitch. Portfolio investment is the right way to get constant returns out of the stock market, when the markets are so volatile. They can get adequate returns in spite of market crashes. Portfolio management is the basic feature of both online and offline trading companies.

Meaning of investment
Investment has different meanings in finance and economics. In economics, investment is the amount purchased per unit time of goods which are not consumed but are to be used for future production. Examples include railroad or factory

construction. Investment in human capital includes costs of additional schooling or on-the-job training. Inventory investment is the accumulation of goods inventories; it can be positive or negative, and it can be intended or unintended. In measures of national income and output Investment is related to saving and deferring consumption. Investment is involved in many areas of the economy, such as business management and finance whether for households, firms, or governments. In finance, investment is the purchase of an asset or item with the hope that it will generate income or appreciate in the future and be sold at the higher price. It generally does not include deposits with a bank or similar institution. The term investment is usually used when referring to a long-term outlook. This is the opposite of trading or speculation, which are short-term practices involving a much higher degree of risk. Financial assets take many forms and can range from the ultra safe low return government bonds to much higher risk higher reward international stocks. A good investment strategy will diversify the portfolio according to the specified needs. Investments are often made indirectly through intermediaries, such as pension funds, banks, brokers, and insurance companies. These institutions may pool money received from a large number of individuals into funds such as investment trusts, unit trusts, SICAVs etc. to make large scale investments. Each individual investor then has an indirect or direct claim on the assets purchased, subject to charges levied by the intermediary, which may be large and varied. It generally does not include deposits with a bank or similar institution. Investment usually involves diversification of assets in order to avoid unnecessary and unproductive risk. Investment is a conscious act of an individual or any entity that involves deployment of money (cash) in securities or assets issued by any financial institution with a view to obtain the target returns over a specified period of time. Target returns on an investment include: Increase in the value of the securities or asset, and/or Regular income must be available from the securities or asset.

Types of Investment

Different types or kinds of investment are discussed in the following points..

1. Autonomous Investment

Investment which does not change with the changes in income level, is called as Autonomous or Government Investment. Autonomous Investment remains constant irrespective of income level. Which means even if the income is low, the autonomous, Investment remains the same. It refers to the investment made on houses, roads, public buildings and other parts of Infrastructure. The Government normally makes such a type of investment.

2. Induced Investment
Investment which changes with the changes in the income level, is called as Induced Investment. Induced Investment is positively related to the income level. That is, at high levels of income entrepreneurs are induced to invest more and vice-versa. At a high level of income, Consumption expenditure increases this leads to an increase in investment of capital goods, in order to produce more consumer goods.

3. Financial Investment
Investment made in buying financial instruments such as new shares, bonds, securities, etc. is considered as a Financial Investment. However, the money used for purchasing existing financial instruments such as old bonds, old shares, etc., cannot be considered as financial investment. It is a mere transfer of a financial asset from one individual to another. In financial investment, money invested for buying of new shares and bonds as well as debentures have a positive impact on employment level, production and economic growth.

4. Real Investment
Investment made in new plant and equipment, construction of public utilities like schools, roads and railways, etc., is considered as Real Investment. Real investment in new machine tools, plant and equipments purchased, factory buildings, etc. increases employment, production and economic growth of the nation. Thus real investment has a direct impact on employment generation, economic growth, etc.

5. Planned Investment
Investment made with a plan in several sectors of the economy with specific objectives is called as Planned or Intended Investment. Planned Investment can also be called as Intended Investment because investors while making investment make a concrete plan of his investment.

6. Unplanned Investment
Investment done without any planning is called as an Unplanned or Unintended Investment. In unplanned type of investment, investors make investment randomly without making any concrete plans. Hence it can also be called as Unintended Investment. Under this type of investment, the investor may not consider the specific objectives while making an investment decision.

7. Gross Investment
Gross Investment means the total amount of money spent for creation of new capital assets like Plant and Machinery, Factory Building, etc. It is the total expenditure made on new capital assets in a period.

8. Net Investment
Net Investment is Gross Investment less (minus) Capital Consumption (Depreciation) during a period of time, usually a year. It must be noted that a part of the investment is meant for depreciation of the capital asset or for replacing a worn-out capital asset. Hence it must be deducted to arrive at net investment.

Importance of Investment
Utilizing Time Value of Money:- Time value of money is the concept that teaches us that Rs. 100 in hand is better than Rs .100 after 2 years, as the interest on this Rs.100 can be Earned in 2 years, thereby making it more valuable. Hence, investing today is important and one should not let money remain idle for long. Estimating Future Value of Goals: - When an individual is planning for future goals, it becomes important to Plan for their future value rather than their current value. Inflation is a very big factor in this. The goal which may be fulfilled today by Rs. 5 lac may Need Rs. 10 lac after 10 years due to inflation. If we plan for accumulating Rs. 5 lac, the goal will not be met adequately. Determining Investment Needs: - Why does one need to invest? To meet a future need. A person sacrifices Use of money today for a higher gratification at a later date. Identify the Need/ goal and you can evaluate where the investment needs to be done. Lump-sum Investments & Regular Investments:-As and when a person is in receipt of lump-sum monies, he should ensure he is investing it according to his requirements. Apart from this, there should be a regular investment being made to ensure he is disciplined in his saving habits. Retirement planning: - Investment decision has become significant as people retire between the ages of 55 & 60. Also, the trend shows longer life expectancy. The earning from employment should, therefore, be calculated in such a manner that a portion should be put away as a savings. Savings by themselves do not increase wealth; these must be invested in such a way that the principal & income will be adequate for a greater number of retirement years. Increase in working population, proper planning for life span & longevity have ensured the need for balanced investments. Returns:- The return from the investment could be in the form of capital gains, cash flows, or both. A retired person may be more interested in regular cash flows to cater for his day to day needs, where as a younger person in accumulation phase may be more concerned with growth of his investment for creating a corpus for his retirement. Capital Protection:- Protecting your capital is the most important aspect of investment. By nature majority of us in India are risk averse. We feel investments are risky and thus

leave most of our saved money in instruments earning low income, without understanding the effect of inflation, which reduces the value of our money every day. Risk is part of our lives. Anything and everything we do have some kind of risk associated with it. Even if we cross a road, there is risk of meeting with an accident. Risk and reward go hand in hand, higher the risk, more is the reward expected. Each of the investment assets has its own associated risk and reward/return, which one must understand before investing his money in any of the investment vehicles. Inflation:- By definition, inflation is the rise in general level of prices of goods and services in an economy over a period of time. When prices rise, each unit of currency buys fewer goods and services, resulting in erosion in the purchasing power of money. This is a loss in the real value of money. The aim of investment is to get returns in order to increase the real value of the money. In other words our investment asset should be able to beat inflation. Taxation:- Income from our investment assets is liable to taxation, which is going to reduce our returns. The real return from any investment vehicle would be the return after taxation and inflation. Liquidity:- It is the ability to convert an investment into cash quickly, without the loss of a significant amount of the value of the investment. Any amount which may be required at a short notice should only be invested in an investment vehicle with high liquidity. Divisibility:- This is the ability to convert part of the investment asset into cash, without liquidating whole of the asset. Divisibility may be an important consideration for many investors, while choosing an investment vehicle. For example, while investing Rs. 15 lacs in senior citizen scheme, one could increase the divisibility without affecting returns by dividing this investment in ticket size of Rs. 2-3 lacs, rather than investing Rs.15 lacs in one go. 73 Before committing your capital to any investment vehicle, it is preferable to consider your financial needs, goals, and aspirations, as well as the risk profile

Characteristics of investment
Return: - All investments are characterized by the expectation of a return. In fact, investments are made with the primary objective of deriving a return. The return may be received in the form of yield plus capital appreciation. The difference between the sale price & the purchase price is capital appreciation. The dividend or interest received from the investment is the yield. Different types of investments promise different rates of return. The return from an investment depends upon the nature of investment, the maturity period & a host of other factors.

Risk: - Risk is inherent in any investment. The risk may relate to loss of capital, delay in repayment of capital, nonpayment of interest, or variability of returns. While some investments like government securities & bank deposits are almost risk less, others are more risky. The risk of an investment depends on the following factors. The longer the maturity period, the longer is the risk. The lower the credit worthiness of the borrower, the higher is the risk.

The risk varies with the nature of investment. Investments in ownership securities like equity share carry higher risk compared to investments in debt instrument like debentures & bonds. Safety: - The safety of an investment implies the certainty of return of capital without loss of money or time. Safety is another features which an investors desire for his investments. Every investor expects to get back his capital on maturity without loss & without delay. Liquidity: - An investment, which is easily saleable, or marketable without loss of money & without loss of time is said to possess liquidity. Some investments like company deposits, bank deposits, P.O. deposits, NSC, NSS etc. are not marketable. Some investment instrument like preference shares & debentures are marketable, but there are no buyers in many cases & hence their liquidity is negligible. Equity shares of companies listed on stock exchanges are easily marketable through the stock exchanges. An investor generally prefers liquidity for his investment, safety of his funds, a good return with minimum risk or minimization of risk & maximization of return. Longer life span and lack of social security:- People live longer now as compared to the earlier generations. Add to that the fact that most individuals have no retirement benefit when they retire from work. Few generations ago, someone would start earning by The time one reached the age of 20 years, work till the age of 58 years and Live till around 65 years. In such a case, one earns for 38 years and lives of the retirement savings for the next 7 years. Fast forward to recent times, one starts working at 25 years of age after completing post-graduation Studies. Many are quitting their jobs earlier, but let us consider a retirement age of 60 years and life span of 80 years. That means, one works and Earns for 35 years to support post retirement life of 20 years. The scales have really tilted. Add to that the fact that earlier, in most jobs (including private sector), pension was a given thing. Now, in most jobs (including Government jobs), no pension is the norm. If f inances are not planned properly, the retirement years could be Very challenging. Proliferation of numerous products:- Life Insurance industry was opened to private players in the late 90s. This led to proliferation of insurance products which are predominantly

investment oriented. Though the Life Insurance Corporation of India(LIC) continues to dominate the life insurance industry business, new players have caught up considerably with their product innovation, aggressive marketing and new distribution channels. In the Mutual Fund industry, with over 35 Asset Management Companies (AMCs), The growth has been moderate to good with product innovations and Increase in reach to a wide geography and class of investors. Complexity of products & services:- Innovation can lead to either simplicity or complexity. In the financial services industry, however, the innovation has made the products increasingly complex. An investor today can participate in the equity markets simply by investing in a mutual fund scheme through a systematic Investment Plan (SIP), but it is still a challenge for many in understanding how mutual funds actually work, and how market forces Impact various products differently. An investor today can have both Insurance and investment in a single product called ULIP (Unit Linked Insurance Policy), but appreciating his actual need for insurance and a return on investment as well as analyzing various components and charges of a ULIP product is a detailed process. Investors need in-Formed guidance on making a finance sense out of what is being offered to them as investment or insurance, in order to achieve their financial goals. Increasing income and savings levels:- Indian Economy has been growing at a 6% - 9% rate of GDP growth driven mainly by domestic consumption. The educated and urban middle class has experienced increase in income levels. At the same time unlike our counterparts in many of the developed countries, Asians, And especially Indians believe in saving money. India has a considerable Household savings ratio which is more than 25%. Increasing level of borrowings:- In todays financial markets there is an easy access to loans resulting in Increased levels of borrowings by people. If not managed carefully this leads to a serious mismatch in earnings and repayment leading to problems in cash flow. Leveraging the low interest rates is a critical aspect which needs to be explained to the borrowers? Higher aspirations and goals:- The days of building a house at retirement with accumulated savings and retirement benefits are over. With access to easy credit at a fair rate of interest and a capacity to repay that loan, given higher income levels, people want to buy house at a younger age. The lifestyle and aspirations have gone up significantly. People want to give the best education to their children, go on regular vacations, buy apartments in up-market localities and want to be financially independent in their post-retirement phase. Nuclear families:- Joint families provided great safety net for most individuals as it shared the resources and difficulties. Now with growing urbanization leading to Nuclear families, these

smaller families have a need to plan belter. They can no longer depend on the support of the larger family since they might be geographically distant. Plethora of Information:- Today, thanks to television, internet and press, there is profusion of public information on various personal finance topics to the investors and consumers. The media has made a huge impact in the availability of financial information and analysis on real time basis to consumers. Although this has helped many investors to take measured investment decisions, others are exposed to many new concepts and terms leaving them more confused than before. Also there is a dearth of availability of relevant in-formation to the investor enabling him to take the right investment decisions. Since many of this information are disseminated in smaller bits the consumers/investors need expert financial planner who can put it all together and give need based advice.

Various Investment Asset Classes

There are two major asset classes: physical and financial. Physical assets are Tangible which one can touch and feel and see. Financial assets are paper Assets

Recommending Investment Strategy

Understanding Various Asset Classes:- As seen earlier, there are various investment options having different features. A financial advisors role is to suggest the appropriate investments based on the needs of the investor. After analyzing the needs of the investor as outlined in the previous paragraph, the advisor then recommends an investment strategy. For example, if the investor needs to grow the value of investments over Long period of time and to beat inflation, the advisor is likely to suggest Investing a good amount in equity related avenues. If the investor needs to withdraw money from the investments within a very short period, liquid investment option is the ideal choice. The investment plan recommends how much money should be invested in which options and how such Allocation should be changed over a period of time. Such a strategy is commonly known as asset allocation. Asset Allocation Asset Allocation decision is the most important decision while designing the portfolio. In fact folios long term return characteristics and risk level are determined by the asset allocation. The asset Allocation depends on a lot of factors specific to an individual such as his age and risk profile, nature of goal short-term or long-term, sensitivity of goal to be achieved, as well as certain external factors like stock market and interest rate scenario in the Period to achieve a particular goal, etc. The other factors like scheme selection, etc. contribute, but to a much lesser effect. Asset Allocation is also important because it is not possible to be invested in the best asset class at all times. Whereas the occasional rewards could be huge, the cost of a mistake could be very large. All assets in your portfolio will not be impacted to a similar extent by the same factor. So, if the portfolio has a mix of unrelated assets, fluctuation in the value of one asset class tends to cancel that in another, thus reducing overall fluctuation in the portfolios value. Advisors also insist on consistently stocking to the asset allocation, which requires periodic rebalancing. This means, if the value of one part of the portfolio rises faster than the other, the advisor recommends that the money be shifted to restore the original asset allocation. For example, let us assume that an investor started with 50% allocation each between equity and debt. After a year, equity market gave 50% appreciation, while debt moved up by 5%. In such a scenario, the balance is tilted in favor of equity. The advisor will now recommend that part of equity portfolio may be sold and the proceeds may be used to buy fixed income assets. Thus, there is an automatic profit booking when the equity prices rose Very fast. In another scenario, if the equity prices rose less than debt prices

Asset Allocation Strategies

Strategic Asset Allocation:- This is a portfolio strategy that involves stocking to long-term asset allocation. Tactical Asset Allocation:- An active portfolio management strategy that rebalances the percentage of assets held in various categories in order to take advantage of market Pricing anomalies or strong market sectors. The major difference between the two is that strategic asset Allocation Ignores the anomalies in the stock or bond or other markets and focuses Only on the investors needs. The assumption here is that asset Allocation Ensures the plan would perform in a more predictable manner helping the investor reaches the financial goals comfortably. Proponents of tactical Asset Allocation believe that the various markets keep offering opportunity than can be exploited to enhance the portfolio returns. It is for an advisor to decide which one to follow based on ones beliefs and abilities. If the advisor believes that there are inefficiencies in the market and also believes that one has to ability to exploit those, one may resort to tactical asset allocation. However, the believers of efficient markets usually stock to strategic asset allocation.

Avenues for Saved Money / Investment Vehicles at axis bank

Various places where one can park his saved money can be broadly classified into: 1. Financial Assets

2. Non-Financial Assets Financial Assets Financial Assets can further be classified into: 1. Cash instruments 2. Debt instruments 3. Equity instruments Non financial assets 1. Commodities 2. Real estate Cash instrument It is the most liquid asset, which include currency, deposit accounts and negotiable instrument. Money in cash form is most useful in emergencies because of easy access; however it tends to lose its value because of inflation. Over a period of time purchasing power of cash money would considerably reduce. Some of the future requirements cannot be anticipated like sudden health problem, accidents, natural calamities etc. These emergencies require sudden unexpected cash out flow, for which we must prepare ourselves. Thus it is very essential to have some of our saved money in cash form to cater for these emergencies. Various cash instruments could be: i) Cash in Hand ii) Cash in Bank

Demerits of cash instrument

Limited Market: One of the major disadvantages of a cash and carry business is that in utilizing this business model you may eliminate more than half of your potential customers. Carrying cash is not nearly as common today as it was in the past. Many people use credit cards and debit cards

Fraud:- Business owners who rely solely upon cash can also open themselves up to fraud more easily since there is no checks and balances system for approving or denying cash funds, aside from the ability of the cashier to recognize counterfeit money. Theft:- The motto "cash is king" still rings true in many sectors, especially the criminal one. If a large number of people know that you only accept cash payments for products, this may indicate that you keep a large amount of cash on hand. This could open your business up to robbery for those who want to get some easy money without having to work for it. Also, for an employee thinking about embezzling, a cash and carry business is easier to manipulate. Online Stores:- Online vendors cannot accept cash. If you use "the green stuff," you can't utilize the thousands of online stores available and are limited to stores you can physically visit.

Merits of cash instrument

Pay Your Expenses:- The first advantage of cash instrument is that you have money on hand to pay your expenses. Expand Your Business:- The second benefit of cash instrument is being able to grow your business, an advantage that your cash-strapped competitors Get a Business Loan:- Another advantage of having positive cash flow is the ability to borrow money. Tax returns and other personal financial information, companies must use cash flow management histories to prove to banks they can repay loans. Paying wages 'cash-in-hand' Skimming some or all of the cash takings Running a part of their normal business activities 'off-the-books' Not reporting the value of goods and services provided in exchange for other goods and services Operating underground - that is, avoiding their tax and superannuation obligations by not registering their business or lodging returns.

Debt Instruments
Investing in debt instruments is like lending your money to a third party, who utilizes this money to earn more money. Generally, periodically part of this money is passed on to you as interest. The capital is returned after the stipulated time period. These instruments beat inflation to some extent;

However taxation may be a concern in many of these instruments. The lock in period could be short, medium or long term depending on the type of debt instrument chosen. Capital is relatively safe; returns are lower than equity but higher than cash instruments. Various debt instruments used are: 1. Small Saving Schemes 2. Government and Corporate Debt Securities 3. Bank deposits Small Saving Schemes Various schemes which fall under this category are: Public Provident Fund National Savings Certificates Post office Monthly Income Scheme Senior Citizen Saving Scheme Post Office term deposit Post office savings Accounts Post office recurring deposit Kisan Vikas Patra

Marketable Fixed Income Instruments

The Government Securities and corporate securities market form two main segments in Indian debt markets and play an important role in capital formation process. These securities form an important source of funds for corporate and Government. The market for government securities is the most dominant part of the debt market in terms of outstanding securities, market capitalization, trading volume and number of participants. It sets benchmark for the rest of the market. Major investors in Debt Market are shown in table. The Central Government mobilizes funds mainly by issue of dated securities and T-bills. Dated Govt. Securities are long term investment instruments, where as T-bills are short term investment instruments. The major investors in sovereign papers are banks, insurance companies and financial institutions, which generally do so to meet statutory requirements. Participants and Products in Debt Market Issuer Instruments Maturity * Investor

Central Government

Dated securities

2-30 years

Central Government

T- bill

91/364 days

State Government

State loan

development 5-10 year

PSUs

Bonds, Structured Obligations

5-10 years

Corporate

Debentures, Bonds

1-12 years

Corporate

Commercial papers

15 days -1 year

Bank

Certificate of deposits

3 months -1 year

RBI, Banks, Insurance Companies, Provident Funds, Mutual Funds, Individuals,FIIs, trusts, Pension Funds RBI, Banks, Insurance Companies Provident Funds, Mutual Funds, Individuals,FIIs, trusts, societies, Pension Funds Banks,Insurance companies,Provident Funds,Individuals, insurance companies, mutual funds, trusts, societies, Pension Funds Banks, Companies, ProvidentFunds, Mutual funds Individuals, Corporate, FIIs, insurance companies,trusts, societies,Pension Funds Banks, Mutual Funds, Corporate Individuals, FIIs, insurance companies, Pension Funds Banks, Mutual funds, Financial Institutions, Corporate, ndividuals, FIIs, insurance companies, Pension Funds Banks,Corporate, Individuals,FIIs, insurance companies, mutual funds, Pension Funds

Bank deposits

Deposits at axis bank

Fixed deposit
Axis Bank offers multitudes of fixed deposit schemes for various durations. It offers simple reinvestment Fixed Deposits (at very competitive interest rates), which can be opened with a minimum investment of Rs 10,000. You can make additions to your deposit in multiples of Re 1 thereafter. The tenure of your fixed term deposit must be a minimum of 6 months.
Bank AXIS ICICI PNB SBI HDFC 1-2 yrs 9% 8.25%-9.25% 9%-9.05% 8.25%-9.25% 8.25%-8.5% 2-3 yrs 8.50% 8.5%-9.25% 9%-9.15% 8.75%-9.25% 8.5%-9.25% 3-5 yrs 8.50% 8.75% 8.5%-9.25% 8.25% 8.25%

Fixed Deposit Schemes

Reinvestment Deposits: In a reinvestment fixed deposit scheme, the interest accrued on your deposit at the end of each quarter is invested along with the principal. The tenure of your deposit must be a minimum of 6 months. At the end of the quarter, the interest and the principal are both rolled over, and the interest is calculated on the total sum. Income tax is deducted at source.

Automatic Rollover: As a Fixed Deposit holder, you can avail of the facility for automatic rollovers on maturity (for both the principal and interest). You can select this option in the Account Opening Document (AOD). The options available are: Rollover only Principal:

Only the principal amount of your fixed deposit will be rolled over. The interest will be either credited to your designated account or paid out. Rollover Principal and Interest accrued in Reinvestment Deposit scheme: These will rollover both the deposit and the interest accrued for the same tenure at the Interest Rates applicable on the maturity date. On or before the maturity date, you can make the following changes in the rollover instructions of the deposit: Change in tenure Change in maturity instructions Change in payment instructions Change in principal (only reduced amount) Change rollover of Principal to rollover of Principal + Interest, or vice versa.

Withdrawals of Fixed Deposits All encashment or withdrawals of Fixed Deposits can only be made at the branch where the deposit was booked. Method of calculation of interest rates on your fixed deposits For fixed deposits with tenure of 6 months & above, interest is calculated on a quarterly basis. Interest earned during the previous quarter is added to the Principal for calculation of interest. Fixed deposit interest rate on this amount is calculated every quarter. For fixed deposits schemes with tenure of below 6 months, interest is calculated at Simple Interest. Please note that the period of Fixed Deposit is considered in number of days. In the event the depositor chooses to receive the periodic interest payments on a quarterly basis, interested is calculated and paid on quarterly rests. On premature withdrawal of the deposit, interest shall be paid only for the period for which the deposit is maintained with the Bank and at the rate applicable for such period. Tax at source is deducted as per the Income Tax regulations prevalent from time to time.

Advantages
High interest rates for your deposit for the duration of the term.

You're assured of returns for your investment. Investor can diversify the amount in different companies You can keep FD with "Time base and Money base" schemes. Term deposits aren't as risky as stocks or property. In fact, term deposits are one of the safest types of investments. You can have the interest paid out by cheque or straight to your bank account, or have the funds reinvested for compounding interest. Having the money locked away for a set duration lets you save more easily. If you're a senior citizen, the FD gives you the highest rate of interest. It depends upon the banks.

Disadvantages If interest rates go up, you may be locked in at a lower rate. The funds are not at call, they are locked into a contract for a certain term agreed by you and the bank. Here's the major disadvantage: you can't touch your funds during the term's duration. If you plan to get a term deposit, you have to be very sure that you can afford to have your savings locked away until the maturity date. If the term deposit allows early withdrawal (not all do), you'll have to deal with penalty charges to get your money. If you really must get your money out (e.g. in the event of an emergency), you can cancel the term deposit but you'll have to deal with release charges, whose cost would depend on how much time the term had left. Deciding on a more frequent interest payment could result in a lower rate. Term deposits provide no tax advantages.

Taxation
All individual depositors and H.U.F. who have a PAN number are eligible to open a fixed deposit account. Any individual who is a Resident Indian and has attained 18 years of age can open a Fixed Deposit account; In his or her individual capacity, or In individual capacity on joint basis. Term deposit shall be of following types, namely: -

Single holder type deposits: The single holder type deposit receipt shall be issued to an individual for himself or in the capacity of the Karta of the Hindu undivided family.

Joint holder type deposits: The joint holder type deposit receipt may be issued jointly to two adults or jointly to an adult and a minor, and payable to either of the holders or to the survivor: Provided that in the case of joint holder type deposit, the deduction from income under section 80C of the Act shall be available only to the first holder of the deposit who should be a PsAN holder. The salient points of the scheme notification are; (a) Fixed tenure without premature withdrawal. (b) Year is defined as a financial year. (c) Amount limited to Rs. 100 minimum and Rs. 100,000 maximum. (d) Bank will issue a Fixed Deposit Receipt that shall be the basis of claiming tax benefit. (e) Term deposit under this scheme cannot be pledged to secure a loan.

Recurring deposit
Axis Bank's Recurring Deposit scheme will allow you with an opportunity to build up your savings through regular monthly deposits of fixed sum over a fixed period of time. Features Recurring deposits are accepted in equal monthly installments of minimum Rs 1,000 and above in multiples of Rs 500 thereafter. Recurring Deposit accounts can be opened for a minimum period of 12 months and in multiples of 12 months thereafter, upto a maximum of 120 months. The amount of installment once fixed, cannot be changed. Installment for any calendar month is to be paid on or before the last working day of the month. Where there is delay in payment of installment, one can regularize the account by paying the defaulted installment together with a penalty (at present it is @ PLR plus 4 % for the period of delay).Fraction of a month will be treated as full month for the purpose of calculating the penalty. The total amount repayable to a depositor, inclusive of interest, depends on the amount of monthly installments and the period of deposit.

Merits
There is no TDS (Tax Deductible at Source) applicable on RD(Recurring Deposits). Recurring deposit encourages regular savings habit among the people. Recurring deposit account holder can get a loan facility. The bank can utilize such funds for lending to businessmen. The bank may also invest such funds in profitable areas.

Demerits One of the major drawbacks with Recurring Deposits is non-flexibility of the amount-ofdeposit. Partial payment is not allowed nor you can pay more than the decided amount. Here again, interest rate depends upon the maturity period, longer the period greater the interest rate.

Taxation
Taxation of Recurring Deposit Tax Deducted at Source ( TDS ) is not applicable on RDs. However interest from RD is not tax free. Income tax is to be paid on interest earned from a Recurring Deposit at the rate of tax slab of the RD holder. If you do not have sufficient funds at the beginning and can invest only in installments, then go for a recurring deposit. Regular savings over a long period at a healthy fixed rate of interest can translate into a significant sum. But note that you need to be disciplined when investing in a recurring deposit. If you do not deposit an installment, the bank may charge you a penalty. Further, if you do not make deposits for an extended period, banks may close your recurring account.

Encash 24 requirement
Features and benefits The Encash 24 (Flexi Deposit) gives you the liquidity of a Savings Account coupled with high earnings of a Fixed Deposit. This is achieved by creating a Fixed Deposit linked to your Savings Account providing you the following unique facilities: Maximum Returns: Your money is no longer idle. As soon as the balance in your Savings Account crosses over Rs 25,000, the excess, in multiples of Rs 5,000 will be transferred automatically to a higher interest earning Fixed Deposit Account. The maturity of fixed or term deposits formed as a result of transfer of money from the Savings Bank account will be for a minimum period 6 months upto a maximum of 5 years. Maximum Liquidity: The money parked in Fixed Deposits as a result of the above mentioned sweep out from your Savings account can be easily accessed by issuing a cheque, withdrawing through ATM etc. This amount is automatically reverse swept from the most recently formed Fixed Deposit in units of Rs 5,000 to the Savings account whenever the balance in your Savings account falls below Rs

25,000. The amount broken form your Fixed Deposit will earn interest rates at the applicable rate for the period that the deposit was held with the Bank. The remaining amount of Fixed Deposit will continue to earn the contracted rate of interest. Auto Renewal: The tenure for the Encash 24 scheme can be flexible for a minimum period 6 months upto a maximum of 5 years. Demerits Charge for non-maintenance rs.750

Mutual Funds
Mutual Funds are an important financial intermediary for an investor. They are a vehicle to mobilize money from investors, to invest in different avenues, in line with the investment objectives of the scheme. Professional expertise along with diversification becomes available to an investor through Mutual Fund route of investment. Through mutual funds one can invest almost in all categories of assets. Mutual funds can be open-ended or close-ended. Units of open ended funds can be purchased from and sold to the fund houses on all working days where as the close-ended funds do not allow the investors to redeem units directly from the funds before maturity. Close-ended funds accept purchases only during the period of launch of the scheme, also known as the NFO. These funds are not allowed to accept purchases after the NFO is over. Listing of units of closed-end fund on one or more recognized stock exchanges is mandatory to provide liquidity to existing investors. The units generally trade on the exchanges at discount to the NAV. Earlier; mutual funds had an option of offering liquidity through listing on a stock exchange or through a periodic redemption facility. Each of the Mutual Funds has an objective and terms of scheme stated in their Offer Document/ Key Information Memorandum, which every investor must go through, in order to check if his own needs and objectives match with the funds objectives. Mutual funds could invest in equity, bonds, short term income instruments, Gold or other precious metals, or Real Estate.

Types of mutual fund

a) Money Market or Cash or liquid Funds b) Debt Funds

c) Equity Funds d) Hybrid Funds e) Exchange Traded Funds (ETFs) f) Fund of Funds a) Money Market / Liquid Funds:- These Mutual Funds invest the investors money in most liquid assets, like, Treasury Bills, Certificates of deposit, Commercial papers etc. These instruments in which Money Market Mutual Fund (MMMF) invests can be encashed at a short notice; capital is safe though returns are low. Post tax the returns from MMMF may be higher than keeping money in savings account in the bank. These funds invest in debt instruments of short term nature like Treasury Bills issued by Government, Certificate of Deposits issued by Banks, and Commercial papers issued by companies. These are considered to be most liquid and least risky investment vehicles. Though interest rate risk and credit risk are present, the impact is low as the investment vehicles maturities are short and quality of papers is sound. b) Debt or Income Funds:- These funds invest in fixed income generating debt instruments, issued by government, private companies, banks, financial institutions, and other entities such as infrastructure companies/utilities. The main objective of these funds is to generate stable income at a low risk for the investor. As compared to the Gilt funds these debt funds have a higher risk of default by their borrowers. These funds can further be categorized as, a) Diversified Debt funds, b) Short Term Debt funds, c) High Yield Debt funds, d) Fixed Term Plans, e) Gilt Funds Diversified Debt Funds:- The objective of these schemes could be to provide safety of capital and regular income. At the same time, some funds may also have an objective of generating higher returns than traditional debt investments. This objective can be achieved by proper management of certain risks, viz. credit risk, interest rate risk or liquidity risk. Gilt Funds:- These funds invest in government securities. Since the funds invest largely in the securities issued by Government of India, the credit risk can be assumed to be non-existent. However, these government securities, also called dated securities, may face interest rate risk, which means as the interest rates rise, the NAV of these funds fall (and vice versa). The NAVs of these funds could be highly volatile, if the maturity is long. These funds are also known as Government Securities Funds or G-Sec Funds. Short Term Debt Funds:- In order to reduce interest rate risk, some funds are mandated to invest in debt securities with short maturity, generally less than 3 years. Such funds earn large part of returns in form of interest accrual and are less sensitive to interest rate movements.

These funds may or may not take liquidity and credit risks. One would be advised to read the scheme objectives and investment style to know more about specific schemes. These funds have the potential to earn higher than liquid funds but the NAVs of these funds also exhibit some degree of volatility. At the same time, the volatility is likely to be much lower than diversified debt funds. High Yield Debt Funds:- High quality (those having high credit rating) debt securities offer low interest rates and hence some investors are not happy with such low returns. They are willing to take some risk without getting exposed to the risk of equity. High yield debt funds are ideally suited for such investors. These funds invest in debt securities with lower credit rating. The lower rating ensures the securities offer higher interest rates compensating the investor for the extra risk taken. Fixed Term Plans:- Fixed term plans, popularly known as FMPs (Fixed maturity plans), have a defined maturity period; say 3 months, 6 months, 1 year, 3 years, etc. The maturity of the debt securities in which the fund invests, and the maturity of the scheme are almost the same. Hence, when the scheme matures and money has to be returned to the investors, the fund does not have to sell the bonds in the market, but the bonds themselves mature and the fund gets maturity proceeds. Since the fund does not have to sell the bonds in the market, the fund is not exposed to interest rate risk. These are close-ended debt funds. The units of these funds have to be listed on a stock exchange to provide liquidity to the investors. These funds are ideally suitable for investors who know the time when they will need the money and also do not need money before the maturity of the FMP.

c) Equity Funds
These funds invest in equities and depending on the type of equities these funds have been further classified as, a) Growth funds, b) Value funds, c) Dividend Yield funds, d) Large Cap funds, e) Mid Cap or Small Cap funds, Certain equity funds have tax benefit under section 80C of the Income-tax Act, 1961 and have a lock in period of three years. These are Equity Linked Savings Schemes popularly called as ELSS. These funds have higher risk, but potential for higher returns.

 Growth funds:- These funds invest in the growth stocks, which ie stocks that exhibit and promise above average earnings growth. Managers using the growth style select stocks which are normally quite high profile. Such stocks being high growth are more visible and also have high investor interest. Due to this, the stocks may appear to be costly on historical valuation parameters. However, the high valuation is justified by the expected high future growth. Value funds:- As the name suggests, value funds buy value stocks as we discussed earlier. Such stocks are generally out of favour with most investors in the market and hence the market price is low as compared to the inherent value of the business. The value style managers generally hold the stocks for longer time horizon than their growth style counter parts. Dividend yield funds:- One of the valuation parameters a value style fund manager looks for is high dividend yield. However, there is a category of funds that consider this one parameter as the most important factor to select stocks. As compared to other parameters of considering value, dividend is believed to be more reliable as it involves cash movement from the company account to the share holder account and hence there is no room for any subjectivity. Large cap funds / Mid cap funds / Small cap funds:- Equity mutual funds can be classified based on the size of companies invested in. In capital market terms, the size of the companies is measured in terms of its market capitalization, which is the product of number of outstanding shares and the market price. It also denotes the price the market is willing to pay to buy the entire company. Larger the market capitalization , larger the company. In popular usage, the word market capitalization is referred to as cap. Fund investing in stocks of large companies are called Large Cap Funds and those investing in stocks of midsized companies are called Small Cap Funds. d) Hybrid Funds:- These are mixed equity and debt funds. Depending on the objective these funds can be further classified as a) Balanced funds, b) Monthly Income Plans (MIP) and c) Asset allocation funds. Balanced funds:- The most popular among the hybrid category, these funds were supposed to be investing equally between equity and fixed income securities. However, in order to benefit from the provisions of the prevailing tax laws, these funds invest more than 65% of their assets into equity and remaining in fixed income securities. These funds are preferred by investors who seek the growth through investment in equity but are not very comfortable with the volatility associated with pure equity funds.

 Monthly Income Plans (MIPs):- This category of fund invests predominantly in fixed income securities with marginal exposure to equity. The fixed income component provides stability to the portfolio, whereas equity provides capital appreciation over long periods of time. Generally, 80% of the scheme corpus is invested in fixed income securities and the balance 20% in equity. However, the allocation could be different from the above. Recently, some fund houses have also launched schemes under this category that invest in equity, fixed income and gold. Asset allocation funds:- Advisors have a choice of either constructing portfolios for their clients through careful selection of components. Alternately, they can also look at readymade solutions available in the form of Asset Allocation Funds launched by certain mutual fund companies. These funds are de-signed with certain investor profiles in mind and most of the fund houses also offer tools to match the investor profile with the various options under these funds. e) Exchange Traded Funds (ETFs):- These funds combine the best features of open and closed mutual fund schemes, and trade like a single stock on stock exchange. Thus these funds can be purchased and sold at real time price rather than at NAV, which would be calculated at the end of the day. These funds, available in India track indices (e.g. Nifty, Junior Nifty or Sensex) or commodities like Gold (Gold ETFs). Recently, active ETFs have also been introduced in Indian market. ETFs are very popular in other countries, especially USA. The biggest advantage offered by these funds is that they offer diversification at costs lower than other mutual fund schemes and trade at real time prices. f) Fund of Funds (FOF):- Fund of Funds maintain a portfolio comprising of units of other mutual fund schemes, just like conventional mutual funds maintain a portfolio comprising of equity/debt/money market instruments or non financial assets. There are different types of fund of funds, each investing in a different type of collective investment scheme. Fund of Funds provide investors with an added advantage of diversifying into different mutual fund schemes with even a small amount of investment, which further helps in diversification of risks.

Advantages of mutual fund

Diversification: - One rule of investing, for both large and small investors, is asset diversification. Diversification involves the mixing of investments within a portfolio and is used to manage risk.

Economies of Scale: - The easiest way to understand economies of scale is by thinking about volume discounts; in many stores, the more of one product you buy, the cheaper that product becomes. Mutual funds are able to take advantage of their buying and selling size and thereby reduce transaction costs for investors. When you buy a mutual fund, you are able to diversify without the numerous commission charges. Divisibility: - Many investors don't have the exact sums of money to buy round lots of securities. One to two hundred dollars is usually not enough to buy a round lot of a stock, especially after deducting commissions. Investors can purchase mutual funds in smaller denominations, ranging from $100 to $1,000 minimums. Smaller denominations of mutual funds provide mutual fund investors the ability to make periodic investments through monthly purchase plans while taking advantage of dollar-cost averaging. Liquidity: - Another advantage of mutual funds is the ability to get in and out with relative ease. In general, you are able to sell your mutual funds in a short period of time without there being much difference between the sale price and the most current market value. Professional Management: - When you buy a mutual fund, you are also choosing a professional money manager. This manager will use the money that you invest to buy and sell stocks that he or she has carefully researched. Therefore, rather than having to thoroughly research every investment before you decide to buy or sell, you have a mutual fund's money manager to handle it for you.

Disadvantages of mutual fund

Costs Control Not in the Hands of an Investor: Investor has to pay investment management fees and fund distribution costs as a percentage of the value of his investments (as long as he holds the units), irrespective of the performance of the fund. No Customized Portfolios: The portfolio of securities in which a fund invests is a decision taken by the fund manager. Investors have no right to interfere in the decision making process of a fund manager, which some investors find as a constraint in achieving their financial objectives. Difficulty in Selecting a Suitable Fund Scheme: Many investors find it difficult to select one option from the plethora of funds/schemes/plans available. For this, they may have to take advice from financial planners in order to invest in the right fund to achieve their objectives.

Taxation of Mutual Funds

Equity Schemes Growth Plan: Short term funds (less than 1 year) are taxed at the rate of 10% and long term funds (over a year) are tax free. Dividend Plan: Dividend paid in Dividend Plans is tax free, and no distribution tax is deducted. However, every time we buy or sell equity shares a Securities Transaction Tax, STT, of 0.25% is paid and further when you redeem your investment, again STT is deducted from your redemption price.

Debt Schemes Any fund wherein the average holding in equity is 65% (as per Budget 2006) or below is treated as a debt fund. If you invest for less than 1 year in the growth option of a debt fund, you will have to pay Capital Gains Tax on your "profits" at the rate at which you pay income tax on your income. But, if you stay invested for over a year, you can either pay 10% tax on the profits or pay 20% after reducing the rate of inflation (indexation benefit). So if you are invested for three or four years, your tax may become much, much lower than 10%.

Equities
Investing in equity means either investing ones funds in a business that is run by self or becoming a shareholder in other businesses, thus taking a higher risk, but with a higher potential of returns. If company/ business does well and makes profit, the investor is going to benefit as he is part owner of this profit, however if the business goes in loss, the investor would also lose proportionately. Investments in equities have a higher potential for returns, though with higher risks too, as one must understand risk and reward go hand in hand. Knowledge, expertise in analyzing the equities and longer horizon of investment, would help to considerably reduce the risk. Returns from equities could be in the form of capital growth, dividends or both. In order to know the growth potential of a company/business, it is prudent to analyze the balance sheet, profit and loss statement and cash flow statement of the company and compare it with previous years statements and peer companys statements. Few of the important terms are described below to help understand these aspects:

a) Earnings per share (EPS):- This is net profit minus dividend earned by Preference shares, divided by number of equity shares. b) Dividend percentage: - This is dividend per share divided by face value of share and then multiplied by hundred to get the percentage. c) Dividend yield (%):- This ratio gives the return in terms of dividend you receive by buying a share in market. It is the dividend per share divided by market price of the share, and then multiplying by 100 to get the percentage. d) Price-Earnings Ratio (P/E Ratio):- It is market price of share divided by earning per share. In other words it indicates the number of times the earning per share, the market is valuing the share. e) Book Value: - This is defined as (Equity capital + net shareholders reserve)/ no. of equ ity shares. Whenever the book value of a company is higher than the market price of the company, it indicates the share of the company is available at a discount. Investors in equity shares employ certain parameters for the selection of stocks in their portfolios. Two popular styles used are growth and value. Under value style, the investors select stocks which are priced very low compared to their inherent value. In order to determine this, the investors look at parameters like low price-to-earnings ratio, low price-tobook value ratio, high dividend yield, etc. Generally, such stocks are out of favour with most investors and hence the value style managers are sometimes referred to as contrarian investors. On the other hand, there are stocks that exhibit very high rate of earnings and business growth. Such stocks are known as growth stocks and are favorite picks for growth style investors. Generally, growth stocks exhibit high price-to-earnings ratio, high price-to-book value ratio and low dividend yields. Various ways of investing in equities for an individual are:1. Equity Oriented Mutual Funds 2. Portfolio Management Schemes 3. Direct Investment in Equities. Advantages Equity financing doesn't have to be repaid. Plus, you share the risks and liabilities of company ownership with the new investors. Since you don't have to make debt payments, you can use the cash flow generated to further grow the company or to diversify into other areas.

Maintaining a low debt-to-equity ratio also puts you in a better position to get a loan in the future when needed. Disadvantages By taking on equity investment, you give up partial ownership and, in turn, some level of decision-making authority over your business. Large equity investors often insist on placing representatives on company boards or in executive positions. If your business takes off, you have to share a portion of your earnings with the equity investor. Over time, distribution of profits to other owners may exceed what you would have repaid on a loan.

Taxation
Dividends received are tax free. Equity investments are subject to short term capital gains (STCG) and long term capital gain (LTCG) also, Dividend received on stock is free from tax for the investor. This is the good news. However, you do have to pay short-term capital gains tax on any capital gains you might make in the short term ('short term defined as any period less than one year) Thus gains from selling equity shares that have been purchased and sold within a year are taxed at 11.22% (10 per cent tax + 2 per cent education cess + 10 per cent surcharge, if applicable). There is no tax on long-term capital gains. All this is over and above the 12.24% service tax you pay on brokerage charges every time you transact business in equity, i.e., buy and sell shares. In addition, you have to pay Securities Transaction Tax (STT) on sale and purchase transactions of shares. The STT rate for delivery-based transactions is 0.125% of the transaction value for both buyers and sellers. For non-delivery based transactions, the STT is 0.025% of the transaction value. Market risks: The risk of market collapse; or that you have invested at the peak of a particular stock. Which means chances are returns on that investment could be minimal at best or worse, will run at a loss.

Real Estate
In India most of us have our major investment in acquiring a house. Every one dreams of having a house of ones own. There is plenty of scope for the planners to professionalize in this field. A house where one lives is a personal asset. It is the second house or other forms of real estate which could form the investment vehicle, as these would be the ones giving returns. We could categorize the real estate in following types:

a) Residential Property. b) Commercial property. c) Industrial real estate d) Agricultural land. e) Semi urban land. f) Time share in a holiday resort. Residential Property: This investment vehicle provides returns in the form of rent and capital appreciation. Tax rebates are available on interest paid and principal repayment when the investment is through a loan. Further, long term loans at attractive rates make this investment attractive. Commercial property: For an investor, constructing a commercial complex or buying a shop or office in a commercial complex could offer regular rental income and capital appreciation over a time period. However this investment requires sufficient outlay and time and effort in managing it. Agricultural land: Agricultural income from agricultural land is not taxable. Further, agricultural land is exempt from wealth tax too. Appreciation in agricultural land value along with regular income makes it an attractive investment vehicle. Semi urban Land: Residential land in suburban areas is usually available at prices lower than those prevailing in the city. This is usually a converted land in private layouts and has a high potential for capital appreciation as the infrastructure increases and surrounding areas develop. Time Share in a Holiday Resort: The concept of time share holidays is increasing every day. The outlay is modest and affordable. It could prove especially useful for people who like to enjoy regular vacations. The stay period if not used could be rented and value of time share also increases over a time period. The investment can be passed in a will and can also be sold in future. Real estate investments require a large investment, and thus needs to be financed. For house, loans could be taken from various financial institutions or from employer. Loans for houses are available usually at a concessional rate as compared to other loans.

Advantages of Property Investment

The advantages of property investment are: High returns are expected Tax benefits under section 80C if purchased on a bank loan Low risk of losing invested capital Does not require regular monitoring Not subject to any maintenance cost

Disadvantage of Property Investment

Low liquidity

Taxation of income from Property Investment

The incidence of tax on capital gains is related to the period for which the capital asset/immovable property is held by the seller before sale. If the period of holding the immovable property is 36 months or less, it is called a 'short-term capital asset'. The profit from transfer of a short-term capital asset is a 'short-term capital gain' and you will have to pay Capital Gains Tax on the "profits" at the rate at which you pay income tax on your income. In case the period of holding an immovable property exceeds 36 months, the property is called a 'long-term capital asset' and profit made out of the transfer of a long-term capital asset is 'long-term capital gain'. You will have to pay Capital Gain Tax on the profit at the rat e you pay income tax after deducting rate of inflation (indexation benefit). However, you can save this tax by again investing in any of these: The residential house should be purchased within one year before or within two years after the date of transfer. The residential house may be constructed within three years after the date of transfer. The house so purchased or constructed should not be transferred again within three years after the purchase or construction. You can invest the capital gains in Rural Electrification Certificates (RECs) or National Housing Authority of India (NHAI) bonds to save the tax. But remember that there is a three years lock-in period on these bonds. Also, the interest income on these bonds is taxable.

Gold
Thought to be one of the first known metals, gold has been coveted throughout history for its beauty, scarcity, malleability, and uncanny resistance to rust and corrosion. Centuries ago, gold's unique combination of properties -- its sun-like color, its soft hardness and especially its imperviousness to decay -- imbued it with magical associations in the eyes of many. Because of these unique properties, gold has traditionally been the currency of choice for much of the world's population. Gold as investment The value of gold has transcended all national, political, and cultural borders, to become a desired asset. It in the form of coins and bars has attracted investments across various cultures for centuries. The advantages of investing in gold are: Investment in Gold has given a average return of 26.98% in the last 3 years One time investment, which accumulates and gains value throughout its lifetime Not subject to any maintenance cost Investment cum utility commodity Low risk of losing invested capital Does not require regular monitoring Is very liquid- valued and traded every where

Types of Gold Investment Gold Funds Gold ETF Gold from Bank Gold from jewelers

Taxation of Gold Investments Short Term: If the period of holding of Gold Funds and Gold ETF is less than 1 year and of Gold from Bank and from jeweler is less than 3 years, it is called as Short Term Investment. And the gain from short term investment is termed as Short term capital Gain. Short term capital Gain is taxed as per income tax slab of investor. Long Term: If the period of holding of Gold Funds and Gold ETF is over 1 year and of Gold from Bank and from jeweler is over 3 years, it is called as Long Term Investment. And the gain from short term investment is termed as Long term capital Gain. Long term capital gain is taxed 10% without indexation (rate of inflation) or 20% with indexation (rate of inflation).

Research methodology