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INDUSTRIAL INTERNSHIP PROGRAMME 2011
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)
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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.
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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.
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EXECUTIVE SUMMARY
A project work is a mandatory requirement for the Masters degree in business Administration.
As a student of MBA, it is an integral part of curriculum to undergo practical training at anorganization. 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 projects 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.
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TABLE OF CONTENT
S.No. Topic PageNo.
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
2.1.1 Focus on Research 24
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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 384.1.2 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
4.2.1 Demographics 49
4.2.2 GDP growth rate 50
4.2.3 Inflation rate 51
4.2.4 Major source of income 51
4.2.5 Exchange & currency rate 51
4.2.6 Tax Structure 52
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4.2.7 Type of political system 53
4.2.8 Major industries 53
4.2.9 Financial services 53
4.2.10 Banking services & products 55
III Kuwait 61
4.3.1 Demographics 61
4.3.2 GDP growth rate 62
4.3.3 Inflation rate 62
4.3.4 Major source of income 63
4.3.5 Exchange & currency rate 634.3.6 Tax Structure 64
4.3.7 Type of political system 65
4.3.8 Major industries 65
4.3.9 Indian companies in Kuwait 66
4.3.10 Financial services 66
4.3.11 Banking services & products 67
4.4 Conclusion 72
Chapter: 6 Other assignments 73
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CHAPTER 1:
INTRODUCTION TO INDIAN
FINANCIAL SYSTEM
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1.1 INTRODUCTIONAs 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 INTRODUCTIONA 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
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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) financialsystem 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, andstoreowners.
Groups of person operating as funds or associations. These groups function under asystem 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 financialintermediaries such as finance, investment, and chit-fund companies.
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1.3 COMPONENTS OF THE FORMAL FINANCIAL SYSTEMThe 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 INSTITUTIONSThese 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-bankingFinancial 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 financeFinancial 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).
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SectoralSectoral financial institutions such as the National Bank for Agricultural and Rural Development
(NABARD) and the National Housing Bank (NHB).
InvestmentInvestment 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-levelThere are state-level financial institutions such as the State Financial Corporations (SFCs) and
State Industrial Development Corporations (SIDCs) which are owned and managed by the
governments.
II. FINANCIAL MARKETSA 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 ofclaim
MoneyMarket
CapitalMarket
Seasoning ofclaim
PrimaryMarket
SecondaryMarket
Timing ofDelivery
Cash or spotMarket
Forward Offutures
Market
OrganisationalStructure
ExchangetradedMarket
Over thecounter
Market
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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 INSTRUMENTSA 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
MarketableMany 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.
TradeableFinancial 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.
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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 SERVICESThese 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 Managing risk
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TYPES OF FINANCIAL SERVICES
Insurance
A contract in which one party agrees to pay for another party's financial loss resulting from aspecified 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 FundA 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.
BankingFinancial 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.
SharesShares 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.
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1.4 INDUSTRY OVERVIEW1.4.1 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 Internetbanking and Core banking have made banking operations more users friendly and easy.
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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 tocater 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 convertuntapped market potential into opportunities by providing tailor-made products.
The insurance market is filled up with new players which has led to the introduction ofseveral 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 distributiontechniques.
The active part of the Insurance Regulatory and Development Authority (IRDA) as aregulatory 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 inspiteof the difficulty by the external set up.
Presently in India there are around 34 national and 2 international SEBI registered venturecapital funds
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1.4.6 OPPURTUNITIES FOR THE FINANCIAL SECTOR IN INDIA
The distributed financial gain of the venture capital funds is not taxed. The financial gainsare taxed after the investors receive as income.
They have more insurance and banking products introduced into the market to expand thespectrum which in turn would boost the growth of the sector.
Further nullification of the regulations has to take place in order to increase thecompetition and boost the growth of the financial sector to reach the US$ 51 billion mark.
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CHAPTER 2:
INTRODUCTION OF COMPANY
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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 initiallyconducted 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.
http://www.motilaloswal.com/Broking_and_distribution/http://www.motilaloswal.com/assetmanagement/pms/overview/http://www.pe.motilaloswal.com/http://www.motilaloswal.com/Investment_Banking/http://www.motilaloswal.com/Investment_Banking/http://www.mostshares.com/http://www.mostshares.com/http://www.motilaloswal.com/Investment_Banking/http://www.motilaloswal.com/Investment_Banking/http://www.pe.motilaloswal.com/http://www.motilaloswal.com/assetmanagement/pms/overview/http://www.motilaloswal.com/Broking_and_distribution/ -
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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 Companys 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.
http://www.newvernonassociates.com/http://www.bvp.com/http://www.motilaloswal.com/http://www.motilaloswal.com/derivative/overview/http://www.motilaloswal.com/derivative/overview/http://www.motilaloswal.com/http://www.bvp.com/http://www.newvernonassociates.com/ -
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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 IPOs Depository Services Portfolio Management Services Wealth Management
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CHAPTER 3:
INTRODUCTION OF PROJECT
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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 nations 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 toenhance 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,
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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, oras is our intention
in this paperassessing the development of the financial sector in the MENA region requires
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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
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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.
Nonbankfinancial sector: In most of the region, the nonbank financial sectorcomprising 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
http://faculty.som.yale.edu/mushfiqmobarak/financial%20sector%20development.pdfhttp://faculty.som.yale.edu/mushfiqmobarak/financial%20sector%20development.pdfhttp://faculty.som.yale.edu/mushfiqmobarak/financial%20sector%20development.pdf -
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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 Population3. Financial sector is developing and must have many future development opportunity4. 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 Financial Sector structure in these countries.
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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 Kuwait
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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 50000Portugal 800000
Qatar 500000
Saudi Arabia 1789000
Singapore 580000
South Africa 1218000
Srilanka 1600000
Thailand 150000
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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 andliving 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 30Bahrain 2.15 -
Guyana 3.65 35-45Indonesia 6.75 25
Israel 3 25
Kenya 6 30Kuwait 5.5 15
Malaysia 3.7 25
Mauritius 4.01 15
Myanmar 10 30Netherland 3.65 20-25
New Zealand 2.5 28Oman 18 12
Portugal 9.19 25
Qatar 1.5 10Saudi Arabia 3 20
Singapore 0.03 17
South Africa 5.5 28Sri 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.
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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
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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.
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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.
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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
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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.
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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 paymentssystem, 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 Guyanas financial system.
Half of this latest IDB financing is made up of a loan from the Banks 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 IDBs Fund for Special Operations. This portion will have
amortization and grace periods of 40 years, and an interest rate 0.25 percent.
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4.1.10 Banking Services and Products
List of banks in Guyana
1. Bank of Baroda (GUYANA) Inc.
Personal BankingDeposits
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 Baroda Career Development
http://www.bankofbaroda.com/http://www.bankofbaroda.com/http://www.bankofbaroda.com/pfs/fixed.asphttp://www.bankofbaroda.com/pfs/current.asphttp://www.bankofbaroda.com/pfs/savings.asphttp://www.bankofbaroda.com/pfs/homeimprove.asphttp://www.bankofbaroda.com/pfs/futurerent.asphttp://www.bankofbaroda.com/pfs/futurerent.asphttp://www.bankofbaroda.com/pfs/advancesecurities.asphttp://www.bankofbaroda.com/pfs/careerdev.asphttp://www.bankofbaroda.com/pfs/careerdev.asphttp://www.bankofbaroda.com/pfs/advancesecurities.asphttp://www.bankofbaroda.com/pfs/futurerent.asphttp://www.bankofbaroda.com/pfs/futurerent.asphttp://www.bankofbaroda.com/pfs/homeimprove.asphttp://www.bankofbaroda.com/pfs/savings.asphttp://www.bankofbaroda.com/pfs/current.asphttp://www.bankofbaroda.com/pfs/fixed.asphttp://www.bankofbaroda.com/ -
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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 Bankingo Cash Management & Remittance
http://www.bankofbaroda.com/pfs/twowheelerloans.asphttp://www.bankofbaroda.com/pfs/bobvyapar.asphttp://www.bankofbaroda.com/pfs/bobashray.asphttp://www.bankofbaroda.com/pfs/bobashray.asphttp://www.bankofbaroda.com/pfs/homeloans_nri.asphttp://www.bankofbaroda.com/pfs/ISHUP.asphttp://www.bankofbaroda.com/pfs/mortgageloans.asphttp://www.bankofbaroda.com/pfs/eduloans.asphttp://www.bankofbaroda.com/pfs/carloans.asphttp://www.bankofbaroda.com/pfs/doctorloan.asphttp://www.bankofbaroda.com/pfs/familyloans.asphttp://www.bankofbaroda.com/pfs/ipo.asphttp://www.bankofbaroda.com/pfs/ipo.asphttp://www.bankofbaroda.com/pfs/ipo.asphttp://www.bankofbaroda.com/pfs/familyloans.asphttp://www.bankofbaroda.com/pfs/doctorloan.asphttp://www.bankofbaroda.com/pfs/carloans.asphttp://www.bankofbaroda.com/pfs/eduloans.asphttp://www.bankofbaroda.com/pfs/mortgageloans.asphttp://www.bankofbaroda.com/pfs/ISHUP.asphttp://www.bankofbaroda.com/pfs/homeloans_nri.asphttp://www.bankofbaroda.com/pfs/bobashray.asphttp://www.bankofbaroda.com/pfs/bobashray.asphttp://www.bankofbaroda.com/pfs/bobvyapar.asphttp://www.bankofbaroda.com/pfs/twowheelerloans.asp -
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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
Baroda Term Deposit
http://www.bankofbaroda.com/int/fclr.asphttp://www.bankofbaroda.com/int/fclr.asphttp://www.bankofbaroda.com/int/nre_ca.asphttp://www.bankofbaroda.com/int/nre_fd.asphttp://www.bankofbaroda.com/int/nro_sb.asphttp://www.bankofbaroda.com/int/nro_ca.asphttp://www.bankofbaroda.com/int/nro_fd.asphttp://www.bankofbaroda.com/int/rfca.asphttp://www.bankofbaroda.com/int/rfcda.asphttp://www.bankofbaroda.com/int/rlfcd.asphttp://www.bankofbaroda.com/int/deposit_struc.asphttp://www.bankofbaroda.com/int/deposit_term.asphttp://www.bankofbaroda.com/int/deposit_term.asphttp://www.bankofbaroda.com/int/deposit_struc.asphttp://www.bankofbaroda.com/int/rlfcd.asphttp://www.bankofbaroda.com/int/rfcda.asphttp://www.bankofbaroda.com/int/rfca.asphttp://www.bankofbaroda.com/int/nro_fd.asphttp://www.bankofbaroda.com/int/nro_ca.asphttp://www.bankofbaroda.com/int/nro_sb.asphttp://www.bankofbaroda.com/int/nre_fd.asphttp://www.bankofbaroda.com/int/nre_ca.asphttp://www.bankofbaroda.com/int/fclr.asp -
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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 Money Gram
http://www.bankofbaroda.com/pfs/homeloans_nri.asphttp://www.bankofbaroda.com/int/loan_fd.asphttp://www.bankofbaroda.com/int/loan_fcnrb_re.asphttp://www.bankofbaroda.com/int/loan_fcnrb_fc.asphttp://www.bankofbaroda.com/int/loan_fcnrb_fc_in.asphttp://www.bankofbaroda.com/int/loan_shipment.asphttp://www.bankofbaroda.com/int/extcommercialborrowings.asphttp://www.bankofbaroda.com/int/rapidfund.asphttp://www.bankofbaroda.com/remitxpress.asphttp://www.bankofbaroda.com/xpressmoney.asphttp://www.bankofbaroda.com/MoneyGram.asphttp://www.bankofbaroda.com/MoneyGram.asphttp://www.bankofbaroda.com/xpressmoney.asphttp://www.bankofbaroda.com/remitxpress.asphttp://www.bankofbaroda.com/int/rapidfund.asphttp://www.bankofbaroda.com/int/extcommercialborrowings.asphttp://www.bankofbaroda.com/int/loan_shipment.asphttp://www.bankofbaroda.com/int/loan_fcnrb_fc_in.asphttp://www.bankofbaroda.com/int/loan_fcnrb_fc.asphttp://www.bankofbaroda.com/int/loan_fcnrb_re.asphttp://www.bankofbaroda.com/int/loan_fd.asphttp://www.bankofbaroda.com/pfs/homeloans_nri.asp -
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2. Citizens Bank Guyana Inc
Products
Saving Account Loans ATM Money card Tele banking Remote Banking Night Depository Utility Payments
3. Demerara Bank LimitedProducts and Services
Saving Deposit account Chequing Account Money master Safety deposit boxes Night Deposit Phone Banking Foreign Exchange Loans and Over drafts American Express
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4. Guyana Bank for Trade and Industry Limited
Products and ServicesGBTI 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 Limited11.Scotiabank Guyana
All these banks Provides same kind of Products as above.
http://www.gbtibank.com/http://www.gbtibank.com/deposit_accounts.htmlhttp://www.gbtibank.com/financing_facilities.htmlhttp://www.gbtibank.com/foreign_trade.htmlhttp://www.gbtibank.com/card_services.htmlhttp://www.gbtibank.com/telephone_banking.htmlhttp://www.gbtibank.com/safe_keeping.htmlhttp://www.gbtibank.com/night_deposit.htmlhttp://www.gbtibank.com/utility_payments.htmlhttp://www.gbtibank.com/payroll_processing.htmlhttp://www.republicguyana.com/http://www.republicguyana.com/http://www.guyana.scotiabank.com/http://www.guyana.scotiabank.com/http://www.guyana.scotiabank.com/http://www.republicguyana.com/http://www.gbtibank.com/payroll_processing.htmlhttp://www.gbtibank.com/utility_payments.htmlhttp://www.gbtibank.com/night_deposit.htmlhttp://www.gbtibank.com/safe_keeping.htmlhttp://www.gbtibank.com/telephone_banking.htmlhttp://www.gbtibank.com/card_services.htmlhttp://www.gbtibank.com/foreign_trade.htmlhttp://www.gbtibank.com/financing_facilities.htmlhttp://www.gbtibank.com/deposit_accounts.htmlhttp://www.gbtibank.com/ -
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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%,
Industry and services25% (2007 est.)
http://en.wikipedia.org/wiki/Agriculturehttp://en.wikipedia.org/wiki/Industryhttp://en.wikipedia.org/wiki/Service_(economics)http://en.wikipedia.org/wiki/Service_(economics)http://en.wikipedia.org/wiki/Industryhttp://en.wikipedia.org/wiki/Agriculture -
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Age/sex Profile: Total population is reported as 41.07 million as of June 2011, with an age
structure of:
014 years: 42.3% (male 8,300,393/female 8,181,898)
1564 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.
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4.2.3 INFLATION RATE:
Year Inflation rate (consumer prices) Rank Percent Change Date of Information
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.
KSh 65 per US Dollar (Equiv. stated as 0.0154 US dollar per Kenya Shilling).
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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%
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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 and10.1 percent in 1996. In the year 2011, approximately 81,000 Kenyans worked in the financial
sector.
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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 July2004, 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
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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 ProductsTrade 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
http://en.wikipedia.org/wiki/ABC_Bank_(Kenya)http://en.wikipedia.org/wiki/Bank_of_Indiahttp://en.wikipedia.org/wiki/Bank_of_Indiahttp://en.wikipedia.org/wiki/ABC_Bank_(Kenya) -
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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
http://en.wikipedia.org/wiki/Barclays_Bankhttp://en.wikipedia.org/wiki/Citibankhttp://en.wikipedia.org/wiki/Commercial_Bank_of_Africahttp://en.wikipedia.org/wiki/Commercial_Bank_of_Africahttp://en.wikipedia.org/wiki/Citibankhttp://en.wikipedia.org/wiki/Barclays_Bank -
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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)All the Local Banks provides same kind of products and services
http://en.wikipedia.org/wiki/Cooperative_Bank_of_Kenyahttp://en.wikipedia.org/wiki/Credit_Bankhttp://en.wikipedia.org/wiki/Diamond_Trust_Bank_Grouphttp://en.wikipedia.org/wiki/Gulf_African_Bankhttp://en.wikipedia.org/wiki/I%26M_Bankhttp://en.wikipedia.org/wiki/I%26M_Bankhttp://en.wikipedia.org/wiki/Imperial_Bank_Kenyahttp://en.wikipedia.org/wiki/Imperial_Bank_Kenyahttp://en.wikipedia.org/wiki/Kenya_Commercial_Bankhttp://en.wikipedia.org/wiki/Kenya_Commercial_Bankhttp://en.wikipedia.org/wiki/Middle_East_Bank_Kenyahttp://en.wikipedia.org/wiki/Middle_East_Bank_Kenyahttp://en.wikipedia.org/wiki/National_Bank_of_Kenyahttp://en.wikipedia.org/wiki/National_Bank_of_Kenyahttp://en.wikipedia.org/wiki/NIC_Bankhttp://en.wikipedia.org/wiki/NIC_Bankhttp://en.wikipedia.org/wiki/Oriental_Commercial_Bankhttp://en.wikipedia.org/wiki/Oriental_Commercial_Bankhttp://en.wikipedia.org/wiki/Prime_Bank_(Kenya)http://en.wikipedia.org/wiki/Prime_Bank_(Kenya)http://en.wikipedia.org/wiki/Prime_Bank_(Kenya)http://en.wikipedia.org/wiki/Oriental_Commercial_Bankhttp://en.wikipedia.org/wiki/NIC_Bankhttp://en.wikipedia.org/wiki/National_Bank_of_Kenyahttp://en.wikipedia.org/wiki/Middle_East_Bank_Kenyahttp://en.wikipedia.org/wiki/Kenya_Commercial_Bankhttp://en.wikipedia.org/wiki/Imperial_Bank_Kenyahttp://en.wikipedia.org/wiki/I%26M_Bankhttp://en.wikipedia.org/wiki/Gulf_African_Bankhttp://en.wikipedia.org/wiki/Diamond_Trust_Bank_Grouphttp://en.wikipedia.org/wiki/Credit_Bankhttp://en.wikipedia.org/wiki/Cooperative_Bank_of_Kenya -
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18.Standard Chartered BankPersonal Banking Priority Banking SME Banking
Accounts and DepositsComprehensive Wealth
Management Services
Business Plus Account
Current Account
Special Privileges for Business
owners
Business Premium Account
Savings Accounts Access to a World of PrivilegesBusiness Priority Account
My Dream Account
Fee Waiver, discounts and
Preferential Rates
Diva Account Automated Banking Services
Executive AccountInvestment Services
Junior Account
Fixed Deposit and Call
Deposit
Credit Cards
o Emirates StandardChartered Platinum
MasterCard
o Emirates MasterCardGold & Classic Credit
Card
http://en.wikipedia.org/wiki/Standard_Chartered_Bankhttp://en.wikipedia.org/wiki/Standard_Chartered_Bankhttp://en.wikipedia.org/wiki/Standard_Chartered_Bank -
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o Visa Gold & ClassicCredit Card
Services
o Branch Banking Hourso Automated Banking
Lobby
o Phone Bankingo Online Bankingo SMS Bankinge-Statements
Loans
Personal Loan
NRI Banking
Introducing Standard Chartered NRI Servicesspecially 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 Global Investment Products
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Insurance Advisory Indian Home Loans Loans against property
Home Assist No minimum Balance requirement in NRE account Competitive conversion rate for Rupee remittances
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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.)
Language: Kuwait's official language is Arabic, and English is the second language.
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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
Year Inflation rate (consumer prices) Rank Percent Change Date of Information
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.
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4.3.4 MAJOR SOURCE OF INCOME
Kuwait has an open economy with proven crude oil reserves of about 96 billion barrels (15 km),
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 themajor 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)
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4.3.6 TAX STRUCTURE
Kuwait Income Tax Rate 0%
Kuwait Corporate Tax Rate 15%
Kuwait Sales Tax / VAT Rate 0%
Kuwait tax planning services: - (corporate and personal tax). We advise clients on latest
corporate and income tax rates in Kuwait, and assist our clients to prepare and submit Kuwait tax
returns. Healy Consultants' Kuwait tax planning services include advice on Kuwait company
formation, and this is one of our core Kuwait tax planning services. The correct corporate
structure is essential to ensure international business is conducted tax-efficiently and legitimately
when starting a business in Kuwait.
International tax planning :- (tax minimising & wealth managment). Keeping abreast of
international tax legislation is at the heart of a successful tax minimisation strategy. Healy
Consultants' tax experts keep clients informed of regulatory changes in Kuwait before they can
have any negative impact, and is therefore one of our most valuable Kuwait tax planning
services. Additionally, our Kuwait wealth management services can legally help clients minimise
international tax liabilities. Companies incorporated in jurisdictions such as Kuwait pay no tax
on revenues sourced outside the country. Many countries have also signed double taxation
treaties with other countries to prevent taxes levied twice on the same income, profit, capital
gains or inheritance. Our Kuwait wealth management services also take into account
confidentiality and privacy concerns.
Tax Year: Tax year is the calendar year.
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4.3.7 TYPE OF POLITICAL SYSTEM
The State of Kuwait is a constitutional emirate with a parliamentary system of government.
Kuwait gained independence from the UK on June 19, 1961. Its constitution, which combines
aspects of both presidential and parliamentary systems of government, was approved and put into
effect in 1962.
4.3.8 MAJOR INDUSTRIES
According to the Kuwaiti Ministry of Interior, there are approximately 640,000 Indians, who
constitute the largest expatriate community in Kuwait. The Indian community is regarded as the
community of first preference among the expatriates in Kuwait. Kuwait views India as a fast
growing economy and a source of highly qualified professional and technical personnel. A large
proportion of the Indian expatriates are unskilled and semi-skilled workers. Professionals like
engineers, doctors, chartered accountants, scientists, software experts, management consultants,
architects; skilled workers like technicians and nurses; semi-skilled workers; retail traders and
businessmen are also present in the Indian community. The total remittance from Kuwait to India
is estimated to be upwards of US$ 3.5 billion annually.
Approximately 300 associations exist within the Indian community in Kuwait, representing a
variety of regional, professional and cultural interests. Of these, 133 Associations are presently
registered with the Embassy. Cultural events are organised regularly by these associations
through the year, to which leading Indian artistes are often invited.
There are 17 Indian Schools in Kuwait affiliated to the Central Board of Secondary Education,
New Delhi.
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4.3.9 INDIAN COMPANIES IN KUWAIT
Indian companies have made a name for themselves in Kuwait. Telecommunication Consultants
India Ltd. (TCIL) has bagged contracts worth US$ 100 million since liberation. The Southern
Petrochemical Industries Corpn. (SPIC) has formed a local joint venture, Gulf SPIC ContractingCo and has formed a local joint venture, Gulf SPIC Contracting Co and has been handling some
important projects in the oilsector. M/S Larsen & Toubro Ltd., are active in Kuwaits
petrochemicals and construction sectors. Some Indian companies from the medical, IT and
Insurance and banking sector have been operating successfully in Kuwait.
4.3.10FINANCIAL SERVICES
Overview
The banking system in Kuwait consists of the Central Bank of Kuwait, ten domestic banks and
five branches of foreign banks (HSBC Bank Middle East, BNP Paribas, Citibank, the National
Bank of Abu Dhabi and Bank of Bahrain and Kuwait). In addition to the 13 commercial banks,
there are two specialized banks in Kuwait, the Industrial Bank of Kuwait and Kuwait Real Estate
Bank.
The Kuwait Finance House and Boubyan Bank are the only licensed deposit-taking institutionsoffering a full range of Islamic banking products. In terms of both assets and capital, the market
is dominated by the National Bank of Kuwait. The National Bank of Kuwait has the most
extensive international banking presence, with subsidiaries and branch offices in Bahrain, Iran,
Jordan, Lebanon, London, New York, Paris, Qatar, Geneva, Saudi Arabia, Singapore, Thailand
and Vietnam, and acquired Credit Bank of Iraq in May 2005.
Despite the governments effort to divest its ownership in the banking sector, a number of local
banks continue to have substantial government ownership. At present there are five branches of
different foreign banks operating in Kuwait and foreign investment in local banks is limited. The
emergence of foreign banks and the acquisition by
Bahrains Ahli-United Bank of a 75% stake in the Bank of Kuwait & the Middle East appear to
mark a move towards greater internationalization of the Kuwaiti banking sector.
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4.3.11Banking Products and Services
1. The Industrial Bank of Kuwait
Financial institution that provides loans to industrial projects and agriculture
Industrial Finance
Long term Industrial Loans Islamic Industrial Finance
Corporate Banking
Treasury & Direct Investment
Managed Protfolios
2. Al Ahli Bank of Kuwait (ABK)
Provides retail banking, corporate banking (loans, letters of credit, payment services),
treasury & investment services (foreign exchange & interest rates services & advice); has a
retail banking network of 13 branches in Kuwait, and one in Dubai
Retail Corporate Banking Treasury International
Accounts Investment units
Loans Financial Institutions
Unit
Cards Trading and
Commercial Unit
Contracting unit
Services Unit
SME unit
Kuwait
http://www.ibkuwt.com/http://www.eahli.com/http://www.indexuae.com/kuwait/index.phphttp://www.indexuae.com/kuwait/index.phphttp://www.eahli.com/http://www.ibkuwt.com/ -
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3. Commercial Bank of Kuwait (CBK)
Bank offering personal banking, corporate banking, Tijari funds, investment services etc;
operates the second largest domestic network comprising 48 branches
Personal
Banking
Corporate
Banking
Tijari Fund
(Fund
Management)
Rates &
market
Checking
Account
Online
Banking
Investment
Fund
Foreign
Exchange
Rates
Saving
Account
Treasury
Services
GCC Equity
Fund
Deposit
Rates
CBK Cards International
Credit
Islamic Fund
Term
Deposits
Trade
Finance
India Fund
Loans
India Fund
Fund Objective
To achieve superior returns over the medium to longer term horizon.
Fund Strategy
The Fund are invested its assets in indian equity markets
Available surplus cash is invested in all type of liquid Money Market instruments.
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Fund Description
Open-ended Fund.
Life of the Fund is 10 years.
Fund's capital will be in the range of KD 5 Million to KD 100 Million.
Minimum subscription is 500 Units (and in multiples of 100 units thereafter).
Subscription / Redemption
Weekly Subscription; applications can be submitted up to Monday (NAV Day) not later than 1
PM.
Redemption is available twice a month. (on 2nd and 4th Monday). Redemption applications
must be submitted 7 working days prior to prescribed day.
Fee
Subscription fees : 1.00%
Redemption fees : 0.25%
Management fees : 1.50%
Custody fees : 0.10%
Client Assurance
CBK Capital will maintain a minimum 5% investment in the Fund at all times.
Target Clients
The Fund is open to all Kuwaiti nationals, Expatriates,Corporations and Institutions.
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4. Gulf Bank
Safat-headquartered bank; activities include retail banking, corporate banking, treasury &
investment management and international banking; has branches in Hawalli, Al-Hajra, Ahmadi,
Farwaniya, Mub
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