EXECUTIVE SUMMARY

Today saving plans play an important role in the economy. Indias high savings rate has been a
crucial driver of its economic boom, providing productive capital and helping to fuel a virtuous
cycle of higher growth. Indian mutual fund market has high proportion and about 5% to 10% of
the Indian population is in mutual fund investment. A person from any category intends to invest
in small saving options.
Person having income from thousands to lacs invest in these plans for return, tax benefit of
future savings. These plans are for everyone in an agricultural country like India. Today around
27% of total investments are covered by small saving plans. This project will help to know about
the small savings options and how customer prefers these plans. After the analysis done, it shows
people invest according to the market condition. In this condition, they take interest in fixed
return and equity linked saving schemes i.e. mutual funds.
There is variety of investment programs ranging from investment and Sips to mutual fund,
Public Provident Fund (PPF), National Saving Certificates (NSC), Kisan Vikas Patra (KVP),
Post Office Recurring Deposits, Post Office Monthly Income Scheme and Post Office Time
Deposits etc. End this study is an attempt to find the most incrative investment option for the
middle class people in India.

OBJECTIVES OF THE PROJECT

1.
2.
3.
4.
5.
6.

Analyzing the investment preference of people in small saving plans.

Analyzing the inclination of Social Economic Class towards the investments.
To know whether the people have knowledge of all these plans.
To know about the relationship between age and investment of the
people.
To know which groups are inclined towards future reinvestments.
To know which plans are suitable for the people to get the maximum return.

LIMITATIONS OF PROJECT

1. Each investor has different psychology so study becomes biased and sample may not help
to gather in depth knowledge.
2. Due to limited area coverage, behavior of investors may be different in other regions.
3. Due to limited time, it was not possible to make in-depth study of these plans.
4. Market condition also affect the survey i.e. investments depends on market conditions i.e.
Bullish or Bearish.

INTRODUCTION TO MUTUAL FUNDS AND ITS VARIOUS

ASPECTS
Mutual Funds means a fund established in the form of a trust by a sponsor, to raise monies by the
trustees through the sale of units to the public, under one or more schemes, for investing in
securities in accordance with Securities and Exchange Board of India (Mutual Funds)
Regulations, 1993 is called a mutual fund.
The Securities and Exchange Board of India (Mutual Funds) Regulations, 1993 define a mutual
fund as a fund established in the form of a trust by a sponsor, to raise monies by the trustees
through the sale of units to the Public, under one or more schemes, for investing in securities in
accordance with these regulations.
In other words, mutual fund is a trust that pools the savings of a number of investors who share a
common financial goal. This pool of money is invested in accordance with a stated objective.
The joint ownership of the fund is thus Mutual, i.e. the fund belongs to all investors. The
money thus collected is then invested in capital market instruments such as shares, debentures
and other securities. The income earned through these investments and the capital appreciations
realized are shared by its unit holders in proportion to the number of units owned by them. Thus
a Mutual Fund are the most suitable investment for the common man as it offers an opportunity
to invest in a diversified, professionally managed basket of securities at a relatively low cost. A
Mutual Fund is an investment tool that allows small investors access to a well diversified
portfolio of equities, bonds and other securities. Each shareholder participates in the gain or loss
of the fund. Units are issued and can be redeemed as needed. The funds Net Assets Value (NAV)
is determined each day.
Investments in securities are spread across a wide cross-section of industries and sectors and thus
the risk is reduced. Diversification reduces the risk because all stocks may not move in the same
direction in the same proportion at the same time. Mutual Fund issues units to the investors in
accordance with quantum of money invested by them. Investors of mutual funds are known as
unit holders.

CONCEPT OF MUTUAL FUND

3

Many Investors with common financial objectives pool their

money

Investors, on a proportionate basis, get mutual fund units for the

sum contributed to the pool

The money collected from investors is invested in to shares,

debentures and other securities by the fund manager

The Fund Manager realizes gains or losses, and collects

dividend or interest income

Any capital gains or losses from such investments are passed on

to the investors in proportion to the number of units held by
them

When an investor subscribes for the units of mutual fund, he becomes part owner of the assets of
the fund in the same proportion as his contribution amount put up with the corpus (the total
amount of the fund). Mutual Fund investor is also known as a mutual fund shareholder or a unit
holder.
Any changes in the value of the investments made in to capital market instruments (such as
shares, debentures etc) is reflected in the Net Asset Value (NAV) of the scheme. Mutual Funds
price per share or exchange traded funds per share value is defined as NAV. NAV of a scheme is
calculated by dividing the market value of schemes assets by the total number of units issued to
the investors.

ADVANTAGES OF MUTUAL FUND

4

Safety of regulated environment.

Choice of schemes
Transparency
Flexibility and Convenience
Portfolio diversification
Reduction or diversification of risk
Reduction in transaction cost
Liquidity
Professional management
Economies of Scale
Divisibility
Dividend reinvestment

DISADVANTAGES OF MUTUAL FUND

Difficulty in selecting a suitable fund scheme

No tailor-made portfolios
No control over cost in the hands of an investor
High expense ratios
Management abuses
Tax inefficiency
Poor trade execution

CATEGORIES OF MUTUAL FUND

In the investment market, one can find variety of investors with different needs, objectives and
risk taking capacities. So, it is very difficult to offer one fund to satisfy all the requirements of
the investors. Just as one shoe is not suitable for all legs, one fund is not suitable to meet the vast
requirements of all investors. Therefore many types of funds are available to the investors. It is
completely left to the discretion of the investors to choose any one of them depending up on
his/her requirement and his/her risk taking capacity.
Mutual fund schemes can broadly be classified into many types as given in the below chart

Open Ended
On the basis of
execution and
operation
Close Ended

Income Fund
Mutual Fund
Growth Fund

On the basis of
yield and
investment
pattern

Balance Fund

Specialised
Fund

Money Market
Mutual Fund

Taxation Fund

NEED OF SMALL SAVINGS OPTIONS

Indias high saving rate has been a crucial driver of its economic boom, providing productive
capital and helping to fuel a virtuous cycle of higher growth, higher income and higher savings.
Since the 1990s, the gross domestic savings rate has risen steadily from an average of 23% to an
estimated high of 35% in the 2006 2007 fiscal years (April to March). The latter rate compares
very favorably not only with the developed economies (the USA and the UK have saving rate of
around 14%), but also with other emerging economies with a few exceptions such as Malaysia
(38%) and Chile (35%).
After losing their investments in stock markets in the past, small investors preferred risk free
small savings schemes, which saw 27.33% surge in collection to Rs. 54,126/- Crore in April
August in the fiscal year 2009 from Rs. 42,507/- Crore in April August in the past two fiscal
years.
The above plan shows how the small savings are useful to the developing country like India.
Addition of rupee to rupee make a huge amount and it is very useful to the countrys economy.
Since Indias 60% population is dependable on agriculture so these small savings plays a great
role and encourage the common man to come out for savings and this make a country
economically good.

SMALL SAVING INVESTMENT OPTIONS

Small Saving Investment Options are classified on the basis of return on investment which is as
follows:1. Fixed Return
2. Variable Return

Fixed Return:In this type of options, the return on the investment is fixed by the Government Agencies and the
chances of changes in the rate of interest are less. The below mention options are available under
the Fixed Return:
1. Public Provident Fund (PPF)
2. National Saving Certificates (NSC)
3. Kisan Vikas Patra (KVP)
4. Post Office Recurring Deposits
5. Post Office Monthly Income Scheme
6. Post Office Time Deposits
7. Certificate of Deposits
8. Senior Citizen Saving Scheme (SCSS)
9. Term Deposits
10. Pension Schemes
11. Pay Roll Saving Schemes
12. 8% Saving Schemes (Taxable)
13. RBI Bond
14. Fixed Deposits

Variable Return:In this type of options, the return on the investment depends up on the markets fluctuations. The
below mention options are available under the Variable Return:
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1.
2.
3.
4.
5.

Equity Linked Saving Schemes (ELSS)

Equity/Debt Oriented Scheme of Mutual Funds
Pension Plans of Mutual Funds
Unit Linked Insurance Premium (ULIP)
Financial Institutional Bonds

Now let us discuss about all the Small Saving Investment Options in details:

Options under Fixed Returns:1. Public Provident Fund (PPF):Who Can Invest:In Public Provident Fund, any Individual, minor and HUFs (Now NRIs not allowed though old
accounts may continue on non-repatriation basis) can invest in PPF.

Issuer:-

Public Provident Fund is issued by Government of India through Nationalized Bank and Post
Office.
Minimum/Maximum Amount of Investment:In Public Provident Fund, minimum amount of investment is Rs. 500/- p.a. and maximum
amount of investment of Rs. 1,00,000/- p.a. in respect of individual and minors taken together
and maximum 12 monthly installments can be paid in a financial year.

Yield:-

In Public Provident Fund, return @ 8.60% p.a. w. e. f. financial year 2011 2012.
Life/Lock-in Period:Public Provident Fund can be kept for 15 years and 2 extensions for block of 5 years at a time are
possible and the same is optional.
Liquidity:-

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In Public Provident Fund, no withdrawal till expiry of 6th Financial Year and then on withdrawal
up to less than 50% of the savings at the end of 4th preceding year or the year immediately
preceding the year of withdrawal. Loan (of up to 25% of amount of the credit at the end of 2
preceding years) can be applied for after 2 years but before 5 years from the end of year in which
initial subscription is made.
Capital Appreciations:In Public Provident Fund, no capital appreciations is available but only accumulation of interest
is available.
Tax Benefits:In Public Provident Fund, Tax Benefits is available under section 10 and 80C and TDS is not
applicable on the Interest on PPF and on withdrawal of PPF Amount.
Nominations/Joint Names:In Public Provident Fund, nomination is possible for all the Investors except for minors.

Advantages of Investment in Public Provident Funds:

people invest in it for claiming tax benefit.

Money is to be paid in installments.
Loan facility is available.
Deposits in this account are not subject to attachment under an order or a decree of Court.

Mostly
Wealth Tax is not applicable.
Public Provident Fund account is transferrable.

Disadvantages of Investment in Public Provident Funds:

Maturity period is very long.

Return interest is less.

2. National Saving Certificates (NSC):-

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Who Can Invest:In National Saving Certificate, any Entity can invest.
Issuer:National Saving Certificate can be issued by Government of India through Post Office.
Minimum/Maximum Amount of Investment:In National Saving Certificate, minimum amount of investment is Rs. 100/- and there is no limit
on maximum amount of investment.
Yield:In National Saving Certificate, return @ 8% p.a. w. e. f. 01/03/2003 compounded half yearly.
Maturity Value shall be Rs. 160.10/- principle and interest for every Rs. 100/-.
Life/Lock-in Period:National Saving Certificate can be kept for 5 years and premature encashment is possible after 3
years with lower yield as per Rule 16 of National Saving Certificates (VIII Issues) Rules, 1989.
New 10 year National Saving Certificate is introduced to compensate for the higher maturity
period and limited liquidity.
Liquidity:National Saving Certificate can be transferred (but not en-cashed) after one year and premature
encashment can be done after 3 years with discounted interest can be pledged against Loan.
Capital Appreciations:In National Saving Certificate, no capital appreciations is available but only accumulation of
interest is available.
Tax Benefits:-

12

In National Saving Certificate, Tax Benefits is available under section 80C in case of investment
and accrued interest except in the 6th year and TDS is not applicable on the Interest on NSC and
on withdrawal amount.
Nominations/Joint Names:In National Saving Certificate, Joint Ownership and Nomination is possible.

Advantages of Investment in National Saving Certificates:

Mostly liked by every category of people.

Interest is compounded half yearly so it can increases after 6 months and becomes

12.06% after 6 years.

Tax benefit is available.
Mortgage facility is available.
National Saving Certificate is transferrable.

Disadvantages of Investment in National Saving Certificates:

Investment time is high.

Money is en-cashed back after maturity period only.

3. Kisan Vikas Patra (KVP):-

Who Can Invest:In Kisan Vikas Patra, any Individual & Trust can invest. Government of Maharashtra has
declared Kisan Vikas Patra as a public security under the provision of Bombay Public Trust Act,
1950.

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Issuer:Kisan Vikas Patra can be issued by Government of India through Post Office.
Minimum/Maximum Amount of Investment:In Kisan Vikas Patra, minimum amount of investment is Rs. 100/- and maximum amount of
investment is No Limit.
Yield:In Kisan Vikas Patra, return @ 8.40% annually compounded of certificate issued on or after
01/03/2003. Every Rs. 1,000/- will become Rs. 1,170.51/- after 21/2 years or more but less than
3 years; and Rs. 1,850.93/- after 8 years or more but less than 8 years & 7 months.
Life/Lock-in Period:Kisan Vikas Patra can be kept for 8 years & 7 months purchased on or after 01/03/2003.
Encashment is possible after 21/2 years.
Liquidity:Kisan Vikas Patra is easily en-cashable after 21/2 years.
Capital Appreciations:In Kisan Vikas Patra, no capital appreciation is available but accumulation of interest doubles in
8 years & 7 months.
Tax Benefits:In Kisan Vikas Patra, Tax Benefits is not available but TDS is not applicable on the Interest
amount received on Kisan Vikas Patra.
Nominations/Joint Names:In Kisan Vikas Patra, Joint ownership and nomination is possible.

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Advantages of Investment in Kisan Vikas Patra:

Mostly liked by people from rural and people whose income is less.
Return gets doubled after maturity.
Its a long term investment.

Disadvantages of Investment in Kisan Vikas Patra:

If prematurity is done than interest is provided at the rate of 3.50%.

Less preferred due to long term investment.

NOTE:- As per the latest development, Kisan Vikas Patra scheme is discontinued.

4. Post Office Recurring Deposits:-

Who Can Invest:In Post Office Recurring Deposits, any Individuals can invest.
Issuer:Post Office Recurring Deposits can be issued by Government of India through Post Office.
Minimum/Maximum Amount of Investment:In Post Office Recurring Deposits, minimum amount of Investment is Rs. 10/- per month or any
amount in multiples of Rs. 5/- and there is no maximum limit of investment.
Yield:In Post Office Recurring Deposit, return @ 8% p.a. compounded quarterly.
Life/Lock-in Period:15

Post Office Recurring Deposit can be kept for 5 years and extension for another 5 years is
possible.
Liquidity:In Post Office Recurring Deposits, one withdrawal up to 50% of the balance will be allowed after
1 year and if up to 12 deposits have been made. Premature closure of accounts is permissible
after 3 years, interest @ applicable to Post Office Savings Account.
Capital Appreciations:In Post Office Recurring Deposits, no capital appreciations is available but only accumulation of
interest is available.
Tax Benefits:In Post Office Recurring Deposits, Tax benefit is not available.
Nominations/Joint Names:In Post Office Recurring Deposit, Joint Account and Nomination is possible.

Advantages of Investment in Post Office Recurring Deposits:

Mostly liked by daily wagers due to low investments.

Investment is on installment basis.
Loan facility is available.

Disadvantages of Investment in Post Office Recurring Deposits:

At the time of maturity, accrued interest is less.

Only popular among low earning people.

5. Post Office Monthly Income Scheme:16

Who Can Invest:In Post Office Monthly Income Schemes, any Individual can invest.
Issuer:Post Office Monthly Income Scheme is issued by Government of India through Post Office.
Minimum/Maximum Amount of Investment:In Post Office Monthly Income Schemes, minimum amount of investment is Rs. 1,500/- and
maximum amount of investment is Rs. 4,50,000/- is allowed for Single Account where as in case
of Joint Account, Rs. 9,00,000/- is allowed as one time deposit only.
Yield:In Post Office Monthly Income Schemes, return @ 8% for deposit made on or after 01/03/2003
payable monthly. In addition bonus of 10% payable on maturity only on account opened till
13/02/2006 and 5% bonus if new account opened after 08/12/2007.
Life/Lock-in Period:Post Office Monthly Income Schemes is kept for 5 years.
Liquidity:Post Office Monthly Income Schemes can be withdrawn at any time after 3 years with 1%
reduction but no bonus and between 1 year to 3 years with a reduction of 2% from deposit
amount.
Capital Appreciations:In Post Office Monthly Income Schemes, no capital appreciation is available.
Tax Benefits:-

17

In Post Office Monthly Income Schemes, Tax benefit is not available and TDS is charged on
Interest amount.
Nominations/Joint Names:In Post Office Monthly Income Schemes, Joint ownership and nomination is possible.

Advantages of Investment in Post Office Monthly Income Schemes:

Mostly liked by senior citizens.

Deposits can be made in cash/cheque/demand draft.
Money is paid on monthly basis, according to investment and interest.

Disadvantages of Investment in Post Office Monthly Income Schemes:

No tax benefit is available.

People need to invest high lump sum amount to get good monthly income.

6. Post Office Time Deposits:-

Who Can Invest:In Post Office Time Deposits, any Individuals, any Trust, Regimental Fund & Welfare Fund can
invest.
Issuer:Post Office Time Deposits can be issued by Government of India through Post Office.
Minimum/Maximum Amount of Investment:In Post Office Time Deposits, minimum amount of Investment is Rs. 200/- and its multiples and
there is no limit in case of maximum amount of Investment in Post Office Time Deposits.
Yield:18

In Post Office Time Deposits, return at the rate of 7.70%, 7.80%, 8% and 8.30% p.a. is payable
on maturity for deposits for 1 year, 2 years, 3 years and 5 years respectively. Interest is paid
annually but calculated on quarterly basis.
Life/Lock-in Period:Post Office Time Deposit can be kept with Post Office either for 1 year, 2 years, 3 years or 5
years.
Liquidity:Post Office Time Deposits can be withdrawn at any time after 6 months but within 1 year
without any interest. Premature withdrawal after 1 year entails reduction of 1% interest scheme
to scheme.
Capital Appreciations:In Post Office Time Deposits, no capital appreciations is available but only accumulation of
interest is available.
Tax Benefits:In Post Office Time Deposits, the 5 year scheme is eligible for tax benefit under section 80 C
(within overall limit of Rs. 1,00,000/-) and further TDS is charged on the interest amount of Post
Office Time Deposit if it is held for 5 years.
Nominations/Joint Names:In Post Office Time Deposits, Joint ownership and nomination is possible in Post Office Time
Deposits.

Advantages of Investment in Post Office Time Deposits:

Maturity period is less.

Minimum amount of investment is less, so it is affordable to all class of people.
Loan facility is available.

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Disadvantages of Investment in Post Office Time Deposits:

Return interest is less.

7. Certificate of Deposits:-

Who Can Invest:In Certificate of Deposits, any Entity (NRIs) can invest only on non-repatriable basis.
Issuer:Certificate of Deposits can be issued by Scheduled Commercial Banks excluding Regional Rural
Banks.
Minimum/Maximum Amount of Investment:In Certificate of Deposits, minimum amount of Rs. 5,00,000/- can be invested and maximum
amount of investment is no limit.
Yield:Yield in Certificate of Deposits varies from time to time and Bank to Bank.
Life/Lock-in Period:Lock in period of Certificate of Deposits is between 91 days to 365 days.
Liquidity:Certificate of Deposits is transferrable by endorsement and delivery after 30 days.
Capital Appreciations:-

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In Certificate of Deposits, no capital appreciation is available but only accumulation of interest is

available.
Tax Benefits:By investing in Certificate of Deposits, no Tax benefits are allowed.
Nominations/Joint Names:In Certificate of Deposits, joint ownership is possible.

Advantages of Investment in Certificate of Deposits:

Maturity period is less.

NRIs can also invest.

Disadvantages of Investment in Certificate of Deposits:

Investment amount is high.

Tax benefit is not available.

8. Senior Citizen Saving Scheme (SCSS):-

Who Can Invest:-

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In Senior Citizen Saving Scheme, Individuals above 60 years of age are allowed to invest and in
certain cases above 55 years is also allowed. NRIs are not allowed to invest in Senior Citizen
Saving Schemes.
Issuer:Senior Citizen Saving Scheme is issued by Government of India through Post Office and
Nationalized Banks.
Minimum/Maximum Amount of Investment:In Senior Citizen Saving Scheme, minimum amount of investment is Rs. 1,000/- and maximum
amount of investment is Rs. 15,00,000/-.
Yield:It will be a type of account which can be opened for 5 years and the same will be extended for
another 3 years and the same will fetch interest at the rate of 9% p. a. and it will be payable on
quarterly basis. In the case of extension of account, interest rate as of that time shall be
applicable.
Life/Lock-in Period:Senior Citizen Saving Scheme account can be opened for 5 years only and the same can be
extended for another 3 years.
Liquidity:From Senior Citizen Saving Scheme amount at the rate of 1.50% is deducted if the account is
closed between 1 year and 2 years and if it closed after 2 years than deduction at the rate of 1% is
applicable.
Capital Appreciations:In Senior Citizen Saving Scheme, no capital appreciation is available but only accumulation of
interest is available.

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Tax Benefits:Investment in Senior Citizen Saving Scheme is allowed as tax exemption u/s. 80C but TDS is
applicable.
Nominations/Joint Names:In Senior Citizen Saving Scheme, joint ownership and nomination is possible.

Advantages of Investment in Senior Citizen Saving Schemes: Facility of prematurity is available.

Disadvantages of Investment in Senior Citizen Saving Schemes:

On maturity, accrued interest is less.

9. Term Deposits:-

Who Can Invest:Any individual or HUF can invest in Term Deposits.

Issuer:Term Deposits can be issued by any Scheduled Banks.
Minimum/Maximum Amount of Investment:In Term Deposits, there is no limit on investment i.e. any amount can be accepted.
Yield:Yield in Term Deposits varies from time to time and from Bank to Bank.

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Life/Lock-in Period:Term Deposits can be invested for a fixed period of not less than 5 years with Scheduled Banks
which is in accordance with a scheme framed and notified by the Central Government in the
Official Gazette for the purpose of this clause.
Liquidity:Term Deposits can be for a fixed period of not less than 5 years with a Scheduled Bank.
Capital Appreciations:In Term Deposits, no capital appreciation is available but accumulation of interest is available in
case of cumulative bond.
Tax Benefits:In Term Deposits, tax benefit is available u/s. 80C and TDS is applicable if interest amount
exceeds Rs. 10,000/- p. a. per branch of each Bank.
Nominations/Joint Names:In Term Deposits, joint ownership and nomination is possible.

Advantages of Investment in Term Deposits:

Tax benefit is available.

Investment amount is low so liked by every class of people.

Disadvantages of Investment in Term Deposits:

Maturity period is high.

10. Pension Schemes:-

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Who Can Invest:In Pension Schemes, any individual above 18 years of age can invest.
Issuer:Pension Schemes can be issued by Life Insurance Corporation of India and other private Life
Insurance Companies.
Minimum/Maximum Amount of Investment:In Pension Schemes, minimum amount of investment is based on the Policy and there is no limit
of investment.
Yield:In traditional schemes, return will be fetched as per bonus rate announced whereas in unit linked
schemes, return will be as per market conditions.
Life/Lock-in Period:Investment in Pension Schemes is kept as per the Policy Term.
Liquidity:Investment in Pension Scheme can be withdrawn at the time of maturity or an individual can
withdraw 1/3rd of the accumulated value as per the policy terms which will be tax free u/s 10
and balance should be commuted for pension.
Capital Appreciations:In traditional schemes, accumulation as per current bonus rate declared by the issuer and in case
of unit linked plans equity scheme, maximum scope of capital appreciation is available.
Tax Benefits:In Pension Schemes, tax benefit is allowed u/s. 80CCC up to Rs. 1,00,000/- and within the
overall limit of Rs. 1,00,000/- of section 80CCE.
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Nominations/Joint Names:In Pension Schemes, nomination is possible.

Advantages of Investment in Pension Schemes:

Investment amount is less so affordable for every class of people.

Good return can be availed when market is down.
Tax benefit is available.

Disadvantages of Investment in Pension Schemes:

Variable return because of market dependency.

11. Pay Roll Saving Schemes:-

Who Can Invest:Any monthly salaried individual can choose the option of Pay Roll Saving Schemes.
Issuer:In Pay Roll Saving Schemes, individual can voluntarily authorize his appointing authority or
employer to deduct monthly contributions from his/her salary and to remit to anyone of the
saving schemes like Post Office Recurring Deposits, Post Office Time Deposits, National Saving
Certificate and Public Provident Fund Scheme, etc.
Minimum/Maximum Amount of Investment:In Pay Roll Saving Schemes, the amount of investment is depending up on the monthly
contribution made by the individual from his salary.
Yield:26

Yield in the Pay Roll Saving Scheme depends up on the saving scheme chosen by the individual.
Life/Lock-in Period:Lock in period in the Pay Roll Saving Schemes depends up on the saving scheme chosen by the
individual.
Liquidity:In Pay Roll Saving Schemes, return on investment depends up on the saving scheme chosen by
the individual.
Capital Appreciations:In Pay Roll Saving Schemes, capital appreciation depends up on the saving scheme chosen by
the individual.
Tax Benefits:In Pay Roll Saving Schemes, tax benefit is available as per the saving scheme chosen by the
individual.
Nominations/Joint Names:In Pay Roll Saving Schemes, nomination is available.

Advantages of Investment in Pay Roll Saving Schemes:

Collection is through concerned person, so money investment is good.

Disadvantages of Investment in Pay Roll Saving Schemes:

People do not prefer it because they want to do personally and account to their
requirements.

12. 8%Saving Schemes (Taxable):-

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Who Can Invest:In 8% Saving Schemes, any individuals, HUFs, Charitable Institutions and Universities,
Hospitals can invest.
Issuer:8% Saving Schemes can be issued by the Government of India.
Minimum/Maximum Amount of Investment:In 8% Saving Schemes, minimum amount of investment is Rs. 1,000/- and maximum amount of
investment is no limit.
Yield:In 8% Saving Schemes, return on investment is at the rate of 8% p. a. Interest on non-cumulative
bonds will be received half yearly i.e. on 1st August and on 1st February and on cumulative
bonds, interest will be compounded with half yearly rates.
Life/Lock-in Period:Lock in period of 8% Saving Schemes is 6 years.
Liquidity:8% Saving Schemes is not transferable and premature encashment is not possible.
Capital Appreciations:In 8% Saving Schemes, capital appreciation is not available except in case of cumulative bonds,
only accumulation of interest is possible.
Tax Benefits:As the name of the schemes suggest, the tax benefit is not available and TDS is also applicable
on the interest amount.

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Nominations/Joint Names:In 8% Saving Schemes, nomination and joint ownership is possible for single holder only and for
joint holder and minor investor, nomination and joint ownership is not available.

Advantages of Investment in 8% Saving Schemes:

Investment amount is less, so it is affordable to all class of people.

Disadvantages of Investment in 8% Saving Schemes:

Tax benefit is not available.

At the time of maturity, interest accrued is less.
Maturity period is high.

13. RBI Bond:-

Who Can Invest:In RBI Bond, any individual can invest.

Issuer:RBI Bond can be issued by the Reserve Bank of India.
Minimum/Maximum Amount of Investment:In RBI Bond, minimum amount of investment is Rs. 1,000/- and maximum amount of
investment is Rs. 2,00,000/-.
Yield:-

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In RBI Bond, return on investment is received at the rate of 8% interest which is compounded
half yearly.
Life/Lock-in Period:RBI Bond can be invested for 5 years.
Liquidity:RBI Bond can be withdrawn at any time after 5 years but one can avail the facility of loan
against such RBI Bond.
Capital Appreciations:In RBI Bond, capital appreciation is not available but accumulation of interest is available.
Tax Benefits:In RBI Bond, tax benefit is available on returns only, not on the investment amount.
Nominations/Joint Names:In RBI Bond, nomination is possible.

Advantages of Investment in RBI Bond:

Good return due to half yearly compounded interest.

Loan facility is available.

Disadvantages of Investment in RBI Bond:

High lump sum amount of investment to be made to get good return.

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14. Fixed Deposits:-

Who Can Invest:In Fixed Deposits, any individuals, HUFs can invest.
Issuer:Fixed Deposits can be issued by any Co-operative Banks, Nationalized Banks, Private Banks and
Post Office.
Minimum/Maximum Amount of Investment:In Fixed Deposits, minimum amount of investment varies from bank to bank which is as follows:
In Co-operative Banks

Rs. 500/- to Rs. 1,000/-

In Nationalized Banks:

Rs. 5,000/- to Rs. 10,000/-

In Private Banks

Rs. 10,000/-

In Fixed Deposits, maximum amount of investment depends up on the investing capacity of the
investors.
Yield:In Fixed Deposits, return on investment is received in the form of interest and rate of interest
varies from Bank to Bank.
Life/Lock-in Period:Fixed Deposits can be kept for a minimum maturity period of 15 days and maximum maturity
period is 10 years.
Liquidity:-

31

Prematurity of Fixed Deposits can be done but the return will be restricted up to the date of
prematurity and the charges will be deducted as per the Banks rule which varies from bank to
bank.
Capital Appreciations:In Fixed Deposits, capital appreciation is not available but accumulation of interest is available.
Tax Benefits:In Fixed Deposits, tax benefit is not available.
Nominations/Joint Names:In Fixed Deposits, nomination and joint ownership is possible.

Advantages of Investment in Fixed Deposits:

Most liked by every class of people as it is safe investment option.

Maturity period is very less.
Loan facility is available.

Disadvantages of Investment in Fixed Deposits:

Return interest accrued to maturity period.

To get good return, investment must be high.

Options under variable Returns:A. Equity Linked Saving Schemes (ELSS):-

Who Can Invest:In Equity Linked Saving Scheme, any entity can invest.

32

Issuer:Equity Linked Saving Scheme is issued as Mutual Fund.

Minimum/Maximum Amount of Investment:In Equity Linked Saving Scheme, minimum amount of investment is Rs. 500/- and no limit for
maximum amount of investment.
Yield:In Equity Linked Saving Scheme, return varies from schemes to schemes and it also depends up
on the dividend options and growth options.
Life/Lock-in Period:Investment in Equity Linked Saving Schemes can be locked for 3 years.
Liquidity:Investment in Equity Linked Saving Schemes can be withdrawn at any time after 3 years.
Capital Appreciations:In Equity Linked Saving Schemes, there is a maximum scope for capital appreciation.
Tax Benefits:In Equity Linked Saving Schemes, tax benefit is available u/s. 80C and concessional capital gain
benefit. Dividend received from these schemes is exempt u/s. 10.
Nominations/Joint Names:In Equity Linked Saving Schemes, joint ownership and nomination is possible.
Advantages of Investment in Equity Linked Saving Schemes:

Reduction and diversification of risk.

Tax benefit is available.
33

Investment amount is less so it is affordable to every class of people.

Disadvantages of Investment in Equity Linked Saving Schemes:

No control over the cost in the hands of an investor.

Variable return because of market dependability.

B. Equity/Debt Oriented Scheme of Mutual Funds:-

Who Can Invest:In Equity/Debt Oriented Scheme of Mutual Funds, any entity can invest.
Issuer:Equity/Debt Oriented Scheme of Mutual Funds is issued as Mutual Funds.
Minimum/Maximum Amount of Investment:In Equity/Debt Oriented Scheme of Mutual Funds, minimum and maximum amount of
investment varies from scheme to scheme.
Yield:In Equity/Debt Oriented Scheme of Mutual Funds, return varies from schemes to schemes and
also depends up on the dividend options and growth options.
Life/Lock-in Period:Equity/Debt Oriented Scheme of Mutual Funds has no lock in period and certain funds carry exit
load if exit within certain specified period.
Liquidity:-

34

Equity/Debt Oriented Scheme of Mutual Funds can be withdrawn at any time subject to exit load
which varies from scheme to scheme.
Capital Appreciations:In Equity/Debt Oriented Scheme of Mutual Funds, there is maximum scope for capital
appreciation.
Tax Benefits:In Equity/Debt Oriented Scheme of Mutual Funds, concessional capital gain tax benefit is
available for equity oriented schemes.
Nominations/Joint Names:In Equity/Debt Oriented Scheme of Mutual Funds, joint ownership and nomination is possible.

Advantages of Investment in Equity/Debt Oriented Scheme of Mutual Funds:

Good return on investment is possible when market is down.

Maturity period is less.

Disadvantages of Investment in Equity/Debt Oriented Scheme of Mutual

Funds:

Variable return because of market dependability.

C. Pension Plans of Mutual Funds:-

Who Can Invest:In Pension Plans of Mutual Funds, any individual and HUF can invest.
Issuer:35

Pension Plans of Mutual Funds is issued as Mutual Funds.

Minimum/Maximum Amount of Investment:In Pension Plans of Mutual Funds, minimum amount of investment is Rs. 500/- and no limit for
maximum amount of investment.
Yield:In Pension Plans of Mutual Funds, return varies from scheme to scheme and it also depends up
on the dividend options and growth options.
Life/Lock-in Period:Investment in Pension Plans of Mutual Funds can be locked for 3 years.
Liquidity:Investment in Pension Plans of Mutual Funds can be withdrawn at any time after 3 years.
Capital Appreciations:In Pension Plans of Mutual Funds, scope for capital appreciation is available but not more than
40% in equities.
Tax Benefits:In Pension Plans of Mutual Funds, tax benefit is available u/s. 80C and concessional capital gain
benefit. Dividend received from these schemes is exempt u/s. 10.
Nominations/Joint Names:In Pension Plans of Mutual Funds, joint ownership and nomination is possible.

Advantages of Investment in Pension Plans of Mutual Funds:

Investment amount is less so it is affordable to every class of people.

Maturity period is less.

36

Disadvantages of Investment in Pension Plans of Mutual Funds:

Low return.

D. Unit Linked Insurance Premium (ULIP):-

Who Can Invest:In Unit Linked Insurance Premium, any individual can invest.
Issuer:Unit Linked Insurance Premium can be issued by Life Insurance Corporation and Other Private
Life Insurance Companies.
Minimum/Maximum Amount of Investment:In Unit Linked Insurance Premium, minimum amount of investment is as per the policy and
maximum amount of investment is no limit.
Yield:In Unit Linked Insurance Premium, return varies with risk cover.
Life/Lock-in Period:Unit Linked Insurance Premium can be locked for 5 years.
Liquidity:Investment in Unit Linked Insurance Premium can be withdrawn at any time after 5 years.
Capital Appreciations:-

37

In Unit Linked Insurance Premium, there is a maximum scope for capital appreciation under
equity scheme.
Tax Benefits:In Unit Linked Insurance Premium, tax benefit is available u/s. 80C. Dividend received from
these schemes is exempt u/s. 10 and on maturity concessional tax benefit is available u/s 10
(10D).
Nominations/Joint Names:In Unit Linked Insurance Premium, single holding and nomination is possible.

Advantages of Investment in Unit Linked Insurance Premium:

Less risky.
Tax benefit is available.

Disadvantages of Investment in Unit Linked Insurance Premium:

Variable return.
Maturity period is high.

E. Financial Institutional Bonds:-

Who Can Invest:In Financial Institutional Bonds, any entity can invest.
Issuer:Financial Institutional Bonds can be issued by any Financial Institutions both public and private.
Minimum/Maximum Amount of Investment:-

38

In Financial Institutional Bonds, there is not limit of investment.

Yield:In Financial Institutional Bonds, return varies from time to time as per the market and other
conditions.
Life/Lock-in Period:Financial Institutional Bonds is invested generally for a period of 3 to 7 years.
Liquidity:Financial Institutional Bonds is illiquid, though saleable in the open market and it can be in
demat form also.
Capital Appreciations:In Financial Institutional Bonds, capital appreciation is not available but accumulation of interest
is available in case of cumulative bonds.
Tax Benefits:In Financial Institutional Bonds, tax benefit is available u/s. 80CCF as investment in
Infrastructure Bond.
Nominations/Joint Names:In Financial Institutional Bonds, joint ownership and nomination is allowed.

Advantages of Investment in Financial Institutional Bonds:

Investment amount is less so it is affordable to every class of people.

Tax benefit is available.

Disadvantages of Investment in Financial Institutional Bonds:

Maturity period is very high.

Return on investment is less.
39

ANALYSIS OF PROJECT
Q-1 :Section
A
B
C

Respondents
44
40
16

Respondents
50
45
40
35
30

Respondents

25
20
15
10
5
0
A

Interpretation:

Survey shows that people has more qualification and are more professional, also take
keen interest in small saving plans.
Small saving plans are not for only one category, it is for every category.

40

Q-2 :-

Sec
A
B
C

Fixed
Return
13
21
8

Variable
Return
10
3
2

Both
26
16
4

60
50
40
Both

30

Variable Return
Fixed Return

20
10
0
A

Interpretation:

Sec A wants to invest in both type of return because of goods knowledge of financial
investments.
Due to low investment by Sec C, their respondents are also low.

41

Q-3:Options
8% Saving Schemes (Taxable)

<1
Lac

1 2 Lac

0
0
2

0
0
21
0

Certificate of Deposits
Equity Linked Saving Schemes
Equity/Debt Oriented Scheme of Mutual
Funds
Financial Institutional Bonds
Fixed Deposits
Kisan Vikas Patra
National Saving Certificate
Pay Roll Saving Schemes
Pension Plans of Mutual Funds
Pension Scheme
Post Office Monthly Income Schemes
Post Office Recurring Deposits
Post Office Time Deposits
Public Provident Fund
RBI Bonds
Senior Citizen Saving Schemes
Term Deposits
Unit Linked Insurance Premium

42

25
Lac

>5 Lac

0
0
26

2
2
5
4
4
2
0
1
0
2
2
1
0
0
3
2
2
0
4

0
0
7
7
9
0
0
1

0
18
7
13
1
0
0

0
0
22
3
17
0
0
0

4
4
1
6
0
0
3
0

11
8
3
10
3
0
8
1

5
7
0
23
6
2
3
2

60
50
40
30
20
10
0

>5 Lac
2 5 Lac
1 2 Lac
< 1 Lac

Interpretation:

Respondent having income less than Rs. 1,00,000/- have least investment.
Respondent having income between Rs. 1,00,000/- to Rs. 2,00,000/- are more interested
in fixed returns.
Respondent having income between Rs. 2,00,000/- to Rs. 5,00,000/- are more inclined
towards the ELSS, NSC and PPF for tax saving.
Respondent having income more than Rs. 5,00,000/- are more inclined to equity market
and ELSS.

Q-4:-

<1
Lac
12
Lac
25
Lac

5 10
Thousan
d

10 20
Thousan
d

20 40
Thousan
d

14

11.46

17

21.66

12

19

26.75

43

>40
% of
Thousan Customer
d
s

>5
Lac
% of
Incom
e

3.82

17.20

10.19

18.47

17.83

45
40
35
30
>40 Thousand

25

20 40 Thousand

20

10 20 Thousand
5 10 Thousand

15
10
5
0
< 1 Lac

1 2 Lac

2 5 Lac

>5 Lac

Interpretation:

More income more investments.

Respondent having income between Rs. 2,00,000/- to Rs. 5,00,000/- has invested up to
40%.
More than 50% investment is from respondent who invest around Rs. 40,000/-.

Q-5

Sources
Agents

Customers
13

44

%
8.2803

31
Newspapers

19.745
51

Word of Mouth

32.484
5

Others

3.1847

Customers

Others; 5% Agents; 13%

Word of Mouth; 51%

Newspapers; 31%

Interpretation:

Word of mouth and agents plays an important role for investment by the customers.

45

CONCLUSION
Most people are having sound knowledge about the saving plans.
People likely to invest 30% to 40% of their income.
People having annual income between Rs. 2,00,000/- to Rs. 5,00,000/- are mostly
interested in schemes which are having less maturity period. They want fast return so that
they can reinvest.
People having income less than Rs. 1,00,000/- prefer to invest in post office savings like
recurring deposits and LIC.
People having income between Rs. 2,00,000/- to Rs. 5,00,000/- prefer to invest in fixed
deposits, post office monthly income schemes and equity linked saving schemes and
some percentage of amount in shares.
People with income less than Rs. 5,00,000/-, prefer to invest in stock, mutual funds,
national saving certificates, and public provident fund.
People having income up to Rs. 1,50,000/- are interested in fixed returns.
People having income more than Rs. 1,50,000/- are interested in either variable return or
in both i.e. in fixed returns and variable returns.
People prefer fixed deposits and insurance more as they consider them as the safer
investment options.
More people consult agents and friends before investing.
For getting the knowledge about the small saving options, word of mouth and agents play
an important role.
People are taking interest in investment in unit linked insurance premium policies.
Customer present income plays a crucial role for their future reinvestment. For the future
reinvestment, customers are willing to invest according to their present situation.

Small Saving Options are not just like a small savings only but a high investment can be made. It
is a safe and right type of investment. The plans which are described here state that how the
small savings are useful for a developing country like India. Addition of rupee to rupee makes a
huge amount and it is very useful to the countrys economy.

46

After losing the investment in stock markets in the past, small investors prefer risk free small
saving schemes, which saw 27.33% surge in collection of money. Customer prefers these small
saving plans because the return is fixed and there is no risk.
Finally the report concludes that how customers invest by considering every aspect of current
scenario. Here every type of saving plan has been taken in to account. Through this analysis, a
customer can understand where to invest their hard earned money by considering the current
economic scenario.

REFERENCES
Search Engines:

www.google.com
www.investopedia.com

Internet:

www.sbi.com
www.sbimf.com
www.timesofindia.indiatimes.com
www.mutualfundindia.com
www.investmentyogi.com
www.investmentkit.com
www.onlinebanksguide.com
www.rediffmail.com
www.tnsmallsavings.com
www.savingwala.com
www.thehindu.com

Other Sources:

Chart from my colleagues.

Pamphlet from Banks, Agents and Post Office.
Knowledge shared from distributors and agents about the small saving options available
in the market.

47

ATTACHMENTS
Questionnaires
1) Are you currently working or retired?
a. Working
b. Retired

2) You are in to which profession?

a. Government Service
b. Private Jobs
c. Business
d. Others specify______________

3) In which range your annual income lies?

a. Less than Rs. 1,00,000/b. Between Rs. 1,00,000/- to Rs. 2,00,000/c. Between Rs. 2,00,000/- to Rs. 5,00,000/d. More than Rs. 5,00,000/-

4) Do you invest?
a. Yes
b. No

5) What kind of investment returns do you have in consideration?

a. Long Term
b. Mid Term
c. Short Term
d. A combination of any two or all the three

48

6) How much you invest from your income?

a. 5 10 Thousand per year
b. 10 20 Thousand per year
c. 20 40 Thousand per year
d. More than 40 Thousand per year

7) Whom do you consult before investing?

a. Agents
b. Family
c. Friends
d. Others Specify______________

8) Are you aware of small saving plans?

a. Yes
b. No

9) Have you ever invested in which of the following small saving options?
a. Public Provident Fund (PPF)
b. National Saving Certificates (NSC)
c. Kisan Vikas Patra (KVP)
d. Post Office Recurring Deposits
e. Post Office Monthly Income Scheme
f. Post Office Time Deposits
g. Certificate of Deposits
h. Senior Citizen Saving Scheme (SCSS)
i. Term Deposits
j. Pension Schemes
k. Pay Roll Saving Schemes
l. 8% Saving Schemes (Taxable)
m. RBI Bond
n. Fixed Deposits
o. Equity Linked Saving Schemes (ELSS)
p. Equity/Debt Oriented Scheme of Mutual Funds
q. Pension Plans of Mutual Funds
r. Unit Linked Insurance Premium (ULIP)
s. Financial Institutional Bonds

10) What type of investments you do?

a. Fixed Return
49

b. Variable Return
c. Both

11) From where did you come to know about these plans?
a. Agents
b. Newspapers
c. Word of Mouth
d. Others Specify____________

12) Of the schemes, you have invested in past, which are the schemes where you are willing to
reinvest in future, give your preferences accordingly?
a. _______________
b. _______________
c. _______________

50