Bhavik final01

(1)

Stevens Business School (2010-12) Page 1

Project Report

On

Gauging the potential of Financial

Services in Emerging Economies

Prepared By

Bhavik Shah

Roll No. 24

Steven Business school 2010-12

Submitted to:

Under Guidance of:

Dr. Himani Joshi

(Assistant Dean of

Steven Business School)

Company Guide:

Mr. Pulkit Bakliwal

(Business Associate of

Motilal Oswal)

(2)

DECLARATION BY STUDENT

I take this opportunity to express my sense of profound gratitude to all the people who have been instrumental in making my training a great learning and rich experience.

I, Bhavik Shah, student of Post Graduate Program of Stevens Business School, Gandhinagar here by declare that the project work entitled ―Gauging the potential of Financial Services in

Emerging Economies” with respect to MOTILAL OSWAL Securities Limited is an original

and individual work submitted by me to Stevens Business School, Ahmedabad under the esteemed guidance of Mr. Pulkit Bakliwal, Mrs. Neha Patni and Dr. Himani Joshi.

(3)

ACKNOWLEDGEMENT

Here, I take this opportunity to humbly express our gratitude to all those concerned with Motilal Oswal Securities Limited. I would like to share the success of our project amongst the person who has directly and indirectly helped us to complete this project.

In representing this report i would like to express my thank to Mr. Pulkit Bakliwal, Business

Associate, Motilal Oswal Securities Limited for giving me the opportunity of having my

internship at Motilal Oswal Securities Limited, and providing his valuable guidance and inspiration for the completion of project.

I would also like to express my gratitude to Mr. Abhishek Pathak and Mrs. Neha Patni for his co-operation and guidance without which this project would never have been a success.

I am also indebted to all the internal employees and fellow trainees of Motilal Oswal for providing consistent encouragement and congenial atmosphere to complete the project.

I would express my sincere thanks to Dr. Himani Joshi and Stevens Business School for providing me necessary guidance and valuable instructions for the completion of this project. I would like to express my heartiest thanks to my family, parents and brother to extend their help as and when required. I would like to thank my friends for their support during my project.

(4)

EXECUTIVE SUMMARY

A project work is a mandatory requirement for the Master‘s degree in business Administration. As a student of MBA, it is an integral part of curriculum to undergo practical training at an organization. The industrial internship aims at exposing the young prospective to the actual business world. Without the practical exposure one cannot consider himself or herself as a qualified capable manager. During the project period student can learn through his own experience, the real situation corporate world and to put his theoretical knowledge into practice. Hence to fulfill the requirement, we have completed our Two Months Internship in Motilal Oswal Securities Ltd. on the topic ―Gauging the Potential for Finance Sector in Emerging Economy/ Country‖ in financial market, given to me by my company guide.

A Financial Sector, with high peak growth, in emerging countries, I aimed to find such emerging country which has high potential to grow fast and have ample opportunity for any Indian Financial Service firm to have a platform to provide financial service in that country and can expand.

Objective of project:-

1. To explore the opportunities for Indian Financial Firm in MENA countries.

2. To study the economic political & financial sector and condition of MENA countries. As project‘s focus is to serve Indian Population residing in foreign country, we made a list of developing country with number of NRI population in that country.

As the Interest rate and Tax rate play a vital role in any financial consideration, we select some of the country with high Indian population ratio and find the interest rate and tax rate of the country. Also demographics of Indian population and economic survey of country helped us to narrow down our list of countries. Then as an individual I got 3 countries for research project.

(5)

(6)

(7)

(8)

TABLE OF CONTENT

S.No. Topic Page

No.

Title Page 1

Declaration 2

Acknowledgement 3

Executive Summary 4

Chapter 1 Introduction to Indian financial system 11

1.1 Introduction 12

1.2 Indian financial system: An introduction 12 1.2.1 Formal and informal financial sector 13

1.2.2 Indian Financial System 13

1.3 Components of formal financial system 14

1.4 Industry overview 19

1.4.1 Growth of financial sector in India 19 1.4.2 Growth of banking sector in India 19 1.4.3 Growth of capital market in India 20 1.4.4 Growth of insurance sector in India 20 1.4.5 Growth of venture sector in India 20 1.4.6 Opportunities for the financial sector in India 21

Chapter 2 Introduction of Motilal Oswal 22

2.1 History 23

(9)

2.2 Motilal Oswal Products & Services 25

Chapter 3 Introduction of project 26

3.1 Finance sector and economic growth 28

3.2 Scope of study 30

3.3 Research objective 32

3.4 Sampling techniques 32

3.5 Research methodology 32

Chapter 4 Findings & conclusion 37

I Guyana 38

4.1.1 Demographics 38

4.1.2 GDP growth rate 39

4.1.3 Inflation rate 40

4.1.4 Major source of income 40

4.1.5 Exchange & currency rate 40

4.1.6 Tax Structure 41

4.1.7 Type of political system 41

4.1.8 Major industries 41

4.1.9 Financial services 42

4.1.10 Banking services & products 43

II Kenya 49

(10)

III Kuwait 61

4.3.6 Tax Structure 64

4.3.9 Indian companies in Kuwait 66

4.4 Conclusion 72

(11)

CHAPTER 1:

INTRODUCTION TO INDIAN

FINANCIAL SYSTEM

(12)

1.1 INTRODUCTION

As a part of Industrial Internship Programme, I as an intern have given a project by the company Motilal Oswal.

Project title “Gauging the Potential for Finance Sector in Emerging Economy/Country”. This project is all about grabbing the potential opportunities in the emerging countries. For selection process many variables are considered like Indian population in that country, Tax structure, Interest rate, Economy and existing Financial services which are discussed in same.

1.2 THE FINANCIAL SYSTEM: AN INTRODUCTION

A financial system plays a vital role in the economic growth of a country. It intermediates between the flow of funds belonging to those who save a part of their income and those who invest in productive assets. It mobilizes and usefully allocates scarce resources of a country. A financial system is a complex, well integrated set of sub systems of financial institutions, markets, instruments and services which facilitates the transfer and allocation of funds,

efficiently and effectively.

Fig.1 The Financial System

Book of Financial Management by Prasanna Chandra

•Money Market •Capital Market •Individuals •Businesses •Governments •Individuals •Businesses • Governments •Commercial Banks •Insurance Companies •Mutual Funds •Provident Funds •Non Banking •Financial Companies Financial Institutions Demanders of Funds Financial Markets Suppliers of Funds

(13)

The financial system provides a payment mechanism, enables the pooling of funds, facilitates the management of uncertainty, generates information for decentralized decision making, and helps in dealing with informational irregularity.

Financial intermediaries give advantages like diversification of investment, lowering transaction cost, provides economies of scale etc.

1.2.1 FORMAL AND INFORMAL FINANCIAL SECTORS

The financial systems of most developing countries are characterized by co-existence and co-operation between the formal and informal financial sectors. The co-existence of these two sectors is commonly referred as ‗financial dualism‘. The formal financial sector is characterized by the presence of an organized, institutional and regulated system which caters to the financial needs of the modern spheres of economy; the informal financial sector is an unorganized, non-institutional, and non-regulated system dealing with the traditional and rural spheres of the economy.

1.2.2 THE INDIAN FINACIAL SYSTEM

The Indian financial system can also be broadly classified into the formal (organized) financial system and the informal (unorganized) financial system. The formal financial system comes under the preview of the Ministry of Finance (MoF), the Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI), and other regulatory bodies. The informal financial system consists of:

 Individual moneylenders such as neighbours, relatives, landlords, traders, and storeowners.

 Groups of person operating as ‗funds‘ or ‗associations‘. These groups function under a system of their own rules and use names such as ‗fixed fund‘, ‗association‘ and ‗saving club‘.

 Partnership firms consisting of local brokers, pawnbrokers, and non-bank financial intermediaries such as finance, investment, and chit-fund companies.

(14)

1.3 COMPONENTS OF THE FORMAL FINANCIAL SYSTEM

The formal financial system consists of four segments or components. These are:- financial institutions, financial markets, financial instruments, and financial services which are in detailed explained below:

I. FINANCIAL INSTITUTIONS

These are mediators that mobilize savings and facilitate the allocation of funds in an efficient manner. Following are the classification of financial institutions:

Classification of Financial Institutions:

 Banking and non-banking

Financial institutions can be classified as banking non-banking financial institutions. Banking institutions are creators and purveyor of credit while non-banking financial institutions are purveyor of credit.

 Term finance

Financial institutions can also be classified as term-finance institutions such as the Industrial Development Bank of India (IDBI), the Industrial Credit and Investment Corporation of India (ICICI), the Industrial Financial Corporation of India (IFCI), the Small Industries Development Bank of India (SIDBI), and the Industrial Investment Bank of India (IIBI).

 Specialized

Financial institutions can be specialized finance institutions like the Export Import Bank of India (EXIM), the Tourism Finance Corporation of India (TFCI), ICICI Venture, and the Infrastructure Development Finance Company (IDFC).

(15)

 Sectoral

Sectoral financial institutions such as the National Bank for Agricultural and Rural Development (NABARD) and the National Housing Bank (NHB).

 Investment

Investment institutions in the business of mutual funds Unit Trust of India (UTI), public sector and private sector mutual funds and insurance activity of Life Insurance Corporation (LIC), General Insurance Corporation (GIC) and its subsidiaries are classified as financial institutions.

 State-level

There are state-level financial institutions such as the State Financial Corporation‘s (SFCs) and State Industrial Development Corporation‘s (SIDCs) which are owned and managed by the governments.

II. FINANCIAL MARKETS

A Financial Market is a market where financial assets are created and exchanged. There are different ways of classifying financial markets:

Fig. 2 Classification of financial markets: Nature of claim Debt Market Equty Market Maturity of claim Money Market Capital Market Seasoning of claim Primary Market Secondary Market Timing of Delivery Cash or spot Market Forward Of futures Market Organisational Structure Exchange traded Market Over the counter Market

(16)

Stevens Business School (2010-12) Page 16 Regulatory Bodies

Two major regulatory bodies for financial system of India are government bodies they are:

Reserve Bank of India- Central banking authority of India

Securities Exchange Board of India- Deals with Capital Market of India

III. FINANCIAL INSTRUMENTS

A financial instrument is a claim against a person or an institution of payment, at a future date, of a sum of money and/or a periodic payment in the form of interest or dividend. The term ‗and/or‘ implies that either of the payments will be sufficient but both of them may be promised. Financial instruments represent paper wealth shares, debentures, like bonds and notes. Following are distinct features of financial instruments.

DISTINCT FEATURES OF FINANCIAL INSTRUMENTS

 Marketable

Many financial instruments are marketable as they are dominated in small amounts and traded in organized markets. This distinct feature of financial instruments has enabled people to hold a portfolio of different financial assets which, in turn, helps in reducing risk.

Savings and investments are linked through wide variety of complex financial instruments known as ‗Securities‘.

 Tradeable

Financial securities are financial instruments that are negotiable and tradeable. Financial securities may be primary or secondary securities.

Primary securities are also termed as direct securities as they are directly issued by the ultimate borrowers of funds to the ultimate savers. E.g. Equity shares and Debentures.

(17)

Secondary securities are also referred to as indirect securities, as they are issued by financial intermediaries to the ultimate savers. E.g. Bank deposits, mutual funds units, and insurance policies.

Financial instruments differ in terms of marketability, liquidity, reversibility, type of options, return, risk and transaction costs. Financial instruments help financial markets and financial intermediaries to perform the important role of channelizing funds from lenders and borrowers.

IV. FINANCIAL SERVICES

These are those services that help with borrowing and funding, lending and investing, buying and selling securities, making and enabling payments and settlements, and managing risk exposures in financial markets. The major categories of financial services are funds intermediation, payments mechanism, provision of liquidity, risk management and financial engineering. Following are the needs and types of financial services for:

NEEDS OF FINANCIAL SERVICES FOR:

 Borrowing and funding

 Lending and investing

 Buying and selling securities

 Making and enabling

 Payments and settlements

(18)

TYPES OF FINANCIAL SERVICES

 Insurance

A contract in which one party agrees to pay for another party's financial loss resulting from a specified event (for example, a accident, theft, or storm damage). Lease agreements generally require that you maintain vehicle accident and comprehensive insurance as well as liability insurance for bodily injury and property damage.

 Mutual Fund

A mutual fund enables investors to pool their money and place it under professional investment management. The portfolio manager trades the fund's underlying securities, realizing a gain or loss, and collects the dividend or interest income. The investment proceeds are then passed along to the individual investors. There are more mutual funds than there are individual stocks.

 Banking

Financial intermediary Institutions for receiving, lending, and safeguarding money as well as conduction other financial transactions. There are several types of banks: central banks, commercial banks, corporate banks, credit unions, savings banks, trust companies, finance companies, life insurers, investment banks, etc. Banks have drastically evolved throughout time, increasing their services but also becoming institutions that cater to greater numbers of people.

 Shares

Shares are a term referred to the units of ownership interest provided to the stockholder or owner of a company. The term is often used in connection with the number of units issued to an owner of Common Stock or Preferred Stock. A stock is a certificate of ownership in a corporation. It is the same as a share.

(19)

1.4 INDUSTRY OVERVIEW

1.4.1 GROWTH OF FINANCIAL SECTOR IN INDIA

The growth of financial sector in India is nearly 8.5% per year (www.economictimes.com). The rise in the growth rate suggests the growth of the economy. The financial policies and the monetary policies are able to sustain a stable growth rate.

The financial sector in India had an overall growth of 15%, which has exhibited stability over the last few years although several other markets across the Asian region were going through disorder. The development of the system pertaining to the financial sector was the key to the growth of the same. With the opening of the financial market variety of products and services were introduced to suit the need of the customer. The Reserve Bank of India (RBI) played a dynamic role in the growth of the financial sector of India.

Analysis of Indian Financial Sector reveals that it is at present going through a phase of stable growth rate which is experiencing a upward swing. The rise can be maintained over a long period by keeping the inflation down.

The major step towards opening up of the financial market further was the nullification of the regulations restricting the growth in the financial sector.

1.4.2 GROWTH OF BANKING SECTOR IN INDIA

The banking system in India is the most extensive. The total asset value of the entire banking sector in India is nearly US$ 270 billion. The total deposits are nearly US$ 220 billion. Banking sector in India has been transformed completely. Presently the latest inclusions such as Internet banking and Core banking have made banking operations more users friendly and easy.

(20)

1.4.3 GROWTH OF CAPITAL MARKET IN INDIA

 The ratio of the transaction was increased with the share ratio and deposit system.

 The removal of the pliable but ill-used forward trading mechanism.

 The introduction of InfoTech systems in the National Stock Exchange (NSE) in order to cater to the various investors in different locations.

 Privatization of stock exchanges.

1.4.4 GROWTH IN THE INSURANCE SECTOR IN INDIA

 With the opening of the market, foreign and private Indian players are keen to convert untapped market potential into opportunities by providing tailor-made products.

 The insurance market is filled up with new players which has led to the introduction of several innovative insurance based products, value add-ons, and services. Many foreign companies have also entered the arena such as Tokio Marine, Aviva, Allianz, Lombard General, AMP, New York Life, Standard Life, AIG, and Sun Life.

 The competition among the companies has led to aggressive marketing and distribution techniques.

 The active part of the Insurance Regulatory and Development Authority (IRDA) as a regulatory body has provided to the development of the sector.

1.4.5 GROWTH OF VENTURE SECTOR IN INDIA

 The venture capital sector in India is one of the most active in the financial sector inspite of the difficulty by the external set up.

 Presently in India there are around 34 national and 2 international SEBI registered venture capital funds

(21)

1.4.6 OPPURTUNITIES FOR THE FINANCIAL SECTOR IN INDIA

 The distributed financial gain of the venture capital funds is not taxed. The financial gains are taxed after the investors receive as income.

 They have more insurance and banking products introduced into the market to expand the spectrum which in turn would boost the growth of the sector.

 Further nullification of the regulations has to take place in order to increase the competition and boost the growth of the financial sector to reach the US$ 51 billion mark.

(22)

CHAPTER 2:

(23)

2.1 HISTORY

Motilal Oswal Securities Ltd. (MOSL) was founded in 1987 as a small sub-broking unit, with just two people running the show. Focus on customer-first-attitude, ethical and transparent business practices, respect for professionalism, research-based value investing and implementation of cutting-edge technology has enabled us to blossom into an over 1600 member team.

Today they are a well diversified financial services firm offering a range of financial products and services such as Wealth Management, Broking & Distribution, Commodity Broking , Portfolio Management Services, Institutional Equities, Private Equity, Investment Banking Services and Principal Strategies.

They have a diversified client base that includes retail customers (including High Net worth Individuals), mutual funds, foreign institutional investors, financial institutions and corporate clients. Their headquartered is in Mumbai and as of March 31st, 2011, had a network spread over 611 cities and towns comprising 1,644 Business Locations operated by our Business Partners and us. As at March 31st, 2011, we had 709,041 registered customers.

Motilal Oswal Financial Services Ltd. (MOFSL) is a well-diversified, financial services

company focused on wealth creation for all its customers, such as institutional and corporate clients, HNI and retail customers. Their services and product offerings include equity broking, commodity broking, and distribution of third party products, investment banking and venture capital management.

Mr. Motilal Oswal and Mr. Raamdeo Agrawal laid the foundation for MOFSL and initially conducted business as a sub-broking firm. Thus, began the expedition of building a professional organization with strong value systems, to provide investment advice to investors.

(24)

Today, Motilal Oswal Financial Services Ltd. is a well-established brand among retail and institutional investors in India, with a presence in over 1533 business locations across over 487 cities.

From a sub-broking firm, Motilal Oswal Financial Services Ltd. has today become a solid financial services company straddling a spectrum of businesses in the Financial services space. These businesses include Wealth Management, Institutional Equities, Investment Banking and Venture Capital Management.

In 2006, the Company placed 9.48% of its equity with two leading private equity investors based out of the US – New Vernon Private Equity Limited and Bessemer Venture Partners. The company got listed on BSE and NSE on September 9, 2007. The issue which was priced at Rs.825 per share (face value Rs.5 per share) got a overwhelming response and was subscribed 27.18 times in confused market conditions. The issue gave a return of 21% on the date of listing. As of end of financial year 2008, the group net worth was Rs.7 bn and market capitalization as of March 31, 2008 was Rs.19 bn.

Credit rating agency Crisil has assigned the highest rating of P1+ to the Company‘s short-term debt program.

Shareholding Pattern at on 31st March, 2011.

As of March 31st, 2011; the total shareholding of the Promoter and Promoter Group stood at 69.16%. The shareholding of institutions stood at 12.07% and non-institutions at 18.77%.

2.1.1 Focus on Research

Research is the solid foundation on which Motilal Oswal Securities advice is based. Almost 10% of revenue is invested on equity research and we hire and train the best resources to become advisors. At present they have a expert team of Research Analysts researching 25+ sectors and commodities. From a fundamental, technical and derivatives research perspective; Motilal Oswal's research reports have received wide coverage in the media (over a 1000 mentions last year). Their consistent efforts towards quality equity research have reflected in an increase in the ratings and rankings across various categories in the Asia Money Brokers Poll over the years.

(25)

Their unique Wealth Creation Study, authored by Mr. Raamdeo Agrawal, Jt. Managing Director, is now in its 15th year. Investors keenly await this annual study for the wealth of information it has on the companies that created wealth during the preceding five years.

Following are the products and services offered by Motilal Oswal:

2.2 PRODUCTS & SERVICES OFFERED BY MOTILAL

OSWAL

Today Motilal Oswal is a well diversified financial services firm offering a range of financial products and services such as:

 Equity

 Derivatives

 Online Trading

 Commodities

 Mutual Funds Distribution

 IPO‘s

 Depository Services

 Portfolio Management Services

(26)

CHAPTER 3:

(27)

Gauging the potential of Financial Services in Emerging Economies

Background: (International Finance Sector and services)

As countries in the Middle East and North Africa (MENA) consider ways to promote more rapid and lasting economic growth, further financial sector reform should be high on the agenda. Policies aimed at enhancing financial sector performance result in higher economic growth both theory and evidence support this proposition. A more developed financial system promotes efficiency and growth by reducing information, transaction, and monitoring costs. Research in this area is typically based on a broad cross section of countries, but comparatively little work has been done on (i) the specifics of financial development in the MENA region and (ii) measures of financial development that go beyond simple aggregate indicators.

Going beyond simple aggregate indicators such as GDP is necessary to identify and prioritize among different areas of financial sector reform. The simple indicators, though easily available and open to to cross-regional and inter comparisons, do not necessarily capture what is broadly meant by financial sector development. Financial development is a multifaceted concept, encompassing not only monetary aggregates and interest rates (or rates of return) but also regulation and supervision, degree of competition, financial directness, institutional capacity such as the strength of creditor rights, and the variety of markets and financial products that comprise a nation‘s financial structure.

In this study, we review what the economic literature says about financial development and growth and draw general lessons for macroeconomic and financial policy. After assessing financial sector development in the MENA region, we propose platform to our company to enhance their services. Drawing on recent research by the IMF on the MENA countries and also considering our requirement of different variables, we evaluate financial sector development and opportunity for Indian financial player to expand, by constructing an index that encompasses some of the themes: monetary policy, banking sector development, regulation and supervision,

(28)

Non Banking Sector, Economic development, Tax structure and also focused on Indian population ratio.

Overall, we find that the relative strength of MENA countries, as a group, include regulation and supervision as well as financial openness. But they need to do more to reinforce the institutional environment and to promote nonbank financial sector development. Based on our measurements, the MENA region performs better than most other developing country regions, but ranks far behind the industrialized countries and East Asia. However, within the MENA region there is substantial variation in the degree of financial development; some countries have advanced financial sectors, while for others progress in this area has been limited.

The rest of the paper is organized as follows. We briefly review the literature on financial development and draw general overview of development in that region. Also we made a detailed study of our selected 9 countries to explore the opportunity to establish in that country. Further, we describe the data collected, and assess country details as per our required variables.

3.1 FINANCE SECTOR AND ECONOMIC GROWTH

There is a large and still growing research literature on financial development and its relationship with growth. Although the precise relationship between financial development and growth continues to be debated, there is general agreement that financial repression, or government-imposed restrictions and price distortions on the financial sector, can inhibit growth prospects. There is also agreement that macroeconomic stability is critical for the growth of financial sector services. Countries should adopt appropriate macroeconomic policies, encourage competition within the financial sector, and develop a strong and transparent institutional and legal framework for financial sector activities. In particular, there is a need for prudential regulations and supervision, strong creditor rights, and contract enforcement. Therefore, government decision-makers should eliminate financial repression conditions as well as facilitate and support the process of financial development as important elements of their policy package to stimulate and sustain economic growth.

Understanding the impact of financial development on economic growth, or—as is our intention in this paper—assessing the development of the financial sector in the MENA region requires

(29)

good measures of financial development. Empirical work is usually based on indicators such as the ratios of liquid liabilities to GDP, deposit money bank assets to total banking sector assets, and credit to the private sector to

GDP. As noted above, long time series of these measures are available for a wide range of countries allowing us to compare and analyze development across countries and over time. However, these simple measures do not necessarily capture the different structural and institutional details of what is broadly meant by financial development. The financial structure of a country is composed of a variety of markets and financial products, and it is difficult to conceive of a few measures that could adequately capture all relevant aspects of development. In addition, the simple quantitative measures may at times give a misleading picture of financial development. For instance, although a higher ratio of broad money (or M2) to GDP is generally associated with greater financial liquidity and depth, the ratio may decline rather than rise as a financial system develops because people have more alternatives to invest in longer-term or less liquid financial instruments.

Going beyond the standard quantitative indicators, Gelbard and Leite (1999) used measures of market structure, financial products, financial liberalization, institutional environment, financial openness, and monetary policy instruments to construct a comprehensive index for 38 sub-Saharan African countries, for 1987 and 1997. Similarly, Abiad and Mody (2003) created an index for a 24-year period from 1973 to 1996 for 35 countries. They examined six measures of policy liberalization in the areas of credit controls, interest rate controls, entry barriers, regulations and securities markets, financial sector privatization, and restrictions on international financial transactions. These more-detailed measures provide a richer description of financial development, and motivate our measures of financial development in the MENA region.

There has been very little work on measuring and assessing financial sector development in the MENA region, mainly because of the paucity of data. Our analysis builds on three studies that have examined financial development in MENA and broadly mirrors their conclusions. Chalk, Jbili, Treichel, and Wilson (1996) found that the thirteen MENA countries included in their analysis have made significant progress in financial deepening. But in most of these

(30)

countries financial markets are thin and tightly regulated, government ownership is prevalent, and market forces play a limited role.

Nashashibi, Elhage and Fedelino (2001) also found that most Arab countries had made progress over the past decade in financial reform, but were still at an early stage in the process. Their financial systems are dominated by commercial banks, and, in some, by public banks, and capital market development is hindered by legal, institutional, financial, and economic factors. In comparison, Jbili, Galbis, and Bisat (1997) concluded that the financial sectors in the Arab states of the Gulf Cooperation Council (GCC) are developed, technologically advanced, and more integrated into the world economy than in the rest of the MENA region. This finding reflects the substantial differentiation in the degree of financial development in the region.

3.2 SCOPE OF STUDY

Having collected and organized the data according to the above themes, an analysis suggests common strengths, trends, and weaknesses, and points to future areas for development. MENA countries in general perform reasonably well in regulation and supervision.

The main findings for the MENA region, according to the themes, are summarized below.

Monetary policy: For the most part, interest rates (or rates of return) are freely determined,

indirect monetary policy tools are employed, and government securities exist. But the limited development or nonexistence of secondary markets for government securities hinders the broad use of open market operations by central banks. In addition, a few countries do not follow a comprehensive framework for designing and conducting monetary policy.

Banking sector: In a few countries, such as many of the GCC countries, the banking sector is

well developed, profitable, and efficient. But in about half the region, this is not case. In many of these countries, the banking sector is dominated by public sector banks, which are characterized by government intervention in credit allocation, losses and liquidity problems, and wide interest rate spreads (or spreads in rates of returns). In more than half the countries, the banking sector is highly concentrated, with assets of the three largest banks accounting for over 65 percent of total

(31)

commercial bank assets, and the entry of new banks is difficult. And in many parts of the region, there is an urgent need for developing modern banking and financial skills.

Nonbank financial sector: In most of the region, the nonbank financial sector—comprising the

stock market, corporate bond market, insurance companies, pension funds and mutual funds— needs further development. Where such markets exist, trading is usually quite limited. The development of these markets is complicated by legal limitations on ownership and the need for a clear and stable legislative framework.

Regulation and supervision: Many MENA countries, such as the GCC countries, Jordan, Lebanon, Morocco, and Tunisia, have strengthened banking supervision and regulation, they have established up-to-date procedures to collect prudential information on a regular basis, and they inspect and audit banks. They have taken steps to conform to international Basel standards by increasing capital adequacy ratios and reducing nonperforming loans. However, success in the latter has been limited, and for most countries nonperforming loans remain in the range of 10 percent to 20 percent of total loans.

Financial openness: MENA countries have gradually opened up their current as well as capital

accounts. Nearly half the countries have open financial sectors, although many maintain restrictions on foreign ownership of assets and repatriation of earnings. Some countries continue to maintain parallel exchange markets and/or multiple currency rates.

Institutional environment: In much of the MENA region, the quality of institutions, including

the judicial system, bureaucracy, law and order, and property rights, is poor. For instance, in several countries, the judicial system is susceptible to political pressure and long delays, resulting in poor legal enforcement of contracts and loan recovery. Property rights enforcement

also tends to be weak. This hinders commercial activity and investment, and hence growth. Source: http://faculty.som.yale.edu/mushfiqmobarak/financial%20sector%20development.pdf

(32)

3.3 RESEARCH OBJECTIVE

The main objective of our project is as follow:

1. To study the economic, political and financial sector and condition of MENA countries. 2. To explore the opportunity for Indian financial firm in MENA countries (Selected 9

country)

3.4 SAMPLING TECHNIQUE

Following variables are considered for our sample: 1. The country must be emerging economy. 2. Must have Indian Population

3. Financial sector is developing and must have many future development opportunity 4. Interest Rate and Tax system is studied.

5. Local Finance service providers and their products.

3.5 RESEARCH METHODOLOGY

Method of data Collection:

Source of data: The study is based on Secondary Data.

 Study the Global Finance Service

 Study the Emerging Country

 Ratio of Indian Population in Emerging Country

(33)

Stevens Business School (2010-12) Page 33 Sampling Method: 1. On the basis of Indian population we have selected 40 countries.

2. Then on interest rate and tax rate we have selected 20 countries. 3. After considering all the variables lastly we have selected 9 countries.

 Bahrain

 United Arab Emirates (UAE except Dubai)

 Dubai  Guyana  Kenya  Kuwait  Qatar  Saudi Arabia  Uganda

4. Now, individually I have 3 countries which are as follows:

 Guyana

 Kenya

(34)

TABLE.1

LIST OF COUNTRIES WITH INDIAN POPULATION

It is the time for Indian Player to explore industry in foreign country, in this context we aimed to find such emerging country with dense Indian population with constraint of our variables. Following is the table of countries name and Indian Population in that country.

Country Name Indian Population

Australia 448000 Bahrain 350000 Belgium 16000 Canada 1000000 China 67000 Denmark 6500 Figai 314000 France 445000 Germany 75500 Greece 12000 Guyana 322200 Indonesia 85000 Ireland 19000 Israel 78000 Italy 71900 Jamaica 54000 Japan 22000 Kenya 75000 Kuwait 579000 Lebanon 10000 Libya 15000 Malaysia 2050000 Mauritious 882000 Myanmar 256000 Uganda 12000 UAE 1300000 Nepal 600000 Netherlands 200000 New Zealand 1000000 Oman 557000 Philippines 50000 Portugal 800000 Qatar 500000 Saudi Arabia 1789000 Singapore 580000 South Africa 1218000 Srilanka 1600000 Thailand 150000

(35)

From the above table, developing countries with more number of Indian people is selected. We have short listed 20 countries looking to the Indian population residing in all the above countries. Our main focus was to select emerging country to have detailed study of their economy and living standard o f NRI. From above 40 countries, we selected 20 countries and found their Interest rates and Tax rates

TABLE.2

COUNTRIES INTEREST RATES AND TAX RATES

Countries Interest Rate (%) Tax Rate (%)

Australia 4.75 30 Bahrain 2.15 - Guyana 3.65 35-45 Indonesia 6.75 25 Israel 3 25 Kenya 6 30 Kuwait 5.5 15 Malaysia 3.7 25 Mauritius 4.01 15 Myanmar 10 30 Netherland 3.65 20-25 New Zealand 2.5 28 Oman 18 12 Portugal 9.19 25 Qatar 1.5 10 Saudi Arabia 3 20 Singapore 0.03 17 South Africa 5.5 28 Sri Lanka 7.9 35 Thailand 2.75 30

Above selected country is displayed below with their Interest rate and tax rate.Countries with low Interest rate are selected. Further study of economy and demographics of population is analyzed to know the potential of financial services in below selected 9 countries. Also the prevailing financial system in countries is taken into consideration.

(36)

FINAL COUNTRIES

TABLE.3

Country Name Population Interest rate (%) Tax Rate (%) 1 Bahrain 3,50,000 2.15 - 2 UAE(Except Dubai) 1700000 0 0 3 Dubai - 0 0 4 Guyana 3,20,000 3.65 35 to 45 5 Kuwait 5,79,000 5.5 15 6 Kenya 75000 6 30 7 Uganda 12000 30 30 8 Qatar 500000 1.5 10 9 Saudi Arabia 1789000 3 20

(37)

CHAPTER 4:

(38)

I. GUYANA

4.1.1 DEMOGRAPHICS

Religion: On religious affiliation indicates that approximately 57% of the population are Christian (of those, 17% are Pentecostal, 8% are Roman Catholic, 7% are Anglican, 5% are Seventh-day Adventist, and 20% belong to other Christian denominations). Approximately 28% are Hindu, 9% are Muslim (mostly Sunni), and 2% practice other beliefs (such as the Rastafarian and Baha'i faiths). An estimated 4% of the population does not profess any religion.

Indian Religion: Most Indo-Guyanese are Hindus; substantial minorities are Muslims and Christians. Many of the Indians have roots from Uttar Pradesh, Bihar, Calcutta and Madras.

(39)

Stevens Business School (2010-12) Page 39 Indian Population: 3, 22,200

Income Profile: Agriculture: 24.3% Industry: 24.7%

Services: 51% (2010 est.)

Age/sex Profile: 0-14 years: 31.9% (male 120,981/female 116,654) 15-64 years: 63.3% (male 235,566/female 235,717) 65 years and over: 4.8% (male 14,801/female 21,049)

Language: Official language(s) English

Recognised regional languages Guyanese Creole, Portuguese, Hindi, Spanish, Akawaio, Macushi,Wai Wai, Arawak, Patamona,Warrau, Carib, Wapishiana,Arekuna

4.1.2 GDP RATE

Year GDP - real growth rate Rank Percent Change Date of Information

2003 2.10 % 126 2002 est. 2004 .50 % 183 -76.19 % 2003 est. 2005 1.90 % 171 280.00 % 2004 est. 2006 -3.00 % 210 -257.89 % 2005 est. 2007 4.50 % 121 -250.00 % 2006 est. 2008 5.30 % 102 17.78 % 2007 est. 2009 3.00 % 128 -43.40 % 2008 est. 2010 2.30 % 78 -23.33 % 2009 est. 2011 2.50 % 139 8.70 % 2010 est.

(40)

4.1.3 INFLATION RATE

Year Inflation rate (consumer prices) Rank Percent Change Date of Information

2003 4.70 % 74 2002 est. 2004 5.70 % 66 21.28 % 2003 est. 2005 4.50 % 138 -21.05 % 2004 est. 2006 6.90 % 157 53.33 % 2005 est. 2007 6.00 % 146 -13.04 % 2006 est. 2008 12.30 % 206 105.00 % 2007 est. 2009 8.30 % 129 -32.52 % 2008 est. 2010 2.90 % 102 -65.06 % 2009 est. 2011 6.80 % 168 134.48 % 2010 est.

4.1.4 MAJOR SOURCE OF INCOME

Gold, Sugar, Fishing/Shrimping, Rice farming, timber and Bauxite.

4.1.5 EXCHANGE &CURRENCY RATE

Currency in Guyana: Guyanese dollar (GYD) if you convert 1 US Dollar into Guyanese Dollar you will end up with a total of 204.9500 Guyanese Dollar

(41)

4.1.6 TAX STRUCTURE

Guyana Income Tax Rate 33.33% Guyana Corporate Tax Rate 35 or 45% Guyana Sales Tax / VAT Rate 16%

4.1.7 TYPE OF POLITICAL SYSTEM

Guyana's long-term political risk profile continues to improve under President Bharrat Jagdeo's administration, encouraging us to revise up the country's score in our long-term political risk ratings. Although significant structural issues continue to hurt the country's political outlook, strong support for the government's economic reforms mean Guyana is well-placed to capitalise on increasingly favourable external conditions, which should further reinforce the country's longer-term political outlook.

President Bharrat Jagdeo's sound macro-economic management and astute diplomacy are boosting Guyana's prominence at both the regional and global level, and in our view this is having a positive impact on the country's political risk profile. In terms of our long-term political risk ratings, the country retains the lowest score out of the five major Caribbean economies, due to structural issues ranging from wide ethnic divisions to a relatively weak constitutional framework.

4.1.8 MAJOR INDUSTRIES

According to Basdeo Mangru, by the first quarter of the 20th century, there were already 238 Indian jewellers; 445 shopkeepers; 845 hucksters; 259 milk-sellers; 12,465 rice farmers and 13,700 landed proprietors, agriculturists and cattle farmers.

(42)

4.1.9 FINANCIAL SERVICES

Guyana improves supervision and access to financial services with IDB support

The third and last programmatic IDB policy-based loan of $5 million will also improve payments system, enhance transparency and fight money-laundering

Guyana will strengthen supervision and the regulatory frameworks of its financial system as well as boost transparency with the third and last programmatic policy-based loan of $5 million approved by the Inter-American Development Bank (IDB).

The supervision capacity of the Bank of Guyana, increase dissemination of financial sector information, and support the implementation of legislation to combat money laundering and financing of terrorism. It is also supporting measures that will help expand access to financial services.

Guyana is boosting efficiency with a framework for automated payments of public sector salaries and pensions, and also developing and implementing a system for a loss-sharing arrangement for large value transfers, consistent with international best practices.

As part of the policy-based loan, Guyana has recently approved three pieces of legislation to strengthen oversight of the financial sector. These regulations give the Central Bank the authority to supervise the majority of non-bank financial institutions, made up mostly of insurance companies, builders and money transfer businesses. In an important step to increase access to credit, the government also passed this year the Credit Reporting Bill 2009, which provides the framework for the creation of a credit bureau in Guyana.

With this third loan, the IDB has provided a total of $15 million since December 2008 of budget support to accompany reforms of Guyana‘s financial system.

Half of this latest IDB financing is made up of a loan from the Bank‘s ordinary capital, with an amortization period of 30 years, a grace period of 6 years and a fixed interest rate. The other $2.5 million will come from the IDB‘s Fund for Special Operations. This portion will have amortization and grace periods of 40 years, and an interest rate 0.25 percent.

(43)

4.1.10 Banking Services and Products

List of banks in Guyana

1. Bank of Baroda (GUYANA) Inc.

 Personal Banking

Deposits

1. Deposit Products & Services

 Fixed

 Current

 Savings

2. Gen Next Services

 Gen-Next Junior  Gen-Next Lifestyle  Gen-Next Power  Gen-Next Suvidha 3. Retail Loans  Home Loan

 Home Improvement Loan

 Loan Against Future Rent Receivables

 Advance Against Securities

(44)

Loan

 Two Wheeler Loan

 Traders Loan

 Baroda Ashray

(ReverseMortgage Loan)

 Home Loans to NRIs / PIOs

 Interest Subsidy Scheme For Housing The Urban Poor (ISHUP)

 Mortgage Loan

 Education Loan

 Auto Loan

 Loan to Doctors

 Personal Loan

 Loan for financing Individuals for subscription to Public Issues /IPO

 Business Banking



Deposits



Loans and Advances



Services

 Corporate Banking

 Wholesale Banking

 Deposits



Loans and Advances



Services

o Appraisal & Merchant Banking o Cash Management & Remittance

(45)

NRI services in Bank of Baroda:

Products & Services Deposit Products

 Foreign Currency Linked Rupee Deposits (FCLR) Scheme  Non Resident External (NRE) (RUPEE) Savings Account  Non Resident External (NRE) (RUPEE) Current Account  Non Resident External (NRE) (RUPEE) Fixed Deposits  Non Resident Ordinary Rupee Savings Account (NRO-SB)  Non Resident Ordinary Rupee Current Account (NRO-CA)  Non Resident Ordinary (NRO) (RUPEE) Fixed Deposits

 Resident Fgn Currency A/c - for NRIs returning to India for settling in India  Resident Foreign Currency (Domestic) Account - for Resident Indians  Rupee Linked Foreign Currency Deposit (RLFCD) Scheme for NRIs

 Deposit Products at overseas centres

 Baroda Structured Deposit

(46)

 Loan Facilities to NRIs

 Housing Loans to NRIs / PIOs

 Loans/Overdrafts Against Security of Non-Resident (RUPEE) Fixed Deposits

 Loans Against FCNR (B) Deposits in Rupees

 Loan Against FCNR (B) Deposits in Foreign Currency in India

 Loan Facilities in Foreign Currency to Residents

 Foreign Currency Loans In India (FCNR 'B' Loans)

 Pre-Shipment/Post-Shipment Credit in Foreign Currency to Exporters

 External Commercial Borrowing

 Inbound Money Transfer Services

 Rapid Funds2India  BarodaRemitXPress

 Xpress Money

(47)

2.

Citizens Bank Guyana Inc

Products

 Saving Account

 Loans

 ATM Money card

 Tele banking

 Remote Banking

 Night Depository

 Utility Payments

3. Demerara Bank Limited Products and Services

 Saving

 Deposit account

 Chequing Account

 Money master

 Safety deposit boxes

 Night Deposit

 Phone Banking

 Foreign Exchange

 Loans and Over drafts

(48)

4. Guyana Bank for Trade and Industry Limited



Products and Services

GBTI offers a wide range of products and services including:

 Deposit Accounts

 Financing Facilities (loans)

 Foreign Trade  Card Services  Telephone Banking  Safe Keeping  Night Depository  Utility Payments  Payroll Processing 5. G.N.C.B. Trust Corporation

6. Globe Trust & Investment Co. Ltd

7. Globe Trust & Investment Co. Ltd

8. Guyana National Co-operative Bank

9. New Building Society Ltd

10. Republic Bank Guyana Limited

11. Scotiabank Guyana

(49)

II. KENYA

4.2.1DEMOGRAPHICS

Religion: Protestant 45%, Roman Catholic 33%, Muslim 10%, Indigenous beliefs 10%, Other 2%

Indian Religion: Hinduism, Islam, Sikhism

Indian Population: 75,000

Income Profile: agriculture 75%,

(50)

Stevens Business School (2010-12) Page 50 Age/sex Profile: Total population is reported as 41.07 million as of June 2011, with an age

structure of:

0–14 years: 42.3% (male 8,300,393/female 8,181,898) 15–64 years: 55.1% (male 10,784,119/female 10,702,999) 65 years and over: 2.6% (male 470,218/female 563,145)

Language: The Kenyan official national language is English, and it is wide spoken. There also another national language, Kiswahili. Both Languages are taught throughout the country.

But Indian speaks English, Punjabi, Gujarati, and Hindustani.

4.2.2 GDP RATE

Year GDP - real growth rate Rank Percent Change Date of Information

2003 .80 % 167 2002 est. 2004 1.50 % 160 87.50 % 2003 est. 2005 2.20 % 162 46.67 % 2004 est. 2006 5.80 % 74 163.64 % 2005 est. 2007 5.70 % 80 -1.72 % 2006 est. 2008 7.00 % 53 22.81 % 2007 est. 2009 1.70 % 163 -75.71 % 2008 est. 2010 2.60 % 74 52.94 % 2009 est. 2011 4.00 % 85 53.85 % 2010 est.

(51)

4.2.3 INFLATION RATE:

2003 1.90 % 166 2002 est. 2004 9.80 % 39 415.79 % 2003 est. 2005 9.00 % 183 -8.16 % 2004 est. 2006 10.30 % 193 14.44 % 2005 est. 2007 10.50 % 191 1.94 % 2006 est. 2008 9.70 % 190 -7.62 % 2007 est. 2009 26.30 % 215 171.13 % 2008 est. 2010 9.30 % 189 -64.64 % 2009 est. 2011 4.20 % 121 -54.84 % 2010 est.

4.2.4 MAJOR SOURCE OF INCOME

Small-scale consumer goods (plastic, furniture, batteries, textiles, clothing, soap, cigarettes, flour), agricultural products, horticulture, oil refining; aluminum, steel, lead; cement, commercial ship repair, tourism.

4.2.5 EXCHANGE &CURRENCY RATE

The currency unit in Kenya is the Kenyan shilling (KES), comprising 100 cents (c). Coins are available in denominations of 5c, 10c, 50c and 1 and 5 shillings.

(52)

4.2.6 TAX STRUCTURE

Tax Year: Tax year is the calendar year.

Kenya Income Tax Rate 30% Kenya Corporate Tax Rate 30% Kenya Sales Tax / VAT Rate 16%

Kenya personal income tax rates are progressive up to 30%, as follows:

Yearly income (Kshs) Tax Rate

0 to 121,968 10% 121,969 to 236,880 15% 236,881 to 351,792 20% 351,793 to 466,704 25% Over 466,704 30%

(53)

4.2.7 TYPE OF POLITICAL SYSTEM

The political system of Kenya is characterized by democratic republic government whereby the President is both chief of state as well as head of government. There is also a vice president and members of the Cabinet who make up the executive branch. The powers of the government in Kenya are distributed among the executive, the legislature and the judiciary. In the political system of Kenya, the judiciary is independent of the executive and the legislature.

4.2.8 MAJOR INDUSTRIES

More recent investments by Indian corporates in businesses in Kenya include Essar (telecom and refining), Bharti Airtel (telecom), Reliance (petroleum retail); Tata (Africa) (automobiles, IT, pharmaceuticals, etc.). Several Indian firms including KEC, Kalpataru Power Transmission Ltd., Kirloskar Brothers Ltd., Mahindra & Mahindra, Thermax, Emcure, Dr. Reddy, Cipla, Cadila, TVS and Mahindra Satyam, etc., have a business presence in Kenya as do the Bank of India and bank of baroda

Small-scale consumer goods (plastic, furniture, batteries, textiles, clothing, soap, cigarettes, flour), agricultural products, horticulture, oil refining; aluminum, steel, lead; cement, commercial ship repair, tourism

4.2.9 FINANCIAL SERVICES

The financial sector has grown considerably in importance throughout the 1990s, increasing its value contribution to the economy from KSh7, 069 million in 1991 to KSh9,843 million in 1996. In terms of GDP contribution, the financial sector accounted for 8.2 percent of GDP in 1991 and 10.1 percent in 1996. In the year 2011, approximately 81,000 Kenyans worked in the financial sector.

(54)

As of the beginning of 1998, the highly diversified financial sector in Kenya consisted of the Central Bank of Kenya, 53 domestic-and foreign-owned commercial banks, 15 non-bank financial institutions, 2 mortgage finance companies, 4 building societies, and numerous insurance companies and other specialized financial institutions. The banking sector is dominated by 4 large banks, which aggregately control 50 percent of all bank assets and 52 percent of bank deposits. The largest bank, the state-owned Kenya Commercial Bank, accounts for 17 percent of bank assets and 18 percent of bank deposits. The multinational Barclays Bank, with 16 percent of bank assets and 15 percent of bank deposits, is next in line, followed by the state-owned National Bank of Kenya and the multinational Standard Chartered Bank, each respectively boasting 8 percent of bank assets and 9 percent of bank deposits.

The Nairobi Stock Exchange, which handles 61 listed firms, was established in 1954. In January 1995, the stock market, including stock-brokerage, was opened up for foreign direct participation, although there is a 40 percent limit on foreign ownership. Market

capitalization has recently manifested considerable growth, increasing from US$1.89 billion in

1995 to US$2.08 billion in 1998.

The Kenya banking system is supervised by the Central Bank of Kenya (CBK). As of late July 2004, the system consisted of 43 commercial banks (down from 48 in 2001), several non-bank financial institutions, including mortgage companies, four savings and loan associations, and several score foreign-exchange bureaus. Two of the four largest banks, the Kenya Commercial Bank (KCB) and the National Bank of Kenya (NBK), are partially government-owned, and the other two are majority foreign-owned (Barclays Bank and Standard Chartered). Most of the many smaller banks are family-owned and -operated

(55)

4.2.10 Banking services & products

Following are Banks of Kenya:

1. ABC Bank (Kenya) Retail & SME

Banking Corporate Banking

Trade Banking Treasury

Account Business Advisory SME Banking

Product Asset Financing. Deposit a/c Project Financing

Treasury Products Trade Finance Cash Management Solutions FOREX Credit Facilities Supply Chain Financing. Investment Accounts. 2. Bank of India Products Current Deposits Saving Bank Deposits Term Deposits Call Deposits

(56)

Stevens Business School (2010-12) Page 56 3. Barclays Bank

Consumer Banking Corporate banking Treasury

Loans Transactional Banking Forex

Accounts Asset Finance Risk Management Solution Barclay card Trade Finance Investment Services

Retail Internet Banking

4. Citibank

Products & Services Cash Mangement Electronic Banking Trade Service Treasury Citi Services Corporate Finance

5. Commercial Bank of Africa

Corporate Business Treasury Investment banking Personal Banking Corporate Banking Corresponding Banks Deposits product Institutional Banking Exchange/ Deposit rates Loan Product Accounts

(57)

Stevens Business School (2010-12) Page 57 6. Cooperative Bank of Kenya

7. Credit Bank

8. Diamond Trust Bank

9. Gulf African Bank

10. I&M Bank

11. Imperial Bank Kenya

12. Kenya Commercial Bank

13. Middle East Bank Kenya

14. National Bank of Kenya

15. NIC Bank

16. Oriental Commercial Bank

17. Prime Bank (Kenya)

(58)

Stevens Business School (2010-12) Page 58 18. Standard Chartered Bank

Personal Banking Priority Banking _{SME Banking}

Accounts and Deposits

Comprehensive Wealth Management Services

Business Plus Account

Current Account

Special Privileges for Business owners

Business Premium Account

Savings Accounts Access to a World of Privileges

Business Priority Account

My Dream Account

Fee Waiver, discounts and Preferential Rates

Diva Account Automated Banking Services Executive Account Investment Services

Junior Account

Fixed Deposit and Call Deposit  Credit Cards o Emirates Standard Chartered Platinum MasterCard o Emirates MasterCard Gold & Classic Credit Card

(59)

o Visa Gold & Classic Credit Card

 Services

o Branch Banking Hours

o Automated Banking Lobby o Phone Banking o Online Banking o SMS Banking e-Statements  Loans Personal Loan NRI Banking

Introducing Standard Chartered NRI Services – specially designed for Global Indians.

India is one name that evokes thousands of emotions and nostalgic feelings amongst all Non-Residents Indians, irrespective of the part of India they belong to. At Standard Chartered we understand how much your heart desires to be with your loved ones back home and support them in every need. So we have the pleasure in introducing our specially designed NRI Services to meet your financial commitments.

Following are the available comprehensive NRI services:

 Dedicated NRI desk

 NRE/NRO/FCNR Fixed deposits

 Indian Investment products

(60)

Stevens Business School (2010-12) Page 60  Insurance Advisory

 Indian Home Loans

 Loans against property

 Home Assist

 No minimum Balance requirement in NRE account

(61)

III. KUWAIT

4.3.1 DEMOGRAPHICS

Religion: Muslim 85% (Sunni 70%, Shia 30%), other (includes Christian, Hindu, Parsi) 15%

Indian Religion: For Indians :-Islam. Sunnis are in majority. About 30% are Shias.

Indian Population: 5, 79,000

Income Profile: Oil and oil-related products

Age/sex Profile: 0-14 years: 25.8% (male 348,816/female 321,565)

15-64 years: 72.2% (male 1,153,433/female 720,392)

65 years and over: 2% (male 25,443/female 25,979) (2011 est.)

(62)

4.3.2 GDP RATE

Year GDP - real growth rate Rank Percent Change Date of Information

2003 -2.00 % 199 2002 est. 2004 4.60 % 67 -330.00 % 2003 est. 2005 6.80 % 35 47.83 % 2004 est. 2006 8.30 % 26 22.06 % 2005 est. 2007 12.60 % 7 51.81 % 2006 est. 2008 4.70 % 120 -62.70 % 2007 est. 2009 8.50 % 21 80.85 % 2008 est. 2010 -4.60 % 181 -154.12 % 2009 est. 2011 3.20 % 115 -169.57 % 2010 est.

4.3.3 INFLATION RATE

2003 2.00 % 159 2002 2004 1.20 % 184 -40.00 % 2003 est. 2005 2.30 % 72 91.67 % 2004 est. 2006 4.10 % 123 78.26 % 2005 est. 2007 3.00 % 84 -26.83 % 2006 est. 2008 5.50 % 133 83.33 % 2007 est. 2009 10.60 % 155 92.73 % 2008 est. 2010 4.00 % 129 -62.26 % 2009 est. 2011 3.80 % 107 -5.00 % 2010 est.

(63)

4.3.4 MAJOR SOURCE OF INCOME

Kuwait has an open economy with proven crude oil reserves of about 96 billion barrels (15 km³), i.e. about 10% of world reserves.

Petroleum accounts for nearly half of GDP, 90% of export revenues, and 5% of government income.

Export of oil marked the beginning of the new era in which oil sector began to play a key role in the growth of National economy.

Kuwait has limited arable land, which limits the agricultural development. Fisheries serves as the major food source locally available. Kuwait is a great importer of food imports.

About 75% of potable water must be distilled or imported.

Industry plays an important role in economic development in Kuwait as it supplies goods and services to the nation.

The government is playing an important role in encouraging the expansion of industry by giving loans, providing infrastructure facilities and by supporting the newly established industries.

4.3.5 EXCHANGE &CURRENCY RATE

The Kuwaiti Dinar (KD) exchange rate policy is controlled by the Central Bank of Kuwait. Kuwaiti Dinar subdivided into 1000 fils is freely convertible. 1 KD = US$ 3.59 (approx); 1 KD = Rs. 162 (approx)