Project Topics:

1. Financial InstrumentsAbstract:

The present financial market is flooded with a lot investment instruments, viz., Shares, Bonds, Mutual funds, Insurance plans, Fixed Deposits, other money and capital market instruments and also various options of investment in Real Estate and Commodity Market etc. Sometimes people refer to these options as "investment vehicles," which is just another way of saying "a way to invest." Each of these vehicles has its own positives and negatives and ultimate decision of investment is influenced by the individual investor’s perception regarding the risk and return of concerned investment opportunity available in the market. Further, the investment decisions is full of complexity because of volatility of market conditions, Inflation rate fluctuations, impact of Global environment, Cash reserve ratio, and Repo rates. Therefore, it is imperative to analyze these factors while taking an investment decision.

Keeping above in mind, the study has been done to see the perception of investors which provides understanding to readers about the various factors which should be keep in mind at the time of investment. The study is useful to company in providing the understanding about the investors’ perception to devise the suitable product/marketing strategies, which would helps it in making their policies or strategies in order to attract them.

Further. financial planner get advent to make portfolio according to response given by respondents, which belong to different occupations, having different income level, different age level or which instrument is mostly like by the investors for investment. The study would further helpful for readers in understanding about the various investment opportunities available in the market.

Objectives of the Study

The various objectives of the study are

1) To study the various financial opportunities available for investment.

2) To study about the investors perception regarding various investment opportunities available in the market

3) To analyze the investment patterns of the investment.

4) To examine the investors changing behavior regarding various investment opportunities.

The study is descriptive and analytical in nature. It is descriptive as it describes the existing financial instruments available in the market. It is analytical as it analyses the perception of the investors.,

NCR region have been taken as universe of the study. Convenient sampling technique is used and a sample of 100 investors has been taken for the purpose of the study.

Interview and questionnaire have been used to conduct the study. A structured questionnaire consisting close-ended questions have been made, which is filled by the trainee during direct interaction with the respondents. Interviews have been taken of Relationship managers of different NBFC's and BANKS to seek the investor’s behavior towards investment.

Types of Investments

There are many ways to invest your money. Of course, to decide which investment vehicles are suitable for you, you need to know their characteristics and why they may be suitable for a particular investing objective.

• Debt Market• Public Provident Fund• Fixed Deposits• Bonds• Mutual Funds• Banks Deposits• Equity Market• Initial Public Offer• Insurance• Forex• Cash• Gold• Real Estate

Short Term Investment

They are good for short term goals, you can look at liquid funds, floating rate funds and shortterm bank deposits as options for this category of investments. Liquid funds have retuned around 5% post-tax returns as compared to 5.6% post-tax that your one-year 8% bank fixed deposit gives you. So, if you have funds for investment for over a period of one year, it is better to go in for bank deposits. However, liquid funds are better, if your time horizon is less than one-year, say around six months. This is because the bank deposit rates decrease proportionately with lower periods, while liquid funds will yield the same annualized returns for any period of time. Short-term floating rate funds can be considered at par to liquid funds for short term investments.

Fixed Maturity Plan (FMP):

If you know exactly for how much time you need to invest your surplus, a smarter option is to invest in FMPs. They are shorter-tenured debt schemes that buy and hold securities till maturity, thereby eliminating the interest rate risk. Try and opt for FMPs that offer a double indexation benefit. Fund houses usually launch double-indexation FMP’s during the end of the financial year so that they cover two financial year closings.

Medium & Long-Term Options:

These options typically offer low or virtually no liquidity. They are, however, largely useful as income accumulation tools because of the assured interest rates they offer. These instruments (small savings schemes) should find place in your long-term debt portfolio.

Reference :

www.axisbank.com/aboutus/aboutaxisbank/About-Axis-Bank.aspwww.citibank.comhttp://en.wikipedia.org/wiki/Indiabullshttp://en.wikipedia.org/wiki/Investmentwww.hsbc.comwww.hsbc.com/1/2/about-hsbcwww.ibef.org

2. Financial Planning and Forecasting

Financial Planning and Forecasting is the estimation of value of a variable or set of variables at some future point. A Forecasting exercise is usually carried out in order to provide an aid to decision – making and planning in the future. Business Forecasting is an estimate or prediction of future developments in business such as Sales, Expenditures and profits. Given the wide swings in economic activity and the drastic effects these fluctuations can have on profit margins, business forecasting has emerged as one of the most important aspects of corporate planning. Forecasting has become an invaluable tool for business to anticipate economic trends and prepare themselves either to benefit from or to counteract them. Good business forecasts can help business owners and managers adapt to a changing economy.

Financial planning and forecasting represents a blueprint of what a firm proposes to do in the future. So, naturally planning over such horizon tends to be fairly in aggregative terms. While there are considerable variations in the scope, degree of formality and level of sophistication in financial planning across firms, we need to focus on common elements which include Economic assumptions, Sales forecast, Pro forma statements, Asset requirements and the mode of financing the investments.In general usage, a financial plan can be a budget, a plan for spending and saving future income. This plan allocates future income to various types of expenses, such as rent or utilities, and also reserves some income for short-term and long-term savings. A financial plan can also be an investment plan, which allocates savings to various assets or projects expected to produce future income, such as a new business or product line, shares in an existing business, or real estate.

Financial forecast or financial plan can also refer to an annual projection of income and expenses for a company, division or department. A financial plan can also be an

estimation of cash needs and a decision on how to raise the cash, such as through borrowing or issuing additional shares in a company.

Objectives of the Study

The main objective of the study is to understand the financial position of the company, refers to the development of long-term strategic financial plans that guide the preparation of short-term operating plans and budgets, which focus on analyzing the pro forma statements and preparing the cash budget.

Financial Forecast

Financial forecast or financial plan can also refer to an annual projection of income and expenses for a company, division or department. A financial plan can also be an estimation of cash needs and a decision on how to raise the cash, such as through borrowing or issuing additional shares in a company.

While a financial plan refers to estimating future income, expenses and assets, a financing plan or finance plan usually refers to the means by which cash will be acquired to cover future expenses, for instance through earning, borrowing or using saved cash.

Corporations use forecasting to do financial planning, which includes an assessment of their future financial needs. Forecasting is also used by outsiders to value companies and their securities. This is the aggregative perspective of the whole firm, rather than looking at individual projects. Growth is a key theme behind financial forecasting, so growth should not be the underlying goal of corporation – creating shareholder value is enabled through corporate growth.

The benefits of financial planning for the organization are

Identifies advance actions to be taken in various areas. Seeks to develop number of options in various areas that can be exercised under different conditions. Facilitates a systematic exploration of interaction between investment and financing decisions. Clarifies the links between present and future decisions. Forecasts what is likely to happen in future and hence helps in avoiding surprises. Ensures that the strategic plan of the firm is financially viable. Provides benchmarks against which future performance may be measured.

There are three commonly used methods for preparing the pro forma financial statements. They are:

1. Percent of Sales Method2. Budgeted Expense Method.3. Variation Method.4. Combination Method.

Percent of Sales Method

The percent of sales method for preparing pro forma financial statement are fairly simple. Basically this method assumes that the future relationship between various elements of costs to sales will be similar to their historical relationship. When using this method, a decision has to be taken about which historical cost ratios to be used.

Budgeted Expense Method

The percent of sales method, though simple, is too rigid and mechanistic. For deriving the pro forma financial statements, we assume that all elements of costs and expenses bore a strictly proportional relationship to sales. The budgeted expense method, on the other hand calls for estimating the value of each item on the basis of expected developments in the future period for which the pro forma financial statements are prepared. This method requires greater effort on the part of management because it calls for defining likely developments.

Variation Method

Variation method on the other hand, calls for estimating the items on the basis of percentage increase or decrease of comparing with the same item of base year. It is quite flexible throughout the future period. This method is not like budgeted method, the value estimating for an item under this method is entirely dependent on the historical data.

Combination Method

It appears that a combination of above explained three methods works best. For certain items, which have a fairly stable relationship with sales, the percent of sales method is quite adequate. For other items, where future is likely to be very different from the past, the budgeted expense method or variation method is eminently suitable. A combination method of this kind is neither overly simplistic as the percent of sales method nor unduly onerous as the budgeted expense method or variation method.

Assumptions

The method used for this study is combination method which eminently works best for an organization.The assumptions made for forecasting are as follows:

1. The sales are expected to increase by 20% every year.2. All expenses are estimated under percentage of sales method.3. Tax is estimated on the basis of profit.4. Proposed Dividend to be increased by Rs. 5,000,000 every year.5. Dividend tax is payable on the basis of proposed dividend.6. Secured and unsecured loans to be decreased by 5% every year.7. Tax liability on percentage of sales method.8. Fixed assets are expected to increase by 2% every year.9. Work-in-progress of capital is expected to decrease by 10% every year.10. Investments are expected to increase by 5%.11. Current assets like inventories and sundry debtors are expected to increase by 2% every year.12. Cash and it equivalents on the basis of percentage of sales method.

13. Loans and advances are estimated to increase by 5% every year.14. Current liabilities are expected to increase by 5% every year.15. Provisions are expected to increase by 10% every year.

Reference :

Financial Management – Prasanna ChandraManagement Accounting – M.Y. Khan and P.K. JainAdvanced Accountancy – S.M. ShuklaFinancial Statements – Royal Classic Groupwww.wikipedia.orgwww.rcg.inwww.mapsofindia.com

3. Evaluation of Capital

The term Capital Budgeting refers to long term planning for proposed capital outlay and their financial. It includes raising long-term funds and their utilization. It may be defined as a firm's formal process of acquisition and investment of capital . Capital budgeting may also be defined as "The decision making process by which a firm evaluates the purchase of major fixed assets". It involves firm's decision to invest its current funds for addition, disposition, modification and replacement of fixed assets. It deals exclusively with investment proposals, which is essentially long-term projects and is concerned with the allocation of firm's scarce financial resources among the available market opportunities.

Some of the examples of Capital Expenditure are

•  Cost of acquisition of permanent assets as land and buildings.

•  Cost of addition, expansion, improvement or alteration in the fixed assets.

•  R&D project cost, etc.,

Capital budgeting is concerned with allocation of the firm's scarce financial resources among the available market opportunities. The consideration of investment opportunities involves the comparison of the expected future streams of earnings from a project with immediate and subsequent streams of expenditure for it". In any growing concern, capital budgeting is more or less a continuous process and it is carried out by different functional areas of management such as production, marketing, engineering, financial management etc. all the relevant functional departments play a crucial role in the capital budgeting decision are considered.

The role of a finance manager in the capital budgeting basically lies in the process of critically and in-depth analysis and evaluation of various alternative proposals, and then to select one out of them. As already stated, the basic objectives of financial management is to maximize the wealth of the share holders, therefore the objectives

of capital budgeting is to select those long term investment projects that are expected to make maximum contribution to the wealth of the shareholders in the long run.

Objective of the Project

•  To study the relevance of capital budgeting in evaluating the project in a government organization.

•  To study the technique of capital budgeting for decision- making.

•  To understand an item wise study of the organization financial performance.

•  The data is collected through the observation in the organization and interview with officials.

By asking question with the accounts and other persons in the financial department.(oral questioning)

These secondary data is existing data which is already been collected by Others, for that the sources are financial journals, annual reports of the SOUTH CENTRAL RAILWAY , RAILWAY website, and other Publications of RAILWAY

•  The Project study is undertaken to analyze and understand the Capital Budgeting process in South Central Railway, which gives main exposure to practical implication of theory knowledge.

•  To know about the organization's operation of using various Capital budgeting techniques.

•  To know how the organization gets funds from various resources.

Features of Capital Budgeting

The important features, which distinguish capital budgeting decision in other day-to day decision, are Capital budgeting decision involves the exchange of current funds for the benefit to be achieved in future. The future benefits are expected and are to be realized over a series of years. The funds are invested in non-flexible long-term funds. They have a long term and significant effect on the profitability of the concern. They involve huge funds. They are irreversible decisions. They are strategic decision associated with high degree of risk.

The importance of capital budgeting can be understood from the fact that an unsound investment decision may prove to be fatal to the very existence of the organization.

The importance of capital budgeting arises mainly due to the following:

1. Large investment:

Capital budgeting decision, generally involves large investment of funds. But the funds available with the firm are scarce and the demand for funds for exceeds

resources. Hence, it is very important for a firm to plan and control its capital expenditure.

2 . Long term commitment of funds:

Capital expenditure involves not only large amount of funds but also funds for long-term or an permanent basis. The long-term commitment of funds increases the financial risk involved in the investment decision.

3. Irreversible nature:

The capital expenditure decisions are of irreversible nature. Once, the decision for acquiring a permanent asset is taken, it becomes very difficult to impose of these assets without incurring heavy losses.

4. Long term effect on profitability:

Capital budgeting decision has a long term and significant effect on the profitability of a concern. Not only the present earnings of the firm are affected by the investment in capital assets but also the future growth and profitability of the firm depends up to the investment decision taken today. Capital budgeting decision has utmost has importance to avoid over or under investment in fixed assets.

5. Difference of investment decision:

The long-term investment decision are difficult to be taken because uncertainties of future and higher degree of risk.

6. Notional Importance:

Investment decision though taken by individual concern is of national importance because it determines employment, economic activities and economic growth.

Independent Project Decision

This is a fundamental decision in Capital Budgeting. It also called as accept /reject criterion. If the project is accepted, the firm invests in it. In general all these proposals, which yield a rate of return greater than a certain required rate of return on cost of capital, are accepted and the rest are rejected. By applying this criterion all independent projects with one in such a way that the acceptance of one precludes the possibility of acceptance of another. Under the accept-reject decision all independent projects that satisfy the minimum investment criterion should be implemented.

Mutually Exclusive Projects Decision

Mutually Exclusive project are those, which compete with other projects in such a way that the acceptance of one will exclude the acceptance of the other projects. The alternatively are mutually exclusive and only one may be chosen. Suppose a company is intending to buy anew machine. There are three competing brands, each with a different initial investment adopting costs. The three machines represent mutually

exclusive alternatives as only one of these can be selected. It may be noted here that the mutually exclusive projects decisions are not independent of the accept-reject decisions.

Capital Budgeting Process

Capital budgeting is complex process as it involves decision relating to the Investment of current funds for the benefit for the benefit to be achieved in future and the future are always uncertain. However, the following procedure may be adopted in the process of Capital Budgeting.

Identification of investment proposals

The capital budgeting process begins with the identification of investment Proposals. The proposal about potential investment opportunities may originate either from top management or from any officer of the organization. The departmental head analysis various proposals in the light of the corporate strategies and submits the suitable proposals to the capital expenditure planning.

Screening proposals:

The expenditure planning committee screens the various proposals received from different departments. The committee reviews these proposals from various angles to ensure that these are in accordance with the corporate strategies, or selection criterion of the firm and also do not lead departmental imbalances.

Evaluation of Various proposals:

The next step in the capital budgeting process is to various proposals. The method, which may be used for this purpose such as, pay back period method, rate of return method, N.P.V and I.R.R etc.

Fixing priorities:

After evaluating various proposals, the unprofitable uneconomical proposal may be rejected and it may not be possible for the firm to invest immediately in all the acceptable proposals due to limitation of funds. Therefore, it essential to rank the project/proposals after considering urgency, risk and profitability involved in there.

Reference :

www.southcentralrailways.comwww.indianrailways.comwww.irfc.com

4. Financial Planning and Forecasting

Financial Planning and Forecasting is the estimation of value of a variable or set of variables at some future point. A Forecasting exercise is usually carried out in order to provide an aid to decision – making and planning in the future. Business Forecasting is an estimate or prediction of future developments in business such as Sales, Expenditures and profits. Given the wide swings in economic activity and the drastic effects these fluctuations can have on profit margins, business forecasting has emerged as one of the most important aspects of corporate planning. Forecasting has become an invaluable tool for business to anticipate economic trends and prepare themselves either to benefit from or to counteract them. Good business forecasts can help business owners and managers adapt to a changing economy.

Financial planning and forecasting represents a blueprint of what a firm proposes to do in the future. So, naturally planning over such horizon tends to be fairly in aggregative terms. While there are considerable variations in the scope, degree of formality and level of sophistication in financial planning across firms, we need to focus on common elements which include Economic assumptions, Sales forecast, Pro forma statements, Asset requirements and the mode of financing the investments.In general usage, a financial plan can be a budget, a plan for spending and saving future income. This plan allocates future income to various types of expenses, such as rent or utilities, and also reserves some income for short-term and long-term savings. A financial plan can also be an investment plan, which allocates savings to various assets or projects expected to produce future income, such as a new business or product line, shares in an existing business, or real estate.

Financial forecast or financial plan can also refer to an annual projection of income and expenses for a company, division or department. A financial plan can also be an estimation of cash needs and a decision on how to raise the cash, such as through borrowing or issuing additional shares in a company.

Objectives of the Study

The main objective of the study is to understand the financial position of the company, refers to the development of long-term strategic financial plans that guide the preparation of short-term operating plans and budgets, which focus on analyzing the pro forma statements and preparing the cash budget.

Financial Forecast

Financial forecast or financial plan can also refer to an annual projection of income and expenses for a company, division or department. A financial plan can also be an estimation of cash needs and a decision on how to raise the cash, such as through borrowing or issuing additional shares in a company.

While a financial plan refers to estimating future income, expenses and assets, a financing plan or finance plan usually refers to the means by which cash will be acquired to cover future expenses, for instance through earning, borrowing or using saved cash.

Corporations use forecasting to do financial planning, which includes an assessment of their future financial needs. Forecasting is also used by outsiders to value companies and their securities. This is the aggregative perspective of the whole firm, rather than looking at individual projects. Growth is a key theme behind financial forecasting, so growth should not be the underlying goal of corporation – creating shareholder value is enabled through corporate growth.

The benefits of financial planning for the organization are

Identifies advance actions to be taken in various areas. Seeks to develop number of options in various areas that can be exercised under different conditions. Facilitates a systematic exploration of interaction between investment and financing decisions. Clarifies the links between present and future decisions. Forecasts what is likely to happen in future and hence helps in avoiding surprises. Ensures that the strategic plan of the firm is financially viable. Provides benchmarks against which future performance may be measured.

There are three commonly used methods for preparing the pro forma financial statements. They are:

1. Percent of Sales Method2. Budgeted Expense Method.3. Variation Method.4. Combination Method.

Percent of Sales Method

The percent of sales method for preparing pro forma financial statement are fairly simple. Basically this method assumes that the future relationship between various elements of costs to sales will be similar to their historical relationship. When using this method, a decision has to be taken about which historical cost ratios to be used.

Budgeted Expense Method

The percent of sales method, though simple, is too rigid and mechanistic. For deriving the pro forma financial statements, we assume that all elements of costs and expenses bore a strictly proportional relationship to sales. The budgeted expense method, on the other hand calls for estimating the value of each item on the basis of expected developments in the future period for which the pro forma financial statements are prepared. This method requires greater effort on the part of management because it calls for defining likely developments.

Variation Method

Variation method on the other hand, calls for estimating the items on the basis of percentage increase or decrease of comparing with the same item of base year. It is quite flexible throughout the future period. This method is not like budgeted method,

the value estimating for an item under this method is entirely dependent on the historical data.

Combination Method

It appears that a combination of above explained three methods works best. For certain items, which have a fairly stable relationship with sales, the percent of sales method is quite adequate. For other items, where future is likely to be very different from the past, the budgeted expense method or variation method is eminently suitable. A combination method of this kind is neither overly simplistic as the percent of sales method nor unduly onerous as the budgeted expense method or variation method.

Assumptions

The method used for this study is combination method which eminently works best for an organization.The assumptions made for forecasting are as follows:

1. The sales are expected to increase by 20% every year.2. All expenses are estimated under percentage of sales method.3. Tax is estimated on the basis of profit.4. Proposed Dividend to be increased by Rs. 5,000,000 every year.5. Dividend tax is payable on the basis of proposed dividend.6. Secured and unsecured loans to be decreased by 5% every year.7. Tax liability on percentage of sales method.8. Fixed assets are expected to increase by 2% every year.9. Work-in-progress of capital is expected to decrease by 10% every year.10. Investments are expected to increase by 5%.11. Current assets like inventories and sundry debtors are expected to increase by 2% every year.12. Cash and it equivalents on the basis of percentage of sales method.13. Loans and advances are estimated to increase by 5% every year.14. Current liabilities are expected to increase by 5% every year.15. Provisions are expected to increase by 10% every year.

Reference :

Financial Management – Prasanna ChandraManagement Accounting – M.Y. Khan and P.K. JainAdvanced Accountancy – S.M. ShuklaFinancial Statements – Royal Classic Groupwww.wikipedia.orgwww.rcg.inwww.mapsofindia.com

5. Credit Analysis of Personal Loan

Personal loans help you to take care of your immediate requirements Without much of a hassle. The most attractive feature of the personal loan is that you do not have to give any kind of security to avail this loan. No Security, Collateral or Guarantors are required to avail personal loans. Also, no questions regarding the end use of the loan are asked since personal loans do not require any security or hypothecation of assets, the rate of interest charged by them is higher compared to any other secured loans.

ABN AMRO Personal Loans are completely flexible - you can take your loan for purchase of assets and consumer durables, home improvements, tax saving investments, higher education, holidays and travel, emergency medical needs, marriage in family in short, for any declared legal use without pledging any security. You may also avail of the "Balance Transfer Program" to retire any high cost loans that you may have taken, including your credit card dues by simply opting for an ABN AMRO Personal Loan. There are no hidden charges - the Personal Loans come to you with minimum formalities, at attractive interest rates and only a one time nonrefundable processing fee. If you are an existing ABN AMRO customer, you could be eligible for special discounts on the interest rates and simplified application formalities under our "Relationship Rewards Program".

Objective of the Research

To find out exactly what is Credit Analysis is? How it is to be done? To find out what is the criteria to be considered by the banks to give loan for various purposes. How the processing is done on the applicant’s loan request & how it is to be accepter or rejected. To know and study various credit facilitities provided by the banks. How the eligibility for granting for granting the loan is calculated.

The main objective of the project was to know the loan proposal system of ABN AMRO BANK. The analysis of any proposal consists of two parts

· Internal

· External

Internal is extract of internal analysis , consisting of calculation of tenor as per norms ,calculation of eligibility with reference to income shown by an applicant, then if approved, to calculate the equated monthly installments & actual disbursement.

External analysis involves collection of documenry proofs regarding income profile, residence verification, repayment capacity and the end use.

Loan with Income Statements / Salaried Employees

The loan offered to salaried employees is given according to the companies they are working with. ABN AMRO Bank has around 7500 companies listed with them, and

they offer loans to the employees working in these companies only. The criteria for listed companies are according to the company profile, past performance, profit earning ability etc. These companies are again been divided into 3 categories i.e. Category A, B & C, according to the above factors.

ABN AMRO Bank gives loan to the officers and management cadres only. They don't give loans to the employees below the officers grade i.e. to the supervisor, the workers etc. The applicant should be earning a Gross annual salary of minimum Rs. 1, 00,000/- per annum. The conditions are as follows.

Conditions

· Officer or management cadre· Working in the current employment for at least 1 year or overall 3 years work experience· Age between 23 to 60 years· Gross annual salary more than Rs. 1, 00,000/- per annum.

This maximum amount that can be given to an applicant is subject to his net monthly income. The amount calculated by the applicants Net Adjusted salary.

CONCEPT OF “CREDIT”

1. It is the idea that if you build up a reputation for paying bills and debts on time you will be able to borrow money in the future.

2. Credit is important because it enables you to borrow money when you need it. In addition, the better your creditworthiness the more cheaply you will be able to borrow money whether for a car, education, home or some other large expenses.

3. On the other hand, if you are not a good credit risk, you may not be able to borrow when you need to, or you might be able to borrow but only at a high interest rate.

Credit is used primarily in order to obtain loans. Loans can be excellent way to be fund large purchases and business initiative ,but managing debt can be complicated process

· It can take just few months to get into financial trouble and years to get out.

· Although debt is some time useful, there is diff between good debt and bad debt the two most important characteristics are how you borrow the money and what you do it .HOW FRUITFULLY YOU USE IT.

· Even though debt is a part of life, the key to preventing it from becoming destructive is knowing its benefits and risks.

Unfortunately credit fraud is increasingly serious problem having grown almost threefold in frequency in the last five years. Under the most common scham called “Identity Theft “the criminal opens a credit card or other account with another person name. The criminal then purchases goods and services and you get stuck with the bill.

Credit card fraud & credit analysis are not related with each other.

Sometimes the creditor / borrower may qote wrong information about his personal loan details. his capacity to pay off the loan ,the reasons for taking the loan.

Therefore to overcome all this fraudulent activity credit analysis is to be done, to check out the worthiness of the creditor to repay the loan and pay the interest.

Reference :

WWW.ABNAMRO.CO.INwww.google.com