SUMMER TRAINING PROJECT REPORT ON

COMPARATIVE OF IDBI FEDERAL INSURANCE PRODUCTS WITH OTHER INSURANCE COMPANY PRODUCTS

A report prepared and submitted for the partial requirement and fulfillment of the MBA Program SUBMITTED TO: BY: Mahamad Arif Khan (Assistant Manager IDBI Federal) MBA 3rd Sem. Amit Awasthi SUBMITTED

GHANSHYAM BINANI ACADEMY OF MANAGEMENT SCIENCES MIRZAPUR

ACKNOWLEDGEMENT

I take this opportunity to express my acknowledgement and deep sense of gratitude for rendering valuable assistance and guidance to me by following personality for successful completion of my project. I am highly obliged to my project guide ...................................................... for his personal encouragement, prompt assistance and help provided to me in completion of my project. He has helped me a lot by giving suggestions and guidance whenever needed. His contribution has been extremely useful and is greatly appreciated. I honor his knowledge and competence in the field of management.

PREFACE

To achieve partial and concrete results, it is necessary that theoretical knowledge must be supplemented with practical environment. Keeping this view in mind, I have completed my research work regarding comparative of idbi federal insurance products with other insurance company products ) By doing this research work I have learnt a lot of things which would be really helpful for me in future. This experience in decision making and practical application of knowledge has contributed greatly to my growth.

DECLARATION

I hereby declare that the survey entitled, comparative of idbi federal insurance products with other insurance company products, that no part of research work has been submitted for any other degree. I also undertake that work is purely academic and no part has been copied or taken from any where. The motive behind the research project was comparative of idbi federal insurance products with other insurance company products

Introduction: Executive summary of the project Executive Summary Banking Industry which is basically my concern industry around which my project has to be revolved is really a very complex industry. And to work for this was really a complex and hectic task and few times I felt so frustrated that I thought to left the project and go for any new industry and new project. Challenges which I faced while doing this project were following- Banking sector was quite similar in offering and products and because of that it was very difficult to discriminate between our product and products of the competitors. - Target customers and respondents were too busy persons that to get their time and view for specific questions was very difficult. - Sensitivity of the industry was also a very frequent factor which was very important to measure correctly. - Area covered for the project while doing job also was very large and it was very difficult to correlate two different customers/respondents views in a one. - Every financial customer has his/her own need and according to the requirements of the customer product customization was not possible.
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So above challenges some time forced me to leave the project but any how I did my project in all circumstances. Basically in this project I analyzed thatWhat factors are really responsible for performance of IDBI Banks performance in this competitive era.

INDEX Serial No. 1 2. 3. 4. Introduction to Insurance Company profile Major competitor LIC Various life insurance plans of IDBI FEDERAL LIFE INSURANCE 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. Various plans of LIC Major plans of IDBI FEDERAL LIFE INSURANCE Major plans of LIC Objectives Research Methodology Data Analysis Findings Suggestions Limitations Conclusion Bibliography Annexure 30 37 45 46 49 60 62 64 66 68 70
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Particulars

Page No.

8 15 24

25 27

INSURANCE
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The meaning of insurance: Insurance is a policy from a large financial institution that offers a person, company, or other entity reimbursement or financial protection against possible future losses or damages. A simple example will make the meaning of insurance easy to understand. A biker is always subjected to the risk of head injury. But it is not certain that the accident causing him the head injury would definitely occur. Still, people riding bikes cover their heads with helmets. This helmet in such cases acts as insurance by protecting him/her from any possible danger. The price paid was the possible inconvenience or act of wearing the helmet; this i.e. equivalent to the insurance premiums paid. Major types of insurances are as mentioned below:

Life insurance: Descendants family receives financial benefits. Life insurances also offer paid proceeds to the beneficiary. Automobile insurance: Usually automobile insurances cover damages and legal financial expenditures of the automobile driver.

Health insurance: Health insurance covers the expenditures associated to treatment and medical expenditures.

Credit insurance: Borrowers often fail to repay debts, loans and mortgages due to certain unavoidable circumstances, credit insurances can be of great help during such crisis.

Property insurance: Property protection insurance provides protection from risks associated to theft, fire, floods etc.
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Life insurance Life insurance or life assurance is a contract between the policy owner and the insurer, where the insurer agrees to pay a sum of money upon the occurrence of the insured individual's or individuals' death or other event, such as terminal illness or critical illness. In return, the policy owner agrees to pay a stipulated amount called a premium at regular intervals or in lump sums.

How life insurance works There are three parties in a life insurance transaction; the insurer, the insured, and the owner of the policy (policyholder), although the owner and the insured are often the same person. For example, if Mr. Rajan buys a policy on his own life, he is both the owner and the insured. But if Mrs. Anita, his wife, buys a policy on Rajans life, she is the owner and he is the insured. The owner of the policy is called the grantee (he or she will be the person who will pay for the policy). Another important person involved is the beneficiary. The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured. The beneficiary is not a party to the policy, but is designated by the owner, who may change the beneficiary unless the policy has an irrevocable beneficiary designation. With an irrevocable beneficiary, that beneficiary must agree to changes in beneficiary, policy assignment, or borrowing of cash value.

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The policy, like all insurance policies, is a legal contract specifying the terms and conditions of the risk assumed. Special provisions apply, including a suicide clause wherein the policy becomes null if the insured commits suicide within a specified time for the policy date (usually two years). Any misrepresentation by the owner or insured on the application is also grounds for nullification. Most contracts have a contestability period, also usually a two-year period; if the insured dies within this period, the insurer has a legal right to contest the claim and request additional information before deciding to pay or deny the claim. The face amount of the policy is normally the amount paid when the policy matures, although policies can provide for greater or lesser amounts. The policy matures when the insured dies or reaches a specified age. The most common reason to buy a life insurance policy is to protect the financial interests of the owner of the policy in the event of the insured's demise. The insurance proceeds would pay for funeral and other death costs or be invested to provide income replacing the deceased's wages. Other reasons include estate planning and retirement. The owner (if not the insured) must have an insurable interest in the insured, i.e. a legitimate reason for insuring another persons life. The insurer (the life insurance company) calculates the policy prices with an intent to recover claims to be paid and administrative costs, and to make a profit. MAJOR PLAYERS OF INDIA IN INSURANCE Reliance Life Insurance is a part of the Reliance group. It is one of the partners of Reliance Capital Ltd which is a Anil Dhirubhai Ambani Group.
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Reliance Capital is one India's most dominant private sector financial services companies. They offer insurance products which help you with savings as well as give you protection.

Canara HSBC Life is a joint venture of Canara Bank, HSBC Insurance (Asia pacific) & Oriental bank of Commerce. The Company got its approval from IRDA in June 2008 and from that commencing its business. They have more than 4100 branches all over India.

DLF pramerica Life Insurance Company Ltd. is a joint venture between DLF Limited & Prudential International Insurance Holdings Limited. DLF Pramerica believes in delivering a secure & enrich life to there customers.

MetLife One of the fastest growing insurance company in India is MetLife. The company started its operations in between 2000-2001. They have a range of various products to offer. ICICI Prudential ICICI Bank with Prudential plc, both well known & strong financial institutions came together in December 2000 to form an insurance company - ICICI Prudential Life Insurance.

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Max New York Life Max Indias leading multi business corporation & New York Life joined there hands in 2000.The company started there operations in 2001. The company is involved in Life & health products.

Bajaj Allianz Bajaj who are into iron & steel, finance, insurance & etc and Allianz who provides financial services when came together they formed Bajaj Allianz Life Insurance Company.

Bharti AXA Bharti AXA Life Insurance is a joint venture between Bharti & AXA. The company started its functionality in December 2006 and they always believe to be a strong financial institute.

HDFC Standard Life HDFC Standard Life Insurance is a joint venture between Housing Development Finance Corporation Limited & a Group of Standard Life Plc.The Company started commencing its business in December 2000.

AEGON Religare AEGON Religare Life Insurance Company Ltd is a joint venture with AEGON, Religare and Bennett, Coleman & Company a part of Times Group. AEGON Religare Life Insurance company was launched in July 2008.

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Kotak Mahindra A joint venture of Kotak Mahindra group & Old Mutual plc is known as Kotak Mahindra Old Mutual Funds. The Company started commencing its business in 2001. The company aim is to help customers in making there financial decisions. Future Generali Life Future Generali is a joint venture between Future Group of India & Italy based Generali Group.Future Generali in India is into both Life & Non Life businesses in India. The company wants to provide a financial security to all.

SBI Life

SBI Life Insurance Company Limited is a joint venture between

State Bank of India and BNP Paribas Assurance. It is present in more than 41 countries across the world. SBI Life offers a variety of plans in life insurance and pension.

Shriram Life Shriram Life Insurance Company is a joint venture between Shriram Group and Sanlam Group.Shriram Group is one of Indias most esteemed financial services & Sanlam Group is one of the largest life insurance providers of South Africa. TATA AIG The TATA Group and American International Group Inc together formed Tata AIG Life Insurance Co. Ltd.Tata Group holds 74% stake in the insurance venture with AIG holding the balance 26%. They started their operations in April 2001

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Aviva Aviva, one of UK's largest insurance company and world's 5th largest insurance group. It was one of the first international insurance company to set up its office in India in the year 1995. They introduced the concept of banc assurance in India.

IDBI Fortis IDBI Fortis Life Insurance Co. Ltd is a joint venture between three financial institutes; they are IDBI Bank, Federal Bank and Fortis. They introduced there plans in March 2008. IDBI owns 48% equity while Federal Bank and Fortis own 26% equity each.

Sahara The Sahara Pariwar stepped into the insurance business by launching Sahara India Life Insurance Co. Ltd. They received the IRDA license in February 2004 and started their operations in October 2004. They are the first solely owned private sector insurance company in India.

ING VYSYA ING Life was established in 2001 as a joint venture between ING Insurance International B.V. (INGI), ING Vysya Bank Limited and GMR Industries Limited. At present, INGI, Exide Industries Limited, Ambuja Cement Ltd, Enam Group are the joint venture partners.

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Star Union Star Union Dai-ichi Life Insurance Co.Ltd. is formed by three various financial institutions. Bank of India, Union Bank of India and Dai-ichi Mutual Life Insurance Company This firm was incorporated in the year 2007 and got their IRDA license on the 26th Dec 2008.

Some of the important milestones in the life insurance business in India are: 1818: Oriental Life Insurance Company, the first life insurance company on Indian soil started functioning. 1870: Bombay Mutual Life Assurance Society, the first Indian life insurance company started its business. 1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business. 1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses. 1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public. 1956: 245 Indian and foreign insurers and provident societies are taken over by the central government and nationalised. LIC formed by an Act of Parliament,

17

viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the Government of India.

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19

Industry status & IDBI Banks interface

Industry introduction The Indian Banking industry, which is governed by the Banking Regulation Act of India, 1949 can be broadly classified into two major categories, non-scheduled banks and scheduled banks. Scheduled banks comprise commercial banks and the cooperative banks. In terms of ownership, commercial banks can be further grouped into nationalized banks, the State Bank of India and its group banks, regional rural banks and private sector banks (the old/ new domestic and foreign). These banks have over 67,000 branches spread across the country in every city and villages of all nook and corners of the land.

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The first phase of financial reforms resulted in the nationalization of 14 major banks in 1969 and resulted in a shift from Class banking to Mass banking. This in turn resulted in a significant growth in the geographical coverage of banks. Every bank had to earmark a minimum percentage of their loan portfolio to sectors identified as priority sectors. The manufacturing sector also grew during the 1970s in protected environs and the banking sector was a critical source. The next wave of reforms saw the nationalization of 6 more commercial banks in 1980. Since then the number of scheduled commercial banks increased four-fold and the number of bank branches increased eight-fold. And that was not the limit of growth. After the second phase of financial sector reforms and liberalization of the sector in the early nineties, the Public Sector Banks (PSB) s found it extremely difficult to compete with the new private sector banks and the foreign banks. The new private sector banks first made their appearance after the guidelines permitting them were issued in January 1993. Eight new private sector banks are presently in operation. These banks due to their late start have access to state-of-the-art technology, which in turn helps them to save on manpower costs.

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During the year 2000, the State Bank Of India (SBI) and its 7 associates accounted for a 25 percent share in deposits and 28.1 percent share in credit. The 20 nationalized banks accounted for 53.2 percent of the deposits and 47.5 percent of credit during the same period. The share of foreign banks (numbering 42), regional rural banks and other scheduled commercial banks accounted for 5.7 percent, 3.9 percent and 12.2 percent respectively in deposits and 8.41 percent, 3.14 percent and 12.85 percent respectively in credit during the year 2000.about the detail of the current scenario we will go through the trends in modern economy of the country.

Current Scenario: The industry is currently in a transition phase. On the one hand, the PSBs, which are the mainstay of the Indian Banking system are in the process of shedding their flab in terms of excessive manpower, excessive non Performing Assets (Npas) and excessive governmental equity, while on the other hand the private sector banks are consolidating themselves through mergers and acquisitions.

22

PSBs, which currently account for more than 78 percent of total banking industry assets are saddled with NPAs (a mind-boggling Rs 830 billion in 2000), falling revenues from traditional sources, lack of modern technology and a massive workforce while the new private sector banks are forging ahead and rewriting the traditional banking business model by way of their

sheer innovation and service. The PSBs are of course currently working out challenging strategies even as 20 percent of their massive employee strength has dwindled in the wake of the successful Voluntary Retirement Schemes (VRS) schemes. The private players however cannot match the PSBs great reach, great size and access to low cost deposits. Therefore one of the means for them to combat the PSBs has been through the merger and acquisition (M& A) route. Over the last two years, the industry has witnessed several such instances. For instance, HDFC Banks merger with Times Bank Icici Banks acquisition of ITC Classic, Anagram Finance and Bank of Madurai. Centurion Bank, Indusind Bank, Bank of Punjab,

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Vysya Bank are said to be on the lookout. The UTI bank- Global Trust Bank merger however opened a pandoras box and brought about the realization that all was not well in the functioning of many of the private sector banks. Private sector Banks have pioneered internet banking, phone banking, anywhere banking, mobile banking, debit cards, Automatic Teller Machines (ATMs) and combined various other services and integrated them into the mainstream banking arena, while the PSBs are still grappling with disgruntled employees in the aftermath of successful VRS schemes. Also, following Indias commitment to the W To agreement in respect of the services sector, foreign banks, including both new and the existing ones, have been permitted to open up to 12 branches a year with effect from 1998-99 as against the earlier stipulation of 8 branches. Tasks of government diluting their equity from 51 percent to 33 percent in November 2000 has also opened up a new opportunity for the takeover of even the PSBs. The FDI rules being more

rationalized in Q1FY02 may also pave the way for foreign banks taking the M& A route to acquire willing Indian partners. Meanwhile the economic and corporate sector slowdown has
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led to an increasing number of banks focusing on the retail segment. Many of them are also entering the new vistas of Insurance. Banks with their phenomenal reach and a regular interface with the retail investor are the best placed to enter into the insurance sector. Banks in India have been allowed to provide fee-based insurance services without risk participation, invest in an insurance company for providing infrastructure and services support and set up of a separate joint-venture insurance company with risk participation.

Aggregate Performance of the Banking Industry Aggregate deposits of scheduled commercial banks increased at a compounded annual average growth rate (Cagr) of 17.8 percent during 1969-99, while bank credit expanded at a Cagr of 16.3 percent per annum. Banks investments in government and other approved securities recorded a Cagr of 18.8 percent per annum during the same period. In FY01 the economic slowdown resulted in a Gross Domestic Product (GDP) growth of only 6.0 percent as against the previous years 6.4 percent. The WPI Index (a measure of inflation) increased by 7.1 percent as against 3.3 percent in FY00. Similarly, money supply (M3) grew by around 16.2 percent as against 14.6 percent a year ago. The growth in aggregate deposits of the scheduled commercial
25

banks at 15.4 percent in FY01 percent was lower than that of 19.3 percent in the previous year, while the growth in credit by

SCBs slowed down to 15.6 percent in FY01 against 23 percent a year ago.

The industrial slowdown also affected the earnings of listed banks. The net profits of 20 listed banks dropped by 34.43 percent in the quarter ended March 2001. Net profits grew by 40.75 percent in the first quarter of 2000-2001, but dropped to 4.56 percent in the fourth quarter of 2000-2001. On the Capital Adequacy Ratio (CAR) front while most banks managed to fulfill the norms, it was a feat achieved with its own share of difficulties. The CAR, which at present is 9.0 percent, is likely to be hiked to 12.0 percent by the year 2004 based on the Basle Committee recommendations. Any bank that wishes to grow its assets needs to also shore up its capital at the same time so that its capital as a percentage of the riskweighted assets is maintained at the stipulated rate. While the IPO route was a much-fancied one in the early 90s, the current scenario doesnt look too attractive for bank majors.
26

Consequently, banks have been forced to explore other avenues to shore up their capital base. While some are wooing foreign partners to add to the capital others are employing the M& A route. Many are also going in for right issues at prices considerably lower than the market prices to woo the investors.

Interest Rate Scene The two years, post the East Asian crises in 1997-98 saw a climb in the global interest rates. It was only in the later half of FY01 that the US Fed cut interest rates. India has however

remained more or less insulated. The past 2 years in our country was characterized by a mounting intention of the Reserve Bank Of India (RBI) to steadily reduce interest rates resulting in a narrowing differential between global and domestic rates. The RBI has been affecting bank rate and CRR cuts at regular intervals to improve liquidity and reduce rates. The only exception was in July 2000 when the RBI increased the Cash Reserve Ratio (CRR) to stem the fall in the rupee against the

27

dollar. The steady fall in the interest rates resulted in squeezed margins for the banks in general.

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Governmental Policy: After the first phase and second phase of financial reforms, in the 1980s commercial banks began to function in a highly regulated environment, with administered interest rate structure, quantitative restrictions on credit flows, high reserve requirements and reservation of a significant proportion of lendable resources for the priority and the government sectors. The restrictive regulatory norms led to the credit rationing for the private sector and the interest rate controls led to the unproductive use of credit and low levels of investment and growth. The resultant financial repression led to decline in productivity and efficiency and erosion of profitability of the banking sector in general. This was when the need to develop a sound commercial banking system was felt. This was worked out mainly with the help of the recommendations of the Committee on the Financial

System (Chairman: Shri M. Narasimham), 1991. The resultant financial sector reforms called for interest rate flexibility for banks, reduction in reserve requirements, and a number of structural measures. Interest rates have thus been steadily
29

deregulated in the past few years with banks being free to fix their Prime Lending Rates(PLRs) and deposit rates for most banking products. Credit market reforms included introduction of new instruments of credit, changes in the credit delivery system and integration of functional roles of diverse players, such as, banks, financial institutions and nonbanking financial companies (Nbfcs). Domestic Private Sector Banks were allowed to be set up, PSBs were allowed to access the markets to shore up their Cars.

Implications Of Some Recent Policy Measures: The allowing of PSBs to shed manpower and dilution of equity are moves that will lend greater autonomy to the industry. In order to lend more depth to the capital markets the RBI had in November 2000 also changed the capital market exposure norms from 5 percent of banks incremental deposits of the previous year to 5 percent of the banks total domestic credit in the previous year. But this move did not have the desired effect, as in, while most banks kept away almost completely from the capital markets, a few private sector banks went overboard and exceeded limits and indulged in dubious stock market deals. The chances of seeing banks making a comeback to the stock markets are therefore quite unlikely in
30

the near future. The move to increase Foreign Direct Investment FDI limits to 49 percent from 20 percent

during the first quarter of this fiscal came as a welcome announcement to foreign players wanting to get a foot hold in the Indian Markets by investing in willing Indian partners who are starved of net worth to meet CAR norms. Ceiling for FII investment in companies was also increased from 24.0 percent to 49.0 percent and have been included within the ambit of FDI investment.

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IDBI bank: all about The economic development of any country depends on the extent to which its financial system efficiently and effectively mobilizes and allocates resources. There are a number of banks and financial institutions that perform this function; one of them is the development bank. Development banks are unique financial institutions that perform the special task of fostering the development of a nation, generally not undertaken by other banks. Development banks are financial agencies that provide medium-and long-term financial assistance and act as catalytic agents in promoting balanced development of the country. They are engaged in promotion and development of industry, agriculture, and other key sectors. They also provide development services that can aid in the accelerated growth of an economy. The objectives of development banks are: To serve as an agent of development in various sectors, viz. industry, agriculture, and international trade To accelerate the growth of the economy To allocate resources to high priority areas

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To

foster

rapid

industrialization,

particularly in the private sector, so as to provide employment opportunities as well as higher production To develop entrepreneurial skills

To promote the development of rural areas To finance housing, small scale industries,

infrastructure, and social utilities. In addition, they are assigned a special role in: Planning, promoting, and developing industries to fill the gaps in industrial sector. Coordinating the working of institutions engaged in financing, promoting or developing industries, agriculture, or trade, rendering promotional services such as discovering project ideas, undertaking feasibility studies, and providing technical, financial, and managerial assistance for the implementation of projects

Industrial development bank of India The industrial development bank of India(IDBI) was established in 1964 by parliament as wholly owned subsidiary of reserve
33

bank of India. In 1976, the banks ownership was transferred to the government of India. It was accorded the status of principal financial institution for coordinating the working of institutions at national and state levels engaged in financing, promoting, and developing industries. IDBI has provided assistance to development related projects and contributed to building up substantial capacities in all major industries in India. IDBI has directly or indirectly assisted all companies that are presently reckoned as major corporates in the country. It has played a dominant role in balanced industrial development. IDBI set up the small industries development bank of India (SIDBI) as wholly owned subsidiary to cater to specific the needs of the small-scale sector.

IDBI has engineered the development of capital market through helping in setting up of the securities exchange board of India(SEBI), National stock exchange of India limited(NSE), credit analysis and research limited(CARE), stock holding corporation of India limited(SHCIL), investor services of India limited(ISIL), national securities depository limited(NSDL), and clearing corporation of India limited(CCIL)

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In 1992, IDBI accessed the domestic retail debt market for the first time by issuing innovative bonds known as the deep discount bonds. These new bonds became highly popular with the Indian investor. In 1994, IDBI Act was amended to permit public ownership up to 49 per cent. In July 1995, it raised over Rs 20 billion in its first initial public (IPO) of equity, thereby reducing the government stake to 72.14 per cent. In June 2000, a part of government shareholding was converted to preference capital. This capital was redeemed in March 2001, which led to a reduction in government stake. The government stake currently is 51 per cent. In august 2000, IDBI became the first all India financial institution to obtain ISO 9002: 1994 certification for its treasury operations. It also became the first organization in the Indian financial sector to obtain ISO 9001:2000 certification for its forex services.

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Milestones

July 1964: Set up under an Act of Parliament as a whollyowned subsidiary of Reserve Bank of India. February 1976: Ownership transferred to Government of India. Designated Principal Financial Institution for cocoordinating the working of institutions at national and State levels engaged in financing, promoting and developing industry.

March 1982: International Finance Division of IDBI transferred to Export-Import Bank of India, established as a wholly-owned corporation of Government of India, under an Act of Parliament.

April 1990: Set up Small Industries Development Bank of India (SIDBI) under SIDBI Act as a wholly-owned subsidiary to cater to specific needs of small-scale sector. In terms of an amendment to SIDBI Act in September 2000, IDBI divested 51% of its shareholding in SIDBI in favour of banks and other institutions in the first phase. IDBI has subsequently divested 79.13% of its stake in its erstwhile subsidiary to date.

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January 1992: Accessed domestic retail debt market for the first time with innovative Deep Discount Bonds; registered path-breaking success.

December 1993: Set up IDBI Capital Market Services Ltd. as a wholly-owned subsidiary to offer a broad range of financial services, including Bond Trading, Equity Broking, Client Asset Management and Depository Services. IDBI Capital is currently a leading Primary Dealer in the country.

September 1994: Set up IDBI Bank Ltd. in association with SIDBI as a private sector commercial bank subsidiary, a sequel to RBI's policy of opening up domestic banking sector to private participation as part of overall financial sector reforms. October 1994: IDBI Act amended to permit public ownership upto 49%.

July 1995: Made Initial Public Offer of Equity and raised over Rs.2000 crore, thereby reducing Government stake to 72.14%.

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March 2000:Entered into a JV agreement with Principal Financial Group, USA for participation in equity and management of IDBI Investment Management Company Ltd., erstwhile a 100% subsidiary. IDBI divested its entire shareholding in its asset management venture in March 2003 as part of overall corporate strategy.

March 2000: Set up IDBI Intech Ltd. as a wholly-owned subsidiary to undertake IT-related activities.

June 2000: A part of Government shareholding converted to preference capital, since redeemed in March 2001; Government stake currently 58.47%.

August

2000:

Became

the

first

All-India

Financial

Institution to obtain ISO 9002:1994 Certification for its treasury operations. Also became the first organisation in Indian financial sector to obtain ISO 9001:2000 Certification for its forex services.

March 2001: Set up IDBI Trusteeship Services Ltd. to provide technology-driven information and professional services to subscribers and issuers of debentures.

Feburary 2002: Associated with select banks/institutions in setting up Asset Reconstruction Company (India) Limited (ARCIL), which will be involved with the

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Strategic management of non-performing and stressed assets of Financial Institutions and Banks. September 2003: IDBI acquired the entire shareholding of Tata Finance Limited in Tata Homefinance Ltd, signalling IDBI's foray into the retail finance sector. The housing finance subsidiary has since been renamed 'IDBI Homefinance Limited'.

December 2003: On December 16, 2003, the Parliament approved The Industrial Development Bank (Transfer of Undertaking and Repeal Bill) 2002 to repeal IDBI Act 1964. The President's assent for the same was obtained on December 30, 2003. The Repeal Act is aimed at bringing IDBI under the Companies Act for investing it with the requisite operational flexibility to undertake commercial banking business under the Banking Regulation Act 1949 in addition to the business carried on and transacted by it under the IDBI Act, 1964.

July 2004: The Industrial Development Bank (Transfer of Undertaking and Repeal) Act 2003 came into force from July 2, 2004.

July 2004: The Boards of IDBI and IDBI Bank Ltd. take inprinciple decision regarding merger of IDBI Bank Ltd. with
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proposed Industrial Development Bank of India Ltd. in their respective meetings on July 29, 2004.

September 2004: The Trust Deed for Stressed Assets Stabilisation Fund (SASF) executed by its Trustees on September 24, 2004 and the first meeting of the Trustees was held on September 27, 2004.

September Development

2004: Bank of

The

new was

entity

"Industrial on

India"

incorporated

September 27, 2004 and Certificate of commencement of business was issued by the Registrar of Companies on September 28, 2004.

September

2004:Notification

issued

by

Ministry

of

Finance specifying SASF as a financial institution under Section 2(h)(ii) of Recovery of Debts due to Banks & Financial Institutions Act, 1993.

September

2004:Notification

issued

by

Ministry

of

Finance on September 29, 2004 for issue of non-interest bearing GoI IDBI Special Security, 2024, aggregating Rs.9000 crore, of 20-year tenure.

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September

2004:

Notification

for

appointed day as October 1, 2004, issued by Ministry of Finance on September 29, 2004.

September 2004:RBI issues notification for inclusion of Industrial Development Bank of India Ltd. in Schedule II of RBI Act, 1934 on September 30, 2004.

October 2004: Appointed day - October 01, 2004 Transfer of undertaking of IDBI to IDBI Ltd. IDBI Ltd. commences operations as a banking company. IDBI Act, 1964 stands repealed. January 2005:The Board of Directors of IDBI Ltd., at its meeting held on January 20, 2005, approved the Scheme of Amalgamation, envisaging merging of IDBI Bank Ltd. with IDBI Ltd. Pursuant to the scheme approved by the Boards of both the banks, IDBI Ltd. will issue 100 equity shares for 142 equity shares held by shareholders in IDBI Bank Ltd. EGM has been convened on February 23, 2005 for seeking shareholder approval for the scheme.

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IDBI Bank Business Chart IDBI BANK

RETAIL BANKING

DEVELOPMENT BANK.

SAVING ACCOUNT

CURRENT ACCOUNT

INVESTMENT

PERSONAL SAVING

CORPORATE SAVING

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IDBI Bank Organizational Chart

Chairman

President

Vice president Finance Regional Head

Vice president H. R.

Vice president Marketing

Vice president Operations

Zonal Head

Divisional Sales Manager

Territory In charge

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44

SWOT ANALYSIS OF IDBI FEDERAL LIFE INSURANCE STRENGTH: Multi-channel distribution and one of the largest distribution networks in India. 1 Million Policies sold within 3 and half years. Training process of the company is very strong. According to the change in surrounding environment like changes in customer requirement.

WEAKNESS: Company does not penetrate on the rural market at a time. There is no plan for the low income group.

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 Fees for the advisor is high than the other companies.

OPPORTUNITY: Insurance market is very big, where company can expand its business easily. It has many ULIP plans so it can grow in near future.

THREATS: OLD HABITS DIE HARD: Its still difficult task to win the confidence of public towards private company. The company is facing major threats from LIC etc. -which is an government company.
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 Plans for all income groups are not available which can create adverse effect later on the market share of the company.

47

MAJOR COMPETITOR AT A GLANCE LIC (LIFE INSURACE CORPORATION) LIC had 5 zonal offices, 33 divisional offices and 212 branch offices , apart from its corporate office in the year 1956. Since life insurance contracts are long term contracts and during the currency of the policy it requires a variety of services need was felt in the later years to expand the operations and place a branch office at each district headquarter. re-organization of LIC took place and large numbers of new branch offices were opened. As a result of reorganisation servicing functions were transferred to the branches, and branches were made accounting units. It worked wonders with the performance of the corporation. It may be seen that from about 200.00 crores of New Business in 1957 the corporation crossed 1000.00 crores only in the year 1969-70, and it took another 10 years for LIC to cross 2000.00 crore mark of new business. But with re-organisation happening in the early eighties, by 1985-86 LIC had already crossed 7000.00 crore Sum Assured on new policies. Today LIC functions with 2048 fully computerized branch offices, 100 divisional offices, 7 zonal offices and the Corporate office. LICs W ide Area Network covers 100 divisional offices and connects all the branches through a Metro Area Network. LIC has tied up with some Banks and Service providers to offer on-line premium collection facility in selected cities. LICs ECS and ATM premium payment facility is an addition to customer convenience. Apart from on-line Kiosks and IVRS, Info Centres have been commissioned at Mumbai, Ahmedabad, Bangalore, Chennai, Hyderabad,

48

Kolkata, New Delhi, Pune and many other cities. With a vision of providing easy access to its policyholders, LIC has launched its SATELLITE SAMPARK offices. The satellite offices are smaller, leaner and closer to the customer. The digitalized records of the satellite offices will facilitate anywhere servicing and many other conveniences in the future. LIC continues to be the dominant life insurer even in the liberalized scenario of Indian insurance and is moving fast on a new growth trajectory surpassing its own past records. LIC has issued over one crore policies during the current year. It has crossed milestone of issuing 1,01,32,955 new policies by 15th Oct, 2005, posting a healthy growth rate of 16.67% over the corresponding period of the previous year. From then to now, LIC has crossed many milestones and has set unprecedented performance records in various aspects of life insurance business. Birla Sun Life Insurance Co. Ltd

Following are the Life Insurance plans that Birla Sun life Insurance Company Ltd. 1.)Birla Sun Life Insurance Term Plan - This plan can take care of your financial commitments of yours towards your family by providing large cover at low cost. Minimum age of entry for this plan is 18-55 and maximum maturity age is 70 years.

49

2. Birla Sun Life Insurance Premium Back Term Plan - This is a low cost life cover promises you to refund the entire premium on maturity or death. Two options are also there to choose 100% premium back or 125% premium back. Maximum term period for this plan is 20 years. 3. Birla Sun Life Insurance Guaranteed Bachat Plan - Its an non participating endowment plan offers you guaranteed returns and chance to earn survival benefit from the 3rd year onwards. You can withdraw this benefit each tear or can use it as to pay the premium dues. 4. Birla Sun Life Insurance Money Back Plus Plan - This is also a nonparticipating endowment plan, which gives you maturity and survival both benefits. One remarkable point is that on every policy anniversary it increases your cover by an equal amount of your base premium. 5. Birla Sun Life Insurance Gold-Plus II - Its an investment plan offering nine-funding option to choose and 100% equity fund option also. Free unlimited switches are given to you to manage your investments. This plan offers good liquidity to you. 6. Birla Sun life insurance Platinum Plus - It is a unit linked, non participating insurance plan. In this plan, the investment risk is borne by the policyholder but not if this policy is detained till maturity.

50

7. Birla Sun Life Insurance Saral Jeevan Plan - In todays fast life its really easy to buy an insurance plan, which you immediately can purchase just by providing three health statements to the company. IDBI FEDERAL LIFE INSURANCE Saral Jeevan is the best option to go for. 8. Birla Sun Life Insurance Supreme-Life - Its a unit linked nonparticipating plan providing 8-fund options to choose. It gives a choice of two death benefits. 9. Birla Sun Life Insurance Dream Plan - Its a unit-linked policy, which provides you guaranteed returns, 0% allocation charges, and option to double or triple the guaranteed maturity. 10. Birla Sun Life Insurance ClassicLife Premier - It will give you guaranteed additions in the form of guaranteed units and a good choice of 8 investment funds are also there. You are free to choose the term period of 10,20,30 or whole life. 11. Birla Sun Life Insurance SimplyLife - It ensures a lifetime of tax-free investments to fulfill the needs of your dear ones. Its a market related plan provides you a good death benefit amount. 12. Birla Sun Life Insurance PrimeLife Premier - Its a single time

51

investment with top up options. It keeps you hassle free and provides you guaranteed returns at regular intervals. 13. Birla Sun Life Insurance PrimeLife - It is a single premium policy gives you the benefit of life insurance and investments as well. Its a nonparticipating ULIP policy. 14. Birla Sun Life Insurance Flexi Cash Flow - For this policy you can pay lump sum premium payment at regular intervals. It will give you 3% guaranteed returns on net policy charges. 15. Birla Sun Life Insurance Flexi Save Plus - This plan will give you the choices of 3 fund options, maturity ages & guaranteed returns of 3%. 16. Birla Sun Life Insurance Flexi Life Line - This would provide you a life long cover till 100 years of age and will give you the option of tax-free partial withdrawals. 17. Birla Sun Life Insurance Single Premium Bond - This plan gives you the opportunity to make one time investment with no medical tests and will also gives you the facility of high entry age. Its a short term investment plan provides you the option of 5 years or 10 years term period. 18. Birla Sun Life Insurance Freedom 58 - Its a non- participating ulip

52

plan. It helps you accumulate your premiums and the investment return there of into a corpus of your retirement. 19. Birla Sun Life Insurance Flexi Secure Life Retirement Plan II - This will provide you the option to take a life cover or not. You can choose your retirement age yourself whether you want to prepone/postpone it. 20. Birla Sun Life Insurance Children's Dream Plan - Its a unit-linked policy, which provides you guaranteed returns, 0% allocation charges, and option to double or triple the guaranteed maturity.

53

Various Plans offered by LIC are as follows :

Endowment Assurance Plans

1. Jeevan Amrit : This plan is designed for a higher cover at a lower cost. In this plan premium payment is limited to 3 or 4 or 5 years and the premium payable during the first year is higher than the premiums payable in subsequent years. 2. New Janaraksha Plan : Is an Endowment Assurance plan that provides financial protection against death throughout the term of plan. It pays the maturity amount on survival to the end of the term. 3. Jeevan Mitra(Double Cover Endowment Plan) : Is an endowment plan which takes care of the financial needs even if death of the policyholder for the whole term of the plan. 4. Jeevan Mitra (Triple Cover Endowment Plan) : Is an endowment plan where thrice the Sum Assured plus all bonuses on the basic sum assured to date is payable in a lump sum upon the death of the life assured. 5. The Endowment Assurance Policy : This policy has a provisions for the family of the Life Assured in event of his early death and also assures a lump sum at a desired age.

54

6.

The

Endowment

Assurance

Policy-Limited

Payment : In this policy the payment of premium can be limited either to a single payment or to a term shorter than the policy.

Children Plans

1. Jeevan Anurag : Is plan designed for the children educational requirements . This plan can be taken on the parents life. The basic sum assured is given immediately on the death of the life assured during the term of the policy. 2. Jeevan Kishore : Is a plan which can be availed by the parent or grand parents of the children. It is an endowment assurance plan for children of less than 12 years of age. 3. Jeevan Chhaya : It is a plan where financial protection is given against death during the term of the plan. It is an Endowment Assurance plan. Besides this benefit one-fourth of Sum Assured is payable at the end of each of last four years of policy term irrespective if the life assured dies or survives the duration of the policy. 4. Komal Jeevan : Is a Money Back Plan which can be bought by the parent or grand parent for their child from the age of 0-10years. This plan gives financial protection against death during the duration of the plan with periodic payments on survival at specified durations.

55

5. Child Future Plan : A policy where the future needs like education, marriage and other requirements are taken care of. This plan provides a benefit which not only takes care of the risk cover of the child during the policy but also after 7 years of the policy being expired. 6. Child Career Plan : A plan to meet the educational and other needs of the child. It provides the risk cover on the life of child during the policy term as well as 7 years after the policy has expired. There are also Survival benefits given to the life assured at the end of a specific duration. 7. Child Fortune Plan : Is a unit linked plan which offers long term capital appreciation. 8. Marriage Endowment Or Educational Annuity Plan : This is an Endowment Assurance plan that provides for benefits on or from the selected maturity date to meet the Marriage/Educational expenses of the named child.

Money Back Plan

1. Bima Bachat : Is a money-back policy which offers financial security and assurance to the policy holder and his family. The policy holder has to pay only one premium. 2. Money Back-20 years : Is an endowment plan where periodic payments of partial survival benefits are paid during the term of the policy till the policy holder is alive.As the policy name goes this plan 20% of the sum assured is
56

payable after 5,10,15 years and the balance 40% accrued bonus is payable at the 20th year. 3. Money Back 25 years : Is the same as the above plan only in this plan the 40% accrued bonus is payable at the 25th year.

Pension plans

1. New Jeevan Dhara - I : is a Deferred Annuity plans that allows the policyholder to make provision for regular income after the selected term. 2. New Jeevan Suraksha - I : Is a deferred annuity plan. 3. Jeevan Nidhi : Is a deferred annuity plan with profits. 4. Jeevan Akshay - VI : By paying a lump sum amount this immediate annuity plan can be bought.

Unit Plans

1. Child Fortune Plus : Is a plan for children and to meet their educational needs. Its a unit linked plan with long term capital appreciation. 2. Fortune Plus : It is a unit linked assurance plan where premium payment term (PPT) is 5 years and the premium payable in the first year will be 50% of total premium payable under the policy.

57

3. Market Plus : Is a unit linked pension plan where after a specific period the pension is paid. 4. Money Plus - I : Is a unit linked Endowment plan which has investment plus insurance during the term and you can pay regular premiums. 5. Profit Plus : It is a unit linked Endowment plan where the premium payment term (PPT) is limited to single lump sum, or uniformly over 3, 4 or 5 years. Whole Life Plans

1. Jeevan Anand : Is a combination of two plans- Endowment Assurance and Whole Life plan. 2. Jeevan Tarang : This is a with-profits whole of life plan which provides for annual survival benefit at a rate of 5 % of the Sum Assured after the chosen Accumulation Period. 3. The Whole Life Policy : Is a plan mainly to provide for payment of sum assured plus bonuses on the death of the policyholder.

Golden Jubliee Plan

58

New Bima Gold : Where the premiums are paid back during the policy term in installments , besides that life insurance cover is given during the also at the extended term of the plan.

Some main Plans of IDBI FEDERAL LIFE INSURANCE: (1) Birla Sun life insurance Platinum Plus - It is a unit linked, non participating insurance plan. In this plan, the investment risk is borne by the policyholder but not if this policy is detained till maturity.

Policy parameters

59

Entry age Minimum annual premium Minimum sum assured Policy term Premium paying term

18-70 Rs. 50000 5*annual premium 10 years 3 years

Premium and sum assured You can pay your policy premium annually, half-yearly, quarterly or monthly, subject to a minimum installment premium of: Rs. 50,000 per annum Rs. 25,000 half-yearly Rs. 15,000 quarterly; or Rs. 10,000 per month (3 monthly installments required at issue) You choose your Sum Assured (minimum 5 x annual premium).

Risk profile 0-40% in money market & cash 0-100% in debt instruments & derivatives 0-100% in equities & equity related securities.

60

Maturity Benefit On maturity, your Fund Value will be paid to you. In addition, we will pay an amount equal to:

the number of units under your policy at that time; times the excess, if any, of the Guaranteed Maturity Unit Price over the then prevailing unit price Death Benefit In the unfortunate event of the death of the life insured prior to the maturity date of the policy, we will pay to the nominee the greater of (a) the Fund Value or (b) the Sum Assured reduced for partial withdrawals as follows:

Before the life insured attains the age of 60, the Sum Assured payable on death is reduced by partial withdrawals made in the preceding two years. Once the life insured attains the age of 60, the Sum Assured payable on death is reduced by all partial withdrawals made from age 58 onwards.

Partial withdraw

61

Partial withdraw years.

after 3 complete policy

Minimum partial withdraw rs.5000

Policy surrender value at that time.

After 3 policy years and you will get 100% fund

(2) Birla Sun Life Insurance childrens Dream Plan

Policy parameters

62

Life Insured (parent): 18 years 60 Entry Ages years Nominee (child) : 30 days 13 years Term Premium paying frequency Addition of riders 18 years less the age of child at entry Regular policy premiums can be paid yearly, halfyearly, quarterly or monthly (for ECS only) Accidental Death & Dismemberment Benefit (ADD)

The annual policy premium is based on: The guaranteed maturity benefit and option you choose. The enhanced sum assured you desire. The plan term and your gender and age at entry.

Guaranteed Fund Value Partial Withdrawals Investment Funds

Equals all premiums paid, less charges and guaranteed maturity benefit(s), accumulated at 3% per annum Allowed after 3 complete policy years

Protector, Builder, Enhancer

63

AT Death Benefit

The sum assured is paid to the nominee upon the death of the life insured (parent) The new life insured is the child and new owner is appointed as per your wishes. The policy is continued as usual except: All riders and risk charges will cease Only the policy administration charge and fund management charge continue, and IDBI FEDERAL LIFE INSURANCE will start paying the Maturity Continuation Benefit on a monthly basis until the policy matures. In case of death of the new life insured (child) prior to the end of the Term, higher of 105% of the Fund Value or the Guaranteed Fund Value will be paid and the policy will be terminated.

Charges of policy Premium allocation charges

64

 Fund management charges Mortality charges Surrender charges etc.

65

(3) Birla Sun Life Insurance Saral Jeevan Plan The saral jeevan plan provides the dual benefit of protection and investment. So it is the ideal policy if you want to secure your life and build wealth at the same time. Poicy parameters Entry age Policy term Age at maturity 18-55 10, 15, and 20 years 65 or less

Mode of Premium Payment -

Annual, Semi Annual, Quarterly, Monthly.

Maturity Benefit Maturity benefit will be sum assured plus fund value at the end of maturity time.

Death Benefit Your nominee will receive both sum assured and fund value in the unfortunate event of death. Investment Funds Protector Builder
66

 Enhancer

Charges of Policy Premium Allocation Charge- Nil (This means all of your policy premium will be invested in the investment funds of your choice). Fund Management Charge Mortality charges Surrender charges etc.

(4) Birla Sun Life Universal Health PlanThe universal health plan is in addition to the benefit amount payable under each health benefit. This unique benefit helps you and your family with out of pocket health related expenses.

Policy parameters Entry Ages 18 years 65 years

67

Term Premium paying frequency

3 years policy premiums can be paid yearly, half-yearly, quarterly or monthly According to age of the insured person. (e.g. for 25

Premium

Rs. 4756 p.a., for 45- Rs. 6725 p.a., for 55- Rs. 9724 p.a.).

Benefits 1. IDBI FEDERAL LIFE INSURANCE pay a fixed benefit amount of Rs. 1000 per day in Hospital plus Rs. 1000 per day in Intensive Care Unit (ICU). In case of an admission for surgical management : 2. if the surgery is listed in covered surgeries: IDBI FEDERAL LIFE INSURANCE pay a fixed benefit amount based on the grade of the covered surgery-Rs. 100000, Rs. 50000, Rs. 25000, Rs. 15000 and Rs. 10000 for grade 1(major) to 5(minor) respectively. 3. if the surgery is not listed in the covered surgeries: IDBI FEDERAL LIFE INSURANCE pay a fixed benefit amount of Rs. 2000 per day in hospital plus Rs. 1000 per day in ICU.

Tax benefit The premium paid by you up to 15000 (Rs.20000 for senior citizens) p.a. to insure yourself and/or your family, is eligible for tax benefit under section
68

80D of the income Tax Act, 1961, which is subject to amendments from to time.

Death/Maturity benefit This plan has no death benefit or maturity benefit. Furthermore, this plan provides for no cash surrender value nor any policy loans. (5) Birla Sun Life Retirement plan Policy parameters Entry Ages Term Premium paying frequency Premium policy premiums can be paid yearly, half-yearly, quarterly or monthly Minimum Rs. 9600 p.a.(premium should be multiple of Rs. 1200) 18 years 80 years

Benefits In the unfortunate event of death of the policyholder the nominee will receive the higher of: 75% of the base premium and all renewal base premiums paid. OR the surrender value at the time plus all accumulated survival benefits.
69

Tax benefits Under section 80CCC and 10(10A)

Partially withdraw You can do partially withdraw min. Rs.5000

Some main plans of LIC (1) Marriage Endowment Or Educational Annuity Plan : This is an Endowment Assurance plan that provides for benefits on or from the selected maturity date to meet the Marriage/Educational expenses of the named child. Entry age Sum assured 18 (min.) 50000 (min) 60(max) no limit (max)

70

Term Mode of payment FEATURES

5 (min)

25 (max)

monthly, qtly, half yrly, yly,

The Marriage Endowment/ Educational annuity plan provides a sum assured to be kept aside for the expenses of marriage or higher education of the policyholder's children. Premiums payable for selected term or till death of the life Assured. Benefits will be given only after the selected term. Maturity benefits Sum Assured + Bonus Accident: Accident benefit equivalent to basic sum assured would be available by paying appropriate additional premiums in that behalf. An amount equivalent to Sum Assured become payable immediately.

71

(2) Jeevan saral plan of LIC Plan Details: This plan is appropriate for employees seeking life cover through Salary Savings Schemes. Eligibility: Minimum Age Term 12 Yrs (completed) 10 Maximum 60 Nearest Birthday 35

Age at maturity Maximum 70 years In case of term rider, minimum and maximum age of entry will be 18 and 50 years respectively. Further minimum sum assured will be Rs.1 lakh. Premium: Minimum premium: Rs 250 per month for entry age up to 49 years and Rs.400 per month for entry age 50 years and above. The premium shall be in multiple of Rs.50 per month. Premium Mode: Yearly, Half yearly, Quarterly and Monthly under Salary Saving Scheme. Survival Benefits: The sum payable at maturity however differs for different entry ages and terms. On Maturity the individual will receive maturity sum assured, plus
72

Loyalty additions, if any. The specimen Maturity Sums Assured (MSAs) per Rs.100/- monthly premium are given below for some of the ages and terms: Age at Entry

Policy Term 10 yrs 15 yrs 19,628 17,839 13,444 20 yrs 28,039 24,598 16,164 25 yrs 36,839 30,854

20 40 50

11,156 10,431 8,442

Death Benefits: Under this plan death cover will be same irrespective of age at entry and term. On death the nominee will receive 250 times the monthly premium, plus return of premiums excluding extra/rider premium premium.

(3) New Jeevan Suraksha Plan This pension plan is a vehicle for planning a life long pension and is also tax deferred. Not only can you plan a pension for life with the help of these annuities but these schemes also help you reduce your tax liability. POLICY PARAMETERS

73

Min Entry Age vesting age deferment period Premium Mode of payment 18 50 2 years Rs. 250 p.m. Yearly, half yearly, quarterly, monthly

Max 70 79 35 years.

Features

AMOUNT (Rs) Rebates Available for Single Premium Rebates Available for Annual Premium

>=1,00,000 < 2,00,000 3%

>=2,00,000 < 5,00,000 4%

>= 5,00,000

5%

6%

7%

8%

Death Benefits If death occurs within 10 years 3% (interest on all premium given)
74

Between 11 to 20 years After 20 years (4) LIC's Market Plus Plan

4% 5%

It is a unit linked deferred pension plan. The policyholder can choose the plan with or without risk cover. He can also choose the level of cover within the limits, which will depend on the mode and amount of premium he/she desires to pay. The allocated premium will be utilized to buy units as per the selected fund type. The Policyholder's Unit Account will be subject to deduction of charges. Units will be allotted and cancelled based on the Net Asset Value (NAV) of the respective fund of the date of allotment / cancellation. There is no Bid-Offer spread (both the Bid price and Offer price of units will be equal to the NAV). The NAV will be declared on a daily basis and will be based on the investment performance, Fund Management Charges (FMC) and whether fund is expanding or contracting under each fund type.

Policy parameters

Entry age

18-70

Premium Single premium

(Min) Rs. 5,000 p.a. for Regular premium and Rs. 10,000 for

75

(Max) No limit

Vesting age Sum Assured opted)

40-75 (min) NIL- (when no life cover is opted) Rs. 25,000 for 50,000 for Regular premium (When life cover is

Single premium, Rs.

(Max) Regular Premium - 20 times of the annualized premium.

Minimum Deferment period

5 years

Investment fund types: Investment in Govt. / Govt. Fund Type Guaranteed Securities / Short-term investments such as money market instruments(Including Govt. Securities & Corporate

Investment in Listed Equity Shares

Corporate Debt Debt) Bond Fund Not less than 80% 100%

NIL

76

Not more than 85% Secured Fund Not less than 65% Not less than 15% and not more than 35% Not less than Balanced Fund 50% Not more than 70% Not less than 30% and not more than 50% Not less than Growth Fund 20% Not more than 40% Not less than 60% and not more than 80%

77

comparison between some main products of IDBI FEDERAL LIFE INSURANCE and LIC

1) Comparison between IDBI FEDERAL LIFE INSURANCEs Children dream plan and LICs Marriage Endowment Or Educational Annuity Plan:

In IDBI FEDERAL LIFE INSURANCE plan policy term is 18 years less the age of child at entry. But in LIC plan policy term is 5-25 years.

Premium paying frequency is almost same i.e yearly , half yearly, quarterly, monthly.

In case of death benefit: in IDBI FEDERAL LIFE INSURANCE plan the sum assured is paid to the nominee upon the death of the life insured

78

(parent). The new life insured is the child and new owner is appointed as per your wishes. In LIC plan if death occurs due to accident then basic sum assured is payable on death immediately and further premiums are not payable.after expiry of the term again basic sum assured + bonus is payable. In IDBI FEDERAL LIFE INSURANCE fund value is guaranteed. o In LIC plan fund value is not guaranteed.

2) Comparison between IDBI FEDERAL LIFE INSURANCEs Saral jeevan plan and LICs Jeevan saral plan In IDBI FEDERAL LIFE INSURANCE plan entry age is 18-55 years In LIC plan entry age is 12-60 years In IDBI FEDERAL LIFE INSURANCE policy term is 10, 15, and 20 years. In LIC policy term is 10-35 years. In IDBI FEDERAL LIFE INSURANCE plan max. Maturity age is 65 years In LIC plan max. Maturity age is 70 years. In IDBI FEDERAL LIFE INSURANCE min. premium is 10000 p.a.
79

In LIC plan min. premium is 5000p.a.

80

3) Comparison between IDBI FEDERAL LIFE INSURANCEs Retirement plan and LICs New

Jeevan Suraksha plan.

In IDBI FEDERAL LIFE INSURANCE plan entry age is 18-80 years In LIC plan entry age is 18-70 yrs.

In IDBI FEDERAL LIFE INSURANCE plan vesting age is 10-40 yrs from entry age (Max. 90yrs.) In LIC plan vesting age is 50-79 yrs.

In IDBI FEDERAL LIFE INSURANCE plan min. premium is 9600 p.a. In LIC plan min. premium is 3000 p.a.

Premium paying frequency is same i.e yearly, half yearly, quarterly, and monthly

Death Benefits:

81

In IDBI FEDERAL LIFE INSURANCE plan the unfortunate event of death of the policyholder the nominee will receive the higher of:

75% of the base premium and all renewal base premiums paid. OR the surrender value at the time plus all accumulated survival benefits.

In LIC plan If death occurs within 10 years Between 11 to 20 years After 20 years 3% (interest on all premium given) 4% 5%

4) Comparison between IDBI FEDERAL LIFE INSURANCE Platinum plus plan and LIC Market plus plan

Entry age in IDBI FEDERAL LIFE INSURANCE and LIC is same i.e. 18-70 years.

82

 In IDBI FEDERAL LIFE INSURANCE min. annual premium is 50000p.a. In LIC plan premium is 10000p.a.

In IDBI FEDERAL LIFE INSURANCE plan maturity benefit is guaranteed In LIC plan maturity benefit is not guaranteed

83

Objectives of study

To determine and analyze the Market Potential of the Birla Sun Life Insurance Company in MOGA City. To study and determine the competitor (LIC) position in the market. To analyze market share of Birla Sun Life Insurance products in Moga city. To analyze the customer satisfaction regarding LIC and IDBI FEDERAL LIFE INSURANCE.

84

RESEARCH METHODOLOGY-

MEANING OF RESEARCHBefore understanding Research Methodology, we should understand the meaning of research. Research in common parlance refers to a search for knowledge. One can also define Research as a scientific and systematic search for pertinence information on a specific topic. In fact, research is an art of scientific investigation.

DEFINITION OF RESEARCHResearch is a systematized effort to gain new knowledge Redmann & Mory MEANING OF RESEARCH METHODOLOGY-

Research Methodology, it is a way to systematically solve the research Problem. It may be understood as a science of studying how research is done scientifically. In it we study the various steps that are generally adopted by the researcher in studying his research problem along with the logic behind them. It is necessary for the researcher to know not only the research.

85

Data Collection: - The objectives of the project are such that both primary and secondary data is required to achieve them. So both primary and secondary data was used for the project. The mode of collecting primary data is questionnaire mode and sources of secondary data are various magazines, books, newspapers, & websites etc.

Primary data The primary data are those data which are collected afresh and for the first time, and thus happen to be original in character. Secondary data The secondary data on the other hand, are those which have already been collected by someone else and which have already been passing through the statistical process. Sample size 100 people of MOGA City were selected Research ----- Purposive research

86

87

88

1) Do you think that investment in Insurance sector is good option?

Particulars Yes No

No. of respondents 90 10

No. of respondents

no, 10

yes no

yes, 90

Interpretation : 90 people say that investment in insurance sector is good option and 10 are saying not.

89

2) Which companys policy do you have?

Particulars IDBI FEDERAL LIFE INSURANCE LIC

No. of respondents 40 60

90

60 50 40 30 20 10 0 BSLI LIC 40

60

No. of respondents

Interpretation: 40 people have IDBI FEDERAL LIFE INSURANCE polic have LIC.

91

3) Which type of policy you have? Particulars No. of respondents LIC No. of respondents IDBI FEDERAL LIFE Whole life plan 20 Retirement plan Children plan Health plan plan Total 10 18 6 INSURANCE 10 4 22 4 0 40

Golden jubilee 6 60

25 20 15 10 5 0
pl an pl an en tp

20

22 18 No. of respondents LIC 6 6 0

pl an pl an la n

10

10 4 4

No. of respondents BSLI

C hi ld re n

W ho le

R et ire

G ol de n

H ea lth

ju bi le e

lif e

92

Interpretation: 20 people of LIC and

10 of

have whole life plan, 18 people of LIC and 22 of birla have Children plan.

4) What percentage of interest you get from it?

Particulars

No. of respondent s LIC

No. of respondent s IDBI FEDERAL LIFE INSURANCE

Below 5 % 5-8 % 8-12 % Above12 %

0 14 42 4

0 6 28 6

93

45 40 35 30 25 20 15 10 5 0 0 0 5-8 % Below 5 % 14 6

42

28 No. of respondents LIC No. of respondents BSLI

4 8-12 %

Above12 %

Interpretation: 14 people of LIC and 6 of Birla are getting 5-8% R.O.I., 42 people of LIC and 28 of Birla are getting 8-12% interest.

5) Why do you invest in this(LIC/IDBI FEDERAL LIFE INSURANCE) company?

Particulars

No. of respondents LIC

No. of respondents IDBI FEDERAL

94

LIFE INSURANCE High interest Growth of the CO. reasonable Maturity benefits 12 8 8 18 12 4 12 4 Good image of CO. 12

Annual premium is 10

Maturity benefits Annual premium is reasonable Growth of the CO. 4 4

12

10 12

18

Good image of CO.

12 12

High interest 0 5

8 10

15

20

Interpretation: 12 people of Birla are investing in this company due to its high interest, 18 people of LIC say that they are investing in LIC due to growth of the co.

95

6) Do you think that investment in IDBI FEDERAL LIFE INSURANCE is better than LIC ?

Particulars Yes No

No. of respondents 44 56

96

No. of respondents
Yes No

44 56

Interpretation: 44 people are saying that investment in IDBI FEDERAL LIFE INSURANCE is better than LIC, but 56 are saying no. (If NO then go to Q.N. 8 otherwise Q.N. 7)

7) If yes, then why?

Particulars

No. of respondents

97

Guaranteed F.V. at maturity Growth rate More ULIP plan Risk covered All above

10 16 8 4 6

No. of respondents

6 4

10

Guaranteed F.V. at maturity Growth rate More ULIP plan

8 16

Risk covered All above

Interpretation: 16 people are saying that because IDBI FEDERAL LIFE INSURANCE gives guaranteed F.V. at maturity time, 8 are saying it has more ULIP plans.

98

8) If no, then why?

Particulars LIC have govt. stake Brand loyalty of LIC Low A.P. than IDBI FEDERAL LIFE INSURANCE High return

No. of respondents 24 14 12 6

High return, 6 LIC have govt. stake Brand loyalty of LIC Low A.P. than BSLI High return Brand loyalty of LIC, 14

Low A.P. than BSLI, 12

LIC have govt. stake, 24

Interpretation: 24 people are saying that investment in LIC is better it has govt. stake, 14 are saying it has brand loyalty.
99

9) When company launch new product , then any information is given to you about that product?

Particulars

No. of respondents LIC

No. of respondents IDBI FEDERAL LIFE INSURANCE

Yes No

24 36

16 24

100

40 35 30 25 20 15 10 5 0 No. of

36 24 16 No Yes respondents respondents No. of Yes No

24

LIC

Interpretation: 24 people of LIC are saying yes and 36 are saying no, 16 people of IDBI FEDERAL LIFE INSURANCE are saying yes and 24 are saying no about providing information.` 67

BSLI

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10) In near future, do you think IDBI FEDERAL LIFE INSURANCE will have high growth rate?

Particulars Agree Neutral Disagree Cant say

No. of respondents 20 26 14 40

No. of respondents

40 35 30 25 20 15 10 5 0 Agree Neutral Disagree Cant say 20 26 14 40 No. of respondents

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Interpretation: 20 people are saying that IDBI FEDERAL LIFE INSURANCE will grow in future, 26 are saying it will be neutral, 40 cant say, and 14 are disagree.

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Findings

90 people saying that investment in insurance sector is good option and 10 are saying no. 40 people have IDBI FEDERAL LIFE INSURANCE policies and 60 have of LIC. 10 people of IDBI FEDERAL LIFE INSURANCE have Whole life plan, 4 have retirement plan, 22 have children plan, 4 have health plan.

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 56 people are saying that investment in LIC is better than IDBI FEDERAL LIFE INSURANCE, 44 are saying investment in IDBI FEDERAL LIFE INSURANCE is better. Most of the people of both LIC and IDBI FEDERAL LIFE INSURANCE are getting rate of interest 8-12% Most of the people have children plan of IDBI FEDERAL LIFE INSURANCE. Most of the people invest due to high interest of the policy in IDBI FEDERAL LIFE INSURANCE People have more faith in govt. Companies than the private. 14 people invest in LIC due to its brand loyalty. 26 people saying that IDBI FEDERAL LIFE INSURANCE growth will be neutral in near future.

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SUGGESTIONS 1) Information regarding new product should be provided to the customers. 2) The company should find out the no. of people who are not having any of the insurance plans through an intensive market research and motivate them to get insured. 3) At some level Company should provide information to the customers about the charges of the policy.

4) Company should target each and every class of the society.

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5) Charges should be low of the policies. 6) Annual premium should be reasonable. 7) IDBI FEDERAL LIFE INSURANCE Company should work in systematic way.

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LIMITATIONS

Some of the respondents were not cooperative. There are chances of biased information provided by the respondents.

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 As the sample size is small compared to the total population, therefore there cant be full accuracy. The time was limited. Area was limited.

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Conclusion Here in this study we see that people have more policies of LIC in comparison to IDBI FEDERAL LIFE INSURANCE. People have more faith in govt. companies than private. So it is necessary for IDBI FEDERAL LIFE INSURANCE Co. that it should give more attention to that points or that areas where it lacks for further future growth. Insurance sector is very wide and co. can grow in future.

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Bibliography

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 www.birlasunlife.com www.licindia.com www.google.com Newspapers

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ANNEXURE NOTE: The information that you will provide will be kept confidential and will be used only for academic Purpose. Our questionnaire will be to those persons who have plans of IDBI FEDERAL LIFE INSURANCE or LIC.

GENERAL

Name ___________________________________________________________ _______ Addres____________________________________________________ _____________ Gender_________Age ________Contact No. __________________________________

1. Do you think that investment in insurance sector is good option (a) Yes (b) No

2. Which companys policy do you have? (a) Birla Sun Life Insurance 3. Which type of policy you have? (b) LIC

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(a)Whole Life Plan Children Plan

(b) Retirement Plan

(c)

(d) Health Plan (f) any other please

(e) Golden jubilee plan

specify___________________ 4. What percentage of interest you get from it? (a) Below 5% (b) 5-8% (c) 8-12% (d) Above 12%

5. Why do you invest in this company? (a) High interest (b) good image (c) Company growth (e) due to maturity benefits

(d) Annual premium is reasonable

(f) Any other please specify ______________________________

6. Do you think that investment in IDBI FEDERAL LIFE INSURANCE is better than LIC? (a) Yes (b) No

( If your answer is no then jump to question no. 8) 7. if yes then why? (a) Because IDBI FEDERAL LIFE INSURANCE gives guaranteed fund value at maturity time (b) Growth rate of company is high (c) IDBI FEDERAL LIFE

INSURANCE has more ULIP plans than LIC

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(d) Risk factor is covered properly

(e) all above

(f) Any other (please specify)_____________ 8. If no then why? (a) Because LIC is having government stake. (b) Brand loyalty of LIC

(c) It has low premium plans than IDBI FEDERAL LIFE INSURANCE (d) Investment return is higher than IDBI FEDERAL LIFE INSURANCE (e) Any other (please specify)__________________________ 9. Whenever company launch new product, then any information is given to you about that product? (a) Yes (b) No

10. In near future IDBI FEDERAL LIFE INSURANCE is having high growth rate. (a) Agree (b) neutral (c) disagree (d) cant say

Any suggestions __________________________________________________

THANKS

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