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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



4.2.5 Exchange & currency rate 51

4.2.6 Tax Structure 52


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III Kuwait 61

4.3.1 Demographics 61

4.3.2 GDP growth rate 62



4.3.5 Exchange & currency rate 634.3.6 Tax Structure 64



4.3.9 Indian companies in Kuwait 66



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
http://www.citizensbankgy.com/http://www.citizensbankgy.com/


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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


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:


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.


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.


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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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.


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


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.


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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.


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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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.


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.
http://www.cbk.com/http://www.cbk.com/


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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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