the units in a Mutual Fund schemes and verify the validity and eligibility of
the investor and allots the units
The mutual fund companies now receive millions of applications if a new scheme is launched.
distributions or to reinvest the earnings and get more shares. Income it earned from dividends on stocks and interest on bonds. A fund pays out nearly all income it receives over the year to fund owners in the form of a distribution. Types of Funds: Mutual funds also come in various sizes and shapes. There are about dozen fund classes but all of them are derivatives of three basic classes are as follows.
Growth: Long term growth, since these funds invest in equities, they are also called as equity funds. Their risk level is high so is the return. Income: This type of fund provides regular income by investing in debt instruments like bonds, debentures etc., Because of their nature of
investment, they are also called debt schemes. Their risk and return levels are medium. Liquidity: These are primarily invested in money market instruments and thus most volatile, safer and give lower returns. These funds are also known as cash or money market funds. In addition to the above type there are other derivative classes as listed below. This type of fund... Invest in this area Balanced fund Is an investment blend of equity and dept Instruments Index fund Invests in the companies that participate in stock market indices in the same weight age comprising of an index Sector fund Invests in companies pertaining to specific sectors like health care, banking, FMCG, technology etc. Ells / Tax funds Invests is Government bonds and generally long term in nature. They provide tax benefits.
These are called mutual fund schemes. It is based on the investment objective. There is another Classification based on the capitalization of funds. If the fund offers purchase or selling on a Continuous basis it is called
open ended mutual fund. On the contrary, if the fund is open only for a particular period, it is called closed ended fund.
Differences: Open ended and Closed ended funds
SNO. Feature Open ended Closed ended 1. Capitalization Unlimited Limited 2. Any time entry Yes No 3. Any time exit Yes No 4. Tax advantage Yes No 5. Available for a fixed period No (with exemption of FMP schemes) Yes 6. Listed on the exchange Generally No Yes
Open ended funds gained popularity because of their flexibility and variety of features they offer. For this reason, majority of the mutual funds are open in nature.
Arms of a mutual fund:
Primarily mutual fund is formed as a trust by a group of sponsors. They are the owners of the mutual funds and forms trust by a group of sponsors. They are the owners of the mutual funds and forms trustees who in turn appoint AMC and manage the mutual fund.
SEBI regulations require that at least two at least two thirds of the directors of trustee company or board of trustees must be independent i.e. they should not be associated with the sponsors. Also, 50% of the directors of AMC must be independent. All mutual funds are required to be registered with SEBI before they launch any scheme.
This entity Does this Sponsor Forms Mf as a trust. Registers with SEBI. Trustees Holds funds invested in a form of units. Ensure compliance with SEBI. Appoints AMC Asset management company Floats MF Schemes, Manages funds and cash. Registrar Holds investor data. Do services to investors Distributors Market various schemes of MF
Transaction types (commercial & non-commercial):
Lets compare various transactions of mutual funds with those of banks.
In a bank, you will In a mutual fund Open an account with initial deposit You subscribe in a scheme and buy units Deposit money Do additional purchases With draw money You redeem units Opt for a recurring deposit Start a systematic investment plan
Since mutual fund offers many more options to investors, it will have many more transaction types as well. Let us see some popular transactions in mutual funds
SNO. Transaction Description 1. New purchase New investment. Buying units in a scheme 2. Additional purchase Buying additional units in a scheme 3. Redemption Selling units and getting money back. 4. Switch/shift Transferring investment from one scheme to other. 5. Dividend When AMC announces dividend in a scheme. 6. Systematic investment Investing fixed amounts periodically like a recurring deposit. 7. Systematic with drawl Reverse of systematic investment Selling units periodically Rest are relating to general maintenance only. So they are non-commercial transactions. Net asset value:
As you must have noticed, we always talk about units in a mutual fund and not money itself. A unit is basic measure of investment n a mutual fund. Each scheme / plan will have a different market value is called the Net asset value or simply NAV. Since market value of the underlying securities changes every day, NAV of a scheme also varies on a day to day basis.
NAV = Total assets Total liabilities/Number of units
SEBI Guidelines on New Fund Offer: 1. Procedure for launching of schemes: (1) No scheme shall be launched by the asset management company unless such scheme is approved by the trustees and a copy of the offer document has been filed with the Board. (2) Every mutual fund shall along with the offer document of each scheme pay filing fees as specified in the Second Schedule. 2. Disclosures in the offer document: (1) The offer document shall contain disclosures which are adequate in order to enable the investors to make informed investment decision [including the disclosure on maximum investments proposed to be made by the scheme in the listed securities of the group companies of the sponsor]. (2) The Board may in the interest of investors require the asset management company to carry out such modifications in the offer document as it deems fit. (3) In case no modifications are suggested by the Board in the offer document within 21 [working] days from the date of filing, the asset management company may issue the offer document. (4) No one shall issue any form of application for units of a mutual fund unless the form is accompanied by the memorandum containing such information as may be specified by the Board. 3. Advertisement material:
(1) Advertisements in respect of every scheme shall be in conformity with the Advertisement Code as specified in the Sixth Schedule and shall be submitted to the Board within 7 days from the date of issue. (2) The advertisement for each scheme shall disclose [investment objective for each scheme] 4. Misleading statements: The offer document and advertisement materials shall not be misleading or contain any statement or opinion, which are incorrect or false. 5. Listing of close ended schemes: Every close ended scheme shall be listed in a recognized stock exchange within six months from the closure of the subscription Provided that listing of close ended scheme shall not be mandatory. (a) If the said scheme provides for periodic repurchase facility to all the unit holders with restriction, if any, on the extent of such repurchase; or (b) if the said scheme provides for monthly income or caters to special classes of persons like senior citizens, women, children, widows or physically handicapped or any special class of persons providing for repurchase of units at regular intervals; or (c) If the details of such repurchase facility are clearly disclosed in the offer document; or (d) If the said scheme opens for repurchase within a period of six months from the closure of subscription.
6. Repurchase of close ended scheme: (1) The asset management company may at its option repurchase or reissue the repurchased units of a close ended scheme. (2) The units of close ended schemes referred to in the proviso to regulation may be open for sale or redemption at fixed pre-determined intervals if the maximum and minimum amount of sale or redemption of the units and the periodicity of such sale or redemption has been disclosed in the offer document. (3) The units of close ended scheme may be converted into open ended scheme. (a) If the offer document of such scheme discloses the option and the period of such conversion; or (b) The unit holders are provided with an option to redeem their units in full. (4) A close ended scheme shall be fully redeemed at the end of the maturity period [Provided that a close ended scheme may be allowed to be rolled over if the purpose, period and other terms of the roll over and all other material details of the scheme including the likely composition of assets immediately before the roll over, the net assets and net asset value of the scheme, are disclosed to the unit holders and a copy of the same has been filed with the Board. Provided further, that such roll over will be permitted only in case of those unit holders who express their consent in writing and the unit holders who
do not opt for the roll over or have not given written consent shall be allowed to redeem their holdings in full at net asset value based price. 7. Offering Period: No scheme of a mutual fund other than the [initial] offering period of any equity linked savings schemes shall be open for subscription for more than 45 days 8. Allotment of Units and refund of money: (1) The Asset management company shall specify in the offer document (a) The minimum subscription amount it seeks to raise under the scheme and (b) In case of over subscription the extent of subscription it may retain Provided that where the asset management company retains the over subscription referred to in clause (b), all the applicants applying up to five thousand units shall be given full allotment subject to the oversubscription mentioned in clause (b). (2) The mutual fund and asset Management Company shall be liable to refund the application money to the applicants- (i) If the mutual fund fails to receive the minimum subscription amount referred to in clause (a) of sub-regulation (1); (ii) If the moneys received from the applicants for units are in excess of subscription as referred to in clause (b) of sub-regulation (1). (3) Any amount refundable under sub-regulation (2) shall be refunded within a period of six Weeks from the date of closure of subscription list, by
Registered A.D and by cheque or Demand Draft marked "A/C Payee" to the applicants.
(4) In the event of failure to refund the amounts within the period specified in sub-regulation (3), the asset management company shall be liable to pay interest to the applicants at a rate of fifteen percent per annum on the expiry of six weeks from the date of closure of the subscription list. 9. Unit certificates or Statement of Accounts: The asset management company shall issue to the applicant whose application has been accepted, unit certificates or a statement of accounts specifying the number of units allotted to the applicant as soon as possible but not later than six weeks from the date of closure of the [initial subscription list and or from the date of receipt of the request from the unit holders in any open ended scheme].Provided that if an applicant so desires, the asset management company shall issue the unit certificates to the applicant within six weeks of the receipt of request for the certificate. 10. Transfer of units: (1) A unit certificate unless otherwise restricted or prohibited under the scheme, shall be freely transferable by act of parties or by operation of law. (2) The asset management company shall, on production of instrument of transfer together with relevant unit certificates, register the transfer and return the unit certificate to the transferee within thirty days from the date
of such production. Provided that if the units are with the depository such units will be transferable in accordance with the provisions of the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996. 11. Dispatch of warrants and proceeds: Every mutual fund and asset management company shall, (a) Dispatch to the unit holders the dividend warrants within [30 days] of the declaration of the dividend. (b) Dispatch the redemption or repurchase proceeds within 10 working days from the date of redemption or repurchase. (c) In the event of failure to dispatch the redemption or repurchase proceeds within the period specified in sub-clause (b), the asset management company shall be liable to pay interest to the unit holders at such rate as may be specified by Board for the period of such delay. (d) Aside payment of such interest to the unit holders under sub-clause (c) the asset management company may be liable for penalty for failure to dispatch the redemption or repurchase proceeds within the stipulated time. Wherever an application for a total value of RS. 50,000 or more, the applicant or in the case of application in joint names, each of the applicants, should mention his/her permanent account number (PAN) allotted under the Income Tax Act, 1961 or where the same has not been allotted, the GIR number and the income-tax Circle/Ward/District should be mentioned. In
case where neither the PAN nor the GIR number has been allotted, the fact of non-allotment should be mentioned in the application form. Any application form without these details should not be accepted by the mutual fund. The above clarification is being issued in accordance with Regulation 77 of the SEBI (Mutual Funds) Regulations, 1996. 12. Instructions for filing scheme offer document with SEBI: As advised in SEBI circular MFD/CIR/06/275/2001 dated July 9, 2001, while filing offer document for launching a new scheme/revising and filing existing offer document with SEBI, the mutual funds should highlight and clearly mention the page number of the offer document on which each of the following observation has been incorporated. In case of any amendment to Regulations, the new provisions should be incorporated in the offer documents.
COMPANY PROFILE
ANALYICAL FRAME WORK
NFO process:
When a mutual fund Assets Management Company (AMC) announces a public issue of units of & new fund/scheme, it is called a new fund offer (NFO). The new fund is planned and sources from where it should be collected and where the amount should be invested is planned by the AMC. According to the SEBI rules any new fund launched should be approved by SEBI. Once the AMC get the approval of SEBI for the fund it does the marketing of the fund by itself or through brokers. The investors who are willing to invest in a particular fund deposit the amount they plan to invest in the bank as directed by the AMC. These banks collect the application and amount and direct it towards the registrar specified by the AMC. From this point India info line came into the picture as the registrar. The role, responsibilities, activities, forms and reports involved in this process of NFO is general, are AMC, fund manager, SIP I/c, Switches I/c.,
NFO Coordinator. Internal auditor, Systems(S/W) dept. IPO Centre coordinator, IPO-RTI, IPO-EDP, Scanning and Printing & Dispatching.
Teams involved in the NFO process- Mutual fund unit Technology team Data entry team Verification team External audit team Scanning team Franking and dispatching team
Description of NFO process: Bank wise segregation: The India info line branches collect the applications of the investors across India and abroad for all the branches of the bank that is involved in this NFO. These applications are sent to India info line processing center, Hyderabad. After receiving, these applications are segregated bank wise and branch wise. IH Numbering: IH numbering is also called as In house Numbering. India info line gives this IH numbering to those applications. This is done for their convenience in doing back office functions easily. All the data on the application is entered into systems through software developed by India info line technology team called K-Bolt. Later on, we can get any information of a particular application or investor that we require by entering this IH number. Binding: All the applications that are received are given for binding. Binding of application is done by segregating them according to the bank and branch fro which they are received. India info line does this Binding because to keep all these applications safe, out of any damage and miss-place.
First Entry: After finishing binding of applications they are sent to Date Entry team. Here the first time entry is done. All the information or date of an investor
that is available on the application like name of the applicant, age, Address, PAN, Bank details, broker code, sub broker code, email addresses, guardian name, amount invested, name of the scheme or plan invested in, etc., are entered into the systems of India info line. Second Entry: After first entry the data is again sent for the second entry. Here in second entry, the data that is entered in first entry is checked and the information what ever is missing is entered. Online Matching: After entering the data like applicant, age, Address, PAN, Bank details, broker code, sub broker code, email addresses, guardian name, amount invested, name of the scheme or plan invested in, etc., in the first entry and once again in the second entry it is sent to the online matching. Here in online matching the physical form of application are kept side by an checking of data that was entered in the first entry and second entry is done. First time verification: Data from online matching is sent to the verification team. This team verifies mistakes that are left in online matching. Mistakes like blank address, PAN blank for amount greater than or equal to 50000 RS. Name blank, bank details blank, invalid or blank broker code etc., are rectified in the first time verification. First time CCL:
First time check clearing list is in short is called as first time CCL. First Time CCL is prepared based on the data that is provided after first time verification. External Audit: First time check-clearing list is sent to an external audit team. India info line appoints this team before the NFO processes. They are nowhere related to the organization. This external audit team will mainly check name of the investor, amount invested, bank details PAN number, name of the scheme/plan and mode of holding (MOH). But in total they will check more than 30 characters Second time verification: If the external auditing is not satisfied and if they find any mistakes or missing information they will send the first time CCL for second time verification. Here they verify the check list once again and mistakes like invalid mode of folding (MOH), invalid email address, status minor without guardian name, invalid date of birth for minor, invalid existing account number, blank/null application number, NRI with blank account type, saving or current, investor signature missing are rectified. Second time CCL: Second check the verification team prepares clearing after verifying the mistakes that are pointed out by the external audit team. After preparing second time CCL it is again sent to external audit team. Integrity Check (NFO team):
Check clearing list will be given by the external audit team to the NFO team in India info line This NFO team in India info line will once again check further mistakes like spelling mistakes in the name of the applicant etc., and rectify them. Integrity Check (by Audit): After integrity check by the NFO team it is once checked by the internal audit team of India info line. Scanning Default Values, Verification of Mismatch cases: Entire data is filtered at each and every step and finally it is given to the scanning team for scanning here scanning team will detect and rectify any further default values and mismatch cases. Reconciliation, Rejections and Cheque returns: Cheques of the investors are sent are sent by the balk to India info line Reconciliation team. Here this team will verify bank details of the investor like PAN number, bank a/c number, comparing the amount invested with that of the minimum amount that has to be invested cheques with out hue signature of the investor bounced cheques etc., and they are rejected. These rejected cheques are dispatched to the investors. A sample statement of accounts (SOA) is prepared by this reconciliation team.
Handling over the data to MFS: Entire data after getting filtered at each and every step will be handing over to mutual fund services team. This MFS team will once again verify the data and the final data will come out any mistakes and default values. Porting in Task MF: Task MF is the software developed by India info line Technology team. It is prepared according to the suggestion given by AMC. This Task MF will resemble the style or Performa or outlook of the statement of accounts. Final data that they got after filtering the mistakes and default values is ported in the task MF. Allotment of units: Allotment of units is done as per the amount that is invested by investors. They will avail the units taking the Net Asset Value (NAV) of that particular scheme as base. Sample SOA verification by audit: Statement of accounts (SOA) is picked up randomly from a huge lot and the audit team does verification. This verification will result in preparing a statement of accounts which in cent percent correct and exact.
This SOA contains data like:
* Name of the investor * Address * Bank details * Pan Number * Guardian name * Broker code * Sub broker code * Nominee name * Nominee addresses * 2 nd and 3 rd applicant name * Amount invested * No. Of units allotted * Fund name, Scheme Name, Plan Name & A/c no * Transaction type details * Mode of redemption payment * Mode of dividend payment * Mode of dispatch * Status, occupation. * Current balance, average price, current cost, current NAV etc., Dispatch of SOA: Statement of accounts (SOA) once prepared is dispatched to the investor. SOAs are neatly packed in an envelope and dispatched to the investors by the dispatch team through courier.
New Fund Report: Raas Capital will finally prepare New Fund Report. This new fund report has to be submitted to the AMC. Then AMC will submit a copy of the same to the SEBI, which is mandatory. The new fund report details like 1) Scheme details * Scheme name * Scheme type * Date of opening * Date of closing the scheme / initial subscription period * Target amount * Minimum amount to be raised 2) Subscription / Allotment details * Number of applications received with in the country * Number of NRI applications received * Subscription amount received with in the country * Subscription amount received form NRI * Date of allotment of units 3) Initial issue expenses 4) Date of dispatch of refund of refund orders 5) Unit holding pattern 6) Distribution schedule 7) Geographical Dispersion list
Holding profile of applicant:
Particulars Single Joint Anyone Total No. of applicants 89 0 31 120 % of applicants 74 0 26 100
Interpretation:
It can be seen that majority of the applicants prefer to hold the allotted units individually and 26% prefer to hold anyone/survivors. This corroborates with the age profile of the applicants.
Particular Business Service Student Professional Retired Housewife Others Total No. of applicants 34 46 2 4 7 23 5 120 % of applicants 28 38 2 3 6 19 4 100
Interpretation:
Majority of the applicants are from services personnel at 38%, next comes business People are 28%. The housewife occupy 3 rd highest at 19%. It is found that professionals and retired are at the lowest.
STATUS:
28 38 2 3 6 19 4 0 5 10 15 20 25 30 35 40 %
o f
a p p l i c a n t s
Occupation
a) Residential status of individual applicants:
Particulars Resident NRI Total No. of applicants 104 4 108 % of applicants 96 4 100
Interpretation:
It can be observed from the table and the chart that the majority of applicants are resident individuals constituting 96% the applicants and remaining 4% are the Non-resident Indians.
Particulars Company Society Fl SME Others Total No. of applicants 1 0 0 10 0 0 % of applicants 10 0 0 80 0 0
Interpretation:
In the non-individuals category HUF occupied the highest at 80% and next 10% is for partnerships. In others category 10% is found and all other non- individual entities have recorded zero applications.
Particulars 5000- 25000 25001- 50000 50001- 100000 Above 100000 Total No. of applicants 78 32 4 6 120 % of applicants 65 27 3 5 100
Inter preta tion:
Amou nt of invest ment is high at 65% in the range 5000-25000 and it is very low at 3% in 50001-100000, but the next slab. Above 100000 has registered 5%.
Particulars Growth option Bonus option Dividend reinvestment Dividend payout Total No. of applicants 59 4 37 20 120 % of applicants 49 3 31 17 100
Interpretation:
Majority of the applicants Opted the growth option and the option of dividend reinvestment is 31%. This means that 80% of the applicants are not investing for income sake rather they look at the accumulation of profits.
Particulars Cheque DD Total No. of applicants 119 1 120 % of applicants 99 1 100
Interpretation:
The mode of payment reflects upon the quality of applicants. On an average 99% have paid through cheques and therefore the NFO is able to attract good quality retail investors.
Analysis of type of account: 99 1 0 20 40 60 80 100 120 Cheque DD %
o f
a p p l i c a n t s
Mode of payment
Particulars SB Current NRO NRE FCNR Total No. of applicants 119 1 0 0 0 120 % of applicants 99 1 0 0 0 100
Interpretation:
Majority of the payments have been made from Savings Bank account (SB). No payments have been found from NRO, NRE, and FCNR even though 4% of the applicants are NRI s
Gender profile of the applicants: 99 1 0 0 0 0 20 40 60 80 100 120 SB Current NRO NRE FCNR %
o f
a p p l i c a n t s
Type of account
Particulars Male Female Total No. of applicants 89 31 120 % of applicants 74 26 100
Interpretation: The female participation in the NFO is low at 26%. The male applicants are very high at 76% as is not normally found in found in institutional investments.
Geographical distribution of applicants:
74 26 0 10 20 30 40 50 60 70 80 Male Female %
o f
a p p l i c a n t s
Gender
Particulars Andhra Pradesh Bihar Kerala Delhi Gujarat Karnataka No. of applicants 4 1 1 17 11 5 % of applicants 3 1 1 14 9 4
Particulars West Bengal Others total No. of applicants 10 6 120 % of applicants 8 5 100
Interpretation: A predominant feature is that 40% of the applications are from Maharastra and next highest 14% is registered for Delhi. Lowest numbers of applications are from Bihar and Chandigarh.
(From the sampling of 100 people 70 percentage of people are really
Interested in mutual funds.)
2. WHAT IS YOUR AGE GROUP (A)25-35 (B)35-45 (C)45-55 (D)55-65
(From the above chart we can understand the age group 55-65 people
are more investing in to the mutual funds).
3. WHAT IS YOUR OCCUPATION (A)PRIVATE EMPLOYEE (B)GOVERNMENT EMPLOYEE (C)BUSINESS PERSON 0 10 20 30 40 50 60 70 YES NO 0 5 10 15 20 25 30 35 40 AGE 25-35 35-45 45-55 55-65
(D)RETIRED
(Here Number of Retired employees are investing more as they are
concerns about their future).
4. IN WHICH TYPE OF MUTUAL FUND DO YOU LIKE TO INVEST (A)CLOSE ENDED (B) OPEN ENDED
(Here open ended schemes are more flexible compare to close so
Many people are interested into open ended schemes).
5. WHAT PERCENT OF RETURN DO YOU EXPECT (A) 10-15 (B) 20-25 (C) 30-40 0 5 10 15 20 25 30 35 OCCUPATION PRIVATE EMPLOYEES GOVERNMENT EMPLOYEES BUSINESS PERSON RETIRED 0 10 20 30 40 50 60 70 80 MUTUAL FUNDS OPEN ENDED CLOSE ENDED
(D) DOUBLING YOUR AMOUNT
(Here Number of people likes to double their amount.)
6. WHICH TYPE OF FUND ALLOCATION DO YOU LIKE (A) 100 PERCENT EQUITY (B) 80 PERCENT EQUITY & 20 PERCENT DEBT (C) 70 PERCENT EQUITY 20 PERCENT DEBT & 10 PERCENT MONEY MARKET (D) 100 PERCENT DEBT
(Here many investors are love to invest in 100 percent equity fund
Allocation scheme.)
7. IN WHICH OF THE UTI SCHEME YOU HAVE INVESTED (A)UTI WEALTH BUILDER FUND (B)UTI INFRASTRUCTURE ADVANTAGE FUND 0 10 20 30 40 50 60 EXPECTING PERCENTAGE 10-15 % 20-30% 30-40% DOUBLING YOUR AMOUNT 0 10 20 30 40 50 FUND ALLOCATION 1OO% EQUITY 80% EQUITY & 20 % DEBT 70% EQUITY 20% DEBT & 10%MONEY MARKET 100% DEBT
(C)UTI LONG TERM ADVANTAGE FUND (D)NONE
(Here the investors are likely to invest in infrastructure advantage
fund as this sector is in a booming stage.)
8. ARE YOU SATISFIED WITH THE RETURNS OF WHICH UTI IS GIVING (A)YES (B)NO (C)CANNOT SAY
(The above chart is clearly saying that today according to market
situation many people are quite satisfied with the return they are
Getting.)
9. HAVE YOU INVESTED IN ANY OTHER MUTUAL FUNDS (A)RELIANCE MUTUAL FUNDS (B)J M FINANCIAL (C)FEDILITY MUTUAL FUNDS 0 10 20 30 40 50 60 UTI SCHEMES UTI WEALTH BUILDER FUND UTI INFRASTRUCTURE ADVANTAGE FUND UTI LONG TERM ADVANTAGE FUND NONE 0 5 10 15 20 25 30 35 40 45 SATISFIED WITH RETURNS YES NO CANNOT SAY
(D)HSBC
(As people are specialized in market more the investors they all are
Investing in HSBC if not in UTI because HSBC is the worlds local bank
And international old more than 200 year old company)
10. DO YOU ADVICE PEOPLE TO INVEST IN MUTUAL FUNDS (A)YES (B)NO (C)CANNOT SAY
NOTE: As mutual funds is the subject to market so people generally does not
Like to give advice to others as it is a risky business.
0 10 20 30 40 50 60 70 OTHER MUTUAL FUNDS RELIANCE MUTUAL FUNDS J M FINANCIAL FEDILITY MUTUAL FUNDS HSBC 27 28 29 30 31 32 33 34 35 ADVICE TO OTHERS YES NO CANNOT SAY
FINDINGS AND CONCLUSIONS
Findings and conclusions:
* The NFO is found to be a complex activity calling for creating an organization polling the knowledge and expertise of people in different areas. * The NFO process is simple and well structured as long as it is to investor to investor, but thereafter the process is lengthy time consuming and found to be overlapping at some stages. * The SEBI regulations governing NFO are comprehensive and protect investor's interest at each level. * Different funds have been designing different forms of applications for NFO. * An analysis of sample of applications revealed the following O Majority applicants prefer to hold the units individually. O Majority of the applicants are in service. O NRI s share is about 4% of the total. O More than 2/3 rd of the applicants are HUF s. O The model age group is 31-60. O The most common investment amount is 5000-25000. O About half of the applicants prefer Growth option. O Almost all applicants make the payments by cheques. O There were no NRO, NRE and FCNR accounts. O Majority the applicants are male, and. O Majority applications are from state of Maharastra
SUGGESTIONS AND RECOMMENDAIONS
Suggestions and recommendations:
* Different funds have been using different forms of applications. A standardized form of application maybe designed by the competent authority and should be made mandatory for all funds to use the standard application form. * The NFO process is very complex and there is a need to simplify the process by eliminating certain unnecessary steps in the process ie instead of carrying out audit for three times and appropriate internal check system maybe devised to keep the errors within the tolerance limits. * The NRI subscribers to the fund maybe encouraged to make the payments from NRO, NRE and FCNR accounts. * The application from institutional investors and foreign institutional investors are to be encouraged through a package of incentives. * The participation of senior citizens in the NFO s may be encouraged as they are likely to hold more surpluses compared to others. * The holding of units in joint names shall be encouraged. * There is a need to investigate the reasons for HUF s occupying more than 2/3 rd share in the non-individual applications as its not a body corporate. * A savings from all channels of India / World are to be tapped by the NFO rather than one or two states applying for a loin share of the option.
BIBILOGRAPHY
Bibliography
* www.raascapital.com * www.sebi.com * www.amfiindia.com * NFO records of Reliance Mutual Fund. * Mutual Funds in India by H SADHAK.