RMF/ Amit Ramawat

8/13/2019 RMF/ Amit Ramawat

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Management Of Financial

Services

Reliance Mutual Fund

Presented By:

Amit Ramawat

MBA/8001/12


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INTRODUCTION

There are a lot of investment avenues available today in the financial market foran investor with an invest able surplus. He can invest in Bank Deposits, CorporateDebentures, and Bonds where there is low risk but low return. He may invest inStock of companies where the risk is high and the returns are also proportionatelyhigh. The recent trends in the Stock Market have shown that an average retailinvestor always lost with periodic bearish tends. People began opting for portfoliomanagers with expertise in stock markets who would invest on their behalf. Thuswe had wealth management services provided by many institutions. Howeverthey proved too costly for a small investor. These investors have found a goodshelter with the mutual funds. Like most developed and developing countries themutual fund cult has been catching on in India. The reasons for this interestingoccurrence are:

1. Mutual funds make it easy and less costly for investors to satisfy their needfor capital growth, income and/or income preservation.

2. Mutual fund brings the benefits of diversification and money management tothe individual investor, providing a

Opportunity for financial success that was once available only to a select few.


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HISTORY

Unit Trust of India is the first Mutual Fund set up under a separate act, UTIAct in 1963, and started its operations in 1964 with the issue of units underthe scheme US-641. In 1978 UTI was delinked from the RBI and IndustrialDevelopment Bank of India (IDBI) took over the Regulatory andadministrative control in place of RBI.

In the year 1987 Public Sector banks like State Bank of India, PunjabNational Bank, Indian Bank, Bank of India, and Bank of Baroda have set up

mutual funds.

Apart from these above mentioned banks Life Insurance Corporation [LIC]and General Insurance Corporation [GIC] too have set up mutual fund. LICestablished its mutual fund in June 1989.while GIC had set up its mutualfund in December 1990.The mutual fund industry had assets undermanagement of Rs. 47,004 cr.

Reliance group was founded by Dhirubhai Ambani in 1966 as apolyester firm. Dhirubhai started the equity cult in India. Reliance later entered into financial services, petroleum refining, power sector.By 2002 Reliance had grown into a U$15 billion conglomerate. Afterthe death of Dhirubhai Ambani on 6 July 2002, Reliance was headedby his sons. The group was formed after the two feudingbrothers Mukesh Ambani and Anil Ambani , split Reliance

Industries. Anil Ambani got the responsibility of Reliance Infocomm,Reliance Energy, Reliance Capital and RNRL. This led to a newbeginning called RELIANCE . Later this group entered the powersector through Reliance Power and the entertainment sector byacquiring Ad labs .


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SECURITIES AND EXCHANGE BOARD OF INDIA

(MUTUAL FUNDS)

(SECOND AMENDMENT) REGULATIONS, 2013.

No. LAD-NRO/GN/12/6108.- In exercise of the powers conferred under section 30 of the

Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby makes the

following regulations to amend the Securities and Exchange Board of India (Mutual Funds)Regulations, 1996, namely:-

1. These regulations may be called the Securities and Exchange Board of India (Mutual

Funds) (Second Amendment) Regulations, 2013.

2. They shall come into force on the date of their publication in the Official Gazette.

3. In the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996,

i. in regulation 34,

the following new proviso shall be inserted, namely,-

Provided tha t in case of mutual fund schemes eligible under Rajiv Gandhi

Equity Savings Scheme, the period specified in this regulation shall be not be

more than thirty days.

ii. in regulation 35,-

a. in sub-regulation (3), the following proviso shall be inserted, namely,-


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Provided that in case of mutual fund schemes eligible under Rajiv

Gandhi Equity Savings Scheme, the period specified in this sub-regulation

shall be fifteen days from the closure of the initial subscription list.

b. in sub-regulation (4), the following proviso shall be inserted, namely,-



shall be fifteen days from the closure of the initial su bscription list.

iii. in regulation 36,-

a. in sub-regulation (1), after the proviso, the following new proviso shall

be inserted, namely,-

Provided further that in case of mutual fund schemes eligible under Rajiv



b. in sub-regulation (2), the following proviso shall be inserted, namely,-




U. K. SINHA

CHAIRMAN (SEBI)


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ADVANTAGES OF MUTUAL FUNDS

There are numerous benefits of investing in mutual funds and one of the keyreasons for its phenomenal success in the developed markets like US and UK isthe range of benefits they offer, which are unmatched by most other investmentavenues.

Diversification

The nuclear weapon in your arsenal for your fight against Risk. It simply meansthat you must spread your investment across different securities (stocks, bonds,money market instruments, real estate, fixed deposits etc.) and different sectors(auto, textile, information technology etc.).

Tax Benefits

Any income distributed after March 31, 2002 will be subject to tax in theassessment of all Unit holders. However, as a measure of concession to Unitholders of open-ended equity-oriented funds, income distributions for the yearending March 31, 2003, will be taxed at a concessional rate of 10.5%.

Regulations

Securities Exchange Board of India (SEBI), the mutual funds regulator has clearlydefined rules, which govern mutual funds. These rules relate to the formation,administration and management of mutual funds and also prescribe disclosureand accounting requirements. Such a high level of regulation seeks to protect theinterest of investors

Affordability

A mutual fund invests in a portfolio of assets, i.e. bonds, shares, etc. dependingupon the investment objective of the scheme. Azn investor can buy in to aportfolio of equities, which would otherwise be extremely expensive.


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DISADVANTAGES OF MUTUAL FUND

Professional M anagement -

Did you notice how we qualified the advantage of professional management with the

word "theoretically"? Many investors debate over whether or not the so-called

professionals are any better than you or I at picking Mutuals. Management is by no

means infallible, and, even if the fund loses money, the manager still takes his/her cut. .

Costs -

Mutual funds don't exist solely to make your life easier--all funds are in it for a Profit.

The mutual fund industry is masterful at burying costs under layers of jargon .Because funds

have small holdings in so many different companies, high returns from a few Investments often

don't make much difference on the overall return. Dilution is also the result of a successful fund

getting too big. When money pours into funds that have had strong Success, the manager often

has trouble finding a good investment for all the new money

Taxes -

When making decisions about your money, fund managers don't consider your personal

tax situation. For example, when a fund manager sells a security, a capital-gain tax is

triggered, which affects how profitable the individual is from the sale. It might have been

more advantageous for the individual to defer the capital gains liability


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RISKS INVOLVED IN MUTUAL FUND

In short, how stable is the company or entity to which you lend your money when you invest?

How certain are you that it will be able to pay the interest you are promised, or repay your

principal when the investment matures?

Inflation risk

Changing interest rates affect both equities and bonds in many ways. Investors are

reminded that predicting which way rates will go is rarely successful. A diversified portfolio

can help in offsetting these changes.

Effect of loss of key professional and inability to adopt

An industries key asset is often the personnel who run the business i.e. intellectual properties of the key

employees of the respective companies. Given the ever-changing complexion of few industries and the

high obsolescence levels, availability of qualified, trained and motivated personnel is very critical for the

success of industries in few sectors. It is, therefore, necessary to attract key personnel and also to retain

them to meet the changing environment and challenges all investments involve some form of risk,

which should be evaluated them potential Rewards when an investment is selected.


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Managing risk

At times the prices or yields of all the securities in a particular market rise or fall due to broad

outside influences. When this happens, the Mutual prices of an out standing, highly profitable

company and a fledgling corporation may be affected.

This change in price is due to market risk.

Interest rate risk

Sometimes referred to as loss of purchasing power. Whenever inflation sprints forward faster

than the earnings on your investment, you run the risk that you will actually be able to buy less,

not more. Inflation risk also occurs when prices rise faster than your returns.

Credit risk

The sector offers. Failure or inability to attract/retain such qualified key personnel may impact

the prospects of the companies in the particular sector in which the fund invests.

Exchange risks

A number of companies generate revenues in foreign currencies and may have investments or

expenses also denominated in foreign currencies. Changes in exchange rates may, therefore,

have a positive or negative impact on companies which in turn would have an effect on the

investment of the fund.


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Investment risks

The sectoral fund schemes, investments will be predominantly in equities of select companies in

the particular sectors. Accordingly, the NAV of the schemes are linked to the equity performance

of such companies and may be more volatile than a more diversified portfolio of equities.

Changes in government policy

Changes in Government policy especially in regard to the tax benefits may impact the business

prospects of the companies leading to an impact on the investments made by the fund.


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Reliance Mutual Fund (RMF)

Its one of Indias leading Mutual Funds, with Average Assets under Management(AAUM) of Rs. 1, 07,749 Cr and an investor count of over 72 Lac folios. (AAUM andinvestor count as of September 2010) AAUM Source : http://www.amfiindia.com/

Reliance Mutual Fund, a part of the Reliance - Anil Dhirubhai Ambani Group, is one ofthe fastest growing mutual funds in the country. RMF offers investors a well-roundedportfolio of products to meet varying investor requirements and has presence in 159cities across the country. Reliance Mutual Fund constantly endeavors to launchinnovative products and customer service initiatives to increase value to investors."Reliance Mutual Fund schemes are managed by Reliance Capital Asset Management

Limited., a subsidiary of Reliance Capital Limited, which holds 93.37% of the paid-upcapital of RCAM, the balance paid up capital being held by minority shareholders."

Reliance Capital Ltd. is one of Indias leading and fastest growing private sectorfinancial services companies, and ranks among the top 3 private sector financialservices and banking companies, in terms of net worth. Reliance Capital Ltd. hasinterests in asset management, life and general insurance, private equity andproprietary investments, stock broking and other financial services.

Sponsor: Reliance Capital Limited

Trustee: Reliance Capital Trustee Co. Limited

Investment Manager: Reliance Capital Asset Management Limited Statutory Details:The Sponsor, the Trustee and the Investment Manager are incorporated under theCompanies Act 1956. Reliance Mutual Fund (formerly known as Reliance CapitalMutual Fund), a Trust under Indian Trust Act, 1882 and registered with SEBI videregistration number MF/022/95/1 dated June 30, 1995.


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Reliance Features related

mutual funds

Reliance was the first fund house to launch sector funds with flexibility toinvest in a range of 0% to 100% in either equity or debt instruments.

Mutual fund investments linked to an ATM/debit card a Relianceinnovation Indias first long-short fund comes from Reliance MutualFund .

As at 31st May 2008, more than 6.6 million people had invested in RelianceMutual Fund;the investments comprised 16% of the countrys entire

mutual fund .


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India's Best Offering: Reliance Mutual Fund

Investing has become global. Today, a lot of countries are waking up to the realitythat in order to gain financial growth, they must encourage their citizens to notonly save but also invest. Mutual funds are fast becoming the mode of investmentin the world.

In India, a mutual fund company called the Reliance Mutual Fund is makingwaves. Reliance is considered India's best when it comes to mutual funds. Its

investors number to 4.6 billion people. Reliance Capital Asset ManagementLimited ranks in the top 3 of India's banking companies and financial sector interms of net value.

The Anil Dhirubhai Ambani Group owns Reliance; they are the fastest growinginvestment company in India so far. To meet the erratic demand of the financialmarket, Reliance Mutual Fund designed a distinct portfolio that is sure to pleasepotential investors. Reliance Capital Asset Management Limited manages RMF.


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Vision and Mission

Reliance Mutual Fund is so popular because it is investor focused. They show their

dedication by continually dishing out innovative offerings and unparalleled serviceinitiatives. It is their goal to become respected globally for helping people achievetheir financial dreams through excellent organization governance and customer

care. Reliance Mutual fund wants a high performance environment that is gearedat making investors happy.

RMF aims to do business lawfully and without stepping on other people. Theywant to be able to create portfolios that will ensure the liquidity of the

investment of people in India as well as abroad. Reliance Mutual Fund also wantsto make sure that their shareholders realize reasonable profit, by deploying funds

wisely. Taking appropriate risks to reach the company's potential is also one ofReliance Mutual Fund's objectives.


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PRODUCT S : RELIANCE MONEY

The products on offer from Reliance Mutual Fund fall into four main categories: equity, debt,sector specific and ETF (Exchange Traded Fund).Each taps into a specific audience profilefulfilling their varying needs. Under the equity category, Reliance has118 SUPERBRANDS sixteenschemes with Reliance Growth Fund and Reliance Vision Fund as its flagship schemes. RelianceEquity Opportunities Fund is a scheme which operates in the multi-cap/multi-sector segment;Reliance Equity Fund is a long-short fund, Reliance Quant plus Fund is a quant fund. Relianceoffers investments in banking, power, media, entertainment and pharmaceuticals; Reliance TaxSaver Fund and Reliance Equity-Linked Savings Fund Series 1 are tax saving schemes; an NRI-dedicated equity scheme is tailored for non-resident Indians. Reliance Regular Savings Fund isan asset-allocation fund with three options. Under the debt and liquid categories, Reliance hasliquid funds, liquid plus funds, income funds, an NRI-dedicated debt fund, gilt funds, fixedmaturity plans and an interval fund. In the hybrid category, Reliance Monthly income Plan is apopular option

Reliance understands that investments in mutual fund share a function of knowledgedissemination and awareness of products amongst potential investors. In building its own baseof assets under management it will necessarily have to carry the entire mutual fund industry.

Towards this end Reliance has launched at wo-pronged initiative. In the first pincer it hascreated a formidable network of 26,000 distributors including some of the biggest names in thebanking sector. This whos who of th e financial industry comprises such giants as Citibank,Standard Chartered, HSBC, ICICI, AXIS, Bank of Baroda, Central Bank of India, Allahabad Bankand fund houses such as JM, DSP Merrill Lynch and Karvy in addition to a massive infrastructureof direct financial investment officers. This prodigious effort is supplemented by the brandscaptive network of 120 branch offices and 30 financial centers. In the second prong, Reliancehas created a series of information packed presentations which help dispel misinformationGroup. This mega business house dominates this key area in the financial sector. Figures for

March 2008 show that it has emerged as the top Indian mutual fund with average assets undermanagement of Rs. 90,938 cr (US$ 22.73 billion) and an investor base of over 6.6 million(Source:www.amfiindia.com).


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Reliances mutual fund schemes are managed by Reliance Capital Asset Management Limited(RCAM), a subsidiary of Reliance Capital Limited, which holds 93.37% of the paid-up capital ofRCAM. The company not chedup a healthy growth of Rs. 16,354 cr (US$ 4.09billion) in assetsunder management in February2008 and helped propel the total industry-wide AUM to Rs.

565,459 cr (US$ 141.36 billion) (Source: indiainvestments.com). A sharp rise in fixed maturityplans (FMPs) and collection of Rs. 7000 cr (US$ 1.75 billion) through new fund offers (NFOs)created this surge. In AUM rankings, Reliance continues to be in the number one spot.

Reliance was the first fund house to launch sector funds with flexibility to invest in a range of0% to 100% in either equity or debt instruments Mutual fund investments linked to anATM/debit card are a Reliance innovation Indias first long -short fund comes from RelianceMutual Fund As at 31st May 2008, more than 6.6 million people had invested in Reliance

Mutual Fund; the investments comprised 16 % of the countrys entire mutual fund asset base.

CONCLUSION

Mutual Fund investment is better than other raising fund .Reliance Mutual Fundhaving good returns in investment.

A good brand is always welcomed over here people are more aware andconscious for the brand so they go for they are ready to spend some extra bucksfor the quality.

At last all con be concluded by that Reliance Money is still growing industry inIndia and is still exploring its potential and prospects in here.


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Cash Reserve Ratio (CRR)

De f i n i t i o n :

Cash Reserve Ratio (CRR) is a specified minimum fraction of the totaldeposits of customers, which commercial banks have to hold as reserveseither in cash or as deposits with the central bank. CRR is set according tothe guidelines of the central bank of a country.

I n t r o d u c t i o n

The reserve requirement (or cash reserve ratio ) is a central bank regulationemployed by most, but not all, of the world's central banks, that sets theminimum fraction of customer deposits and notes that each commercial bank must holdas reserves (rather than lend out). These required reserves are normally in the formof cash stored physically in a bank vault (vault cash) or deposits made with a centralbank.

The required reserve ratio is sometimes used as a tool in monetary policy, influencingthe country's borrowing and interest rates by changing the amount of funds available forbanks to make loans with. Western central banks rarely alter the reserve requirementsbecause it would cause immediate liquidity problems for banks with low excessreserves; they generally prefer to use open market operations (buying and sellinggovernment-issued bonds) to implement their monetary policy. The People's Bank of

China uses changes in reserve requirements as an inflation-fighting tool, and raised thereserve requirement ten times in 2007 and eleven times since the beginning of 2010 .

T h e c o n v e n t i o n a l v i e w

The economic theory that a reserve requirement can act as a tool of monetary policy isfrequently found in economics textbooks. The higher the reserve requirement is set, thetheory supposes, the less funds banks will have to loan out, leading to lower moneycreation and perhaps ultimately to higher purchasing power of the money previously inuse. The effect is multiplied, because money obtained as loan proceeds can be re-deposited; a portion of those deposits may again be loaned out, and so on. The effecton the money supply is governed by the following formulas:


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: definitional relationship between monetary base Mb (bankreserves plus currency held by the non-bank public) the narrowly defined moneysupply , M1,

: derived formula for the money multiplier mm , the

factor by which lending and re-lending leads M1 to be a multiple of the monetarybase:where notationally,

the currency ratio: the ratio of the public's holdings of currency (undepositedcash) to the public's holdings of demand deposits ; and

the total reserve ratio (the ratio of legally required plus non-requiredreserve holdings of banks to demand deposit liabilities of banks).

However, in the United States (and other countries except Brazil, China,

India, Russia), the reserve requirements are generally not frequentlyaltered to implement monetary policy because of the short-term disruptiveeffect on financial markets.

Statutory liquidity ratio (SLR)

It refers amount that the commercial banks require to maintain in the form of gold orgovt. approved securities before providing credit to the customers. Here by approvedsecurities we mean, bond and shares of different companies. Statutory Liquidity Ratio isdetermined and maintained by the Reserve Bank of India in order to control theexpansion of bank credit. It is determined as percentage of total demand and timeliabilities. Time Liabilities refer to the liabilities, which the commercial banks are liable topay to the customers after a certain period mutually agreed upon and demand liabilitiesare such deposits of the customers which are payable on demand. example of timeliability is a fixed deposits for 6 months, which is not payable on demand but after sixmonths. example of demand liability is deposit maintained in saving account or currentaccount, which are payable on demand through a withdrawal form of a cheque. SLR isused by bankers and indicates the minimum percentage of deposits that the bank has tomaintain in form of gold,cash or other approved securities.Thus, we can say that it isratio of cash and some other approved liabilities(deposits). It regulates the credit growthin India
http://en.wikipedia.org/wiki/Money_supplyhttp://en.wikipedia.org/wiki/Money_supplyhttp://en.wikipedia.org/wiki/Money_supplyhttp://en.wikipedia.org/wiki/Money_supplyhttp://en.wikipedia.org/wiki/Money_multiplierhttp://en.wikipedia.org/wiki/Money_multiplierhttp://en.wikipedia.org/wiki/Money_multiplierhttp://en.wikipedia.org/wiki/Demand_deposithttp://en.wikipedia.org/wiki/Demand_deposithttp://en.wikipedia.org/wiki/Demand_deposithttp://en.wikipedia.org/wiki/Demand_deposithttp://en.wikipedia.org/wiki/Money_multiplierhttp://en.wikipedia.org/wiki/Money_supplyhttp://en.wikipedia.org/wiki/Money_supply


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The liabilities that the banks are liable to pay within one month's time, due to completionof maturity period, are also considered as time liabilities. The maximum limit of SLR is40% and minimum limit of SLR is 23% In India, Reserve Bank of India alwaysdetermines the percentage of SLR. There are some statutory requirements fortemporarily placing the money in government bonds. Following this requirement,

Reserve Bank of India fixes the level of SLR. At present, the minimum limit of SLO thatcan be set by the Reserve Bank is 23% AS ON September 2013 Objectives of SLR:The main objectives for maintaining the SLR ratio are the following:

to control the expansion of bank credit. By changing the level of SLR, the ReserveBank of India can increase or decrease bank credit expansion.

to ensure the solvency of commercial banks. to compel the commercial banks toinvest in government securities like government bonds.

If any Indian bank fails to maintain the required level of Statutory Liquidity Ratio, then itbecomes liable to pay penalty to Reserve Bank of India. The defaulter bank pays penalinterest at the rate of 3% per annum above the Bank Rate, on the shortfall amount forthat particular day. But, according to the Circular, released by the Department ofBanking Operations and Development, Reserve Bank of India; if the defaulter bankcontinues to default on the next working day, then the rate of penal interest can beincreased to 5% per annum above the Bank Rate. This restriction is imposed by RBI onbanks to make funds available to customers on demand as soon as possible. Gold andgovernment securities (or gilts) are included along with cash because they are highlyliquid and safe assets.

The RBI can increase the SLR to contain inflation, suck liquidity in the market, to tightenthe measure to safeguard the customers money. In a growing economy banks wouldlike to invest in stock market, not in government securities or gold as the latter wouldyield less returns. One more reason is long term government securities (or any bond)are sensitive to interest rate changes. But in an emerging economy interest rate changeis a common activity.
http://en.wikipedia.org/wiki/Penal_interesthttp://en.wikipedia.org/wiki/Penal_interesthttp://en.wikipedia.org/wiki/Penal_interesthttp://en.wikipedia.org/wiki/Penal_interesthttp://en.wikipedia.org/wiki/Penal_interesthttp://en.wikipedia.org/wiki/Penal_interest


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Difference between CRR and SLR

Both CRR and SLR are instruments in the hands of RBI to regulate money supply in thehands of banks that they can pump in economy

SLR restricts the banks leverage in pumping more money into the economy. On theother hand, CRR, or cash reserve ratio , is the portion of deposits that the banks have tomaintain with the Central Bank to reduce liquidity in banking system. Thus CRR controlsliquidity in banking system while SLR regulates credit growth in the country.

The other difference is that to meet SLR, banks can use cash, gold or approvedsecurities whereas with CRR it has to be only cash. CRR is maintained in cash formwith central bank, whereas SLR is money deposited in govt. securities. CRR is used tocontrol inflation

References

Websites:

www.reliancemoney.com

www.indiainfoline.com

en.wikipedia.org

www.slideshare.com
http://en.wikipedia.org/wiki/Reserve_Requirementhttp://en.wikipedia.org/wiki/Reserve_Requirementhttp://en.wikipedia.org/wiki/Reserve_Requirementhttp://www.reliancemoney.com/http://www.reliancemoney.com/http://www.indiainfoline.com/http://www.indiainfoline.com/http://en.wikipedia.org/http://en.wikipedia.org/http://www.slideshare.com/http://www.slideshare.com/http://www.slideshare.com/http://en.wikipedia.org/http://www.indiainfoline.com/http://www.reliancemoney.com/http://en.wikipedia.org/wiki/Reserve_Requirement


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RMF/ Amit Ramawat