Description
The services of financial institution and observes their consumer satisfaction on the basis of all financial services which is necessary to poverty reduction. In this project an attempt has been made to study the reach and efficiency of financial institution , how they give their some special scheme or programme for poverty eradication. Efforts were also made, to find out what are the challenges ahead for financial institutions.
MINOR PROJECT On MARKET PENETRATION AND CONSUMER ACCEPTANCE OF FINANCIAL SERVICES IN RURAL INDIA
Preface
In the project of ?CONSUMER ACCEPTENCE AND MARKET PENETRATION OF FINANCIAL SERVICES IN RURAL AREAS? our objective is that studies the services of financial institution and observes their consumer satisfaction on the basis of all financial services which is necessary to poverty reduction. In this project an attempt has been made to study the reach and efficiency of financial institution that how they give their some special scheme or programme for poverty eradication. Efforts were also made, to find out what are the challenges ahead for financial institutions. Firstly we collect the relative literature review for the deep knowledge of the subject and then we make questionnaire which is used to collecting relative data to analyses the market penetration and consumer acceptance of their scheme in rural areas. Then by the analysis of data that was collected from villages like Dubeypur, Kasturipur and rural market in Allahabad district we find that there is not such growth of financial sector in rural areas. Basically we found that the rural people awareness about some special schemes and services which is provided only for rural areas.
Acknowledgements
It is needed a moment of great pleasure to express my sense of profound gratitude & indebtness to all the people who have been instrumental in making my project a rich experience. It give me great privilege and honor to offer thanks to all those who helped me in my project, I would like to extend my sincere thanks and gratitude to my project guide Dr. Piyali Ghosh for acting as a mentor and as a catalyst during entire duration of my project. I also thank him for providing continuous support and expert guidance throughout my project, whenever needed.
Heartfelt thanks to many respondents whose ideas, critical insights and suggestions have been valuable during the making.
NAND KISHOR RAM 2008MB44 MBA_1st year
Table of content
List of the table
List of figures
Chapter 1 Introduction
India has one of the most extensive financial systems comprising of banks, microfinance institutions and self-help groups. There are more than 30,775 rural branches of commercial and regional rural banks. Rural cooperative institutions have a wider outreach, with 1, 08,779 primary agricultural co-operative societies (PACS). In addition, 2.24 million self-help groups (SHGs), with the credit linkages by banks are also operating in India. Furthermore, the number of Kisan Credit Card (KCCs) holders has increased to 59.09 million. Indeed, India compares favorably with other Developing countries both in terms of the geographical area covered as well as average population served per bank branch. While the growth and coverage of formal financial services in rural India may seem remarkable, the vast majority of rural poor still does not have access to formal finance. This lack of access to formal credit and savings services jeopardizes India’s efforts to both poverty reduction as well as wealth creation necessary to propel the nation towards ecological, social and economic well-being. This is so because the financial sector in India has failed to craft management innovations that build on the strength of the informal money lending. No wonder then, nearly 45% of the rural lending in India is by moneylenders and the trend is actually on the rise3. Indeed, despite concerted efforts by formal and semi-formal financial mechanisms, the informal moneylenders have dynamically outsmarted them in their reach to poor by their dynamic management skills and social networks. There is a vast literature demonstrating the importance of the moneylenders in rural economy across the word. While a full review of literature is beyond the scope of this paper some of the literature is indicated in the references.
The reasons for the continuous existence of moneylenders in India have to be found both in the inadequacy of the formal financial systems as well as the efficiency and innovations
of the moneylenders are themselves. Serving the rural poor is a high-risk, high-cost proposition for banks. Banks have always feared the uncertainty about the repayment capacity of poor, whose incomes are subject to numerous vulnerabilities. In the absence of reliable credit information and costly monitoring, banks fear a high Default risk. This is often exacerbated by the poor people’s lack of collateral. Additionally, the transaction costs of rural lending in India are high, mainly due to small loan sizes, the high frequency of transactions, the large geographical spread, the Heterogeneity of borrowers, and illiteracy. Rural poor too find the banks unattractive because of their inflexibility, high transaction costs and a time-consuming process. For a poor person the transaction costs associated with numerous visits to bank, long wait of time, mistrust born out of bad experience, and payment of extra-legal money for the approval of loan all add up to costs which are more or less equal to the costs of obtaining loan from moneylenders with comparative efficiency.
Moneylenders are characterized as being exploitative and unscrupulous. However, less recognised is the fact that faced with the competition from the expanding formal financial system moneylenders have adapted management innovations in order to remain in business. Consequently, their description as being exploitative needs reconsideration and should be seen in comparison to rates being charged for convenience-products by formal financial establishments. There are enough reasons to Set aside the notion that informal moneylenders are always bad and exploitative and the formal financial services—as operate currently—are always good.
Credit cards in India are a case in point. Credit cards are essentially convenience products and a profitable service industry for banks. In India banks issuing credit cards charge at an average annual rate of 34% interest on the outstanding balance. Thus, credit card loan is about 3.2 times more expensive than a home loan at an average rate of 10.5%. Even if we take the lowest credit card rate of around 20% in India, it is still twice the home loan rate in India. These rates compare well with the interest rates charged by the moneylenders,
but are not considered exploitative by the financial system. Moneylenders acting similarly as service providers to the excluded segment of the society are nonetheless considered as exploitative. As noted earlier, if we compare beyond this comparative position, there are five other key arguments that emerge from the available literature. These are: • In dealing with everyday competition with growing formal financial services Moneylenders have evolved innovative mechanisms and adaptations for efficiency and sustainability that have an edge over the formal financial systems in India. Majority of moneylenders are now using socially-responsible lending practices because they make sound business sense. • Destruction of informal and time-honoured money lending innovation in rural India is expected to have the similar negative economic impact as that of destruction of informal manufacturing in the past. • Moneylenders, banks and microfinance are imperfect substitutes for one another. These mechanisms, however, innovatively brought together to redesign a robust and effective financial systems based on the principles of complementary strengths. Less exploitative than credit card industry.
It is, therefore, important to acknowledge moneylenders as legitimate constituents of financial system. They have extensive social network and substantial credibility. Banks must establish linkages with them in order to serve the poor. In addition, moneylenders should be given the flexibility to access the deposits from the public, as any other financial institution.
Chapter 2 Literature Review
In a present study, an attempt has been made to assess the impact of commercial banks on the rural people of different villages of Allahabad . further an attempt has also been made to ascertain the various factor for mounting overdues of institutional and non institutional credit the study has tried to ascertain whether literacy, age ,caste of borrower , quantum of credit , processing time taken by banks in sanctioning the loans under finance (credit gap ) etc. influence the borrower to become defaulters resulting more and more over dues . For this purpose twelve sample borrower of 3 villages of Allahabad were selected under random sampling method. The relevant data were collected from the borrowers by direct and personal interview method , with the help of a suitably designed questionnaire .
Financial Growth in India:
Inclusion measures in India have led to physical expansion in the country. Unfortunately, the expansion has not brought about the necessary change in the backward and rural areas as financial services are yet to reach a vast majority of the population. The financial exclusion is characterised by ever since the enactment of the Cooperative and Regional Rural Banks Acts and nationalisation of scheduled commercial banks, financial limited service providers, limited goals and limited lending, besides a huge area of operation and missing linkages between financial institutions and local organisations. Demand-side factors have also contributed to the present dimension of financial exclusion, the result of which is that over two-thirds of the under-served segments resort to high-cost financial services from informal sources, which are present in every nook and corner. This paper
considers a number of alternative initiatives to increase access to institutional financial services for the under-served population.
Next Generation Financial Reforms for India:
India has grown by leaps and bounds in recent years and is emerging as a major world economic power. After lumbering along at a pace of about 4-5 percent GDP growth a year in the 1980s and the 1990s, the economy has surged in this decade, posting an average annual growth of 8.5 percent since 2005 (see Chart 1). The challenge now is to maintain this growth momentum and provide benefits as well as economic opportunities to a broad swath of the population.
Figure 1
India's financial system—comprising its banks, equity markets, bond markets, and myriad other financial institutions—is a crucial determinant of the country's future growth trajectory. The financial system's ability to channel domestic savings and foreign capital into productive investment and to provide financial services—such as payments, savings, insurance, and pensions—to a vast majority of households will influence economic as well as social stability. While India's financial institutions and regulatory structures have been developing gradually, the time has come to make a more concerted push toward the next generation of financial reforms. A growing and increasingly complex market-oriented economy, and its greater integration with global trade and finance, will require deeper, more efficient, and well-regulated financial markets. These considerations prompted the Indian government to institute a high-level committee—composed of a select group of financial sector practitioners, businesspeople, academics, and policymakers—to map out a blueprint for financial reforms. After more than six months of intensive work, the committee recently delivered its draft report to the government (available at http://planningcommission.nic.in/reports/genrep/report_fr.htm). In this article, we summarize the key findings of the report and examine its recommendations. Three main conclusions Many government committees over the years have looked into specific aspects of India's financial reforms, but this is the first committee mandated to "outline a comprehensive agenda for the evolution of the financial sector." Indeed, the report argues that there are deep linkages among different reforms, including broader reforms to monetary and fiscal policies, and recognizing these linkages is essential to achieve real progress. The report has three main conclusions. First, India's financial system is not providing adequate services to the majority of domestic retail customers, small and medium-sized enterprises, or large corporations. Government ownership of 70 percent of the banking
system and hindrances to the development of corporate debt and derivatives markets have stunted financial development. This will inevitably become a barrier to high growth. Second, the financial sector—if properly regulated but unleashed from government strictures that have stifled the development of certain markets and kept others from becoming competitive and efficient—has the potential to generate millions of muchneeded jobs and, more important, have an enormous multiplier effect on economic growth. Third, in these uncertain times, financial stability is more important than ever to keep growth from being derailed by shocks hitting the system, especially from abroad. Although the Indian economy dodged the Asian crisis and the recent subprime crisis, a lot remains to be done to secure the stability and durability of the financial system. Where things stand The report finds that the Indian financial system has made significant strides in recent years. India's stock exchanges, in particular, have developed well and become a vital source of funding for enterprises and an alternative savings instrument for households. Stock market capitalization has risen significantly—aided by financial inflows from abroad—and the technical infrastructure of equity trading is state of the art (see Chart 2).
Figure 2
The Indian government has taken a number of steps to improve the banking system. Banking reforms, which started nearly two decades ago, have increased the efficiency of the banking system, and the ratio of nonperforming loans to deposits is about 1 percent—a remarkably low level. Many of the public sector banks have become quite profitable and well capitalized, and they coexist with a vibrant private banking system. However, in terms of overall financial depth—the size of the financial system relative to the economy—India does not compare favorably with other countries or even most other emerging markets at a similar stage of development. Despite the apparent strength of the banking system, the ratio of private sector credit to GDP is still low by international standards (see Chart 3). Some of the restrictions on the banking system, and the incentives for banks to hold government bonds rather than make loans, have stifled lending. Consequently, the average ratio of loans to deposits in the Indian banking system is much lower than in most other countries.
Figure 3 The government bond market appears large—public debt amounts to about 70 percent of GDP—but much of the stock of government bonds is held by banks, a requirement prescribed by the "statutory liquidity ratio," and is not traded. The corporate bond market remains woefully underdeveloped, with the total capitalization amounting to less than 10 percent of GDP. Regulatory restrictions have also kept certain derivatives markets, especially for currency derivatives, from developing. The absence of these markets is being felt sorely as India's capital account has become more open over time, potentially leading to greater short-term currency volatility. India is seen as an attractive destination for foreign capital, which has meant large inflows in recent years through various channels, especially portfolio equity investment by foreign investors (see Chart 4). The financial system faces ever-greater challenges in intermediating the rising amounts of foreign as well as domestic capital in an efficient way to the most productive investments. At the same time, it will be important not to let the capacity and expertise to regulate financial markets fall too far behind innovations in these markets.
Clearly, there are big challenges to achieving further financial reforms. Let us start with the big picture.
Figure 4 Fine-tuning macroeconomic policies Why do macroeconomic policies matter for financial reforms? The links between macroeconomic management and financial development are deep and run in both directions. Disciplined and predictable monetary, fiscal, and debt management policies create a foundation for financial sector reforms. In turn, a well-functioning financial system is essential for the effective transmission of macroeconomic policies. Whatever their faults might be, India's macroeconomic policies have delivered high growth and, until recently, stable inflation. Why fix what isn’t broke? Because, in the memorable words of Bob Dylan, the times they are a-changing'. Cross-border capital flows—both inward and outward—have ramped up and are likely to remain large and volatile, creating huge complications for monetary policy as these flows affect the domestic money supply, the exchange rate, and so on. Re-imposing capital controls is not a good option; even existing controls are losing their potency as agile
investors invariably find ways to evade them. The only viable alternative is to have predictable and consistent policies that at least do not create volatility themselves and that give policymakers the flexibility to respond rapidly to shocks. What are the options for monetary policy, especially now that the demands on it are growing as the economy becomes more open and exposed to a wider array of domestic and external shocks? The Reserve Bank of India (RBI), India's central bank, has done a good job of managing the multiple mandates foisted upon it—keeping inflation under reasonable control, managing some of the pressures on the exchange rate, and coping with capital inflows—all against the background of strong growth. But there is a risk that this high-wire act has reached its limits. The recent volatility in the rupee has revived calls for the RBI to more actively manage the exchange rate, which is becoming increasingly difficult as the capital account becomes more open. Sustained intervention in the foreign exchange market can also create unrealistic expectations about the RBI's ability to manage multiple objectives with one instrument. Focusing on a single objective—low and stable inflation—is ultimately the best way that monetary policy can promote macroeconomic and financial stability. This does not mean sacrificing or ignoring growth. Indeed, well-anchored inflationary expectations may well be the best tonic that monetary policy can provide for growth. Contrary to what some commentators seem to believe, there is no long-run trade-off between growth and inflation, and for monetary policy to try and engineer a short-run trade-off can be dangerous. In short, the inflation objective would in fact make monetary policy more effective and strengthen the RBI's hands rather than pinning them down. India's fiscal policy also needs a makeover. There has been encouraging progress in reducing the budget deficit, but this may just be a cyclical improvement as a result of a strong economy. Recent events, such as the government's waiver of certain farm loans and the growing oil subsidies, raise serious concerns that fiscal rectitude may fall prey to the election cycle. Large deficits raise the specter of future inflation, and they could also suck up funds that would otherwise be available for private investment.
The size of government budget deficits matters for financial reforms also because the deficit is partially financed by getting banks to buy government bonds. Durable reductions in the fiscal deficit and public sector borrowing requirement are therefore crucial to reduce the constraints on monetary policy (as prospects of large deficits make it harder to manage inflationary expectations) and allow financial sector reforms, especially banking reforms, to proceed. Promoting financial inclusion A robust financial system is not much good if most people don't have access to it. Financial inclusion—which means providing not just credit but also other financial services such as savings and insurance products—is a key priority, especially in rural India. Nearly three-quarters of farm households have no access to formal sources of credit and lack instruments to insure against adverse events such as low crop yields due to bad weather. But this problem is not limited to rural areas. The lack of access to formal banking services affects more than one-third of poor households, leaving them vulnerable to informal intermediaries such as moneylenders, and makes the distribution of public transfers less efficient. And the lack of financing and insurance stifles entrepreneurial activities. Mandated requirements of a certain quantum of lending to government-favored "priority" sectors and interest rate ceilings for small loans, especially to the agricultural sector, may be well intentioned but have ended up restricting rather than improving broad access to institutional finance. Banks have no incentive to expand lending if the price of small loans is fixed by fiat. Partly as a consequence, nearly half of the loans taken by those in the bottom quarter of the income distribution are from informal lenders at an interest rate of more than 36 percent a year, well above the mandated lending rate for banks, which is less than half that rate. According to the report, the solution is not more intervention but more competition between formal and informal financial institutions and fewer strictures on the former. For instance, freeing up interest rates and then setting up incentives for banks to make loans to
priority sectors such as agriculture (rather than just mandating this by fiat) could lead to more credit flowing to these sectors and in a more efficient way. Allowing more banks, especially smaller, well-capitalized and well-governed private banks, to operate and deliver retail services could also improve access to finance—making it more flexible and more attuned to local needs. A level playing field Given the size of the Indian banking system and its predominant role in the financial system, banking reforms are a cornerstone of the overall reform program. The Indian banking system has been characterized by an implicit "grand bargain," whereby banks get access to low-cost deposits in return for fulfilling certain social obligations, such as lending to priority sectors and funding the government by buying government bonds. This is becoming an unviable framework as the privileges of banks, including state-owned banks, erode and constraints on them such as priority sector lending, which are often motivated by political rather than economic considerations, increase. Maintaining public ownership of a large portion of the banking system is not conducive to efficiency. A one-shot privatization is not realistic or even desirable, but there is a lot that can be done even now to facilitate the transition to a more efficient banking system. One step would be to create stronger and more independent boards, perhaps with a private investor owning a large strategic stake, that could manage the large state-owned banks better and with less government interference. Another would be to allow bank mergers, especially to enable smaller and less efficient banks to be taken over. Other steps, such as freeing up banks to set up branches and ATMs with less onerous licensing restrictions, could foster more growth, entry, and competition in the banking system. Keeping regulation in step with innovation The U.S. subprime problem has highlighted the need for good regulation even in the most sophisticated financial markets. Effective regulation is still more important in a nascent but fast-growing financial system. The government has an essential role: making the rules of the game clear and flexible enough to cope with financial innovation without stifling it.
For instance, fostering markets for foreign exchange derivatives would help domestic firms with exposure to international trade protect themselves from currency fluctuations. But it does create some risks that foreign investors will use those markets for mounting speculative runs on the currency and that domestic firms will get burned if they buy those derivatives without fully understanding them. The solution is not to choke off these markets but to make them more transparent, subject participants to uniform disclosure standards, and prevent fraudulent behavior. Can all risks be eliminated? Certainly not, but there are definitely ways to shift the balance between benefits and risks in favor of the former. As in many other countries, a number of financial services firms in India now operate in different financial markets (for example, insurance, banking, and mutual funds), and these markets are becoming more closely linked. These trends imply that regulation of each market in isolation is no longer the right approach. The situation right now is that there are multiple regulators in some areas and none in others. Many regulators for specific areas tend to focus very narrowly, leaving financial firms unsupervised. Although a move to a single regulator may be premature in India's context, a lot can be done even within the present framework to improve coordination and to clearly delineate responsibilities among existing regulatory agencies. Also, instead of focusing excessively on enforcing a plethora of sometimes archaic rules, it certainly makes sense for regulators to focus on the bigger risk picture, especially in their interaction with large, systemically important, financial conglomerates. Such principles-based regulation will be more conducive to rapidly evolving financial markets and is also more adaptable. The potential risks of a financial meltdown have made central bankers and regulators very cautious, perhaps rightly so. But excessive caution is not a virtue in itself. It can prevent markets from becoming larger and capable of absorbing shocks, and stifle innovation such as the development of new markets and financial instruments. It could even generate more financial stress (and have perverse effects when such stress does hit the system) if regulators focus on a rigid set of rules rather than taking a broader view of financial market exposures of institutions under their purview.
Connections and small steps With so many difficult challenges, where does one start? Many of the required reforms are in fact deeply intertwined. For instance, it would make sense to level the playing field between banks and nonbank financial corporations by easing the requirement that banks finance priority sectors and the government. But making these changes while the government continues to have huge financing needs, and without having a more uniform and nimble regulatory regime, could be risky. The connections stretch beyond just financial reforms to broader macroeconomic reforms, which could reinforce individual financial sector measures. For instance, allowing foreign investors to participate more freely in corporate and government debt markets could increase liquidity in those markets, provide financing for infrastructure investment, and reduce public debt financing through banks. It could also provide an additional riskbearing buffer in the economy. India's rich and complex political process being what it is, focusing solely on the big picture could bog down progress. Hence, the report also lists a number of specific steps that could get the process of reforms going and build up some momentum as people see the benefits. Many of these are less controversial but will still require some resolve on the part of policymakers to implement. For instance, converting trade receivable claims to electronic format and creating a structure to allow them to be sold as commercial paper could greatly boost the credit available to small and medium-sized enterprises. We believe that if other policies are in sync, implementation of this report's blueprint for financial sector reforms could add significantly to India's economic growth and also make a major contribution to the sustainability of this growth, in both the economic and the political dimensions. The absence of reforms, on the other hand, would represent not only a lost opportunity but also a huge source of risk for the economy.
Chapter 3 RESEARCH METHODOLOGY
The first stage of the research programme is focused on the causal relationships between the financial sectors and the rural customer about their acceptance of services. It will also try to identify a core set of financial services that are necessary for poverty reducing growth and the institutional structures that have been more successful in providing them. The methodology we have taken in this project is based on the both close ended as well as open ended question in same time there is one question based on lickers scale on the basis of five. Our questionnaire is prepared to think all the aspects to rural people. Focus studies within each theme will clarify the key issues to be explored in country based research. The links between the financial sector, growth and poverty reduction will be explored:
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at a macro level – looking, at savings and the overall policy environment at institutional level - looking at the type of financial institutions which are best suited to provide appropriate financial services
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At micro level - looking at patterns of demand and supply for financial services for households and enterprises.
Chapter 3 (a) Limitation of research methodology
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Most of the villagers were illiterate so they were not able to respond properly. As the survey was conducted during the afternoon period, the most of the males were not at their homes and female respondents were not able to respond properly.
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Some of the villagers were busy in their work, so they were little reluctant to answer the questions properly. As the sample taken was very little, only 10-12 villagers were asked the questions. So, it may not give the correct result because a small sample cannot represent the whole rural sector.
Chapter 4 Findings and observation
Service penetration 1. Categories of people according to their own occupation
Table 1 Occupation Farmer Landowner Services Self employed Farmer+ Landowner Farmer+ Self employed Farmer+ Services+ Landowner Below 10th 2 0 0 1 0 0 0 Education 10th 12th 2 0 0 0 0 1 0 2 0 0 0 0 0 0
Graduate 0 0 1 0 0 0 0
PG 0 0 1 0 0 2 0
2. Persons having account in
Table 2 Account in
Education qualification Number of respondent
Bank (%) 3 2 3 0 75 75
Post office (%) 100 25 25
Below 10th 10th 12th
Graduate Post graduate
1 3
100 100
0 0
By taking the reference from table 2, it is found that respondents who have education qualification either below 10th, 10th, 12th, graduate, or post graduate prefer to deposit money in bank because they think this is the safe place for their money
3. Name of the bank in which people having
Table 3
Education qualification Number of respondent
account
Name of bank 2 2 2 1 Regional rulal bank Holagarh SBI,Regional rulal bank Holagarh SBI, Regional rulal bank Holagarh Bank of Baroda, ICICI, Regional rulal bank , SBI
Below 10th 10th 12th Graduate
Post graduate
3
SBI,PNB
By taking the reference from the table 3, it is found that respondents who are having education qualification below 10th prefer to open there account in rural bank, because their main concern is easy approach and they are depositing the money for their future use only. Respondents who are having education qualification till 12th gave mix responses as some are looking for the services and some are looking for easy approach this is the reason some prefer to have account in nationalised bank and some in rural bank. Respondents who have are graduates mainly prefer to have their account in nationalised banks as they are concerned about the services provided by the bank. Respondents who are post graduate prefer to have their account in nationalised banks only as they are concerned about the bank services.
4. Type of account people having
Table 4
Type of account
Education qualification Number respondent of
Saving (%) 66.67 100 100 100 100
Current (%) 0 0 0 0 0
Fixed (%) 0 0 0 0 0
Recurring (%) 0 0 0 0 0
Below 10th 10th 12th Graduate Post graduate
3 2 3 1 3
By taking the reference from table 4, it is found that respondents who have education qualification either below 10th, 12th, graduate, or post graduate prefer to have saving account as either they are working or are farmers so they don’t require current or recurring account. Reason for preferring saving account is that they are getting interest on their money.
5. Services availed by the people given by the bank
Table 5.1
Education qualification Number of respondent
Below 10th
2 SERVICES AVAILED BY YOU Responses in Responses in Remittances Foreign Exchange Bill payment Bank assurance Tax collection Mutual funds Insurance 0 0 0 0 0 0 0
ATM ATM cum debit card Any where banking Tele banking Remote access terminal Direct-E tax pay Internet & mobile banking
0 0 0 0 0 0 0
Multi-city cheque facility
0
By taking the reference from the table 5.1 it is found that respondent who are having education qualification below 10th are not using the services provided by the banks as few of the respondents are utilising ATM service of the bank and not any other services since They have no idea about this and not educated. Table 5 .2
Education qualification Number of respondent
10th
2 SERVICES AVAILED BY YOU Responses in Responses in Remittances Foreign Exchange Bill payment Bank assurance Tax collection Mutual funds Insurance 0 0 66.67 0 0 0 0
ATM ATM cum debit card Any where banking Tele banking Remote access terminal Direct-E tax pay Internet & mobile banking Multi-city cheque facility
0 0 0 0 0 0 0 0
By taking the reference from the table 5.2 it is found that respondent who are having education qualification 10th are using the services provided by the banks as only2 out of 3 (66.67%) respondents are utilising ATM service of the because they little about the ATM And other Bank services.
Table 5.3
Education qualification Number of respondent
12th
3 SERVICES AVAILED BY YOU
Responses in ATM ATM cum debit card Any where banking Tele banking Remote access terminal Direct-E tax pay Internet & mobile banking Multi-city cheque facility 50 0 0 0 0 0 0 0 Remittances Foreign Exchange Bill payment Bank assurance Tax collection Mutual funds Insurance
Responses in 0 0 0 0 0 0 0
By taking the reference from the table 5.3 it is found that respondent who are having education qualification till 12th not using the services provided by the banks as only 50 of the respondents are utilising ATM service provided by the bank and not any other services since they don’t have any need for any other services as is clear from the table 1 that 50 and farmers and rest 50 are farming on their own land so they don’t need other services and other reason is that by taking reference from table 3 50 of them are having account in rural bank and they have easy approach for this bank
Table 5.4
Education qualification Number of respondent
Graduate
1 SERVICES AVAILED BY YOU Responses in Responses in Remittances Foreign Exchange Bill payment Bank assurance Tax collection Mutual funds 0 0 0 0 0 100
ATM ATM cum debit card Any where banking Tele banking Remote access terminal Direct-E tax pay
100 0 0 0 0 0
Internet & mobile banking Multi-city cheque facility
0 100
Insurance
0
By taking the reference from the table 5.4 it is found that respondent who is graduate is utilising the services provided by the bank as it is clear from the table 3 that mainly all the graduates are having account in nationalised banks as they are concerned about the services provided by the banks and other reason is that as is clear from the table 1 that respondents who are graduate are mainly doing service so they need the services provided by the bank . Table 5.5
Education qualification
Number of respondent
Post graduate
3 SERVICES AVAILED BY YOU Responses in Responses in Remittances Foreign Exchange Bill payment Bank assurance Tax collection Mutual funds Insurance 0 0 0 0 0 0 50
ATM ATM cum debit card Any where banking Tele banking Remote access terminal Direct-E tax pay Internet & mobile banking Multi-city cheque facility
66.6 66.6 100 0 0 0 33.3 0
By taking the reference from the table 5.5 it is found that respondent who are graduate are utilising the services provided by the bank as it is clear from the table 3 that mainly all the graduates are having account in nationalised banks as they are concerned about the services provided by the banks and other reason is that as is clear from the table 1 that respondents who are graduate are mainly doing service so they need the services provided by the bank.
6. Source of loan
Table 6 Source of loan
Education qualification Number respondent of
Bank ()
Rural bank()
Post office()
Private lender() 33.3 0 0 0 0
Below 10th 10th 12th Graduate Post graduate
1 2 3 1 1
0 100
0 50(1/2*100)
0 0 33.3 0 0
50(2/3*100) 0 100 50 0 0
By taking the reference from the table 6 it is found that respondents who are having education qualification below 10th don’t prefer to take loan as they thought that banks are corrupt as is clear from table 22 and private lenders hire a very high rate of interest. Respondents who have education qualification till 12th have taken loan but only from bank as they also thought that banks are bank corrupt and private lenders hire high rate of interest. Respondents who are graduates don’t prefer to take loans since they self sufficient as most of the graduates belong to the working class as is evident from the table 1. Respondents who are post graduates have taken loan as they felt need for it and they prefer to take loan from bank because of lower interest rate.
7. Type of loan taken
Table 7 Type of loan
Education qualification Number respondent of
Home() 0 0 66.7 0
Vehicle() 0 0 0 0
Personal() 0 100 0 0
Education() 33.3 0 33.3 100
Below 10th 10th 12th Graduate
3 2 3 1
Post graduate
3
33.3
0
0
33.3
By taking reference from table 7 it is found that respondents who are having education qualification below 10th have taken education loan as they taken for their children education. Respondent who are either educated till 12th or graduate have taken loan for vehicles as some them are using vehicles for commercial use. Post graduate respondents who are working class people (table 1) have taken loan for their home. From table 7 it can be analysed that no one has taken personal loan
8. Type of insurance policies
Table 8 Type of insurance
Education qualification Number respondent of
Life () 66.67 50 66.67 100 0
Home () 0 0 0 0 0
Motor () 0 0 0 0 0
Health () 33.33 0 0 0 0
Life + Motor () 0 0 0 0 66.67
Life + Motor + Health() 0 0 0 0 0
Below 10th 10th 12th Graduate Post graduate
3 2 3 1 3
By taking reference from table 8 is found that respondents who have education qualification either below 10th or till 12th have taken life insurance policies as they are concerned about their future. Respondents who are graduates or post graduates have taken life insurance, health insurance and vehicle insurance as they are concerned for future and since most of graduates belong to working class so therefore many of them have taken these policies as to save their income tax.
9. No of insurance policies acquired by people
Table 9
Education qualification Number of respondent
None() 33.33 50 33.33 0 33.33
Below 10th 10th 12th Graduate Post graduate
3 2 3 1 3
Number of insurance policies Two() Three More than () three() 66.67 0 0 0 50 66.67 0 0 0 0 100 0 0 66.67 0 0 One()
By taking reference from table 9 it found that respondents who are having education qualification below 10th have taken only two out of three insurance policy since they don’t have enough money to pay for the monthly instalments as it is clear from the table 1 most of them are farmers. Respondents who are having educational qualification 10th are aware about insurance policy in our survey report 2 out of 2 people have taken the insurance policies, but they have not enough money to pay the monthly instalment . Respondents who are having education qualification till 12th have taken two insurance policies as some of them are having enough money to monthly instalments. Respondents who are either graduate or post graduate are mainly working class people so they have enough money to pay for the monthly instalments and one more reason to take two or more than three policies is that they want to save their income tax.
10. Service awareness
Table 10.1
Education qualification Number of respondent
Below 10
3 AWARENESS OF THE FACILITIES PROVIDED BY BANK Responses in Responses in ATM 0 Remittances 0 ATM cum debit card 0 Foreign Exchange 0 Any where banking 0 Bill payment 0
th
Tele banking Remote access terminal Direct-E tax pay Internet & mobile banking Multi-city cheque facility
0 0 0 0 0
Bank assurance Tax collection Mutual funds Insurance
0 0 0 0
By taking reference from table 10.1 it is found that respondents who are having education qualification below 10th are not aware of the services provided by the bank as to them bank is a place to deposit money
Table 10.2
Education qualification Number of respondent
10th
2 AWARENESS OF THE FACILITIES PROVIDED BY BANK Responses in Responses in ATM 50 Remittances 0 ATM cum debit card 0 Foreign Exchange 0 Any where banking 0 Bill payment 0 Tele banking 0 Bank assurance 0 Remote access terminal 0 Tax collection 0 Direct-E tax pay 0 Mutual funds 0 Internet & mobile banking 0 Insurance 0 Multi-city cheque facility 0
By taking reference from table 10.2 it is found that respondents who are having education qualification 10th are aware of the services provided by the bank as to them bank is a place to deposit money.
Table 10.3
Education qualification Number of respondent
12th
3 AWARENESS OF THE FACILITIES PROVIDED BY BANK Responses in Responses in ATM 66.67 Remittances 0 ATM cum debit card 33.33 Foreign Exchange 0
Any where banking Tele banking Remote access terminal Direct-E tax pay Internet & mobile banking Multi-city cheque facility
0 0 0 0 33.33 0
Bill payment Bank assurance Tax collection Mutual funds Insurance
0 0 0 0 0
By taking reference from table 10.3 it is found that respondents who are having education qualification till 12th are aware of the some of the services provided by bank since some of them have opened their account in the nationalised banks because of the services they provide. As is evident from table 5.2 many the respondents are using the services provided by bank.
Table 10.4
Education qualification Number of respondent
Graduate
1 AWARENESS OF THE FACILITIES PROVIDED BY BANK Responses in Responses in ATM 0 Remittances 0 ATM cum debit card 100 Foreign Exchange 0 Any where banking 0 Bill payment 100 Tele banking 0 Bank assurance 0 Remote access terminal 0 Tax collection 0 Direct-E tax pay 0 Mutual funds 100 Internet & mobile banking 100 Insurance 100 Multi-city cheque facility 100
By taking reference from table 10.4 it is found that respondents who is graduates knows about the services provided by the bank as many of them have opened account in nationalised banks for the services they provide and as many of these respondents belong to working class (table 1) because of this they have many work in banks where they come to kwon about these services. Table 10.5
Education qualification Number of respondent
Post graduate 3 AWARENESS OF THE FACILITIES PROVIDED BY BANK Responses in Responses in ATM 100 Remittances 66.67 ATM cum debit card 100 Foreign Exchange 66.67
Any where banking Tele banking Remote access terminal Direct-E tax pay Internet & mobile banking Multi-city cheque facility
66.67 66.67 66.67 66.67 100 100
Bill payment Bank assurance Tax collection Mutual funds Insurance
100 66.67 66.67 33.33 100
By taking the reference from table 10.5 it is clear that respondents who are post graduate knows about all the services provided by the bank since that respondent is working is SBI he is aware of all the services provided by the bank.
11. Loan services provided by bank
Table 11.1
Education qualification Number of respondent
Below 10
th
3 LOAN SERVICES PROVIDED BY YOUR BANK Responses in 0 0 50 100 0 0 Trade finance loan Special mortgage schemes Personal loan for pensioners Agriculture loan Special loan for women Kashan credit card
House loan Home renovation loan Education loan Personal loan Auto finance loan Consumer durable loan
Responses in 0 0 0 66.67 0 0
By taking the reference from table 11.1 it is clear that respondents who are having education qualification below 10th knows about some of the loan services provided by the bank since there are many ads on TV and radio so they come to kwon about these services and since many banks are approaching villages for agricultural loan they teaches about the agricultural loans. Table 11.2
Education qualification Number of respondent
10th
2 LOAN SERVICES PROVIDED BY YOUR BANK Responses in 0 0 0 0 Trade finance loan Special mortgage schemes Personal loan for pensioners Agriculture loan
House loan Home renovation loan Education loan Personal loan
Responses in 0 0 0 100
Auto finance loan Consumer durable loan
0 0
Special loan for women Kishan credit card
0 0
By taking the reference from table 11.2 it is clear that respondents who are having education qualification 10th knows about some of the loan services provided by the bank since there are many ads on TV and radio so they come to kwon about these services and since many banks are approaching villages for agricultural loan they teaches about the agricultural loans and they also learned by the teacher and their institutions.
Table 11.3
Education qualification Number of respondent
12th
3 LOAN SERVICES PROVIDED BY YOUR BANK Responses in 33.33 0 33.33 0 0 0 Trade finance loan Special mortgage schemes Personal loan for pensioners Agriculture loan Special loan for women Kishan credit card
House loan Home renovation loan Education loan Personal loan Auto finance loan Consumer durable loan
Responses in 0 0 0 0 0 0
By taking the reference from table 11.3 it is clear that respondents who are having education qualification 12th knows about some of the loan services provided by the bank since there are many ads on TV and radio so they come to kwon about these services and since many banks are approaching villages for agricultural loan they teaches about the agricultural loans.
Table 11.4
Education qualification Number of respondent
Graduate
1 LOAN SERVICES PROVIDED BY YOUR BANK Responses in 0 0 100 0 0 0 Trade finance loan Special mortgage schemes Personal loan for pensioners Agriculture loan Special loan for women Kashan credit card
House loan Home renovation loan Education loan Personal loan Auto finance loan Consumer durable loan
Responses in 0 0 0 0 0 0
By taking reference from table 11.4 it is found that respondents who are graduates knows about the loan services provided by the banks as is evident from table 1 that most of these respondents are working class people and many of them are also working in insurance sector and bank sector because of this they knows about these services. Many these respondents have their account in nationalised banks and these banks make them aware of these services.
Table 11.5
Education qualification Number of respondent
Post graduate
3 LOAN SERVICES PROVIDED BY YOUR BANK Responses in 100 100 100 100 100 100 Trade finance loan Special mortgage schemes Personal loan for pensioners Agriculture loan Special loan for women Kashan credit card
House loan Home renovation loan Education loan Personal loan Auto finance loan Consumer durable loan
Responses in 100 100 100 100 100 100
By taking the reference from table 11.5 it is clear that respondents who are post graduate knows about all the services provided by the bank since that respondent is working is SBI so he is aware of all the services provided by the bank.
12. Loan services for agriculture
Table 12
Education qualification
Number of respondent
Loan services for agriculture
Below 10 10th 12th Graduate Post graduate
th
3 2 3 1 3
Fertilizers, equipment Fertilizers, equipment Fertilizers, equipment Fertilizers, equipment, tube well , Fertilizers, equipment
By taking reference from table 11.1, 11.2, 11.3, 11.4,11.5 it is found that respondents who are either below 10th,10th, 12th, graduates or post graduates knows about the
agriculture loan services provided by the banks. From table 12 it is found that all the respondents knows that there bank provide loan for agriculture equipments, fertilizers, and tube wells. Since many banks are approaching rural areas to tell about the special agriculture loans they are providing and many of the respondent have account in nationalised banks and these banks make them aware of the agriculture loans.
13. Insurance Company
Table 13 INSURANCE COMPANY Reliance Birla Aviva Others () () () 0 0 0 None 0 0 0 None 0 0 0 None 0 0 0 ICICI, New India 66.67 33.33 0 0 ICICI LIC () 66.67 50 66.67 100
Education qualification
Number of respondent
Below 10th 10th 12th Graduate Post graduate
3 2 3 1 3
By taking the reference from table 13 it is found that LIC is the main choice for all the respondents. Some of the respondents are also having policies from ICICI and new India.
14. Service satisfaction
Table 14
Education qualification Number of respondent
Below 10th 10 12th Graduate Post graduate
3 2 3 1 3
Very satisfied () 50 50 0 0 0
SATISFACTORY LEVEL (FOR BANKS) Satisfied Neither satisfied dissatisfied Very () nor dissatisfies () dissatisfied () 0 50 0 0 0 50 0 0 33.33 0 33.33 0 100 0 0 0 66.67 0 33.33 0
By taking the reference from table 14 it is found that all the respondents are satisfied from the services provided by their bank. As these banks make them aware of the new schemes and help them if they are having any problem in bank.
15. Satisfactory level for Insurance Company
Table 15
Education qualification Number of respondent
Below 10th 10th 12th Graduate Post graduate
3 2 3 1 3
SATISFACTORY LEVEL (FOR INSURANCE COMPANY) Very Satisfied Neither satisfied dissatisfied Very satisfied () nor dissatisfies () dissatisfied () () 0 0 0 0 0 0 50 50 0 0 0 33.33 0 33.33 0 0 100 0 0 0 33.33 33.33 0 0 0
By taking the reference from table 15 it is found that all the respondents are satisfied from the services provided by their bank. As these banks make them aware of the new schemes and help them if they are having any problem in bank.
16. Service selection consideration
Table 16
Education qualification Number of respondent
Below 10th 10th 12th Graduate Post graduate
3 2 3 1 3
Reason for not taking loan from Bank Delay in Discouraging Others processing () attitude () 100 0 Corruption 50 100 Don’t give info 0 100 Corruption 100 0 High interest rate 33.33 0 High interest rate
By taking the reference from table 16 it is found that all the respondent who are either having education qualification below 10th ,10th, 12th thought that bank are corrupted and shows discouraging behaviour but graduates and post graduates don’t prefer loan from bank as it is time consuming process and they prefer take loans if required when they are getting it at lower rate.
17. Service usage consideration
Table 17 Purpose of personal loan Agriculture Land 0 0 0 0 0 0 0 0 0 0
Education qualification
Number of respondent
Marriage 0 0 0 0 0
Cattle 0 0 0 0 0
Below 10th 10th 12th Graduate Post graduate
3 2 3 1 3
By taking reference from table 17 it is found that no one has taken personal loan, as they have no need for that and personal loan is available at higher rate of interest.
doc_265755656.docx
The services of financial institution and observes their consumer satisfaction on the basis of all financial services which is necessary to poverty reduction. In this project an attempt has been made to study the reach and efficiency of financial institution , how they give their some special scheme or programme for poverty eradication. Efforts were also made, to find out what are the challenges ahead for financial institutions.
MINOR PROJECT On MARKET PENETRATION AND CONSUMER ACCEPTANCE OF FINANCIAL SERVICES IN RURAL INDIA
Preface
In the project of ?CONSUMER ACCEPTENCE AND MARKET PENETRATION OF FINANCIAL SERVICES IN RURAL AREAS? our objective is that studies the services of financial institution and observes their consumer satisfaction on the basis of all financial services which is necessary to poverty reduction. In this project an attempt has been made to study the reach and efficiency of financial institution that how they give their some special scheme or programme for poverty eradication. Efforts were also made, to find out what are the challenges ahead for financial institutions. Firstly we collect the relative literature review for the deep knowledge of the subject and then we make questionnaire which is used to collecting relative data to analyses the market penetration and consumer acceptance of their scheme in rural areas. Then by the analysis of data that was collected from villages like Dubeypur, Kasturipur and rural market in Allahabad district we find that there is not such growth of financial sector in rural areas. Basically we found that the rural people awareness about some special schemes and services which is provided only for rural areas.
Acknowledgements
It is needed a moment of great pleasure to express my sense of profound gratitude & indebtness to all the people who have been instrumental in making my project a rich experience. It give me great privilege and honor to offer thanks to all those who helped me in my project, I would like to extend my sincere thanks and gratitude to my project guide Dr. Piyali Ghosh for acting as a mentor and as a catalyst during entire duration of my project. I also thank him for providing continuous support and expert guidance throughout my project, whenever needed.
Heartfelt thanks to many respondents whose ideas, critical insights and suggestions have been valuable during the making.
NAND KISHOR RAM 2008MB44 MBA_1st year
Table of content
List of the table
List of figures
Chapter 1 Introduction
India has one of the most extensive financial systems comprising of banks, microfinance institutions and self-help groups. There are more than 30,775 rural branches of commercial and regional rural banks. Rural cooperative institutions have a wider outreach, with 1, 08,779 primary agricultural co-operative societies (PACS). In addition, 2.24 million self-help groups (SHGs), with the credit linkages by banks are also operating in India. Furthermore, the number of Kisan Credit Card (KCCs) holders has increased to 59.09 million. Indeed, India compares favorably with other Developing countries both in terms of the geographical area covered as well as average population served per bank branch. While the growth and coverage of formal financial services in rural India may seem remarkable, the vast majority of rural poor still does not have access to formal finance. This lack of access to formal credit and savings services jeopardizes India’s efforts to both poverty reduction as well as wealth creation necessary to propel the nation towards ecological, social and economic well-being. This is so because the financial sector in India has failed to craft management innovations that build on the strength of the informal money lending. No wonder then, nearly 45% of the rural lending in India is by moneylenders and the trend is actually on the rise3. Indeed, despite concerted efforts by formal and semi-formal financial mechanisms, the informal moneylenders have dynamically outsmarted them in their reach to poor by their dynamic management skills and social networks. There is a vast literature demonstrating the importance of the moneylenders in rural economy across the word. While a full review of literature is beyond the scope of this paper some of the literature is indicated in the references.
The reasons for the continuous existence of moneylenders in India have to be found both in the inadequacy of the formal financial systems as well as the efficiency and innovations
of the moneylenders are themselves. Serving the rural poor is a high-risk, high-cost proposition for banks. Banks have always feared the uncertainty about the repayment capacity of poor, whose incomes are subject to numerous vulnerabilities. In the absence of reliable credit information and costly monitoring, banks fear a high Default risk. This is often exacerbated by the poor people’s lack of collateral. Additionally, the transaction costs of rural lending in India are high, mainly due to small loan sizes, the high frequency of transactions, the large geographical spread, the Heterogeneity of borrowers, and illiteracy. Rural poor too find the banks unattractive because of their inflexibility, high transaction costs and a time-consuming process. For a poor person the transaction costs associated with numerous visits to bank, long wait of time, mistrust born out of bad experience, and payment of extra-legal money for the approval of loan all add up to costs which are more or less equal to the costs of obtaining loan from moneylenders with comparative efficiency.
Moneylenders are characterized as being exploitative and unscrupulous. However, less recognised is the fact that faced with the competition from the expanding formal financial system moneylenders have adapted management innovations in order to remain in business. Consequently, their description as being exploitative needs reconsideration and should be seen in comparison to rates being charged for convenience-products by formal financial establishments. There are enough reasons to Set aside the notion that informal moneylenders are always bad and exploitative and the formal financial services—as operate currently—are always good.
Credit cards in India are a case in point. Credit cards are essentially convenience products and a profitable service industry for banks. In India banks issuing credit cards charge at an average annual rate of 34% interest on the outstanding balance. Thus, credit card loan is about 3.2 times more expensive than a home loan at an average rate of 10.5%. Even if we take the lowest credit card rate of around 20% in India, it is still twice the home loan rate in India. These rates compare well with the interest rates charged by the moneylenders,
but are not considered exploitative by the financial system. Moneylenders acting similarly as service providers to the excluded segment of the society are nonetheless considered as exploitative. As noted earlier, if we compare beyond this comparative position, there are five other key arguments that emerge from the available literature. These are: • In dealing with everyday competition with growing formal financial services Moneylenders have evolved innovative mechanisms and adaptations for efficiency and sustainability that have an edge over the formal financial systems in India. Majority of moneylenders are now using socially-responsible lending practices because they make sound business sense. • Destruction of informal and time-honoured money lending innovation in rural India is expected to have the similar negative economic impact as that of destruction of informal manufacturing in the past. • Moneylenders, banks and microfinance are imperfect substitutes for one another. These mechanisms, however, innovatively brought together to redesign a robust and effective financial systems based on the principles of complementary strengths. Less exploitative than credit card industry.
It is, therefore, important to acknowledge moneylenders as legitimate constituents of financial system. They have extensive social network and substantial credibility. Banks must establish linkages with them in order to serve the poor. In addition, moneylenders should be given the flexibility to access the deposits from the public, as any other financial institution.
Chapter 2 Literature Review
In a present study, an attempt has been made to assess the impact of commercial banks on the rural people of different villages of Allahabad . further an attempt has also been made to ascertain the various factor for mounting overdues of institutional and non institutional credit the study has tried to ascertain whether literacy, age ,caste of borrower , quantum of credit , processing time taken by banks in sanctioning the loans under finance (credit gap ) etc. influence the borrower to become defaulters resulting more and more over dues . For this purpose twelve sample borrower of 3 villages of Allahabad were selected under random sampling method. The relevant data were collected from the borrowers by direct and personal interview method , with the help of a suitably designed questionnaire .
Financial Growth in India:
Inclusion measures in India have led to physical expansion in the country. Unfortunately, the expansion has not brought about the necessary change in the backward and rural areas as financial services are yet to reach a vast majority of the population. The financial exclusion is characterised by ever since the enactment of the Cooperative and Regional Rural Banks Acts and nationalisation of scheduled commercial banks, financial limited service providers, limited goals and limited lending, besides a huge area of operation and missing linkages between financial institutions and local organisations. Demand-side factors have also contributed to the present dimension of financial exclusion, the result of which is that over two-thirds of the under-served segments resort to high-cost financial services from informal sources, which are present in every nook and corner. This paper
considers a number of alternative initiatives to increase access to institutional financial services for the under-served population.
Next Generation Financial Reforms for India:
India has grown by leaps and bounds in recent years and is emerging as a major world economic power. After lumbering along at a pace of about 4-5 percent GDP growth a year in the 1980s and the 1990s, the economy has surged in this decade, posting an average annual growth of 8.5 percent since 2005 (see Chart 1). The challenge now is to maintain this growth momentum and provide benefits as well as economic opportunities to a broad swath of the population.
Figure 1
India's financial system—comprising its banks, equity markets, bond markets, and myriad other financial institutions—is a crucial determinant of the country's future growth trajectory. The financial system's ability to channel domestic savings and foreign capital into productive investment and to provide financial services—such as payments, savings, insurance, and pensions—to a vast majority of households will influence economic as well as social stability. While India's financial institutions and regulatory structures have been developing gradually, the time has come to make a more concerted push toward the next generation of financial reforms. A growing and increasingly complex market-oriented economy, and its greater integration with global trade and finance, will require deeper, more efficient, and well-regulated financial markets. These considerations prompted the Indian government to institute a high-level committee—composed of a select group of financial sector practitioners, businesspeople, academics, and policymakers—to map out a blueprint for financial reforms. After more than six months of intensive work, the committee recently delivered its draft report to the government (available at http://planningcommission.nic.in/reports/genrep/report_fr.htm). In this article, we summarize the key findings of the report and examine its recommendations. Three main conclusions Many government committees over the years have looked into specific aspects of India's financial reforms, but this is the first committee mandated to "outline a comprehensive agenda for the evolution of the financial sector." Indeed, the report argues that there are deep linkages among different reforms, including broader reforms to monetary and fiscal policies, and recognizing these linkages is essential to achieve real progress. The report has three main conclusions. First, India's financial system is not providing adequate services to the majority of domestic retail customers, small and medium-sized enterprises, or large corporations. Government ownership of 70 percent of the banking
system and hindrances to the development of corporate debt and derivatives markets have stunted financial development. This will inevitably become a barrier to high growth. Second, the financial sector—if properly regulated but unleashed from government strictures that have stifled the development of certain markets and kept others from becoming competitive and efficient—has the potential to generate millions of muchneeded jobs and, more important, have an enormous multiplier effect on economic growth. Third, in these uncertain times, financial stability is more important than ever to keep growth from being derailed by shocks hitting the system, especially from abroad. Although the Indian economy dodged the Asian crisis and the recent subprime crisis, a lot remains to be done to secure the stability and durability of the financial system. Where things stand The report finds that the Indian financial system has made significant strides in recent years. India's stock exchanges, in particular, have developed well and become a vital source of funding for enterprises and an alternative savings instrument for households. Stock market capitalization has risen significantly—aided by financial inflows from abroad—and the technical infrastructure of equity trading is state of the art (see Chart 2).
Figure 2
The Indian government has taken a number of steps to improve the banking system. Banking reforms, which started nearly two decades ago, have increased the efficiency of the banking system, and the ratio of nonperforming loans to deposits is about 1 percent—a remarkably low level. Many of the public sector banks have become quite profitable and well capitalized, and they coexist with a vibrant private banking system. However, in terms of overall financial depth—the size of the financial system relative to the economy—India does not compare favorably with other countries or even most other emerging markets at a similar stage of development. Despite the apparent strength of the banking system, the ratio of private sector credit to GDP is still low by international standards (see Chart 3). Some of the restrictions on the banking system, and the incentives for banks to hold government bonds rather than make loans, have stifled lending. Consequently, the average ratio of loans to deposits in the Indian banking system is much lower than in most other countries.
Figure 3 The government bond market appears large—public debt amounts to about 70 percent of GDP—but much of the stock of government bonds is held by banks, a requirement prescribed by the "statutory liquidity ratio," and is not traded. The corporate bond market remains woefully underdeveloped, with the total capitalization amounting to less than 10 percent of GDP. Regulatory restrictions have also kept certain derivatives markets, especially for currency derivatives, from developing. The absence of these markets is being felt sorely as India's capital account has become more open over time, potentially leading to greater short-term currency volatility. India is seen as an attractive destination for foreign capital, which has meant large inflows in recent years through various channels, especially portfolio equity investment by foreign investors (see Chart 4). The financial system faces ever-greater challenges in intermediating the rising amounts of foreign as well as domestic capital in an efficient way to the most productive investments. At the same time, it will be important not to let the capacity and expertise to regulate financial markets fall too far behind innovations in these markets.
Clearly, there are big challenges to achieving further financial reforms. Let us start with the big picture.
Figure 4 Fine-tuning macroeconomic policies Why do macroeconomic policies matter for financial reforms? The links between macroeconomic management and financial development are deep and run in both directions. Disciplined and predictable monetary, fiscal, and debt management policies create a foundation for financial sector reforms. In turn, a well-functioning financial system is essential for the effective transmission of macroeconomic policies. Whatever their faults might be, India's macroeconomic policies have delivered high growth and, until recently, stable inflation. Why fix what isn’t broke? Because, in the memorable words of Bob Dylan, the times they are a-changing'. Cross-border capital flows—both inward and outward—have ramped up and are likely to remain large and volatile, creating huge complications for monetary policy as these flows affect the domestic money supply, the exchange rate, and so on. Re-imposing capital controls is not a good option; even existing controls are losing their potency as agile
investors invariably find ways to evade them. The only viable alternative is to have predictable and consistent policies that at least do not create volatility themselves and that give policymakers the flexibility to respond rapidly to shocks. What are the options for monetary policy, especially now that the demands on it are growing as the economy becomes more open and exposed to a wider array of domestic and external shocks? The Reserve Bank of India (RBI), India's central bank, has done a good job of managing the multiple mandates foisted upon it—keeping inflation under reasonable control, managing some of the pressures on the exchange rate, and coping with capital inflows—all against the background of strong growth. But there is a risk that this high-wire act has reached its limits. The recent volatility in the rupee has revived calls for the RBI to more actively manage the exchange rate, which is becoming increasingly difficult as the capital account becomes more open. Sustained intervention in the foreign exchange market can also create unrealistic expectations about the RBI's ability to manage multiple objectives with one instrument. Focusing on a single objective—low and stable inflation—is ultimately the best way that monetary policy can promote macroeconomic and financial stability. This does not mean sacrificing or ignoring growth. Indeed, well-anchored inflationary expectations may well be the best tonic that monetary policy can provide for growth. Contrary to what some commentators seem to believe, there is no long-run trade-off between growth and inflation, and for monetary policy to try and engineer a short-run trade-off can be dangerous. In short, the inflation objective would in fact make monetary policy more effective and strengthen the RBI's hands rather than pinning them down. India's fiscal policy also needs a makeover. There has been encouraging progress in reducing the budget deficit, but this may just be a cyclical improvement as a result of a strong economy. Recent events, such as the government's waiver of certain farm loans and the growing oil subsidies, raise serious concerns that fiscal rectitude may fall prey to the election cycle. Large deficits raise the specter of future inflation, and they could also suck up funds that would otherwise be available for private investment.
The size of government budget deficits matters for financial reforms also because the deficit is partially financed by getting banks to buy government bonds. Durable reductions in the fiscal deficit and public sector borrowing requirement are therefore crucial to reduce the constraints on monetary policy (as prospects of large deficits make it harder to manage inflationary expectations) and allow financial sector reforms, especially banking reforms, to proceed. Promoting financial inclusion A robust financial system is not much good if most people don't have access to it. Financial inclusion—which means providing not just credit but also other financial services such as savings and insurance products—is a key priority, especially in rural India. Nearly three-quarters of farm households have no access to formal sources of credit and lack instruments to insure against adverse events such as low crop yields due to bad weather. But this problem is not limited to rural areas. The lack of access to formal banking services affects more than one-third of poor households, leaving them vulnerable to informal intermediaries such as moneylenders, and makes the distribution of public transfers less efficient. And the lack of financing and insurance stifles entrepreneurial activities. Mandated requirements of a certain quantum of lending to government-favored "priority" sectors and interest rate ceilings for small loans, especially to the agricultural sector, may be well intentioned but have ended up restricting rather than improving broad access to institutional finance. Banks have no incentive to expand lending if the price of small loans is fixed by fiat. Partly as a consequence, nearly half of the loans taken by those in the bottom quarter of the income distribution are from informal lenders at an interest rate of more than 36 percent a year, well above the mandated lending rate for banks, which is less than half that rate. According to the report, the solution is not more intervention but more competition between formal and informal financial institutions and fewer strictures on the former. For instance, freeing up interest rates and then setting up incentives for banks to make loans to
priority sectors such as agriculture (rather than just mandating this by fiat) could lead to more credit flowing to these sectors and in a more efficient way. Allowing more banks, especially smaller, well-capitalized and well-governed private banks, to operate and deliver retail services could also improve access to finance—making it more flexible and more attuned to local needs. A level playing field Given the size of the Indian banking system and its predominant role in the financial system, banking reforms are a cornerstone of the overall reform program. The Indian banking system has been characterized by an implicit "grand bargain," whereby banks get access to low-cost deposits in return for fulfilling certain social obligations, such as lending to priority sectors and funding the government by buying government bonds. This is becoming an unviable framework as the privileges of banks, including state-owned banks, erode and constraints on them such as priority sector lending, which are often motivated by political rather than economic considerations, increase. Maintaining public ownership of a large portion of the banking system is not conducive to efficiency. A one-shot privatization is not realistic or even desirable, but there is a lot that can be done even now to facilitate the transition to a more efficient banking system. One step would be to create stronger and more independent boards, perhaps with a private investor owning a large strategic stake, that could manage the large state-owned banks better and with less government interference. Another would be to allow bank mergers, especially to enable smaller and less efficient banks to be taken over. Other steps, such as freeing up banks to set up branches and ATMs with less onerous licensing restrictions, could foster more growth, entry, and competition in the banking system. Keeping regulation in step with innovation The U.S. subprime problem has highlighted the need for good regulation even in the most sophisticated financial markets. Effective regulation is still more important in a nascent but fast-growing financial system. The government has an essential role: making the rules of the game clear and flexible enough to cope with financial innovation without stifling it.
For instance, fostering markets for foreign exchange derivatives would help domestic firms with exposure to international trade protect themselves from currency fluctuations. But it does create some risks that foreign investors will use those markets for mounting speculative runs on the currency and that domestic firms will get burned if they buy those derivatives without fully understanding them. The solution is not to choke off these markets but to make them more transparent, subject participants to uniform disclosure standards, and prevent fraudulent behavior. Can all risks be eliminated? Certainly not, but there are definitely ways to shift the balance between benefits and risks in favor of the former. As in many other countries, a number of financial services firms in India now operate in different financial markets (for example, insurance, banking, and mutual funds), and these markets are becoming more closely linked. These trends imply that regulation of each market in isolation is no longer the right approach. The situation right now is that there are multiple regulators in some areas and none in others. Many regulators for specific areas tend to focus very narrowly, leaving financial firms unsupervised. Although a move to a single regulator may be premature in India's context, a lot can be done even within the present framework to improve coordination and to clearly delineate responsibilities among existing regulatory agencies. Also, instead of focusing excessively on enforcing a plethora of sometimes archaic rules, it certainly makes sense for regulators to focus on the bigger risk picture, especially in their interaction with large, systemically important, financial conglomerates. Such principles-based regulation will be more conducive to rapidly evolving financial markets and is also more adaptable. The potential risks of a financial meltdown have made central bankers and regulators very cautious, perhaps rightly so. But excessive caution is not a virtue in itself. It can prevent markets from becoming larger and capable of absorbing shocks, and stifle innovation such as the development of new markets and financial instruments. It could even generate more financial stress (and have perverse effects when such stress does hit the system) if regulators focus on a rigid set of rules rather than taking a broader view of financial market exposures of institutions under their purview.
Connections and small steps With so many difficult challenges, where does one start? Many of the required reforms are in fact deeply intertwined. For instance, it would make sense to level the playing field between banks and nonbank financial corporations by easing the requirement that banks finance priority sectors and the government. But making these changes while the government continues to have huge financing needs, and without having a more uniform and nimble regulatory regime, could be risky. The connections stretch beyond just financial reforms to broader macroeconomic reforms, which could reinforce individual financial sector measures. For instance, allowing foreign investors to participate more freely in corporate and government debt markets could increase liquidity in those markets, provide financing for infrastructure investment, and reduce public debt financing through banks. It could also provide an additional riskbearing buffer in the economy. India's rich and complex political process being what it is, focusing solely on the big picture could bog down progress. Hence, the report also lists a number of specific steps that could get the process of reforms going and build up some momentum as people see the benefits. Many of these are less controversial but will still require some resolve on the part of policymakers to implement. For instance, converting trade receivable claims to electronic format and creating a structure to allow them to be sold as commercial paper could greatly boost the credit available to small and medium-sized enterprises. We believe that if other policies are in sync, implementation of this report's blueprint for financial sector reforms could add significantly to India's economic growth and also make a major contribution to the sustainability of this growth, in both the economic and the political dimensions. The absence of reforms, on the other hand, would represent not only a lost opportunity but also a huge source of risk for the economy.
Chapter 3 RESEARCH METHODOLOGY
The first stage of the research programme is focused on the causal relationships between the financial sectors and the rural customer about their acceptance of services. It will also try to identify a core set of financial services that are necessary for poverty reducing growth and the institutional structures that have been more successful in providing them. The methodology we have taken in this project is based on the both close ended as well as open ended question in same time there is one question based on lickers scale on the basis of five. Our questionnaire is prepared to think all the aspects to rural people. Focus studies within each theme will clarify the key issues to be explored in country based research. The links between the financial sector, growth and poverty reduction will be explored:
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at a macro level – looking, at savings and the overall policy environment at institutional level - looking at the type of financial institutions which are best suited to provide appropriate financial services
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At micro level - looking at patterns of demand and supply for financial services for households and enterprises.
Chapter 3 (a) Limitation of research methodology
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Most of the villagers were illiterate so they were not able to respond properly. As the survey was conducted during the afternoon period, the most of the males were not at their homes and female respondents were not able to respond properly.
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Some of the villagers were busy in their work, so they were little reluctant to answer the questions properly. As the sample taken was very little, only 10-12 villagers were asked the questions. So, it may not give the correct result because a small sample cannot represent the whole rural sector.
Chapter 4 Findings and observation
Service penetration 1. Categories of people according to their own occupation
Table 1 Occupation Farmer Landowner Services Self employed Farmer+ Landowner Farmer+ Self employed Farmer+ Services+ Landowner Below 10th 2 0 0 1 0 0 0 Education 10th 12th 2 0 0 0 0 1 0 2 0 0 0 0 0 0
Graduate 0 0 1 0 0 0 0
PG 0 0 1 0 0 2 0
2. Persons having account in
Table 2 Account in
Education qualification Number of respondent
Bank (%) 3 2 3 0 75 75
Post office (%) 100 25 25
Below 10th 10th 12th
Graduate Post graduate
1 3
100 100
0 0
By taking the reference from table 2, it is found that respondents who have education qualification either below 10th, 10th, 12th, graduate, or post graduate prefer to deposit money in bank because they think this is the safe place for their money
3. Name of the bank in which people having
Table 3
Education qualification Number of respondent
account
Name of bank 2 2 2 1 Regional rulal bank Holagarh SBI,Regional rulal bank Holagarh SBI, Regional rulal bank Holagarh Bank of Baroda, ICICI, Regional rulal bank , SBI
Below 10th 10th 12th Graduate
Post graduate
3
SBI,PNB
By taking the reference from the table 3, it is found that respondents who are having education qualification below 10th prefer to open there account in rural bank, because their main concern is easy approach and they are depositing the money for their future use only. Respondents who are having education qualification till 12th gave mix responses as some are looking for the services and some are looking for easy approach this is the reason some prefer to have account in nationalised bank and some in rural bank. Respondents who have are graduates mainly prefer to have their account in nationalised banks as they are concerned about the services provided by the bank. Respondents who are post graduate prefer to have their account in nationalised banks only as they are concerned about the bank services.
4. Type of account people having
Table 4
Type of account
Education qualification Number respondent of
Saving (%) 66.67 100 100 100 100
Current (%) 0 0 0 0 0
Fixed (%) 0 0 0 0 0
Recurring (%) 0 0 0 0 0
Below 10th 10th 12th Graduate Post graduate
3 2 3 1 3
By taking the reference from table 4, it is found that respondents who have education qualification either below 10th, 12th, graduate, or post graduate prefer to have saving account as either they are working or are farmers so they don’t require current or recurring account. Reason for preferring saving account is that they are getting interest on their money.
5. Services availed by the people given by the bank
Table 5.1
Education qualification Number of respondent
Below 10th
2 SERVICES AVAILED BY YOU Responses in Responses in Remittances Foreign Exchange Bill payment Bank assurance Tax collection Mutual funds Insurance 0 0 0 0 0 0 0
ATM ATM cum debit card Any where banking Tele banking Remote access terminal Direct-E tax pay Internet & mobile banking
0 0 0 0 0 0 0
Multi-city cheque facility
0
By taking the reference from the table 5.1 it is found that respondent who are having education qualification below 10th are not using the services provided by the banks as few of the respondents are utilising ATM service of the bank and not any other services since They have no idea about this and not educated. Table 5 .2
Education qualification Number of respondent
10th
2 SERVICES AVAILED BY YOU Responses in Responses in Remittances Foreign Exchange Bill payment Bank assurance Tax collection Mutual funds Insurance 0 0 66.67 0 0 0 0
ATM ATM cum debit card Any where banking Tele banking Remote access terminal Direct-E tax pay Internet & mobile banking Multi-city cheque facility
0 0 0 0 0 0 0 0
By taking the reference from the table 5.2 it is found that respondent who are having education qualification 10th are using the services provided by the banks as only2 out of 3 (66.67%) respondents are utilising ATM service of the because they little about the ATM And other Bank services.
Table 5.3
Education qualification Number of respondent
12th
3 SERVICES AVAILED BY YOU
Responses in ATM ATM cum debit card Any where banking Tele banking Remote access terminal Direct-E tax pay Internet & mobile banking Multi-city cheque facility 50 0 0 0 0 0 0 0 Remittances Foreign Exchange Bill payment Bank assurance Tax collection Mutual funds Insurance
Responses in 0 0 0 0 0 0 0
By taking the reference from the table 5.3 it is found that respondent who are having education qualification till 12th not using the services provided by the banks as only 50 of the respondents are utilising ATM service provided by the bank and not any other services since they don’t have any need for any other services as is clear from the table 1 that 50 and farmers and rest 50 are farming on their own land so they don’t need other services and other reason is that by taking reference from table 3 50 of them are having account in rural bank and they have easy approach for this bank
Table 5.4
Education qualification Number of respondent
Graduate
1 SERVICES AVAILED BY YOU Responses in Responses in Remittances Foreign Exchange Bill payment Bank assurance Tax collection Mutual funds 0 0 0 0 0 100
ATM ATM cum debit card Any where banking Tele banking Remote access terminal Direct-E tax pay
100 0 0 0 0 0
Internet & mobile banking Multi-city cheque facility
0 100
Insurance
0
By taking the reference from the table 5.4 it is found that respondent who is graduate is utilising the services provided by the bank as it is clear from the table 3 that mainly all the graduates are having account in nationalised banks as they are concerned about the services provided by the banks and other reason is that as is clear from the table 1 that respondents who are graduate are mainly doing service so they need the services provided by the bank . Table 5.5
Education qualification
Number of respondent
Post graduate
3 SERVICES AVAILED BY YOU Responses in Responses in Remittances Foreign Exchange Bill payment Bank assurance Tax collection Mutual funds Insurance 0 0 0 0 0 0 50
ATM ATM cum debit card Any where banking Tele banking Remote access terminal Direct-E tax pay Internet & mobile banking Multi-city cheque facility
66.6 66.6 100 0 0 0 33.3 0
By taking the reference from the table 5.5 it is found that respondent who are graduate are utilising the services provided by the bank as it is clear from the table 3 that mainly all the graduates are having account in nationalised banks as they are concerned about the services provided by the banks and other reason is that as is clear from the table 1 that respondents who are graduate are mainly doing service so they need the services provided by the bank.
6. Source of loan
Table 6 Source of loan
Education qualification Number respondent of
Bank ()
Rural bank()
Post office()
Private lender() 33.3 0 0 0 0
Below 10th 10th 12th Graduate Post graduate
1 2 3 1 1
0 100
0 50(1/2*100)
0 0 33.3 0 0
50(2/3*100) 0 100 50 0 0
By taking the reference from the table 6 it is found that respondents who are having education qualification below 10th don’t prefer to take loan as they thought that banks are corrupt as is clear from table 22 and private lenders hire a very high rate of interest. Respondents who have education qualification till 12th have taken loan but only from bank as they also thought that banks are bank corrupt and private lenders hire high rate of interest. Respondents who are graduates don’t prefer to take loans since they self sufficient as most of the graduates belong to the working class as is evident from the table 1. Respondents who are post graduates have taken loan as they felt need for it and they prefer to take loan from bank because of lower interest rate.
7. Type of loan taken
Table 7 Type of loan
Education qualification Number respondent of
Home() 0 0 66.7 0
Vehicle() 0 0 0 0
Personal() 0 100 0 0
Education() 33.3 0 33.3 100
Below 10th 10th 12th Graduate
3 2 3 1
Post graduate
3
33.3
0
0
33.3
By taking reference from table 7 it is found that respondents who are having education qualification below 10th have taken education loan as they taken for their children education. Respondent who are either educated till 12th or graduate have taken loan for vehicles as some them are using vehicles for commercial use. Post graduate respondents who are working class people (table 1) have taken loan for their home. From table 7 it can be analysed that no one has taken personal loan
8. Type of insurance policies
Table 8 Type of insurance
Education qualification Number respondent of
Life () 66.67 50 66.67 100 0
Home () 0 0 0 0 0
Motor () 0 0 0 0 0
Health () 33.33 0 0 0 0
Life + Motor () 0 0 0 0 66.67
Life + Motor + Health() 0 0 0 0 0
Below 10th 10th 12th Graduate Post graduate
3 2 3 1 3
By taking reference from table 8 is found that respondents who have education qualification either below 10th or till 12th have taken life insurance policies as they are concerned about their future. Respondents who are graduates or post graduates have taken life insurance, health insurance and vehicle insurance as they are concerned for future and since most of graduates belong to working class so therefore many of them have taken these policies as to save their income tax.
9. No of insurance policies acquired by people
Table 9
Education qualification Number of respondent
None() 33.33 50 33.33 0 33.33
Below 10th 10th 12th Graduate Post graduate
3 2 3 1 3
Number of insurance policies Two() Three More than () three() 66.67 0 0 0 50 66.67 0 0 0 0 100 0 0 66.67 0 0 One()
By taking reference from table 9 it found that respondents who are having education qualification below 10th have taken only two out of three insurance policy since they don’t have enough money to pay for the monthly instalments as it is clear from the table 1 most of them are farmers. Respondents who are having educational qualification 10th are aware about insurance policy in our survey report 2 out of 2 people have taken the insurance policies, but they have not enough money to pay the monthly instalment . Respondents who are having education qualification till 12th have taken two insurance policies as some of them are having enough money to monthly instalments. Respondents who are either graduate or post graduate are mainly working class people so they have enough money to pay for the monthly instalments and one more reason to take two or more than three policies is that they want to save their income tax.
10. Service awareness
Table 10.1
Education qualification Number of respondent
Below 10
3 AWARENESS OF THE FACILITIES PROVIDED BY BANK Responses in Responses in ATM 0 Remittances 0 ATM cum debit card 0 Foreign Exchange 0 Any where banking 0 Bill payment 0
th
Tele banking Remote access terminal Direct-E tax pay Internet & mobile banking Multi-city cheque facility
0 0 0 0 0
Bank assurance Tax collection Mutual funds Insurance
0 0 0 0
By taking reference from table 10.1 it is found that respondents who are having education qualification below 10th are not aware of the services provided by the bank as to them bank is a place to deposit money
Table 10.2
Education qualification Number of respondent
10th
2 AWARENESS OF THE FACILITIES PROVIDED BY BANK Responses in Responses in ATM 50 Remittances 0 ATM cum debit card 0 Foreign Exchange 0 Any where banking 0 Bill payment 0 Tele banking 0 Bank assurance 0 Remote access terminal 0 Tax collection 0 Direct-E tax pay 0 Mutual funds 0 Internet & mobile banking 0 Insurance 0 Multi-city cheque facility 0
By taking reference from table 10.2 it is found that respondents who are having education qualification 10th are aware of the services provided by the bank as to them bank is a place to deposit money.
Table 10.3
Education qualification Number of respondent
12th
3 AWARENESS OF THE FACILITIES PROVIDED BY BANK Responses in Responses in ATM 66.67 Remittances 0 ATM cum debit card 33.33 Foreign Exchange 0
Any where banking Tele banking Remote access terminal Direct-E tax pay Internet & mobile banking Multi-city cheque facility
0 0 0 0 33.33 0
Bill payment Bank assurance Tax collection Mutual funds Insurance
0 0 0 0 0
By taking reference from table 10.3 it is found that respondents who are having education qualification till 12th are aware of the some of the services provided by bank since some of them have opened their account in the nationalised banks because of the services they provide. As is evident from table 5.2 many the respondents are using the services provided by bank.
Table 10.4
Education qualification Number of respondent
Graduate
1 AWARENESS OF THE FACILITIES PROVIDED BY BANK Responses in Responses in ATM 0 Remittances 0 ATM cum debit card 100 Foreign Exchange 0 Any where banking 0 Bill payment 100 Tele banking 0 Bank assurance 0 Remote access terminal 0 Tax collection 0 Direct-E tax pay 0 Mutual funds 100 Internet & mobile banking 100 Insurance 100 Multi-city cheque facility 100
By taking reference from table 10.4 it is found that respondents who is graduates knows about the services provided by the bank as many of them have opened account in nationalised banks for the services they provide and as many of these respondents belong to working class (table 1) because of this they have many work in banks where they come to kwon about these services. Table 10.5
Education qualification Number of respondent
Post graduate 3 AWARENESS OF THE FACILITIES PROVIDED BY BANK Responses in Responses in ATM 100 Remittances 66.67 ATM cum debit card 100 Foreign Exchange 66.67
Any where banking Tele banking Remote access terminal Direct-E tax pay Internet & mobile banking Multi-city cheque facility
66.67 66.67 66.67 66.67 100 100
Bill payment Bank assurance Tax collection Mutual funds Insurance
100 66.67 66.67 33.33 100
By taking the reference from table 10.5 it is clear that respondents who are post graduate knows about all the services provided by the bank since that respondent is working is SBI he is aware of all the services provided by the bank.
11. Loan services provided by bank
Table 11.1
Education qualification Number of respondent
Below 10
th
3 LOAN SERVICES PROVIDED BY YOUR BANK Responses in 0 0 50 100 0 0 Trade finance loan Special mortgage schemes Personal loan for pensioners Agriculture loan Special loan for women Kashan credit card
House loan Home renovation loan Education loan Personal loan Auto finance loan Consumer durable loan
Responses in 0 0 0 66.67 0 0
By taking the reference from table 11.1 it is clear that respondents who are having education qualification below 10th knows about some of the loan services provided by the bank since there are many ads on TV and radio so they come to kwon about these services and since many banks are approaching villages for agricultural loan they teaches about the agricultural loans. Table 11.2
Education qualification Number of respondent
10th
2 LOAN SERVICES PROVIDED BY YOUR BANK Responses in 0 0 0 0 Trade finance loan Special mortgage schemes Personal loan for pensioners Agriculture loan
House loan Home renovation loan Education loan Personal loan
Responses in 0 0 0 100
Auto finance loan Consumer durable loan
0 0
Special loan for women Kishan credit card
0 0
By taking the reference from table 11.2 it is clear that respondents who are having education qualification 10th knows about some of the loan services provided by the bank since there are many ads on TV and radio so they come to kwon about these services and since many banks are approaching villages for agricultural loan they teaches about the agricultural loans and they also learned by the teacher and their institutions.
Table 11.3
Education qualification Number of respondent
12th
3 LOAN SERVICES PROVIDED BY YOUR BANK Responses in 33.33 0 33.33 0 0 0 Trade finance loan Special mortgage schemes Personal loan for pensioners Agriculture loan Special loan for women Kishan credit card
House loan Home renovation loan Education loan Personal loan Auto finance loan Consumer durable loan
Responses in 0 0 0 0 0 0
By taking the reference from table 11.3 it is clear that respondents who are having education qualification 12th knows about some of the loan services provided by the bank since there are many ads on TV and radio so they come to kwon about these services and since many banks are approaching villages for agricultural loan they teaches about the agricultural loans.
Table 11.4
Education qualification Number of respondent
Graduate
1 LOAN SERVICES PROVIDED BY YOUR BANK Responses in 0 0 100 0 0 0 Trade finance loan Special mortgage schemes Personal loan for pensioners Agriculture loan Special loan for women Kashan credit card
House loan Home renovation loan Education loan Personal loan Auto finance loan Consumer durable loan
Responses in 0 0 0 0 0 0
By taking reference from table 11.4 it is found that respondents who are graduates knows about the loan services provided by the banks as is evident from table 1 that most of these respondents are working class people and many of them are also working in insurance sector and bank sector because of this they knows about these services. Many these respondents have their account in nationalised banks and these banks make them aware of these services.
Table 11.5
Education qualification Number of respondent
Post graduate
3 LOAN SERVICES PROVIDED BY YOUR BANK Responses in 100 100 100 100 100 100 Trade finance loan Special mortgage schemes Personal loan for pensioners Agriculture loan Special loan for women Kashan credit card
House loan Home renovation loan Education loan Personal loan Auto finance loan Consumer durable loan
Responses in 100 100 100 100 100 100
By taking the reference from table 11.5 it is clear that respondents who are post graduate knows about all the services provided by the bank since that respondent is working is SBI so he is aware of all the services provided by the bank.
12. Loan services for agriculture
Table 12
Education qualification
Number of respondent
Loan services for agriculture
Below 10 10th 12th Graduate Post graduate
th
3 2 3 1 3
Fertilizers, equipment Fertilizers, equipment Fertilizers, equipment Fertilizers, equipment, tube well , Fertilizers, equipment
By taking reference from table 11.1, 11.2, 11.3, 11.4,11.5 it is found that respondents who are either below 10th,10th, 12th, graduates or post graduates knows about the
agriculture loan services provided by the banks. From table 12 it is found that all the respondents knows that there bank provide loan for agriculture equipments, fertilizers, and tube wells. Since many banks are approaching rural areas to tell about the special agriculture loans they are providing and many of the respondent have account in nationalised banks and these banks make them aware of the agriculture loans.
13. Insurance Company
Table 13 INSURANCE COMPANY Reliance Birla Aviva Others () () () 0 0 0 None 0 0 0 None 0 0 0 None 0 0 0 ICICI, New India 66.67 33.33 0 0 ICICI LIC () 66.67 50 66.67 100
Education qualification
Number of respondent
Below 10th 10th 12th Graduate Post graduate
3 2 3 1 3
By taking the reference from table 13 it is found that LIC is the main choice for all the respondents. Some of the respondents are also having policies from ICICI and new India.
14. Service satisfaction
Table 14
Education qualification Number of respondent
Below 10th 10 12th Graduate Post graduate
3 2 3 1 3
Very satisfied () 50 50 0 0 0
SATISFACTORY LEVEL (FOR BANKS) Satisfied Neither satisfied dissatisfied Very () nor dissatisfies () dissatisfied () 0 50 0 0 0 50 0 0 33.33 0 33.33 0 100 0 0 0 66.67 0 33.33 0
By taking the reference from table 14 it is found that all the respondents are satisfied from the services provided by their bank. As these banks make them aware of the new schemes and help them if they are having any problem in bank.
15. Satisfactory level for Insurance Company
Table 15
Education qualification Number of respondent
Below 10th 10th 12th Graduate Post graduate
3 2 3 1 3
SATISFACTORY LEVEL (FOR INSURANCE COMPANY) Very Satisfied Neither satisfied dissatisfied Very satisfied () nor dissatisfies () dissatisfied () () 0 0 0 0 0 0 50 50 0 0 0 33.33 0 33.33 0 0 100 0 0 0 33.33 33.33 0 0 0
By taking the reference from table 15 it is found that all the respondents are satisfied from the services provided by their bank. As these banks make them aware of the new schemes and help them if they are having any problem in bank.
16. Service selection consideration
Table 16
Education qualification Number of respondent
Below 10th 10th 12th Graduate Post graduate
3 2 3 1 3
Reason for not taking loan from Bank Delay in Discouraging Others processing () attitude () 100 0 Corruption 50 100 Don’t give info 0 100 Corruption 100 0 High interest rate 33.33 0 High interest rate
By taking the reference from table 16 it is found that all the respondent who are either having education qualification below 10th ,10th, 12th thought that bank are corrupted and shows discouraging behaviour but graduates and post graduates don’t prefer loan from bank as it is time consuming process and they prefer take loans if required when they are getting it at lower rate.
17. Service usage consideration
Table 17 Purpose of personal loan Agriculture Land 0 0 0 0 0 0 0 0 0 0
Education qualification
Number of respondent
Marriage 0 0 0 0 0
Cattle 0 0 0 0 0
Below 10th 10th 12th Graduate Post graduate
3 2 3 1 3
By taking reference from table 17 it is found that no one has taken personal loan, as they have no need for that and personal loan is available at higher rate of interest.
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