Conference Proceedings Conventional To Digital - A Shift in Banking A Two Day National Conference 21st and 22nd April, 2017

Conventional to Digital
- A Shift in Banking
A Two Day National Conference

21st and 22nd April, 2017
Editors:
Dr. N. Sundaram
Dr. D.S. Selvakumar
Dr. A.V.V.S. Subbalakshmi
Dr. M. Muthumeenakshi
Department of Commerce
School of Social Sciences and Languages
VIT University
Vellore 632 014
Tamil Nadu
Editorial Team
1. Dr. N. Sundaram
Professor and Head, Department of Commerce, School of Social Sciences and
Languages, VIT University, Vellore 632 014
2. Dr. D.S. Selvakumar

Professor, Department of Commerce, School of Social Sciences and
3. Dr. A.V.V.S. Subbalakshmi

Assistant Professor, Department of Commerce, School of Social Sciences and
4. Dr. M. Muthumeenakshi
Assistant Professor, Department of Commerce, School of Social Sciences and
5. Mr. R. Balachandar
Bachelors of Commerce, Department of Commerce, School of Social Sciences
and Languages, VIT University, Vellore 632 014
6. Mr. Ravi Khetan

Bachelors of Commerce, Department of Commerce, School of Social Sciences
and Languages, VIT University, Vellore 632 014
7. Mr. Cherian Thomas

Ph. D. Scholar, Department of Commerce, School of Social Sciences and
5. Mr. M. Sriram
Ph. D. Scholar, Department of Commerce, School of Social Sciences and
Department of Commerce
The Department of Commerce is one of the four departments in the School

of Social Sciences and Languages, VIT University, Vellore. It has 15
faculty members, who are highly qualified with rich experience in
teaching and research. Apart from offering Ph.D., programmes, the
Department offers B.Com and adopts an innovative teaching-learning
process called Curriculum for Applied Learning (CAL), as per changing
requirements of the students and the industries as well. The Department of
Commerce equips the students with required Communication and
Computer skills through rigorous internship in order to increase
employability.
School of Social Sciences and Languages
The School of Social Sciences and Languages was formed as a separate

school in the year 2009 and it is one of the most acclaimed Humanities /
Social Sciences schools in India. The prime focus of the school is to
impart futuristic and supportive education to students-education in
subjects like Commerce, Economics, Ethics and values, Psychology and
Sociology. The school is a great learning centre of Indian and foreign
languages too, like Tamil, Hindi, English, French, German, Japanese,
Arabic, Russian and Chinese. The teaching and research of the school is
broadly structured around four departments: Commerce, Social Sciences,
English, and Other Languages. The school provides a dynamic and inter-
disciplinary environment that facilitates teaching and research in Social
Sciences and Languages.
VIT University
VIT University was founded in 1984 as Vellore Engineering College by

the present Chancellor, Dr. G. Viswanathan. From its humble beginnings,
the institution has grown exponentially to that of more than 35,000
students. It was conferred the University status in 2001 in recognition of
its excellence in academics, research and extracurricular initiatives.
Currently, VIT has four campuses - one in Vellore and the others in
Chennai, Amaravati and Bhopal. VIT has been consistently ranked among
the best institutions of the country, and is aspiring to emerge as a global
leader. The National Institutional Ranking Framework (NIRF) of the
MHRD, Government of India, has identified VIT as the best Private
Engineering Institution in India. With students from all the states of India
and from more than 50 countries, the cosmopolitan culture provides an
appropriate ambience for holistic learning and comfortable living. Sports,
games and cultural activities are an integral part of student life on
campus. VIT holds an exemplary placement record by consistently placing
more than ninety percent of the students in good companies. The
Universitys international linkages provide ample opportunities for
students and faculty to gain global exposure. VIT alumni, spread across
the world, are serving the most advanced as well as the most deprived
societies.
Executive Committee
Chief Patron
Dr. G. Viswanathan
Founder and Chancellor
VIT University
Patrons
Shri. Sankar Viswanathan, Dr. Sekar Viswanathan,

Vice President Vice President
Shri. G.V. Selvam, Kadhambari S. Viswanathan,

Vice President Assistant Vice President (Chennai Campus)
Dr. Anand A. Samuel, Dr. S. Narayanan,
Vice Chancellor Pro-Vice Chancellor
Dr. V. Raju, Dr. K. Sathiyanarayanan

Pro- Vice Chancellor Senior Professor & Registrar
Advisor
Dr. K. Revathi,
Professor & Dean
School of Social Sciences & Language
Steering Committee
Dr. N. Sundaram, Dr. D.S. Selvakumar,

Professor and Head Professor
Dr. A.V.V.S. Subbalakshmi, Dr. M. Muthumeenakshi,

Assistant Professor Assistant Professor
Student Organizers
Balachandar. R Ravi Khetan

B. Com Final Year B. Com Final Year
Cherian Thomas Sriram. M

Ph. D. Scholar Ph. D. Scholar
i
Conventional to Digital A Shift in Banking
Contents
Preface iii
1 A Comparative Study of SERVQUAL Analysis: 04

Public v/s Private Sector Banks
Uday Kiran Sarma and S. Hanumantha Rao
2 A Study about Internet Banking and Its Impact 11

Gayathri. G and Nisha. S
3 A Study on Adoption and Use of Mobile Banking with Special Reference 20

to Public Sector Banks in Karur District
Dr.T.S.Agilla and K.V.Hariprakash
4 A Study on Analysis of BOP Trends with reference to India 25

Hymavathi, Dr. K. Kalpana and K. Phani Kumar
5 A Study on Contribution of MFIs on Poverty Alleviation in Vellore 33

District
Dr. J. Ramola Premalatha and Ranjith R
6 A Study on Investment Pattern of Housewives in Vellore District 42

Dr. J. Ramola Premalatha and V. Kokila
7 A Study on Investors Purchasing Preferences on Investment in Indian 49

Mutual Funds Market
S. K. Muzeer and Dr. B. Radha
8 A Study on Stress Management among College Teachers in Andhra 56

Pradesh
Lakshmi Narahari and Dr. Kalpana Koneru
9 A Study Performance of Primary Agricultural Credit Societies Banks in 64

India
N. A. Kavitha and Dr. M. Muthumeenakshi
10 Antecedents of Digital Banking - An Empirical Study 70

S. Meganathan, P. Jayashree and I. Mohamed Rabeek
11 Application and Utility Expectancy of Mobile Banking Transactions - An 78

Empirical Base on Tiruchirappalli Town
Dr. R. Ramachandran
12 Banking Ombudsman 85
Dr. A.V.V.S. Subbalakshmi and V.S. Srivasuthaa
ii
13 Comparative Study on Financial Analysis of SBI and ICICI Banks 89

R. Geetha and Manisha Jain . K
14 Conventional to Digital A Shift in Banking 106

Aiswarya Kameswaran and R. C. Sri Harsha
15 Crypto Currency An alternative Tender? 113

Vedhavel S
16 Demonetization and its Impacts on Economy 119

Dr. B. Balachandran
17 Demonetization 125
Pavithran. S and Harrish. B. U
18 Demonetization: Its Legitimacy and Concerns with Banking Sector 129

Mathanachandiran. B and Sravani C.V.P
Digital Payment Systems: Perception and Concerns among Urban 133

19 Consumers
Dr. M.Sumathy and Vipin K.P.
20 E-Banking: A Budding and Merchandising Mode of Transaction 139

Rohith Rajeeve Thomas
21 Effectiveness of Online Advertising 145

M. Roopkumar and Dr. A.V.V.S. Subbalakshmi
22 Foreign direct Investment: An enquiry into its impacts on the economy 147
M. Vilasini and J. Aravind
23 Future Prospects of Plastic Money in Indian Banking System 151

Dr. Ramola Premalatha J, P.G.Suresh, K.C.Arun Kumar and S.Harish
Venkatram
24 Green Banking: An innovative initiative towards Sustainable 155

Development
Sravani C.V.P. and Komal.S
25 Impact of Demonetisation on Indian Stock Market: With Special 159

Reference to Bank Nifty
Dr.P.Chellasamy and Anu.K.M
26 Impact of Demonetization on Indian Economy 163

Dr.G.Ganesan and B.Gajendranayagam
iii
27 Impact of Demonetization on Select Public Sector Banks in India listed 170

with NSE
Dr.P.Chellasamy and P.Valarmathi
28 Internet Banking- Benefits and Challenges in an Emerging Economy 176

R. Geetha and Dr. M. Muthumeenakshi
29 Internet Banking in China An Analysis 180

WU DAN, LI CUN QI, WANG SHENG YU and XU BING LEI
30 Kinship of Consumer and Brand towards Pepsi 186

Dr. A.V.V.S. Subbalakshmi, P.G.Suresh, K.C.Arun Kumar and S.Harish
Venkatram
31 Mobile Banking 190

B.Krishnaveni and A.Kiruthika
32 Online Banking Frauds 192

Nikshey Bhavith V
33 Role of Financial Institutions for Sustainable Development 197

Dr. S. Tameem Sharief and Nabeel Ahmed
34 The Corporate Crimes Societal Dogma - A Critical Review 200

Godwin David C. Mathew, Ddharaniikota Ssuyodhan and Dr. S. Usha
iv
Preface
With the advent of Globalization in 1991, there has been a sea change in
Indian Banking system. Moreover, digitalization has created a global
market place for common man to easily gain access. With Digital Banking
and mobility, the need is no longer to "leap-frog" but to "deep-dive" into
the future. Going digital and mobile for a bank is no longer an option, it's a
simple bare necessity - to collaborate and flourish. Thus, research areas
such as demonetization, internet banking, plastic money, tele-banking,
banking ombudsman, have been duly paid attention through this
conference. This conference proceeding is with select papers which are
deliberated in five technical sessions in the conference. We are confident
that this conference Conventional to Digital A Shift in Banking will
pave way to research scholars, academicians and bankers to meet the
future challenges in the global economy due to digilization.
We wish to congratulate and thank all the authors for sharing their
knowledge and support, which has made this conference a grand success.
Dr. N. Sundaram
Dr.D.S.Selvakumar
Dr. A.V.V.S.Subbalakshmi
Dr. M. Muthumeenakshi
1
Conventional to digital - A Shift in Banking
A Comparative Study of SERVQUAL Analysis: Public v/s Private Sector Banks
Uday Kiran Sarma,

Department of Management Studies,
Vignans Foundation for Science Technology & Research University,
Vadlamudi, Guntur (Dt), A.P
Email: udaykiransarma@gmail.com
S. Hanumantha Rao,
Vignans Foundation for Science Technology & Research University,
Vadlamudi, Guntur (Dt), A.P
Email: sama.hanumantharao@gmail.com
Abstract
The aim of the study is to draw out the correlation between the service quality and customer
satisfaction in public and private sector banks by identifying the gaps between the service
qualities of what the customer is expecting and what the customer is receiving. The study also
aims at bringing out the most important attributes of the service quality that distinguish one
bank from another. The study also tried to understand whether the customers of public sector
banks are satisfied or the customers that of private sector banks are satisfied with the
services provided by the respective banks. The survey used the five dimensions of the service
quality (Tangibility, Responsibility, Reliability, Assurance and Empathy) to identify their
influence on customer satisfaction. The questionnaire was administered to 418 customers
from public and private sector banks and the results are analyzed. The SERVQUAL tool is
the most effective tool to assess the service quality in banks all over the world.
Keywords: Servqual, Public Sector, Private Sector, Customer Satisfaction, Banking Sector,
Perceived Quality, Gap analysis
Introduction
The banking industry in a developing country like India plays a key role in improving the
economy. India is a country with population growing greater than that of the worlds
population growth. It is estimated that by 2025, India will be the highest populated country in
the world. With the growing population, the need for banks where people can save their
money is also growing. With the increase in number of banks, the competition also is
increasing. The banks, in order to attract more customers, need to know what aspects of a
bank the customers like the most. The banks can then concentrate on those aspects more and
achieve greater customer appreciation.Our project here helps us to find the different factors
which the customers like most and the gap arising between the expected and perceived values
in both service and quality provided by the bank.
Better quality of services provided by the bank has a positive influence on satisfaction of its
customers and it directly contributes to profitability of banking industry. Good quality of
service provides numerous benefits to banking industry like better corporate image,
enhancement in customer satisfaction, cross selling opportunities, decreased customers
defection, increased chances of word to mouth recommendation and facilitates the
maintenance of long term and good customer relationships. In modern banking system
maintaining and developing long term customer relationships is essential for competitive
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business. SERVQUAL is a well-known research instrument for evaluating service quality in

banking industry. SERVQUAL perfectly covers the dimensions that are considered by a
customer in evaluating quality of service in a bank. SERVQUAL can generally be applied for
evaluating service quality in any service sector. Most of the studies have utilized
SERVQUAL for evaluating service quality of banking industry. Many alternative instruments
to SERVQUAL have also been applied in banking sector.
The objective of this study is to examine the service quality of banks as perceived by its
customers in public and private sector banks separately. SERVQUAL covers five service
quality dimensions including 20 items. The second aim is to evaluate the contribution by each
SERVQUAL dimensions and the third objective is to estimate gap analysis between expected
and perceived service quality in both public and private sector banks.
Literature review
The customer judgment of overall excellence about service quality of a service sector is
termed as perceived service quality (Parasuraman et al. 1988). This judgment is based on
difference that what a customer expect from his service provider and what the actual service
he receives from it (Parasuraman et al. 1988). Numerous research instruments exists for
measurement of service quality and SERVQUAL is a well-known model (Ladahri 2009) and
it is assumption based that comparison between the customer belief that what quality of
service should be provided by service deliver and the actual service received will give us the
perceived service quality of customer (Gronroos 1984). SERVQUAL deals with five service
quality dimensions, Tangible, Reliability, Responsiveness, Assurance and Empathy.
The SERVQUAL questionnaire covers these five service quality dimensions using two
portions. One portion is comprised of expectations of customer and other is based on received
service quality perception. Each portion has 20 items. The use of SERVQUAL instrument
has already been validated in assessing service quality of repair and maintenance service
providing firm, long-distance telephone corporation, telecommunication, credit card
company, information system, libraries, insurance, restaurant, health care and retail chains
(Parasuramanet al. 1988; Van der Wal et al. 2002; Kilbourne et al. 2004; Lee and Ulgado
1997; Mels et al. 1997; Parasuraman et al. 1985; Jiang et al. 2000; Cook and Thompson
2001).
The applicability of SERVQUAL in banking sector has revealed various results.

SERVQUAL application in Cyprus banking industry has identified three dimensions
influencing the service quality i.e tangibles, reliability, and responsiveness-empathy.
Assurance has been eliminated due to inadequate factor loadings (Arasli et al. 2005). Use of
SERVQUAL in Chinese banking sector have revealed six dimensions of service quality i.e.
tangibles, reliability, responsiveness, assurance, empathy 1 (understanding of needs) and
empathy 2 (convenient operating hours) (Lam 2002). The quality of the services that a bank
provides is related to the satisfaction of customers and it is estimated by dissatisfying and
satisfying the service provided by the bank over time. The perceived service quality has
positive effect on satisfaction of customers. Previous studies have revealed that perceived
service quality has positive effect on satisfaction of customer in four service sector i.e dry
cleaning, fast food, pest control and banking (Cronin and Taylor 1992). Bei and Chiao 2006
also reported positive influence of perceived service quality on three service providers i.e.
petrol station, automobile repair and banking. Significant correlations have been found
between overall customer satisfaction and service quality dimensions (Aldaigam and Buttle
2002).
3
The service quality in banking industry relates to assurance, empathy, responsiveness and
reliability (Johnston 1995). Reliability and assurance has strong influence on banking sector
service quality and customer satisfaction (Zhou 2004). Study carried out on USA,
Netherland, Hong Kong, morocco and Australian banking sector reported direct impact of
service quality on customer satisfaction (Brady et al 2005). Similar results have been reported
in Greek banking industry (Arsali et al. 2005). Six dimension scale for evaluating service
quality in banks have been developed by Bahia and Nantel (2000) from the original ten
dimensions proposed by Parasuraman et al. (1985). Evaluation of service quality in
Australian Banks yield four dimensions of service quality i.e. communication, credibility,
staff conduct and access to teller services. The study was conducted on 791 customers of
bank and overall data reliability was in the range of 0.80-0.88. 17 items and five point likert
scale was used (Avikaran 1994). Nam (2008) evaluated service quality in retail banking in
US and South Korea. It involved 129 respondents. Reliability was in range of 0.72-0.85. 23
items and seven point likert scale was used in study.
The quality of the services that a bank provides is related to the satisfaction of customers and
it is estimated by dissatisfying and satisfying the service provided by the bank over time. The
perceived service quality has positive effect on satisfaction of customers. Previous studies
have revealed that perceived service quality has positive effect on satisfaction of customer in
four service sector i.e dry cleaning, fast food, pest control and banking (Cronin and Taylor
1992). Bei and Chiao 2006 also reported positive influence of perceived service quality on
three service providers i.e. petrol station, automobile repair and banking. Significant
correlations have been found between overall customer satisfaction and service quality
dimensions (Aldaigam and Buttle 2002). The service quality in banking industry relates to
assurance, empathy, responsiveness and reliability (Johnston 1995). Reliability and assurance
has strong influence on banking sector service quality and customer satisfaction (Zhou 2004).
Study carried out on USA, Netherland, Hong Kong, morocco and Australian banking sector
reported direct impact of service quality on customer satisfaction (Brady et al 2005).
Service Quality Dimension - Service Quality Gap Model (SERVQUAL)
The gap model (also known as the "5 gaps model") of service quality is an important
customer-satisfaction framework. In "A Conceptual Model of Service Quality and Its
Implications for Future Research"(The Journal of Marketing, 1985), A. Parasuraman, VA
Zeitham and LL Berry identified five major gaps that face organizations seeking to meet
customer's expectations of the customer experience. SERVQUAL is one the tools used in
measuring the quality of services. According to Buttle (1996), SERVQUAL is for the
measuring and managing the quality of service. Asubeonteng et al (1996) also intimated that
the model is used to measure the quality of service from the customers point of view. The
originators of the model are Parasuraman, Zeithamal and Berry. It was developed in 1985 but
was polished in their subsequent articles (Parasuraman et al 1988). The main aim of
SERVQUAL is to have a standard and a reliable tool that can be used to measure the quality
of services in different service sectors.
4
Research Objectives
1. To understand the customer expectations of service provided by public and private sector
banks.
2. To understand what services customer that are provided by the bank are most important
in customers perspective.
3. To find the gap between the expected and perceived quality of services from bank in the
view of customer
4. To compare the services provided by public and private sector banks and to understand
what factors customers value the most.
5. Essential and recommendations for improvements
Research Methodology
To find the perceived service quality the questionnaire was used which was originally given
by (Parasuraman et al. 1988). This instrument has two parts to be answered .i.e. expectation
and perception with 20 questions each and 40 questions in total. Each part has five
dimensions measured on 5 point like scale ranging from 1= strongly agree to 5=strongly
disagree.
Sources of data: The questionnaire has been administrated to 418 people of which 250 are
online and the remaining 168 are self-administered.
Sampling: As the survey is expected to gather more responses, the survey is done both online
and offline. The sampling techniques used for both are different. For online data collection,
Snowball sampling technique is used and for offline method, Snowball sampling technique is
used.
The survey requires us to use a variety of software tools to complete the project. Some of the
tools used are Google Forms for administering questions online, Excel for recording
responses and sorting data and SPSS for analysis and testing
Analysis and Interpretations
Variable Category Count Percentage (%)

Male 219 52.4%
Gender Female 199 47.6%
Total 418 100.0%
18-24 222 53.1%
25-34 122 29.2%
35-44 24 5.7%
Age Groups
45-54 45 10.8%
55-64 5 1.2%
Total 418 100.0%
Illiterate 3 .7%
High School 15 3.6%
Intermediate 13 3.1%
Educational Qualification
Graduate 243 58.1%
Post Graduate 143 34.2%
Total 418 100.0%
Single 286 68.4%
Marital Status Married 132 31.6%
Total 418 100.0%
Government Employee 30 7.2%
Private Employee 109 26.1%
Occupation
Business 14 3.3%
5
Student 205 49.0%

Self Employed 35 8.4%
House Wife 15 3.6%
Farmer 6 1.4%
Retired 4 1.0%
Total 418 100.0%
Public 291 69.6%
Type of the Bank Private 127 30.4%
Total 418 100.0%
1-4 257 61.5%
5-9 115 27.5%
10-14 26 6.2%
Duration of Use
15-19 16 3.8%
Above 20 4 1.0%
Total 418 100.0%
Interpretation: Out of total responses 52% are from male respondents and 48% are from
female. According to the data received from the survey, 33% of the male population are using
a Public sector bank account and fro the same, women accounts to 36% of the total
population. It is observed that 19 % male and only 11% female respondents used a private
sector bank account. From the survey, we can infer that there are more people using a public
sector bank account rather than a private sector bank account and in the respondents most of
the account holders are female.
An observation of the survey reveals that most of the respondents are of the age group 18-24.
174 respondents scaling to a whopping 59% of the total respondents are youngsters. Among
the collected data most youth prefer a Public sector bank to a Private sector bank. The
reasons for this favoritism may be unveiled at the end of this survey.
The percentage of graduates participated in this survey accounts to 58% followed by post
graduates. Here also it is observed that the number of people using public sector bank
accounts are more in number than that of the private sector. 68% of the Graduates and 72%
of the Post Graduates preferred a Public Sector bank account to a private sector one.
We can interpret from the above that most of the students own a bank account from a public
sector bank. The students constitute about 49% of the total respondents in the survey among
which about 78% of them own a Public Sector bank account and the remaining own a Private
Sector bank account. It is also clear that most of the Government and private employees use a
public sector bank account for their regular salary transactions.
Of all the respondents, 68% are unmarried and the remaining 32% are married. Almost 71%
of the Public Sector Bank account holders and 61 % of the private Sector bank Account
holders are unmarried. In this survey, 70% of the respondents own a Public Sector Bank
Account and only 30% own a Private Sector Bank Account. We can observe that most of the
respondents are using Savings bank account both in public and private sector banks. 84% of
the total Respondents use a Savings Bank Account. Most of the respondents are using this
account less than 5 years. 61% of the respondents were using their bank accounts for less
than 5 years. 27% were using for almost 10 years. Only a meagre number of respondents
constituting to just 1% have been using bank accounts for more than 20 years. Among these
users, most of them are using public sector bank accounts. Among the online banking users,
though the number of Public sector bank users are more in number, Private sector bank
account users are the most to avail the online services. It is observed that almost 82% of the
6
private sector bank users are using the Online banking services whereas only 73% of the total
public sector bank account users use the online services.
Gap Analysis:
Public Sector Banks
Difference Average
Expectations Mean Perceptions Mean
in Means Difference
E1 4.113 P1 3.464 0.649
E2 4.082 P2 3.337 0.745
Tangibles 0.746
E3 4.110 P3 3.216 0.894
E4 3.921 P4 3.227 0.694
E5 4.031 P5 3.096 0.935
E6 3.928 P6 3.089 0.839
Reliability 0.840
E7 3.890 P7 3.113 0.777
E8 3.942 P8 3.134 0.808
E9 3.962 P9 3.120 0.842
E10 4.027 P10 3.361 0.666
Responsiveness 0.803
E11 3.938 P11 3.113 0.825
E12 3.928 P12 3.048 0.880
E13 3.952 P13 3.082 0.870
E14 4.203 P14 3.540 0.663
Assurance 0.813
E15 4.003 P15 3.278 0.725
E16 4.186 P16 3.192 0.994
E17 3.918 P17 2.990 0.928
E18 4.007 P18 3.234 0.773
Empathy 0.832
E19 4.000 P19 3.199 0.801
E20 3.931 P20 3.107 0.824
From the analysis of means, we observe that the means on the expected side are more than
those from the perceived side. The difference in means of expected and perceived values are
all positive indicating that the expected is more than what is perceived by the customers in
public sector banks. A considerable amount of gap is seen in the reliability segment and the
tangibles segment has the least gap.
Private Sector Banks

Difference Average
Expectations Mean Perceptions Mean
in Means Difference
E1 4.150 P1 3.386 0.764
E2 4.031 P2 3.228 0.803
Tangibles 0.837
E3 4.047 P3 3.165 0.882
E4 4.118 P4 3.220 0.898
E5 4.102 P5 3.165 0.937
E6 3.795 P6 3.236 0.559
Reliability 0.897
E7 4.165 P7 3.016 1.149
E8 4.031 P8 3.087 0.944
E9 4.079 P9 3.276 0.803
E10 4.142 P10 3.394 0.748
Responsiveness 0.855
E11 4.220 P11 3.165 1.055
E12 3.906 P12 3.094 0.812
E13 4.024 P13 3.134 0.890
E14 4.134 P14 3.346 0.788
Assurance 0.880
E15 4.181 P15 3.087 1.094
E16 3.969 P16 3.220 0.749
7
E17 4.102 P17 2.795 1.307

E18 4.008 P18 3.102 0.906
Empathy 1.180
E19 4.189 P19 2.866 1.323
E20 3.969 P20 2.787 1.182
From the analysis of means, here also we observe that the means on the expected side are
more than those from the perceived side. The difference in means of expected and perceived
values are all positive indicating that the expected is more than what is perceived by the
customers in private sector banks. The average difference indicating the Gap is more in
Empathy segment and least in tangibles.
Conclusion: From the above survey, we can arrive at some conclusions on various aspects of
services and quality of services provided at public and private sector banks. The conclusions
are as follows
i. Private sector bank customers are expecting more from the bank and the services and the
quality of services provided at the banks are not up to the expectations of the customers.
ii. Customers are expecting less with the services of the public sector bank and the banks are
meeting the customers expectations.
iii. In both public and private sector banks, Empathy is almost the common main dimension
lagging in the banks as it is observed that the gap between expected and perceived service
quality is more. Public sector banks are more empathetic though, when compared to the
private sector banks.
iv. In providing tangible dimension relating to that of technology and physical facilities, both
the banks are doing a good job. This can be concluded by observing that there is a very
less gap between the differences of means.
Suggestions: By observing the above conclusions, some suggestions can be provided for the
banks:
i. Banks should concentrate more on being empathetic towards its customers rather than
spending valuable money on physical ambiance.
ii. Private sector banks should concentrate more its customers needs than public sector
banks as people are not expecting more from public sector banks.
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public and private sector banks. IUP Journal of Management Research, 8(9), 7.
8. Parasuraman, A., Zeithaml, V. A., & Berry, L. L. (1985). A conceptual model of service
quality and its implications for future research. the Journal of Marketing, 41-50.
9. Parasuraman, A., Berry, L. L. & Zeithaml, V. A. (1988). SERVQUAL: A multiple-item
scale for measuring consumer perceptions of service quality. Journal of Retailing, 64(1),
12-40.
9
A Study about Internet Banking and Its Impact
Gayathri. G,
Master of Business Administration,
Anna University Regional Campus, Coimbatore.
Email: gayathrigiriiyer@gmail.com
Nisha. S,
Master of Business Administration,
Anna University Regional Campus, Coimbatore
Email: nishazmail@gmail.com
Abstract
Internet banking is a gateway for the financial transactions performed through the World
Wide Web. It is advantageous for the people in doing the transactions through the bank. Bank
acts an intermediary between the two parties. There are many significant developments
which happened in the internet banking so far. Every module in the business transactions are
replaced by internet banking. It adopts Cashless economy. People are moving forward in a
purposeful direction with virtual banking. Indistinguishable cons of internet banking bring
out the challenges faced by the banks and also the user. This article is about the impact of
Internet banking faced by the user at recent times. We here discuss both the inevitable
advantages and disadvantages with possible solutions to overcome the hiccup.
Keywords: Virtual banking, financial transactions, Cashless economy
Objective of the study
To learn the concept of internet banking

To know the threats of internet banking and to know how to overcome the hiccups
To study about factors influencing internet banking
Introduction
Bank is the financial institution that accepts deposits from public and creates credit. Lending
activities can be performed directly or indirectly through capital markets. Due to their
importance in the financial stability of a country, banks are highly regulated in most
countries.
Banking in India in the modern sense, originated in the last decades of the 18th century
among the first banks were the Bank of Hindustan which was established in 1770 and
liquidated in 1829- 1832 and General Bank of India established in 1786. The largest bank and
the oldest bank still existence is the State Bank of India (SBI). It is originated as the Bank of
Calcutta in June 1806. In 1809 it was renamed as the Bank of Bengal. This was one of the
three banks funded by preliminary Government. Later, Bank of Bengal, Bank of Bombay,
and Bank of Madras the three banks were merged in 1921 to the form of imperial Bank of
India. Which upon the independence, became the State Bank of India (SBI) in 1955. For
many years preliminary banks had acted as quasi central banks as did their successor, until
the Reserve bank of India was established in 1935 under Reserve Bank of India.
10
Internet Banking
Internet banking also known as online banking, e-banking or virtual banking is an electronic
payment system that enables customers of a bank or other financial institutions to conduct a
range of financial transaction through the financial institutions website. To access a financial
institution online banking facility a customer with internet access would need to register with
the institution for the service and setup passwords and other credentials for customer
verification.
The credentials for online banking is normally not the same as for telephone or mobile
banking. The IT (Information Technology) has had a great impact on the Indian Banking
System. The use of computers was lead to introduction online banking system in India.
In 1984 Introduction of MICR Technology

In 1988 suggested models to implement the Internet Banking
In 1994 Introduction of EFT (Electronic Fund Transfer)
In 1995 Implementation of EP (Electronic Payments)
In 2016 Digital currencies
In simple words internet banking is a convenient way to do banking from the comfort of your
home or office. Avoid the queue or delays and simple and secure internet banking facility for
unmatched online experience. Following are the features of internet banking:
Check the statements

Transfer funds
Open a fixed deposit
Pay utility bills
Open deposit
Recharge prepaid mobile or DTH and a lot
Buy general insurance
Pay taxes, and many more financial and nonfinancial services
How do you get internet banking?
These days most banks offer internet banking
Step1: To avail this service. You must firstly hold the bank account with the bank
Step2: Request for online or internet banking feature
Step3: Bank will accept your request and give you an online banking id and password using
which you can use internet banking
Objectives of internet banking
Following are the main objectives of introducing the internet banking
Reduce the carrying huge amount of cash

Adopts cashless economy
To operate the banking transactions around the clock
Able to transfer the amount anytime and anywhere
Easily can view banking statement
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Used to received and make payment at anytime

Make the banking transaction too simple by saving time of customers.
To develop the banking infrastructure
Factors affecting internet banking
The general factors which affect internet banking in India are
Lack of awareness among the customers.

No proper guidelines followed by banks in internet banking.
Not all the customers are digitally connected.
Additional taxes charged for internet banking.
Lack of physical relationship with the bankers.
Security issues in online banking.
Usage of internet banking in other countries:
a) In United States of America
First online banking services in the United States. Online banking was first introduced in the
early 1980s in New York United States. Four major banks- Citi bank, Chase Manhattan,
chemical bank and manufacturer Hanover-offered home banking services
b) In United Kingdom
Almost simultaneously with the United States online banking arrived in the United Kingdom.
The United Kingdom first online banking services is home link was setup by Bank of
Scotland for the customers of the Nottingham Building Society (NBS) in 1983.
c) In France
After a test period with 2500 user starting 1980 online banking services were launched in
1984 using Mintel terminals that were distributed freely to the population by the government.
Eventually 6.5 million Mintels were installed in household in 1990. Online banking was one
of the popular services later, online banking services migrated to internet.
Banks and World Wide Web
Around 1994, banks saw the rising popularity of internet as an opportunity to advertise their
services. Initially they used the internet as another broucher, without interaction with
customers. Early sites featured pictures of the bank officers or buildings and provided
customer with maps of branches and ATM locations, phone number to call for further
information and simple listing products.
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Internet World Status

Top 20 countries with the highest number of internet users
Sl. Population, Internet Users
Country or Region
No. 2017 Est. 31 Mar 2017
1 China 1,388,232,693 731,434,547
2 India 1,342,512,706 462,124,989
3 United States 326,474,013 286,942,362
4 Brazil 211,243,220 139,111,185
5 Indonesia 263,510,146 132,700,000
6 Japan 126,045,211 118,453,595
7 Russia 143,375,006 104,553,691
8 Nigeria 191,835,936 93,591,174
9 Germany 80,636,124 71,727,551
10 Mexico 130,222,815 69,915,219
11 Bangladesh 164,827,718 66,965,000
12 United Kingdom 65,511,098 60,273,385
13 Iran 80,945,718 56,700,000
14 France 64,938,716 56,367,330
15 Philippines 103,796,832 54,000,000
16 Italy 59r,797,978 51,836,798
17 Vietnam 95,414,640 49,741,762
18 Turkey 80,417,526 46,196,720
19 Korea, South 50,704,971 45,314,248
20 Thailand 68,297,547 41,000,000
Total 5,038,740,614 2,738,949,556
Rest of the World 2,480,288,356 993,023,867
Total World Users 7,519,028,970 3,731,973,423
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Internet Banking in India
Evolution of Internet banking (I banking) started in India by use of Automated Teller

machine (ATM) and has included the telephone banking. Direct bill payment, electronic fund
transfer and online banking. Internet banking shows that the acceptance of telephone (WAP
enabled) banking and Interactive TV banking usage are increasing in recent times. However,
it has been forecast by many that online banking will continue to be most popular method for
future electronic financial transactions.
Internet Banking capabilities and feature
Customer can perform following tasks
Viewing accounts Balances

Viewing recent transactions
Downloading bank statements
Viewing images of paid cheques
Downloading periodic accounts statements
Downloading applications for M-banking and E-banking
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Transaction tasks
Fund transfer between customers linked account.

Paying third parties including bill payments
Investment purchase or sale
Loan applications and transactions, such as repayment of enrollments
Credit card applications
Register utility billers
Other uses
Financial institution administration

Management of multiple users having varying levels of authority
Transaction approval process
Conceptual framework of internet banking

automated
teller mahines
E- cheque tele banking
Debit card smart cards
Automated Teller Machine
An automated teller machine or ATM is the short, it is a machine that lets people take out
(withdraw) cash from their bank accounts. In the United Kingdom (UK), ATMs are often called cash
machines, cashpoints or the hole in the wall. Some ATMs allow people to do more than take money
out. They may allow people to put in money, or check how much money is in a bank account. ATMs
may be found in stores and shopping malls. Sometimes, they can be found in bars or restaurants.
Other times, at special events, people may set one up so the guests can use the machine, like at a
fundraiser. People need a debit card or credit card in order to use an ATM. They will also need to
have a Personal Identification Number (PIN), which is a code that lets them get into their account.
There are a number of scams with ATMs. In one scam, con artists look over the victim's shoulder and
find their PIN; this is known as shoulder surfing. In another, they may install a video camera and get
PIN numbers from that way. They then make cards using the PIN number and account number to be
able to use that person's account.
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Tele banking
Telephone banking is a service provided by a bank or other financial institution, that

enables customers to perform a range of financial transactions over the telephone, without the need
to visit a bank branch or automated teller machine. Telephone banking times are usually longer than
branch opening times, and some financial institutions offer the service on a 24-hour basis. Most
financial institutions have restrictions on which accounts may be accessed through telephone
banking, as well as a limit on the amount that can be transacted.
The types of financial transactions which a customer may transact through telephone banking
include obtaining account balances and list of latest transactions, electronic bill payments,
and funds transfers between a customer's or another's accounts.
From the bank's point of view, telephone banking minimises the cost of handling transactions
by reducing the need for customers to visit a bank branch for non-cash withdrawal and
deposit transactions.
Smart Cards
A smart card is a card with a microchip in it. Such cards are used as a method
of identification and authentication. Plastic cards that allow to withdraw money from a cash
machine often are smart cards nowadays (Some of them still have a magnetic stripe which
holds the same information). The very often the user is identified with a PIN. If the pin is
entered correctly, money can be withdrawn. If the PIN is not entered correctly, the card is
blocked (after a number of false attempts). At first, smart cards were used in public
telephones in France, in 1983. There, the card simply stored a pre-paid credit. This credit was
reduced when calls were made. Another way to solve the problem is that the balance is stored
in a remote database. To make calls, a (usually toll-free number) is first called. From there,
additional calls can be made. This eliminates the need for cards with chips on them.
There are two basic kinds of smart cards:
Simple cards only contain memory that can be read and written to. Examples of this
model are phone cards, or cards for health insurance. All the processing of the data is
done outside the cards
Complex cards contain an integrated microchip. In addition to being able to store
data, they can also do some of the data processing. Unlike with the simple cards, there
is generally no way to directly access the memory of the card. Examples of such cards
include the bank cards that can be used for withdrawing money, or the SIM
cards used in mobile phones
Debit Card
A debit card (also known as a bank card or check card) is a plastic payment card that can be
used instead of cash when making purchases. It is similar to a credit card, but unlike a credit
card, the money comes directly from the user's bank account when performing a transaction.
In many countries, the use of debit cards has become so widespread that their volume has
overtaken or entirely replaced cheques and, in some instances, cash transactions. The
development of debit cards, unlike credit cards and charge cards, has generally been country
specific resulting in a number of different systems around the world, which were often
16
incompatible. Since the mid-2000s, a number of initiatives have allowed debit cards issued in
one country to be used in other countries and allowed their use for internet and phone
purchases.
Debit cards usually also allow for instant withdrawal of cash, acting as the ATM card for
withdrawing cash. Merchants may also offer cashback facilities to customers, where a
customer can withdraw cash along with their purchase
E- Cheque
An electronic cheque, also referred to as an e-cheque, is a form of payment made via the
internet, or other data network, designed to perform the same function as a conventional
paper cheque. Since the check is in an electronic format, it can be processed in fewer steps.
Additionally, it has more security features than standard paper cheques including
authentication, public key cryptography, digital signatures and encryption, among others.
Advantages of internet banking
Internet Banking has several advantages over traditional one which makes operating an
account simple and convenient. It allows you to conduct various transactions using the bank's
website and offers several advantages. Some of the advantages of internet banking are:
1. Online account is simple to open and easy to operate.
2. It is quite convenient as you can easily pay your bills, can transfer funds between
accounts, etc. Now you do not have to stand in a queue to pay off your bills; also you do
not have to keep receipts of all the bills as you can now easily view your transactions.
3. It is available all the time, i.e. 24x7. You can perform your tasks from anywhere and at
any time; even in night when the bank is closed or on holidays. The only thing you need
to have is an active internet connection.
4. It is fast and efficient. Funds get transferred from one account to the other very fast. You
can also manage several accounts easily through internet banking.
5. Through Internet banking, you can keep an eye on your transactions and account balance
all the time. This facility also keeps your account safe. This means that by the ease of
monitoring your account at anytime, you can get to know about any fraudulent activity or
threat to your account before it can pose your account to severe damage.
6. It also acts as a great medium for the banks to endorse their products and services. The
services include loans, investment options, and many others.
Disadvantages of internet banking:
7. Though there are many advantages of internet banking, but nothing comes without
disadvantages and everything has its pros and cons; same is with internet banking. It also
has some disadvantages which must be taken care of. The disadvantages of online
banking include the following:
8. Understanding the usage of internet banking might be difficult for a beginner at the first
go. Though there are some sites which offer a demo on how to access online accounts,
but not all banks offer this facility. So, a person who is new, might face some difficulty.
17
9. You cannot have access to online banking if you dont have an internet connection; thus
without the availability of internet access, it may not be useful.
10. Security of transactions is a big issue. Your account information might get hacked by
unauthorized people over the internet.
11. Password security is a must. After receiving your password, do change it and memorize it
otherwise your account may be misused by someone who gets to know your password
inadvertently.
12. You cannot use it, in case, the banks server is down.
13. Another issue is that sometimes it becomes difficult to note whether your transaction was
successful or not. It may be due to the loss of net connectivity in between, or due to a
slow connection, or the banks server is down.
Issues to be concerned with internet banking:
a) Transaction Issues
Sometimes a face-to-face meeting is required to complete complex transactions and address

complicated problems. A traditional bank can host meetings and call in experts to solve a
specific issue. In addition, international transactions may be more difficult (or impossible)
with some direct banks.
If you regularly deposit cash, a traditional bank with a drive-through window may be more
practical and efficient. Another potential drawback is that most direct banks do not have their
own ATM machines. Unless an internet bank has a network alliance with another bank, you
will be charged for your ATM use.
b) Service Issues
Some direct banks may not offer all the comprehensive financial services, such as insurance
and brokerage accounts, that traditional banks offer. Traditional banks sometimes offer
special services to loyal customers, such as preferred rates and investment advice at no extra
charge. In addition, routine services such as notarization and bank signature guarantee are not
available online. These services are required for many financial and legal transactions.
Security
Direct banks are subject to the same laws and regulations as traditional banks, and accounts
are protected by the FDIC. Sophisticated encryption software is designed to protect your
account information, but no system is perfect. Accounts may be subject to phishing, hacker
attacks, malware and other unauthorized activity. However, one advantage of online banking
is that you are likely to find a security breach more quickly, because your account balance is
so accessible. Most banks now make scanned copies of cleared checks available online,
which helps to avoid and identify check fraud. It enables verification that all checks are
signed by you and that dollar amounts have not been changed. The timely discovery of
discrepancies can be reported and investigated immediately. Identity theft is a significant
concern, but some online banks take this risk more seriously than others. Before opening an
online account, thoroughly investigate the bank's security policies and protections to ensure
they meet your expectations
18
How to overcome the hiccups
Digital bankers have major pent up demand to use fingerprint scanning.
Fingerprint scanning is the most preferred way to authenticate. One in three respondents
said they would prefer to use fingerprint scanning, like Apples Touch ID technology, to
log in to their financial accounts. Consumers preferring fingerprint scanning outnumbered
those choosing regular user name name and passwords by a 14 percentage point margin,
at 33% versus 19%.
Despite its popularity, the majority of bank customers lack access to fingerprint scanning.
Sixty-four percent of respondents with a bank account said that they were unable to
access digital banking by scanning their fingerprint. Once factor behind the lack of
availability is that many banks that lead in offering fingerprint scanning only support the
feature on Apple iOS, finding the large number of devices to support on Android presents
a greater development challenge.
Tech providers lead banks in meeting customer demand. The three major technology
provider mobile wallets, Android Pay, Apple Pay, and Samsung Pay, each already
support fingerprint scanning to make purchases online and at the point-of-sale. Banks are
increasingly finding themselves directly competing with mobile wallet providers, as more
issuers release their own branded mobile wallets, like Wells Fargo Wallet, Chase Pay, or
Citi Pay. Fingerprint logins to banking will soon become a need-to-have feature. Banks
that roll out the fingerprint scanning feature today can lure customers with an in-demand
capability most of their competitors lack. Those institutions also stand to increase digital
banking frequency of use by removing the time and effort it takes users to log in.
Recognizing the strong interest customers have in biometric logins, and seeking to
position themselves as security-minded, it is likely that a large number of financial
institutions will build out support for fingerprint scanning this year. Passwords and PINs
are being rendered irrelevant thanks to rising digital fraud, growing concern about data
privacy, and difficulty remembering an endless stream of letters and numbers. Thats
been leading both software and hardware firms to explore new methods of verifying user
identity. One such method is biometrics unique biological measurements that can be
digitized and turned into a trackable record. These methods, which include fingerprint
scanners, voice verification, or retina and vein scans, are steadily gaining popularity for
unlocking smartphones or accessing sensitive apps BI Intelligence forecasts that by
2021, 99% of US smartphones will be biometrics-enabled. But theyre also becoming
increasingly popular as a way to verify payments, because they keep consumer data
secure without inconveniencing consumers. But as these methods are implemented, firms
face unique security challenges. Because of the way biological data is stored and
encrypted, its much harder for hackers to access and use. But if it is accessed, its
extremely valuable, since biological data cant be changed or replaced in the event of a
breach. And though those risks could deter consumer, merchant, and vendor adoption, it
appears as though most parties believe the benefits outweigh the risks and will likely
implement biometrics-based authentication in their applications moving forward.
19
Discussions
US smartphone makers are rapidly integrating biometrics-based features, such as

fingerprint scanners, into their devices. BI Intelligence forecasts that 99% of installed
smartphones in the US will be equipped with fingerprint scanners by 2021. The shift will
happen much sooner for the installed base of iPhones in the US nearly all of which
will be biometrics-enabled by 2018.
Biometric technology is moving beyond fingerprints. Right now, biometric verification is

largely concentrated on fingerprint-scanning technology on mobile phones. But the
technology is expanding, and other verification methods, including facial recognition and
iris scanning, are becoming more popular.
Biometrics does pose their own security challenges. The unique nature of biometric
verification, and the fact that the digitized record is stored locally in a secure portion of
the phone, makes this data far more protected than traditional verification methods. But
the risk to this type of data is also greater because unique, permanent biological
identifiers are very valuable
Conclusion
The internet banking is the easiest and fast growing services of financial institutions that help
the customers. With both virtual and physical places banks offer unique benefits and
drawbacks. The users can adapt for both online and offline services. The emerging fingerprint
technology will help the users with secured banking services. If both the services are handled
by the institutions with a thorough strategy , the customers will enjoy the conveniences. The
personal relationships at the physical branch can also be maintained.
References
1. Rahmath S., Hema D. & Kammani a., (2011), Internet Banking Adoption in an Emerging
Economy: Indian Consumers Perspective, International Arab Journal of e-Technology, Vol. 2, No. 1.
2. Srivastava R. K., (2007), Customers Perception on Usage of Internet Banking, Innovative
Marketing, Vol. 3, Issue 4.
3. Centeno, C. (2004), Adoption of Internet services in the Acceding and Candidate Countries,
lessons from the Internet banking case, Telematics and Informatics, Vol.21, pp. 293-315.
4. Shilpan Vyas, The impact of e-banking on traditional banking services, Published in Singhania
University Rajasthan, India.
20
A Study on Adoption and Use of Mobile Banking with Special Reference to Public
Sector Banks in Karur District
Dr.T.S.Agilla, Assistant Professor in Commerce

Tamil Nadu National Law School, Tiruchirappalli
K.V.Hariprakash ,II year B.Com .L.L.B (Hons)

Tamil Nadu National Law School, Tiruchirappalli
Abstract
This purpose of the study is to investigate the factors influencing the use of mobile banking
and to explore the perceived utility of mobile banking users .And also to provide suggestions
to banks to make the mobile transactions user friendly and satisfactory. In order to
accomplish the objectives of the study, a sample of 100 account holders using mobile banking
of two public sector banks were taken by using Simple Random Sampling technique. Both
primary and secondary data were explored. Hypothesis were framed and tested with
statistical tools. Percentage analysis were used to complete the analysis of the collected data
and Chi square were used to test the hypothesis. The findings of the study were generalized.
Keywords: Mobile Banking services , Adoption Behavior, Public Sector Banks
Introduction
Mobile Commerce in India is increasing at a very fast pace. According to TRAI (2013),
subscribers who accessthe internet through wireless phones are 143.2 Million. Mobile
commerce has emerged after the introduction of electroniccommerce. A simple definition of
E-Commerce describes it as: the buying and selling of products and services over theWeb
(Kalakota and Robinson, 2001)1. E-Commerce has gained importance in the last few years.
E-Commerce applicationsdeveloped so far, assume basically fixed users with wired
infrastructure such as PC Connected with internet using aLAN (Local Area Network). Many
new E-Commerce applications are possible using wireless and mobile networks 2.
These applications are termed as Wireless E-commerce or Mobile Commerce. With the
increase in the number ofwireless internet subscribers and advancement in the operating
systems of mobile phones, mobile commerce has reached toevery nook and corner of the
world.M-Commerce is an area which is rapidly changing the way people conduct their
financial transactions.
According to TRAI, mobile banking involves the use of mobile phones for banking
transactions like fund transfer, balance check, etc. As per the extant guidelines of RBI, banks
that are licensed, supervised and have a physical presence in India, are permitted to offer
mobile banking services. Mobile Banking policies in India aim to enable funds transfer from
an account in any bank to any other account in the same or any other bank (interoperability)
on a real time basisirrespective of the mobile network the customer has subscribed to (TRAI,
2013) 3. The Mobile phone plays a very important role in the development of mobile
commerce and mobile banking.
Concept of mobile banking
Mobile Banking refers to provision and availment of banking and financial services with the
help of mobile telecommunication devices. The scope of offered services may include
21
facilities to conduct bank transactions, to administer accounts and to access customized

information (Tiwari and Buse 2007) 4.
In the broader sense mobile banking as that type of execution of financial services in the
course of which - within an electronic procedure -
the customer uses mobile communication techniques in conjunction with mobile devices
(Pousttchi and Schurig 2004) 5.
Mobile Banking can be said to consist of three inter-related concepts viz. Mobile Accounting,
Mobile Brokerage and Mobile Financial Information. Mobile Accounting is sometimes
characterized as transaction-based banking services that revolve around a bank account and
are availed using mobile devices. Not all Mobile Accounting services are however
necessarily transaction-based.
A more precise definition of Mobile Accounting would therefore characterize it as

availment of account-specific banking services of non-informational nature. Whereas
Mobile Brokerage, in context of banking services, refers to intermediary services related to
the bourse, e.g. selling and purchasing of stocks. Mobile Brokerage can be thus defined as
transaction based mobile financial services of non-informational nature that revolve around a
securities account. At last, Mobile Financial Information refers to non-transaction based
banking and financial services of informational nature. It includes subsets from both banking
and financial services and is meant to provide the customer with anytime, anywhere access to
information. The information may either concern the bank and securities accounts of the
customer or it may be regarding market developments with relevance for that individual
customer. The information may be customized on the basis of preferences given by the
customer and sent with a frequency decided by him (Tiwari and Buse 2007) 6.
Objectives of the study
1.To highlight the Mobile banking users preferences towards various type of financial
transactions.
2.To bring out the factors influencing the usage of Mobile banking.
3.To know theusage of Mobile Banking for users.
4.To identify the payment behaviour of Mobile banking users.
5. To measure the effectiveness of Marketing and Advertising among the users of Mobile
Banking
Research Design
The study was an Exploratory Research which was sought to investigate the adoption and use
of Mobile banking which is a new phenomenon in the Indian Banking sector. The research
targeted public sector banks i.e those that are offering the service of Mobile banking. For this
study, two public sector banks were selected on the basis of the market share i.e State bank
of India (SBI) and Punjab National Bank (PNB). The sample size includes 100
respondents who were the users of Mobile Banking,i.e 50 each from the State Bank of India
and Punjab National Bank . The set of questionnaires were given to the randomly. A
structured questionnaire was adopted and modified from previous studies on this topic. The
questionnaire contains two sections: the first section was designed to gather the respondents'
personal and demographic information. The second part was designed to gather the
22
respondents' factors, usage , and awareness on those the questionnaire was pre-tested with a
sample of 30 customers using mobile banking of two commercial banks which was modified
to increase its clarity and applicability.
The primary data collected through the questionnaires were analysed by using the following
statistical technique
a) Percentage Analysis b) Chi-square test.
Hypothesis
Researcher also tried to find out if there is any association between occupation of the
respondents and type of bills paid through Mobile Banking by the respondents of both the
banks. The hypothesis framed were as follows
1. HO = Occupation of the sample respondents does not influences the type of bills paid through
Mobile Banking by the respondents of both the banks
H1 = Occupation of the sample respondents influences the type of bills paid through Mobile
Bankingby the respondents of both the banks.
Analysis and Results
Demographic Characteristics
It is found that the 54 per cent of respondents were in the age group of 25-45 years. 26 per
cent of age group were in the age group of 16 -25 years.11 per cent were in the age group of
45- 60 years. 9 per cent were in the age group of 61 plus years. It is clear that most of the
mobile banking users werein the age group of 16-25 years. Occupation of the respondents
shows that 27 per cent of them were private business professionals with more 32 per cent of
respondent having account in State Bank of India. 20 per cent of respondents each were in
Government service and Private business executive with more per cent of respondents having
account in State Bank of India. 11 per cent of respondents each were private business
employee and in business self employment. It is clear that most of the respondents using
mobile banking were Private business professionals. Educational status of the respondents
shows that 43 per cent of respondents were degree holders with more percentage of
respondents having account in Punjab national Bank. 40 per cent of respondents were having
technical education with more percentage of respondents having account in State Bank of
India. 12 per cent of them were educated upto secondary level. 5 per cent of them were
having primary level of education. It is clear that respondents those who were having
technical education and degree holder mostly use mobile banking. Income of the respondents
shows that 37 per cent of the respondents were in the income group of 3-5 lacs with more 38
percent of respondents having account in State Bank of India.30 per cent of respondents were
in the group of 1-3 lacs. 30 per cent of respondents were in the income group of 1-3 lacs. It is
obvious that most of the respondents were in the income group of 3-5 lacs.
Type of Bank Account of Respondents
It is found that 49 per cent of respondents were having savings account with more 56 per
cent of respondents having savings account in Punjab National Bank.41 per cent of
respondents were having current account with more 44 per cent of respondents from State
Bank of India. 10 per cent were having both savings and current account. It is clear that most
of the respondents were having Savings account.
23
Preference towards various types of Financial Transaction done by Respondents
It is inferred that 15 per cent of respondents were there for the following type of financial
transactions fund transfer , balance enquiry, bill payment, cash with drawl and purchasing.It
is clear from the table that most of the respondents use mobile banking for the financial
transactions like fund transfer, balance enquiry, bill payment, cash withdrawl and purchasing.
Factors Influencing the usage of Mobile Banking
It is resulted that 35 per cent of the respondents were of the opinion that all the factors
influenced the use of mobile banking by 36 per cent respondents of State Bank of India and
34 per cent of respondents of Punjab National Bank. 24 per cent of respondents were
influenced by the factor 1 mobile banking services like customers having ATM s in their
pocket by 14 per cent of respondents of State Bank of India and 10 per cent of respondents of
Punjab National Bank. The factors SMS Banking services saves time and banks providing
training to customers each has 11 per cent of respondents. It can be concluded that only 35per
cent of the respondents are influenced by all the factors to use mobile banking.
Usage of Mobile Financial Transaction
The result showed that 52 per cent of respondents use mobile banking several times in a week
with more 30 per cent of respondents having account in State Bank of India. 19 per cent of
respondents use mobile banking several times daily. It is inferred that most of the respondents
uses mobile banking frequently. Additionally, it is found that 31 per cent of respondents were
of the opinion that mobile banking menu is easy to navigate , to understand ,to make
payment, to transfer money, to make balance enquiry 32 per cent of more respondents
having account in State Bank of India. It is clear that only 31 per cent of the respondents
gives many opinion and are satisfied with the usage of mobile banking menu in phone.
Payment Behaviour
It is found that 27 per cent of respondents uses mobile banking for paying mobile phone bill
with more 30 per cent of respondents having account in State Bank of India . 25 per cent of
respondents use mobile banking for paying Electricity and water bills . It is obvious that most
of the respondents use mobile banking for paying mobile,electricity and water.
Effectiveness of marketing and advertising among the users of mobile banking
The above table shows that 44 per cent respondents gets source of knowledge about mobile
banking directly from bank with 52 per cent of more respondents having account in State
Bank of India. 20 per cent of respondents gets source of knowledge about mobile banking
from SMS service provider. It is clear that most of the respondents acquire source of
knowledge from the banks where they hold their accounts.
Hypothesis Testing
The data was further subjected to Chi Square Testing for validation of hypothesis.
A Null hypothesis is formed and tested in the study.
HO = Occupation of the sample respondents does not influences the type of bills paid through Mobile
Bankingby the respondents of both the banks
H1 = Occupation of the sample respondents influences the type of bills paid through Mobile
Bankingby the respondents of both the banks.
24
Results of Chi Square Test
Test
D.f Sig Cal. value Table value Result
used
Chi- 35 per
5per cent 16.96 49.8 Accepted
Square cent
Above Table reveals that calculated value is less than the tabulated value. Therefore we
accept the hypothesis. Hence it can be concluded that occupation of the sample respondents
does not influences the type of bills paid through mobile banking by the respondents of both
the banks.
Findings and Implications
Around the globe, various initiatives use the mobile phone toprovide financial services to
those without access to Traditional Banks. It has become impetrative for the banks to adopt
such technologies and strategies which ensure their success. As a result, the banks are trying
to develop an understanding about their customers by analyzing their behavior regarding the
services. The research findings confirmed that most of the banking users were in the age
group of 16-25 years. Banks has to provide training to the customers those who were in the
age group of 45 & above. In analyzing the occupation of the respondents more Professional
people ,Business executive and Government Employees uses mobile banking services.
Banks must take initiative to make the mobile banking familiar for the people engaged in
different occupations. The result shows that more respondents who were having university
degree and technical education uses mobile banking easily and banks should take steps to
train the customers having primary and secondary level of education. This research shows
that most of the respondents were in the income group of 3-5 lacs.It is clear that even low and
middle income group of people uses mobile banking. This study clearly points out that more
number of respondents were using only few type of transactions and banks should train the
respondents for using the other types of financial transactions in mobile banking. This
research study clearly shows that only 35 per cent of the respondents are influenced by all the
factors to use mobile banking and rest of the respondents were influenced by few factors.
Banks must take initiative and motivate its customers to use mobile banking. It is clear from
this study that most of the respondents use mobile banking frequently. In case of usage of
mobile banking menu few respondents faces difficulty in usage of mobile banking menu in
phone and banks should offer its guidance to customers to overcome the difficulty. In case of
analyzing the type of bills paid by the customer of both the banks it is inferred that most of
the respondents uses mobile banking for paying their mobile phone bill and electricity and
water bills.
Banks have to train the customers for paying other types of bills through mobile banking.
Results has clearly pointed out that customers of both the banks gets awareness about mobile
money services directly from banks. Banks can advertise in mass media for creating
awareness about mobile banking among the people.
25
Conclusion
The study brings forth the several insights regarding the factors influencing the usage of
mobile banking and perceived utility of mobile banking users. A critical finding is that the
customers of both the banks were influenced by the most of the factors and this shows that
mobile banking service are gaining popularity among the users. Overall perceptions of
mobile banking in the daily lives of account holders are an encouraging sign of the potential
of mobile banking among the customers of public sector banks. Mobile banking sector is in
need for regulations for Electronic Banking in India which is to be addressed to ensure
customers trust and make it more effective in the times to come.
References
1.TRAI. (2013), The Indian Telecom Services Performance Indicators. Delhi: Telecom
Regulatory Authority of
India
2.Kalakota, R., & Robinson, M. (2001). M-Business: The Race to Mobility. New York:
McGraw-Hill Companies
3.TRAI. (2013),The Indian Telecom Services Performance Indicators. Delhi: Telecom
Regulatory Authority ofIndia
4.Tiwari, Rajnish& Stephan, Buse (2007), The Mobile Commerce Prospects: A Strategic
Analysis of Opportunities in the Banking Sector, http://www.globalinnovation.
net/publications/PDF/HamburgUP_Tiwari_Commerce.pdf [accessed 15 Aug 2010]
Pousttchi, Key &Schurig, Martin (2007), Assessment of Todays Mobile Banking
Applications from the View of Customer Requirements,
http://mpra.ub.unimuenchen.de/2913/ [accessed 10 Oct 2010]
7.Prerna Sharma Bamoriya, Issues & Challenges in Mobile Banking In India: A Customers
Perspective, Research Journal of Finance and Accounting,ISSN 2222-1697 (Paper) ISSN
2222-2847 (Online)
Vol 2, No 2, 2011.
26
A Study on Analysis of BOP Trends with reference to India
Hymavathi,
Assistant Professor,
Vignan University, Vadlamudi, Guntur(Dt), A.P
Email: hyma.chunduri@gmail.com
Dr. K. Kalpana,
Associate Professor,
K. Phani Kumar,
Department rof Management Studies,
Abstract
Globalization is severely impact the countrys foreign exchange reserves. Leadership

changes and Macro Economic factors are going to affect the countries trade balances. The
balance of payments (BOP) is the method countries use to monitor all international monetary
transactions at a specific period of time. Usually, the BOP is calculated every quarter and
every calendar year. This paper examines the trend pattern of balance of payment during the
period2011-12 to 2015-16 and the factors which have effected during that period and the
impact on balance of payment. And latest developments in current as well capital account,
which factors in economy as well as contemporary issues leads to developments since2011-
2012 .There are some reasons which causes Disequilibrium in balance of payments like
population growth, Demonstration effect, cyclic fluctuations etc. It also tells about in Bop
statement how changes happen in current account and capital account from 2011 to 2016.
The trend graph is explaining the Indias current situation and how the future growth will be.
Keywords: Balance of Payments, contemporary issues, economy, current account, capital

account.
Introduction
In the modern world, there is hardly any country which is self-sufficient in the sense that it
produces all the goods and services it needs. Every country imports from other countries the
goods that cannot be produced at all in the country or can be produced only at an unduly high
cost as compared to the foreign supplies.
To estimate trend and pattern of current account, capital account and balance of payment.
To elaborate the recent BOP developments.
To analyze future trends and correlate the latest trends with the contemporary factors.
27
Balance of Payment (Bop)
The balance of payments (BOP) is the method countries use to monitor all international
monetary transactions at a specific period of time. Usually, the BOP is calculated every
quarter and every calendar year. All trades conducted by both the private and public sectors
are accounted for in the BOP in order to determine how much money is going in and out of a
country. If a country exports goods and services more than the imports of goods and services
from other countries then we called country has surplus balance. In the same way if a country
imports goods and services during a period more than the exports made by that country then
we called that country has deficit balance. The BOP is divided into three main categories: the
current account, the capital account and the financial account. Within these three categories
are sub-divisions, each of which accounts for a different type of international monetary
transaction.
The Current Account
The current account is used to record the inflow and outflow of goods and services into a
country. Earnings on investments, both public and private, are also put into the current
account. In current account we should maintain both debit and credit columns but a small
change have to be made (i.e., take Dr at right hand side and cr at left hand side), This includes
goods such as raw materials and manufactured goods that are bought, sold or given away
(possibly in the form of aid). Services refer to receipts from tourism, transportation,
engineering, business service fees (from lawyers or management consulting, for example),
and royalties from patents and copyrights. When combined, goods and services together
make up a countrys balance of trade (BOT). The BOT is typically the biggest bulk of a
countrys balance of payments as it makes up total imports and exports. If a country has a
balance of trade deficit, it imports more than it exports, and if it has a balance of trade
surplus, it exports more than it imports. Receipts from income-generating assets such as
stocks (in the form of dividends) are also recorded in the current account. The last component
of the current account is unilateral transfers. These are credits that are mostly workers
remittances, which are salaries sent back into the home country of a national working abroad,
as well as foreign aid that is directly received.
Current account transactions:
The current account records the receipts and payments of foreign exchange in the following
ways. They are
Current account receipts
Export of goods
Invisibles
Services
Unilateral transfers
Investment income
Non-monetary movement of gold
28
Current account payments
Import of goods
Invisibles
Services
Unilateral transfers
Investment income
Non-monetary movement of gold
The Capital Account:
The capital account is where all international capital transfers are recorded. This refers to the
acquisition or disposal of non-financial assets (for example, a physical asset such as land) and
non-produced assets, which are needed for production but have not been produced, like a
mine used for the extraction of diamonds.The capital account is broken down into the
monetary flows branching from debt forgiveness, the transfer of goods, and financial assets
by migrants leaving or entering a country, the transfer of ownership on fixed assets (assets
such as equipment used in the production process to generate income), the transfer of funds
received to the sale or acquisition of fixed assets, gift and inheritance taxes, death levies, and,
finally, uninsured damage to fixed assets.
Capital account transactions:
Similarly, capital account transaction takes place in following ways
Capital account receipts
1. Long term inflow of funds

2. Short term inflow of funds
Capital account payments
1. Long term out flow of funds

2. Short term out flow of funds
Distinction between Current Account and Capital Account:
The distinction between the current account and capital account of the balance of payment
may be noted. The current account deals with payment for currently produced goods and
services. It includes also interest earned or paid on claims and also gifts and donations.
The capital account, on the other hand, deals with capital receipts and payments of debts
and claims. The current account of the balance of payments affects the level of national
income directly. For instance, when India sells its currently produced goods and services
to foreign countries, the producers of those goods get income from abroad.
In other words, current account receipts have the effect of increasing the flow of income in
the country. On the other hand, when India imports goods and services from foreign
countries and pays them money which would have been used to demand goods and
services within the country money flows out to foreign countries.
29
Thus, current account payments to foreigners involve reduction of the flow of income
within the country and constitute a leakage. Thus, the current account of the balance of
payments has a direct effect on the level of income in a country. The capital account,
however, does not have such a direct effect on the level of income; it influences the
volume of assets which a country holds.
Balance of Trade and Balance of Payments
Balance of trade and balance of payments are two related terms but they should be carefully
distinguished from each other because they do not have exactly the same meaning. Balance
of trade refers to the difference in values of imports and exports of commodities only, i.e.,
visible items only. Movement of goods between countries is known as visible trade because
the movement of goods is open and visible and can be verified by the custom officials.
During a given period of time, the exports and imports may be exactly equal, in which case
the balance of trade is said to be in balance. But this is not necessary because those who
export and import are not necessarily the same persons. If the value of exports exceeds the
value of imports, the country is said to have an export surplus. On the other hand, if the value
of its imports exceeds the value of its exports, the country is said to have a deficit balance of
trade.
Disequilibrium
Though the credit and debit are written balanced in the balance of payment account, it may
not remain balanced always. Very often, debit exceeds credit or the credit exceeds debit
causing an imbalance in the balance of payment account. Such an imbalance is called the
disequilibrium. Disequilibrium may take place either in the form of deficit or in the form of
surplus. Disequilibrium of Deficit arises when our receipts from the foreigners fall below our
payment to foreigners. It arises when the effective demand for foreign exchange of the
country exceeds its supply at a given rate of exchange. This is called an 'unfavorable balance'.
Disequilibrium of Surplus arises when the receipts of the country exceed its payments. Such a
situation arises when the effective demand for foreign exchange is less than its supply. Such a
surplus disequilibrium is termed as 'favorable balance'.
Causes of disequilibrium in Balance of Payment
Development Programmes
Developing countries which have embarked upon planned development programmes require
to import capital goods, some raw materials which are not available at home and highly
skilled and specialized manpower. Since development is a continuous process, imports of
these items continue for the long time landing these countries in a balance of payment deficit.
Demonstration Effect
When the people in the less developed countries imitate the consumption pattern of the
people in the developed countries, their import will increase. Their export may remain
constant or decline causing disequilibrium in the balance of payments.
30
Natural Factors
Natural calamities such as the failure of rains or the coming floods may easily cause
disequilibrium in the balance of payments by adversely affecting agriculture and industrial
production in the country. The exports may decline while the imports may go up causing a
discrepancy in the country's balance of payments.
Cyclical Fluctuations
Business fluctuations introduced by the operations of the trade cycles may also cause
disequilibrium in the country's balance of payments. For example, if there occurs a business
recession in foreign countries, it may easily cause a fall in the exports and exchange earning
of the country concerned, resulting in a disequilibrium in the balance of payments.
Inflation
An increase in income and price level owing to rapid economic development in developing
countries, will increase imports and reduce exports causing a deficit in balance of
payments.ased their surplus. The poor marketing facilities of the developing countries have
pushed them into huge deficits.
Flight of Capital
Due to speculative reasons, countries may lose foreign exchange or gold stocks People in
developing countries may also shift their capital to developed countries to safeguard against
political uncertainties. These capital movements adversely affect the balance of payments
position.
Globalization
Due to globalization there has been more liberal and open atmosphere for international
movement of goods, services and capital. Competition has been increased due to the
globalization of international economic relations. The emerging new global economic order
has brought in certain problems for some countries which have resulted in the balance of
payments disequilibrium.
Population Growth
Most countries experience an increase in the population and in some like India and China the
population is not only large but increases at a faster rate. To meet their needs, imports
become essential and the quantity of imports may increase as population increases.
31
India's BOP statement for last five years (US $ million)

2013-14 2014-15 2015-16
2011-12 2012-13
PR PR P
1 2 3 4 5 6
A. CURRENT ACCOUNT
1 Exports, (f.o.b). 309,775 306,583 318,606 316,544 266,366
2 Imports, c.i.f. 499,534 502,238 466,217 396,445 396,445
-
3 Trade Balance -195,657 -147,610 -144,930 -130,080
189,760
4 Invisibles, Net. 111,605 107,494 115,312 118,082 107,929
a) Non-Factor Services of which : 64,098 64,916 73,067 76,528 69,677
Software Services 60,957 63,504 67,002 70,400 71,454
b) Income. -15,988 -21,455 -23,028 -24,140 -24,375
c) Private Transfers 63,469 64,342 65,481 66,264 63,139
5 Current Account Balance -78,155 -88,163 -32,296 -26,859 -22,151
B. CAPITAL ACCOUNT
1 Foreign Investment, Net {a+b} 39,232 46,712 26,387 73,456 31,892
a) Direct Investment 22,061 19,819 21,564 31,251 36,021
b) Portfolio Investment 17,171 26,892 4,823 42,204 -4,131
2 External Assistance, Net 2,297 983 1,031 1,724 1,504
3 Commercial Borrowings, Net 10,344 8,485 11,777 1,570 -4,529
4 Short Term Credit, Net 6,669 21,658 -5,043 -112 -1,611
5 Banking Capital of which : 16,226 16,570 25,449 11,618 10,630
NRI Deposits, Net 11,919 14,841 38,891 14,055 16,053
6 Rupee Debt Service -78 -57 -51 -80 -72
7 Other Capital, Net* -6,928 -5,042 -10,762 1,108 3,314
8 Total Capital Account 67,754 89,300 48,786 89,286 41,129
C. Errors & Omissions -2,431 2,688 -984 -1,022 -1,074
D. Overall Balance [A(5)+B(8)+C] -12,832 3,822 15,509 61,405 17,906
E. Monetary Movements (F+G) 12,831 -3,826 -15,508 -61,406 -17,905
F. IMF, Net
G. Reserves and Monetary Gold (Increase -,
12,831 -3,826 -15,508 -61,406 -17,905
Decrease +) of which : SDR allocation
Memo: As a ratio to GDP
1 Trade Balance -10.4 -10.7 -7.9 -7.1 -6.3
2 Net Services 3.5 3.5 3.9 3.7 3.4
3 Net Income -0.9 -1.2 -1.2 -1.2 -1.2
4 Current Account Balance -4.2 -4.8 -1.7 -1.3 -1.1
5 Capital Net (Excld. changes in reserves) 3.7 4.9 2.6 4.4 2.0
6 Foreign Investment, Net 2.2 2.6 1.4 3.6 1.5
PR: Partially Revised. P: Provisional

32
Current account developments
Current Account Balances From 2011-12 to 2015-16

0
-10,000 2011-12 2012-13 2013-14 PR 2014-15 PR 2015-16 P
-20,000
-30,000 -22,151
-26,859
-40,000
-50,000 -32,296
-60,000
-70,000
-80,000
-78,155
-90,000
-88,163
-100,000
Year 2011-12 2012-13 2013-14 PR 2014-15 PR 2015-16 P

Balances -78,155 -88,163 -32,296 -26,859 -22,151
Interpretation
Current account balances are showing a decline trend from the year 2014-15 to 2015-2016 by
$4.78 millions which is a positive sign for the Indian economy. Although current account
balances are showing 22.15million deficit balance it will be a positive sign to Indian
economy because when compared the deficit balance of FY 2014-15-26.85million the deficit
balance came down by 4.78 million. Because of drastical fall in imports leads this change.
During 2015-16 the imports was 396,444 million against 396,444 millions in the FY 2014-
15.It could happened because of government policies and make in India campaign.
If India could follow the same trend definitely the amount spent on foreign goods will get
down soon.
33
Capital Account Developments
Capital Account Balances From 2011-12 To 2015-16

100,000
90,000 89,300 89,286
80,000
70,000 67,755
60,000
50,000 48,787
40,000 41,128
30,000
20,000
10,000
0
2011-12 2012-13 2013-14 PR 2014-15 PR 2015-16 P
Year 2011-12 2012-13 2013-14 PR 2014-15 PR 2015-16 P

Balances 67,755 89,300 48,787 89,286 41,128
Interpretation
Capital account balances are showing a decline trend from the year 2014-15 to 2015-2016 by
$48.15 millions. which is a positive sign for the Indian economy. Although capital account
balances are showing 23.46 million deficit balance it will be a positive sign to Indian
economy because when compared the deficit balance of FY 2014-15 50.41million the deficit
balance came down by 48.15 million. Because of drastic fall in Exports leads this change.
During 2015-16 the imports was 316,544 million against 266,366 millions in the FY 2014-
15.
Conclusion
In capital account, Exports decreases in the year 2011-2016 and imports increases initially
and after that decreases in the year 2011-2016. In current account, foreign investment (which
includes Portfolio investment and direct investment) also decreases in the year 2011-2016.
Population growth, Demonstration effect, cyclic fluctuations, Natural factors, Globalization
and inflation are the factors which causes disequilibrium in balance of payments.
34
References
1. Dornbusch, Rudiger, Stanley Fischer, and Richard Startz. 2004. Macroeconomics, 8th ed.
Boston: McGraw-Hill.
2. Frenkel, Jakob, and Harry G. Johnson, eds. 1976. The Monetary Approach to the Balance
of Payments. Toronto: University of Toronto Press.
3. Husted, Steven, and Michael Melvin. 2007. International Economics, 7th ed. Boston:
Pearson/Addison-Wesley.
4. International Monetary Fund. Various years. Balance of Payments Statistics Yearbook.
Washington, DC: Author.
5. Alfaro, Laura (2003). Foreign Direct Investment and growth: Does the sector matter?
(Harvard Business School Working Paper). Harvard, USA.
6. Chopra, Ajai, Charles Collyns, Richard Hemming, Karen Parker, Woosik Chu, and
Oliver
7. Department of Commerce (Annual report,) www.commerce.nic.in
8. Economic Survey (2010-11), http://indiabudget.nic.in
9. Kumar, Rajiv., Mathew Joseph, Dony Alex, Pankaj Vashisht and Debosree Banerjee,
(2009),Indian Economic Outlook: 2008-09 and 2009-10., ICRIER Working Paper No.
234, ICRIER, New Delhi
10. Reserve Bank of India (2008). Handbook of Statistics on Indian Economy
(2008).Mumbai
35
A Study on Contribution of MFIs on Poverty Alleviation in Vellore District
Dr. J. Ramola Premalatha,

Associate Professor,
Department of commerce,
VIT University, Vellore
Ranjith R,
B.Com (Final year),
Department of commerce,
Abstract
India is a huge country with a large population. Banks, though have grown in size, have
certain limitations as they cannot open branches in remote and inaccessible places. In order
to meet the banking requirements of the people, there are many Non-Banking Financial
Companies and Micro Finance Institutions operating mainly in rural parts of the country.
NBFCs perform banking functions at a small scale that of banks and MFIs function at a
smaller level than that of NBFC. These MFIs provide similar services as NBFC to the
underprivileged and impoverished sections of the society who do not have access to banking
facilities. They provide very small funds from Rs.1,000- 20,000 to the poor to start a business
aiming the poverty alleviation by developing micro-entrepreneurship. This development of
micro-entrepreneurship can help reduce the problem of unemployment and several social
problems in the society. Also, MFIs provide very small loans to the underprivileged sections
of the society. This paper tries to assess the functioning of micro-finance institutions and the
impact on the marginalized groups in terms of socio-economic development.
Keywords: Non banking finance companies, micro-finance institutions, underprivileged

sections, poverty alleviation, socio-economic development.
Introduction
After Independence, India opted for a planned system of Economic Development wherein,
the Public sector controlled the commanding heights of the economy. Several major banks
were nationalised in 1969, followed by another dose of nationalisation in 1980, with the
intent of extending financial assistance to the rural areas and the weaker sections of the
society.In spite of these steps, the availability of credit to low-income clientele did not show
much improvement. While the middle and upper segments of society continued to avail
finance from the banking system by offering some security or the other, lower segments of
the population who had no worthwhile asset to offer as a security, could not take advantage
of the liberalised system of bank credit.
Such segments of the population depended on the landlords/local money lenders for their
financial requirements- are they religious, medical, educational, etc. The money lenders and
landlords had a vice-like grip on such segments of the population and the meagre assets they
had (land, gold ornaments, etc.) were most of the time mortgaged with the landlords/money
lenders.The situation in the countryside, where agriculture was the mainstay of 80% of the
population, was much worse. The All India Rural Credit Survey Committee had recorded in
its comprehensive report on Rural Credit that the Indian farmer is born in debt, lives in debt
and bequeaths debt which was quite apt at that time.
36
Non-Banking Financial Company (NBFC)
Non-bank financial companies (NBFCs) are the financial institutions that provide banking
services to the people without meeting the legal definition of a bank, i.e. they do not hold a
banking license. Their operations are still exercised under bank regulation. While banks and
non-banking financial companies (NBFC) are the key financial intermediaries, that offer
similar services to the customers, the major difference between NBFC and bank is that unlike
banks, an NBFC cannot issue self-drawn cheques and demand drafts. As finance is the basic
requirement of individuals and business, banks alone cannot cater all the sections of the
society. That is why NBFC came into being, both in public and private sector, to complement
banks in providing finance to people.
Definition of the term Micro finance
According toBarr,Michael (2005), Microfinance is a form of financial development that has

primarily focused on alleviating poverty through providing financial services to the poor.
Most people think of microfinance, if at all, as being about micro-credit i.e. lending small
amounts of money to the poor. Microfinance is not only this, but it also has a broader
perspective which also includes insurance, transactional services, and importantly savings.
Microfinance Institutions
A microfinance institution is an organization that offers financial services to low-income

populations. Almost all these institutions offer micro credit to their members and only take
back small amount of savings from their borrowers, and not from the general public. They
also offer insurance and other services. MFIs are expected to satisfy the financial needs of the
rural and semi-urban low income households; customers include women, daily wage workers,
farmers, small traders and retailers.
The characteristics of microfinance products include:
Small amounts of loans

Short- terms loan (usually up to the term of one year).
Payment schedules attribute frequent installments (or frequent deposits).
Installments made up from both principal and interest, which amortized in course of
time.
Higher interest rates on credit (higher than commercial bank rates but lower than
loan-shark rates), which reflect the labour-intensive work associated with making small loans
and allowing the microfinance intermediary to become sustainable overtime.
Application procedures are simple.
The micro-finance context in India
In India, there is a diversity of approach to microfinance, involving banks, government

agencies, NGOs. The focus of this study is on the specialized MFIs who provide financial
services to the rural and urban poor whilst building their own financial sustainability. Most
MFIs have groups as intermediaries for financial transactions, but actually there are different
ways of working with groups. They may be broadly classified as the Self Help Group model
(SHGs), the Grameen replicators and Cooperatives.
37
In each of these models, the groups usually assume joint liability for loans taken by its
members, but there are significant differences in the services offered by them and in the
extent of responsibility of the beneficiaries in financial transactions. Only a small number of
MFIs have an individual banking approach.
Objectives of Microfinance institutions
To access the required capital without fear of loan sharks.

To implementation of entrepreneurial ideas of underprivileged people and self-sufficiency.
To improve standards of living and financial stability.
To empower women with economic advancement.
To improve the overall well-being of community.
Tamil Nadu and poverty alleviation
Tamil Nadu is one of the most industrialized States and is the second largest economy in
India in 2012. However, over 20 percent of the population continues to live in poverty, which
is particularly in rural areas with high inequality and a large population of persons with
disabilities. A large portion of the population depends on agricultural for livelihoods, due to
low skill levels and weak access to credit and markets.
Poverty can be defined either in terms of biological needs or economic condition. Based on
biological approach, the poverty line is defined in terms of calorie intake and those who fall
below the poverty line are poor. Accordingly, the cut off calorie norm (per capita per day) is
set to be 2400 and 2100 calories in rural and urban areas respectively. Based on economic
approach, people are grouped based on per capita income/expenditure or standard of living
index. The Task Force on Provision of Minimum Needs and effective Consumption Demand
(1979), considered the cut off per capita per month income of Rs.49.10 and Rs. 56.00 for
rural and urban areas respectively based on 1973-74 base year. In terms of per capita
expenditure, Rs.15 and Rs.20 per month in rural and urban areas respectively at 1960-61
prices are taken to determine the poverty levels. The monthly per capita income for dividing
people as BPL in Tamil Nadu is estimated at Rs.639 for rural and Rs.808.8 for urban areas.
The Tendulkar committee recommended use of implicit prices derived from quantity and
value data collected in household consumer expenditure surveys for computing and updating
the poverty lines. The level of poverty could be also measured based on standard of living
index constructed using socio-economic indicators. The prevalence of poverty in both rural
and urban areas had been estimated for Tamil Nadu. The research on this area is to
investigate the effectiveness of MFIs in economic development in Vellore district.
38
Table 1: Poverty Lines for 2011-12
Sl. No. State Monthly percapita income (Rs.)

Rural Urban Combined
1 Tamil Nadu 880 937 1817
2 All India 816 1000 1816
Note: Computed as per Tendulkar method on Mixed Reference Period (MRP)
Table 2: No. and percentage of population below poverty lines for 2011-12
Sl. State/National Rural Urban Combined

No
% of No. of % of No. of % of No. of
persons persons persons persons persons persons
(in lakhs) (in lakhs) (in lakhs)
1 Tamil Nadu 15.83 59.23 6.54 23.40 11.28 82.68
2 All India 25.70 2166.58 13.70 531.25 21.92 2697.83
Population as on 1st March 2012 has been used for estimating number of persons below
poverty line. (2011 Census population extrapolated)
Rural Poor: They are depending on agriculture as primary source of income. Majority of
them are small or marginal farmers and they do not have certain and regular income streams.
Urban Poor: They require facilities like housing finance, health insurance, remittances,
savings & investments.
Problems faced by MFIs
Although the MFIs where seen as the helping hand of the poor, They cant be a solution to
the large scale poverty that prevails in our rural areas many researches had pointed out the
following problems faced by MFIs.
Though they were formed to enable the poor to work on businesses they fail to cope
up with this objective and behave similar to the local money lenders.
Corruption is found in the MFIs.
Poor record keeping and lack of managerial capacity.
Lack of proper legislation to distinguish between NGOs and MFIs.
Lack of vision
Lack of training
Lack of proper commercial orientation
All these factors prohibit the growth of MFIs and delimit their impact.
MFIs Vs NBFCs
NBFC is a company that does not engage in agricultural or industrial activities, and is not
permitted to engage in sale or purchase, and even construction of immovable property. NBFC
is registered under the Companies Act, 1956 with the government of India.
39
If NBFC performs banking functions at a scale smaller than that of banks, MFI exists at a
level that is smaller than that of NBFC. MFI stands for Micro Finance Institutions, and such
institutions are providing similar services as NBFC to the underprivileged and impoverished
sections of the society who do not have access to banking facilities.MFIs operate at a further
smaller level than NBFC and provide very small loans to the underprivileged sections of the
society. Both MFIs and NBFCs perform similar services to the rural regional groups who
dont access to the banking facilities.
Research Gap
The literature shows that the studies done on the effect of MFIs are inconclusive. But
conducting such a survey in Vellore district is justifiable as the district has lot of scope for
industries. This situation can re-evaluate the plans and policies followed by the MFIs and
Government on poverty alleviation. Hence it is necessary to conduct a survey on the effects
of MFIs on poverty alleviation in Vellore district.
Statement of the problem
Poverty is widespread in Vellore district as the district is considered as the industrial sector
and less employment opportunities are found for the marginalised groups. For this reason,
MFIs came into existence in reducing poverty by bringing economic development. Since it is
an industrial sector, there is lots of scope for starting industries in the district. Therefore, it is
from this background that the study can be done to examine the effects of MFIs on poverty
alleviation.
Research questions
Impact assessment is important as to know whether MFIs are meeting its objectives.
Therefore, the following questions were developed as key research questions, taking MFI
objectives into consideration:
(i) Who is being served by microfinance? Are the poorest getting left out?
(ii) Does microfinance lead to a reduction in poverty: Is it sufficient to move poor families
out of a situation of poverty? Do they provide the better-off to provide employment
opportunities to the very poor?
(iii) Which products and services are most effective in reaching the poor, responding to the
needs of the poor?
(iv) What effect does microfinance have on other systems or sources of finance both formal
(local banks) and informal (moneylenders, traders)?
The main purpose of the study is to assess the contribution of microfinance institutions
in poverty alleviation from poor in Vellore district. The other objectives are:
To findout whether the rural people are aware of MFIs and its aim in poverty
alleviation in their areas
40
To find out the reasons to approach MFIs than the formal financial system
To examine the contribution of MFIs in improving the living standard of poor in
Vellore district
To find out the satisfaction level of beneficiaries in Vellore District
Review of related literature
MFIs were formed to meet many objectives: the important one is to eradicate poverty and
improve the standard of living of the rural population, offer finance to the rural community,
empowering women, and developing the industrial sector. The studies show mixed results on
the performance of the MFIs. Some are success stories and some have failure stories. Recent
studies show that there is a conflict in measuring financial assistance and poverty alleviation.
Thus to meet the objectives, it has to regard itself as a business venture apart from financing
household needs.
Rigorous empirical analysis in the issue of statistical impact of microfinance began in

the1990s. However, the studies so far remain few in addressing the effectiveness of
microfinance in poverty alleviation (AdamandVonPische, 1992). The introduction of MFIs is
seen as the best alternative source of financial services for low income earners in rural areas
as a means to raise their income, hence reducing their poverty level. According to the
research done by the World Bank, India is home to almost one third of the worlds poor.
UNCDF (2004) states that studies have shown that microfinance plays three key roles in
development. It helps very poor households meet basic needs and protects against risks,is
associated with improvements in household economic welfare, helps to empower women by
supporting womens economic participation and so promotes gender equity.
Otero (1999)stated that microfinance creates access to productive capital for the poor, which
together with human capital, addressed through education and training, and social capital,
achieved through local organisation building, enables people to move out of poverty. By
providing material capital to a poor person, their sense of dignity is strengthened and this can
help to empower the person to participate in the economy and society.
A rigorous study by Pathak and Pant (2006) in Jaunpur district of UP shows that SGSY has
not contributed significantly to the change in the level of income of the beneficiaries (as
quoted in Tankha, et al, 2008). Rogaly (1996) finds five major faults with MFIs. He argued
that they encourage a single-sector approach to the allocation of resources to fight poverty,
microcredit is irrelevant to the poorest people, an over-simplistic notion of poverty is used,
there is an over-emphasis on scale, and there is inadequate learning and change taking place.
The aim of microfinance according to Otero (1999) is not just about providing capital to the
poor to combat poverty on an individual level, it also has a role at an institutional level. It
seeks to create institutions that deliver financial services to the poor, who are continuously
ignored by the formal banking sector. Morduch and Haley (2002) said that there is evidence
saying that it is possible for micro finance institutions to serve the poor and achieve financial
sustainability. Swain (2004) said microfinance institutions serve better along with other
poverty alleviation policies than alone. Manandhar and Pradhan (2005) stated that MFIs are
41
effective in poverty reduction since the poor and low income household take advantage of
them to increase their living standards through self-employment.
Littlefield and Rosenberg (2004) stated that the poor are generally excluded from the
financial services sector of the economy so MFIs have emerged to address this market failure.
By addressing this gap in the market in a financially sustainable manner, an MFI can become
part of the formal financial system of a country and so can access capital markets to fund
their lending portfolios, allowing them to dramatically increase the number of poor people
they can reach. Studies show that (Aigbokhan and Asemota 2011) that the variables like loan
taken, cumulative loan, loan cycle, experience with micro finance institutions and education
can help to eliminate poverty level.
However, in India less research is found on in regard to whether micro finance has an effect
on poverty alleviation as that will be done in this study.
Significance of the study
The study will be beneficial to institutions engaging in microfinance services to side-line

their accomplishments to suit the requirements of the beneficiaries. Also it will help the MFIs
to strengthen the use of credit thus increasing credit facilities. To policy makers, the research
was vital by considering Governments anti-poverty drives. It presented the role of the MFIs
in poverty alleviation in both urban and rural areas and will act as a basis for development.
Methodology of the study
Selection of the district:
There are 30 revenue districts in Tamil Nadu as on 31.3.2007 and Vellore district is one of
them. Even though the district is known for its leather industry and agriculture, it is one of the
industrially backward districts in the state. Very few studies were attempted in general about
the district and in particular, but studies related to effectiveness of MFIs in Vellore district
are almost non-existent.
Sampling design for the study:
The study will be a descriptive survey. Survey design will be designed accordingly to collect
personal information that helps in learning beneficiaries attitudes, beliefs, values, habits and
desire. This study aims to examine the augmentation in per capita income of the both rural
and urban poor, who are the beneficiaries of the products and services in the study area. The
study can employ stratified random sampling techniques to select the beneficiaries because it
will enable to get desired representation from the various sub-groups in the population.Four
taluks in Vellore district i.e. Katpadi, Vellore, Vaniyambadi, Walaja are selected for
collecting the data from rural poor and urban poor.
Sample size: The sample size of the study is 50beneficiaries in Vellore district.
Limitation of the present study:
The study is a micro level, therefore, findings may not possible for applied in the macro level,
however, all possible efforts have been taken to ensure the correctness of the data used in the
present research work.
42
Data collection: This study is based on primary as well as secondary data. The interview
schedule is used to collect primary data from the respondents and secondary data is gathered
from leading journals, newspapers, related government office documents, standard books,
published articles and various websites. The research instrument had both qualitative and
quantitative information. This will be used to collect data from the employees and
beneficiaries on the effectiveness of the MFIs products and services. The questionnaire was
translated into the regional language Tamil and has both open ended and closed ended
questions and 5 point Likert scale was used to find out the satisfaction level as most of them
are illiterates.
Data Analysis and interpretation: The main objective of the study is to find out whether the
MFIs contribute to the improvement of standard of living of the rural people in Vellore
district as they were formed with the expectation to do so. Hence 50 people were interviewed
to satisfy the objective of the study. First the question was asked to the respondents that
whether they are aware of the MFIs functioning in their areas and their aim in alleviating
poverty. The responses are given below by way of pie chart.
Fig. 1: Poverty alleviation and MFIs
Poverty Reduction
0% 0% Strongly Disagree
0%
14% Disagree
36%
Neither Disagree nor
Agree
Agree
50%
Strongly Agree
Source: Primary data
From Fig.1 it is understood that 50% of the respondents are not aware of the objective of
MFIs i.e poverty alleviation and only 14 % agree that the MFIs are functioning to eliminate
the poverty from the rural areas.
43
Fig. 2: Purpose of lending loans from MFIs
0% 0% Emergencies
0% 4% Strongly Disagree (1)
Disagree (2)
42%
Neither Agree nor
Disagree (3)
54%
Agree (4)
Strongly Agree (5)
It is decided to find out for what reasons the beneficiaries approach the MFIs functioning in
their areas. Around 54% of them agreed that they approach these MFIs to meet the
emergency needs only. The same is explained in the above pie chart (Fig 2).
The next objective is to find out whether MFIs contribute to the improvement of standard of
living of the beneficiaries living in the rural areas. The data was analysed and interpreted in
the following chart (Fig 3).
Fig. 3: Living standard of marginalized groups
MFIs doesn't Improve the Standard of living

0% 0% 4%
Strongly Disagree (1)
14% Disagree (2)
44%
Neither Agree nor
Disagree (3)
Agree (4)
38%
Strongly Agree (5)

44
Fig.3 shows that 44% of the respondents agree that MFIs do not contribute to the
improvement of the standard of living of the beneficiaries in Vellore district. This is clear
from the point that as the beneficiaries approach the MFIs for emergencies, they just lend
money for higher interest but not bothered about the development of the beneficiaries.
The questionnaire had questions to find out whether the MFIs help in increase the savings,
increase in income, poverty reduction, social status, rate of interest is high or not, educate
their children, participate in the social activities, improvement in the basic amenities, etc. The
overall satisfaction of the beneficiaries has been studied and the responses are collected
through 5 point Likert scale and analysed and given below in way of chart (Fig 4).
Fig4: Overall Satisfaction
50 46 45
45
40 36 35
35 31 30 30
30 26 26 25 26
24 24 24 2423 25
25 22 21 21 22 22
19 19 20
20 18 1818
15 16
1413
15 11 1212 12 12 12
9 10 10 10
10 7 8 7
5
0
strongly disagree Disagree Neither agree nor agree strongly agree
Disagree
increase in saving increase in income

poverty reduction social status
Participation in social development activities Rate of interest is high
Improved in basic facilities and Amenities Improved in standard of living
Education to children
The chart shows that 46% respondentsstrongly disagreedwith the poverty reduction objective
of MFIsand 45% respondents strongly disagreed that the standard of living was improved by
borrowing from the MFIs.So they are not satisfied with the overall performance of MFIs as
the rate of interest charged by them is high as mentioned by 36%. .
Findings
India still is the home to the largest population of the poor in the world and about 37 percent
of population is below poverty line. Micro-finance program are important institutional
devices for providing small credit to the rural people in order to alleviate poverty, but they
fails to alleviate the poverty because they collect high amount of interest for a short term
45
credit which fulfils MFIs personal motives of earning profit and doubling the investment in
short span of time. Inspite of MFIs high interest rates, the rural poor borrow money from
MFIs because of theirinability to access of banking services, Moreover MFIs fails to improve
the standard of living, financial stability and the overall Well-being of community.This study
reveals that the availability of micro-credit though proper banking channels to the poor will
help rural people to take up larger productive activities and decrease the dependence on
money lenders and MFIs who charge high amount of interest.
Suggestions and Conclusion
India still is the home to the largest population of the poor in the world and about 37 percent
of population is below poverty line. Micro-finance Institutions can provide small credit to the
rural people in order to alleviate poverty, have the potential to minimize the problems of
inadequate access of banking services to the poor. Many studies revealed that increased
availability of micro-credit to the poor will help them to take up larger productive activities
and decrease the dependence on money lenders. If properly positioned, MFIs are useful tools
for poverty alleviation. As mentioned in the study the MFIs are found doing very little on
improving the standard of living of the poor.
It is suggested from the study that either MFIs can join hands with the NBFCs so that
banking services will be more accessible and affordable by the poor, which will aid in
improving in standard of living of poor. Or because of complaints in the functioning of MFI,
government can plan to convert them into NBFC.
References
1. Adams, D. W., and Von Pischke, J. D (1992). Microenterprise credit programs:

Djvu. World Development 20(10): pp.14631470.
2. Aigbokhan, B. E. and Asemota, A. E(2011). An assessment of microfinance as a tool

for poverty reduction and social capital formation: evidence on Nigeria. Global
Journal of Finance and Banking Issues, Vol.5. No.5. [Online].
3. Dichter, T.W., (1999). NGOs in microfinance: Past, present and future in

Microfinance in Africa, Breth,S.A.(Ed.)Mexico City Sasakawa Africa Association,
pp.12-37.
4. Hulme, D. and Mosley, P. (1996) Finance against Poverty. Volume 1, Routledge,

London.
5. Johnson, S. and Rogaly, B (1997) Microfinance and Poverty Reduction, Oxfam UK

and Ireland, Oxfam Publications.
6. Littleield, E., Murduch, J. and Hashemi, S. (2003) Is Microfinance an Effective

Strategy to Reach the Millennium Development Goals, CGAP, Focus Note 24.
7. Manandhar, K. B. and Pradhan, K. K. 2005.Microfinance:Practices and policy

Environment in Nepal. Paper presented at World Congress on Agriculture and Rural
Finance, Addis Ababa, Ethiopia, November 25th -28th.
46
8. Morduch,J.,and Haley, B. (2002). Analysis of the Effect so Microfinance on Poverty

Reduction.NYU Wagner Working Paper No. 1014.Online.
9. Navajas, S., Schreiner, M., Gonzalez-Vega, C. and Rodriguez-Meza, J. (2000).

Microcredit and the Poorest of the Poor: Theory and Evidence from Bolivia. World
Development, Vol. 28, No.2, pp. 333-346.
10. Otero, M. (1999) Bringing Development Back into Microfinance. Journal of

Microfinance, Vol. 1, No. 1, pp. 8-19.
11. Pathak and Pant (2009). Micro Finance Matters...? Impact Evaluation of SGSY: A
Case Study of Jaunpur District.
12. R.Radharukkumani .(2012). women entrepreneurs -challenges and opportunities

Journal of HRD.
13. Sathiyabama.K (2010).Rural women empowerment and entrepreneurship

development. Department of political science, Gandhi gram rural institute .April
2010, Dindgul district. Tamil Nadu.
14. Simanowitz, A. and Brody, A. (2004) Realising the potential of microfinance.

Insights, Issue 51, pp.1-2.
15. Stellamary.K (2012) Micro-finance and women development comparative study an

socio-economic development of self-help group women in few districts of Tamil
Nadu region, Department of economics, University of Mumbai, June-2012 .
16. Swain,R.,B.2004.Ismicrofinanceagoodpovertyalleviationstrategy?Evidencefromimpac
tassessment.SwedishInternationalDevelopmentCooperationAgency,SIDA.
17. UNCDF (2004) Basic Facts about Microfinance
18. Wright, G.A.N. (2000) Microfinance Systems.Designing Quality Financial Services

for the Poor, Zed Books Ltd., London and New York.
47
A Study on Investment Pattern of Housewives in Vellore District
Dr. J. Ramola Premalatha,

Associate Professor, Department of Commerce, School of Social Sciences and Languages,
Email: ramolapremalatha@vit.ac.in
V. Kokila,
B.Com, Department of Commerce, School of Social Sciences and Languages,
Abstract
Nowadays investment has become fascinating because the individual can take part in the
decision-making process and find the results of their choice which can make them happy. Not
all investments are safe as investors will not have right decisions over the period of years.
Even then every investor should get a positive return out of the investment. It is one of the
major problems in middle-income class families as their savings of now will meet the
expenses of tomorrow. Everyone i.e. every woman makes the investment. This study aims to
present the general profile and purpose of investment of housewives in Vellore District. More
specifically an attempt has been made in this article to find out the decision-making process
and the purpose of investment on the basis of the importance of parameters identified before
an investment is made. The research also finds the impact of age, educational qualification
and family income on the purpose of investment of the housewives on investment.
Keywords: Investment, housewives, decision, purpose, influence.
Introduction
Women take part an extraordinary place in all over the world. Though men are working,
earning, supporting the family, they cannot fill the place of women, because from the ancient
era to modern era they are experts in all the fields. In ancient days, women were not allowed
to go out. Their work is to look after the family like cooking, taking care of husband and
children and doing all the house works. But in this modern era, the scenario of women has
been changed. By which means they have given the freedom to come out and work like men
in various fields. Still, she is looking after the family once she comes from the work.
Working women are investing as they get the source of money from their salary. But
interestingly it is seen thatnon-working women, housewives are also investing for their future
benefit or needs. As we all know that they have the habit of savings which they use to save in
their container boxes in the kitchen. Still, this habit of savings exhibits in some housewives at
present situation too. They were also some kind of jobs for housewives as they can work and
earn from their home so that they can use the earning money for the purpose of their family.
Review of literature
P. R. Kousalya and P. Gurusamy (2012) studied about the preference, factors influencing the
investors, problems faced by them and level of awareness on investment. Sreelatha Reddy.K
and Lalitha Narayanan (2015) analyzed the factors affecting individual investment decision
making and studied the difference in perception of investors in the decision of investing on
the basis of risk and returns and also examined the impact of risk and returns associated with
investments in respect of age, income and profession of individuals.
48
Rajeshwari Jain (2014) found out the investors awareness level, the frequency of investment
and avenues preferred by them. They identified the investors objectives behind investing in
various avenues and also stated the factors which influenced them to invest in these tools.
Deepak Sood and Dr. Navdeep Kaur (2015) evaluated the saving habits, investment pattern
and also analyzed investment selection behavior of salaried class people at Chandigarh.
R.Sellappan, S.Jamuna, and Kavitha (2013) found out the factors that affect individual
investment decision and differences in the perception of investors in the decision of investing
on the basis of age and marital status.
TamilSelvi (2015) assessed the investors attitude towards the investment avenues, offered
suggestions for making investments and also found the main objective of the investors in
Coimbatore District towards making investments. Mr. C. Sathiyamoorthy and Dr. K.
Krishnamurthy (2015) covered the level of awareness on the basis of investment pattern,
factors motivating investment, factors influencing investment decisions, investment portfolio,
problems faced by the investors and risk factors of salaried class investors in Tiruvannamalai
district of Tamilnadu. Mr. Muttesha. N and Ms. Nagaveni J. G. (2016) analyzed the
investment pattern of investors among salaried people in Davangere City. They evaluated the
factors influencing the investment decisions of the investors. And identified the problem
faced by the investors while investing and also studied the level of satisfaction by the
investors. Ramprasath. S and Dr. B. Karthikeyan (2013) analyzed the behavior of individual
investors in Kattumannar Koil taluk while selecting their investment avenues and examined
the factors influencing the sample respondents in the study area to choose a particular type of
investment.
Prof.Harshvardhan and N. Bhavsar (2013) evaluated the saving habits of school teachers in
Ahmednagar City, Maharashtra and analyzed the investment pattern, expected rate of return
on their investment and offered suggestions based on findings. The review shows that there
are factors influencing the decision of the investment made by the salaried women in the
country. No research has been done on housewives in any part of the country. Hence the
study is proposed to be done on housewives. No study has been done in Vellore district on
housewives investment pattern and especially in rural areas. It is quite interesting to find out
whether rural women housewives have any investment ideas for their families. Hence the
study is done in the rural area of Vellore district on 100 housewives.
Investment
Investment is considered as the sacrifice of some present amount to get a huge amount of
money in future. It is based on many decisions such as type, amount, period, etc. Investment
is the use of funds which is an additional income to the family. It is actually commitment of
resources out of savings or earnings with the hope that there will be some benefit in the
future. Investments will generally expect to yield some positive return over the period of
time. Investment has both risk and return. Today, we find that investment has become
mandatory and part of every family and is very popular among the people especially women
in the country. The word invest can be split up into words. In means putting present
money and vest means getting extra money. In brief words, we could tell that investment
means investing an amount of money and paying interest to get back a lump sum of money
than the invested amount.
49
Types of investment
There are two types of investment. It can be described as follows:
1. Fixed income investment

One who makes a payment in a fixed amount at a fixed schedule is known as fixed
income investment. Example: One can pay the interest once in a year at a fixed rate
and repay the principal amount on maturity like in bonds, fixed deposits,and
preference shares.
2. Variable income investment

One who makes a payment for higher returns is known as a variable income
investment. Example: One who gets profit or loss in an investment like investing in
business ownership (equities) or property ownership.
Statement of the problem
India is in a better position in terms of savings compared to other countries. Savings culture
of housewives was taking place from ancient era to modern era. Hence the market for savings
is growing every year and there is a need to study about women and their savings pattern in
the country especially in rural parts of the country. With this savings, investment habit has
also combined with their culture. Even investment pattern was also changing from time to
time. The women lag in various areas of investment such as awareness, the purpose of
investment and preference for investment. So an attempt has been made to find out the
decision in investment and out of what they do invest, the purpose of investment, a period of
investment and how much do they invest. Also, the researchers wanted to find out whether
there is any relationship between age, education and family income on the purpose of
investment.
To know the general profile of housewives in Vellore district.

To identify the investment behavior of investors in Vellore district.
To find out the significant relationship between age, education and family income
on the purpose of investment.
Research methodology
The area of the survey was taken at Arcot which is a rural area in Vellore District. Arcot is
situated on the southern banks of Palar River. It is mostly surrounded by agriculture area. It is
very famous for edible oil production which focuses on groundnut and gingelly oil
production. The certain cast of people is more outstanding in this edible oil business. The
study of research is descriptive in nature. This paper used both primary data and secondary
data. The primary data wascollected through questionnaire as well as interview schedule from
100 respondents. And the secondary data was collected with the help of journals, articles,
newspapers and internet etc.
Tools for analysis: Simple percentage and ANOVA was used.

50
Limitations of study
This study was confined only on housewife investors.

The samples were taken only in Arcot.
The data were collected from only 100 people.
Data analysis and interpretation
The data collected was analyzed using SPSS 21. The profile of the respondents is given in
Table 1.
Table 1: Profile of the respondents
Items Categories N %
Age(years) 21-30 6 6.0
31-40 36 36.0
41-50 30 30.0
51 and above 28 28.0
Qualification Illiterate 28 28.0
Primary 8 8.0
High School 34 34.0
Higher Secondary 8 8.0
Degree 22 22.0
Family income <50,000 22 22.0
(p.a) 50,001-1,00,000 34 34.0
Above 1,00,001 44 44.0
Family type Joint 36 36.0
Nuclear 64 64.0
Earning members 1 40 40.0
2 46 46.0
3 6 6.0
More than 3 8 8.0
Level of awareness Low 14 14.0
Moderate 38 38.0
High 48 48.0
Source: Primary Data
The above table illustrates that 36% of the sample investors fall under the age group of 31-
40 years and 34% of them have high school education.22% of them fall under the group of
low income (below Rs. 50,000 p.a), 34% of them fall under middle income group
(Rs.50,001-1,00,000), while 44 % of the respondents fall under high-income group (above
Rs.1,00,001). From the analysis, it is concluded that most of the respondents fall under the
high-income group. They have a nuclear family system where the earning members are only
two. 48% of them are highly aware of the investment on various aspects regarding
investment.
51
Table 2: Investment Behaviour
FACTORS CATEGORIES N %
Investment decision Self-decision 22 22.0
Family 56 56.0
Friends 16 16.0
Others 6 6.0
Purpose of investment Returns 18 18.0
Emergency 24 24.0
Childrens education and marriage 58 58.0
Source of investment Income from family 37 37.0
Inherited wealth 31 31.0
Own savings 32 32.0
Percentage of savings <10% 28 28.0
11% -20% 34 34.0
21% -30% 22 22.0
More than 31% 16 16.0
Periodof Short-term(0-1 yr) 4 4.0
investment(years) Medium-term(2-5 yrs) 70 70.0
Long- term(more than 6yrs) 26 26.0
It is witnessed from the above table that 56% of the respondents investment decision was
taken with their family.58% of women invest for childs education and marriage purpose.
Also, it is lime lighted that37% of them invest from their family incomeand 34% of them
save 11%-20% of their family income. 70% of the women save for a period of 2-5 years
which is the medium term.
Age and Purpose of Investment
The two-way table has been prepared to show the variation in the purpose of investment with
different age groups of investors.
Table 3: Age and Purpose of Investment
AGE PURPOSE OF INVESTMENT TOTAL

LOW MODERATE HIGH
21-30 1 (16.7) 1 (16.7) 4 (66.7) 6
31-40 16 (44.4) 12 (33.3) 8(22.2) 36
41-50 8 (26.6) 17 (56.7) 5 (16.7) 30
51 and above 18 (64.3) 6 (21.4) 4 (14.3) 28
TOTAL 43 36 21 100
The above table highlights that out of 100 sample investors, 66.7% of investors has ahigh
purpose of investment in which most of them are under the age group of 21-30 years. This is
followed by 64.3% with a low purposethat falls under the age group of 51 years and above. It
is also found that 56.7% have the moderate purpose of investments that fall under the
category of 41-50 years.
52
The null hypothesis has been formulated to find out the relationshipbetween age and purpose
of investment among investors.
H01: There is no significant relationship between age and purpose of investment by women
in Arcot area, Vellore district. The below table 3.1 is represented by ANOVA.
Table 3.1: ANOVA
SUM OF SQUARES DF MEAN SQUARE F SIG.

Between groups 8.706 4 2.177 3.128 0.024
Within groups 31.314 45 0.696
TOTAL 40.020 49
The analysis shows that there is a significant association between age and purpose of
investment. The hypothesis is rejected as the p-value is less than 0.05.
Education Level and Purpose of Investment
The following two-way table is prepared to show the educational level with the purpose of
investment about various aspects regarding investment.
Table 4: Education Level and Purpose of Investment
EDUCATION PURPOSE OF INVESTMENT TOTAL

LOW MODERATE HIGH
Illiterate 16 (57.1) 7 (25) 5 (17.9) 28
Primary 3 (37.5) 4 (50) 1 (12.5) 8
High school 15 (44.1) 8 (23.5) 11 (32.4) 34
Higher secondary 3 (37.5) 2 (25) 3(37.5) 8
Degree 7 (31.8) 3 (13.6) 12 (54.5) 22
TOTAL 44 24 32 100
From the above table, it is pointed that from100 samples57.1% has a low purpose of
investment in which majority of them were illiterates. Followed by 54.5% of degree investors
has a high purpose and 50% of the primary investors have a moderate purpose of investors.
In order to understand the relationship between educational level and purpose of investment,
the following null hypothesis has been formulated and tested.
H02: There is no significant relationship between the respondents education and purpose of
investment in Arcot area. The ANOVA table 4.1 is drafted down.
Table 4.1: ANOVA
SUM OF SQUARES DF MEAN SQUARE F SIG

Between groups 5.087 4 1.272 0.850 0.501
TOTAL 72.420 49
53
Hence, it is concluded that educational level does not have any relationship with the purpose
of investment in their childs education and marriage. This shows that the level of education
plays a major role in the investment of women. The null hypothesis is accepted as the p-value
is more than 0.05.
Family Income and Purpose of Investment
The following two-way table has been made to represent the difference in purpose of
investment with the family income of investors.
Table 5: Family Income and Purpose Of Investment
FAMILY INCOME PURPOSE OF INVESTMENT TOTAL

LOW MODERATE HIGH
>50,000 11 (50) 4 (18.2) 7 (31.8) 22
50,001-1,00,000 7 (20.6) 11 (32.4) 16 (47.1) 34
Above 1,00,001 9 (20.5) 21 (47.7) 14 (31.8) 44
TOTAL 27 36 37 100
It is determined from the above table that out of 100 respondents 50% of them has a
lowpurpose of investment that falls under the category of less than 50,000 of their family
income.47.7% of investors has a moderate purpose which falls under the income of above
1,00,001.47.1% of them has a high purpose that lies between 50,001-1,00,000 of their
income.
To find out the relationship between family income and purpose of investment, the null
hypothesis has been stated below.
H03: There is no significant relationship between family income and purpose of investment
among women in Arcot area. The ANOVA table 5.1 is given below.
Table 5.1: ANOVA
SUM OF SQUARES DF MEAN SQUARE F SIG

Between groups 8.224 4 2.056 4.139 0.006
TOTAL 30.580 49
The above table shows that there is a significant association between family income and
purpose of investment. The null hypothesis is rejected as the p-value is less than 0.05. It is
therefore concluded that there is a significant relationship between the respondents family
income and purpose of investment.
Findings
The study reveals that the awareness level of investment by women in Arcot area is 48%
which is very high.Most of the women had high school education,invest from their family
54
income for their childs education and marriage purposes out of their savings which are11%
to 20%. Because of these reasons they invest for the medium term of 2-5 years.
Since the purpose of the investment is for marriage and childrens education, ANOVA is
done to find out whether there is anyrelationship between the age of theinvestor and the
family income on the purpose of investment. The results showed that it is insignificant. But
education level does not have anyinfluence on thepurpose of investment.
Conclusion
There are many investment options available for women in general. As the purpose of the
investment is to educate their children and their marriage, the families of women in Arcot
decide to invest for a medium term out of the family income to the extent of 20%. Their
savings and investment lifestyle could support and act as the pillar of their family. Hence
while making investments, they must consider factors like return and safety, so that they
could lead a very prosperous life without depending on others for their needs and sorrows.
References
1. Dr.Ananthapadhmanabha Achar (2012). Saving And Investment Behaviour Of Teachers -

An Empirical Study. IJPS. Vol.2, No.8, ISSN No.2249-5894, pp.263-286.
2. Dr.Girish Jain and MeenuBaliyan (2014). Determinants Of Saving And Investment In

India. Scientific Society of Advanced Research and Social Change (SSARSC), International
Journal of Geo Science and Geo-Informatics. Vol.1, No.1, ISSN No.2349-6975, pp.1-13.
3. Dr.A.R.Kanagaraj,N.Priyanandhini, and R.Venkatesan(2014).A Study On Perception

OfWomen Investorstowards Investments.Paripex - Indian Journal of Research. Vol.3,
No.7,ISSN No.2250-1991, pp.1-2.
4. P.R.Kousalya and P.Gurusamy (2012). Women Investors Perception Towards

Investments. IJSR - International Journal of Scientific Research. Vol.1, No.6, ISSN No.2277
8179, pp.80-81.
5. Dr. G. Santhiyavalli and M. Usharani (2014).Investment Behaviour OfWomen Investor In

Coimbatore City. International Journal of Innovative Research and Practices (IJIRP).Vol.2,
No.3, ISSN No.2321-2926,pp.1-10.B.Thulasipriya (2015). A Study On The Investment
Preference of Government Employees on Various Investment Avenues. International Journal
of Management Research and Social Science (IJMRSS). Vol.2, No.1, ISSN No.2394-
6407(Print) ISSN No.2394-6415(Online), pp. 9-16.
55
A Study on Investors Purchasing Preferences on Investment in Indian Mutual Funds

Market
S. K. Muzeer,
Ph.D. Research Scholar, Dept, of MBA,
Eswar College of Engineering, Narasaraopet,
Guntur (District) -522601, Andhra Pradesh,
E- Mail: shaikmuzeer786@gmail.com
Dr. B. Radha,
M.Com, M.Phil, PhD Associate Professor, Dept, of Commerce,
PG studies, VRS & YRN College,
Chirala, Prakasam (District) -523155, Andhra Pradesh,
E- Mail: radhab1959@gmail.com
Abstract
The Capital Market in India, based on the strong foundation of the 8th five-year plan, has
witnessed phenomenal growth in recent years. The encouraging trends in the economy,
especially on the industrial front and the process of liberalization of the recent past, have
spurred the growth of the capital market. Investment decisions are taken within the
framework provided by a complex of financial institutions and intermediaries, which together
comprise the capital market. It has a vital role in promoting efficiency and growth. It
intermediates the flow of funds from those who want to save a part of their income, from
those who want to invest in productive assets. It is this market, which provides the mechanism
for channeling current savings into investment, into productive facilities, that is, for
allocating the countrys capital resources among alternative uses. In India, mutual funds
have been preferred as an avenue for investment by the household savers only from 1990s.
On the whole, the mutual fund industry is able to mobilize 8 percent of the gross domestic
household savings in the country. It is a good going, indeed.
Keywords: Capital market, mutual funds, investors, investments
Introduction
Investment decisions are taken within the framework provided by a complex of financial
institutions and intermediaries, which together comprise the capital market. It has a vital role
in promoting efficiency and growth. It intermediates the flow of funds from those who want
to save a part of their income, from those who want to invest in productive assets. It is this
market, which provides the mechanism for channeling current savings into investment, into
productive facilities, that is, for allocating the countrys capital resources among alternative
uses. In effect, the capital market provides an economys link with the future, since current
decisions, regarding the allocation of capital resources, are major determining factors of
tomorrows output. The crucial role played by the capital market, in shaping the pattern and
growth of real output, imparts a social significance to individual investments and portfolio
decisions. The efficiency of intermediation depends on the width, depth and diversity of the
capital market. Till about two decades ago, a large part of household savings was either
invested directly in physical assets, or put in bank deposits and government small savings
schemes. It is only since the late eighties that the equity market has started to play a role in
this intermediation process.
56
The Capital Market in India, based on the strong foundation of the 8th five-year plan, has
witnessed phenomenal growth in recent years. The encouraging trends in the economy,
especially on the industrial front and the process of liberalization of the recent past, have
spurred the growth of the capital market. In India, the Mutual Funds industry has been
monopolized by the Unit Trust of India ever since 1963. Now, the commercial banks, like
the State Bank of India, Canara Bank, Indian Bank, Bank of India and the Punjab National
Bank, have entered into the field. To add to the list are the Life Insurance Company of India
and the private sector banks and financial institutions. These institutions have successfully
launched a variety of schemes to meet the diverse needs of millions of small investors. Unit
Trust of India has the countrys largest corpus accounting for nearly 10 percent of the
countrys stock market capitalization. Next comes the State Bank of India Mutual fund.
In order to meet the challenges of the emerging competitive environment, financial

corporations reoriented their strategies to bring about innovations in their products and
diversified their activities both fund-based and non-fund based. As a result of this, Industrial
Finance Corporation of India (IFCI), Industrial Credit and Investment Corporation of India
(ICICI) and Industrial Development Bank of India (IDBI) launched mutual fund schemes to
tap more and more savings of households and set up asset management company to manage
these schemes.
There are mutual funds with investments sources abroad called off-shore funds. They have
been established for attracting NRI investments to the capital market in India. The India Fund
Unit Scheme 1986 traded in the London Stock Exchange and the India Fund Unit Scheme
1988 traded in the New York Exchange were floated by the Unit Trust of India and the India
Magnum Fund was floated by the State Bank of India.
Besides the above, the Life Insurance Company and the General Insurance Company have
also entered into the market. Again, many private organizations have entered into the field.
Most of the schemes have declared a dividend ranging between 13.6 percent and 18 percent.
In most of the cases it is around 14 percent only.
The recent trend in the mutual fund industry is to go for tie-up arrangements with foreign
collaborators. We find Tata tying up with Klein Worth Benson; General Insurance
Corporation with George Soros; Credit Capital with Lazard Brothers; Kothari with Pioneer;
Industrial Credit and Investment Corporation of India with JP Morgan; 20th century with
Morgan; State Bank of India with General Electric Capital and so on. Of course, these tie-ups
would bring in new perspective, systems and technology and this very foreign tag may add
credit to the institution.
The private sector, which entered the arena in 1993, is concentrating on the primary market.
It is so because; investments in new shares fetch appreciation from 30 to 1500 percent in a
very short period. Promoters too give preferential treatment to mutual funds because it
reduces their marketing cost. Again, they go for fund participation in a venture ever before its
goes to public. They see potential for immense appreciation in unlisted securities, which
intend to go to public with a short period of one year.
In India, mutual funds have been preferred as an avenue for investment by the household
savers only from 1990s. On the whole, the mutual fund industry is able to mobilize 8 percent
of the gross domestic household savings in the country. It is a good going, indeed.
57
Mutual Funds
A mutual fund is a special type of investment institution, which acts as an investment agent.
It pools the funds of the investors and invests large funds into well-diversified portfolio. It
employs fund managers and investment consultants for maximizing returns on investments.
These institutions are popularly known as mutual funds.
Mutual funds are generally used for open-ended investment schemes being set up by banks or
financial and other institutions, which raise funds from public through issue of stocks or
units. Holders are assured of a fixed percentage of return on their investment. The units so
issued are also eligible for redemption at a later date. The funds collected are invested in
stock exchange securities or money market operations.
Mutual Fund A Globally Proven Investment
Worldwide, the mutual fund, or unit trust, as it is called in some parts of the world, has a long
and successful history. The popularity of the mutual fund has increased, manifold. In
developed financial markets, like United States, mutual funds have almost over taken bank
deposits and total assets of insurance funds. In United States alone there are over 5,000
Mutual funds with total assets of over US$ 7000 billion. A mutual fund is formed by the
coming together of a number of investors who hand over their surplus funds to a professional
organization to manage their funds. A mutual fund is basically a risk reduction tool.
Classifications of Mutual funds
Equity Fund: Mutual funds invest only in equity shares of companies and undertake risks
associated with equity shares.
Growth Funds: Mutual funds invest their funds in growth securities, which assure capital
appreciation in long run.
Income fund: Mutual funds invest in such securities, which yield high return on
investments
Real Estate funds: These are closed-ended mutual funds with investment in real estate
and properties.
Offshore Funds: Such mutual funds invest in securities of foreign companies and such
investments require RBI permission.
Open-Ended Schemes: Mutual funds may have open-ended schemes under which an
investor is free to join the fund or withdraw from the fund at any time after an initial
lock in period. It announces purchase and repurchases prices from time to time. Unit
Trust of Indias 1964 unit scheme is an example of such fund.
Close-Ended Schemes: Such mutual funds do not issue shares or units or repurchase or
redeem on a periodic basis. Units of such schemes can be redeemed only on termination
or through dealing in secondary market. Canshare, Canstock, Cangrowth, SBI Magnum
etc., are examples of such mutual fund.
58
Leverage Fund: Also known as borrowed funds are used to increase the size of value of
portfolio and benefit to members by gains arising out of excess of gains over cost of
borrowed funds. Such mutual funds invest in risky investment and speculative trading.
Hedge Funds: Mutual funds which employ their funds by speculative trading, i.e., buying
shares whose prices are likely to rise and selling shares whose prices are likely to dip,
are called hedge funds.
Growth and Income Funds: These include balance funds, total return funds and equity
income funds. These are highly interest sensitive. Portfolio consists of common stocks
to the extent only to offer a degree of capital appreciation and only to offset against
consumer rising prices Aggressive
Growth Funds: Aims at capital growth. It is characterized by high turnover, investment

in risk taking new companies, risk taking approach, capital appreciation, etc.,
Speciality Funds: It may take the form of sectoral funds, index funds, option income
funds, leverage funds, metal funds etc.,
Asset Allocation Funds: These funds depend upon the asset classes to be included in their
portfolio. Such funds include common stocks, foreign stocks, precious metals, real
estate stocks, bonds, money market instruments, foreign currencies and other mutual
fund units.
International Funds: These include global funds, which invest in securities of both
domestic and other countries; international funds that invest in securities of companies
domiciled outside the country; regional funds that invest in countries of a specific region
and funds that are country specific.
Tax-Exempt Fund: These funds invest their funds in such investments, which receive tax
benefits and/or enjoy exclusive tax-free treatment.
Dual Purpose Fund: Income growths are two objectives which are achieved by offering
half of the amount of funds to those investors who expect regular income and half of
those who wish growth or appreciation. The funds thus received are pooled together and
used for investment. Any income derived from the portfolio goes to the investor who
holds income shares. The investors who hold growth shares receive no income. Instead,
they receive capital gains arising from the sale of investments of total portfolio.
Funds of funds: Mutual funds, which invest only in units of other mutual fund, are called
fund of funds.
New direction funds: These funds invest in companies engaged in scientific and
technological research in fields such as birth control, anti-pollution, oceanography, etc.,
59
Need of the study
The New Economic Policy (NEP) of structural adjustment and stabilization program was
given a big thrust in India in June 1991. The financial system reforms have received special
attention as a part of this policy because of the perceived interdependent relationship between
the real and the financial sectors of the modern economy. Immediately after the
announcement of the New Economic Policy, the government had appointed a high level
committee of financial system to examine all aspects relating to the structure, organization,
functions and procedures of the financial system. The committee submitted its main report in
November 1991. Since then, the authorities have introduced a large number of changes or
reforms in the Indian financial sector in the light of the said report.
Measures introduced in the Indian economy by the Government through devaluation,

deregulation, de-licensing, globalization, mutual fund market reforms and free pricing have
further increased the interest in stock market. A number of new investors and significant
fresh funds have been inducted into the mutual fund industry.
It is a place for trading in money and short-term financial assets that are as liquid as money.
It provides a platform for short-term surplus funds of lenders or investors and short-term
requirements of borrowers. The instruments can be traded at low cost and are highly liquid.
Mutual fund activities in India were limited to only money markets but are now developing
into a various market. In recent years, new instruments such as 182 days treasury bills,
certificate of deposits and commercial paper have been introduced. Interbank call money
transactions still form the major part of the mutual fund market. The market is highly
volatile. Treasury bills and certificate of deposits are now widely used but use of commercial
paper has not picked up because of its high money market rate. The above argument
profoundly forces the researcher to study the implications of financial sector reforms
especially on the Indian capital market. It is also important to study how the economic
reforms flourish the mutual fund industry and help the investors to possess the awareness and
transparency.
Customary Measures of Measurement Standard Deviation Markowitz (1952) suggested the

use of standard deviation as a measure of risk. This metric measures the dispersion of returns
from a central average value. The metric has distributional properties that allow inferences to
be drawn. The greater the standard deviation, the greater is the fund's volatility.
The Sharpe Index-
The Sharpe ratio is a risk-adjusted measure developed by the Nobel Laureate William
Sharpe. Markowitz (2009), the founder of Modern Portfolio Theory (MPT) , suggested that
investors choose optimum portfolios on the basis of their expected return and risk
characteristics. As noted above, the overall risk of a portfolio is measured by the standard
deviation of its returns. Sharpe used this concept to build a "reward to variability" ratio which
has become known as the Sharpe Index. The metric is calculated using standard deviation and
excess return (i.e. return above a risk free investment) to determine reward per unit of risk.
The higher the Sharpe ratio, the better is the fund's historical risk-adjusted performance. In
theory, any portfolio with a Sharpe index greater than one is performing better than the
market benchmark.
60
Lensen's Alpha (2012)-
Jensen's Alpha is also a reward to risk measure. However, it uses a different concept of risk.
This measure's framework is taken from the capital asset pricing model (CAPM). In this
model, among the assumptions, it is taken that every investor holds a diversified portfolio.
This allows investors to diversify away some of their investment risk, leaving them exposed
only to 'systematic' or non-diversifiable market-related risk. Jensen's Alpha uses only
systematic risk for scaling a portfolio's return. Alpha measures the deviation of a portfolio's
return from its equilibrium level, defined as the deviation of return from the risk., adjusted
expectation for that portfolio's return. For ranking purposes, the higher the alpha, the better is
the performance. The fund beats the market, on a systematic risk adjusted basis, if Jensen's
Alpha is greater than zero, and vice versa.
Treynor Index (2012)
A third performance measure is the Treynor index. This is calculated in the same manner as
the Sharpe index, using excess returns on the fund, but the excess return on the fund is scaled
by the beta of the fund, as opposed to the funds' standard deviation of returns. Of these three
traditional measures, the regression-based Jensen's Alpha is most commonly used in
academic research. It provides a measure of whether a manager beats the market, as well as
suggesting the magnitude of over/under performance (cited in FMRC Report, 2003 prepared
for the Australian Securities & Investment Commission, Sydney)
The path breaking works of Sharpe (2006), Treynor (2007), Treynor and Mazuy (2008),
Jensen (1968), Fama (2009), Merton (2010), Henriksson and Merton (2011), Henriksson
(2012), and those of other researchers are widely acknowledged and used botll by academics
and practitioners in performance evaluation of managed portfolios. The later studies have
made several refinements, up-gradation, and extension of earlier works in terms of
methodology, coverage and estimation.
Statement of the Problem
In 1991, the Indian government initiated a comprehensive market-oriented reform program.

At the core of the program was a phased deregulation of the financial sector, along with
reforms of trade and industrial policies. Important elements of the financial liberalization
program were a lifting of several interest rate ceilings in both credit and bond markets, an
easing of requirements that had made it mandatory for banks to hold a part of their portfolio
in non-interest-bearing reserves and low-yielding government securities, a partial dismantling
of barriers to enter into the banking sector and greater freedom given to banks to close
unviable branches in rural and semi-urban areas. Along with the liberalization measures was
a move to introduce a regulatory mechanism that could ensure the safety and solvency of the
financial sector in the deregulated environment. Hence, this study is focused on analyzing
the implications of financial sector reforms on mutual funds and the influence of latest
developments on the behavior of investors.
To study the various factors of selected Public and Private sector mutual funds and its
influence on the investment preference and behavior of investors.
To identify the role of different industries and source of information about awareness of
public and private sector mutual funds in increasing the investments in mutual funds.
61
To offer suggestions and recommendations to investors and mutual fund organization for
better investment options.
Methodology
Pilot study and Pre-testing:
A preliminary investigation was undertaken by contacting 80 investors of mutual funds to

identify the important variables factors regarding characteristic features of mutual funds,
instrument and the changes, return of investments and the latest developments in the mutual
fund industry. The purpose of the pilot study is to test the quality of the items in the
questionnaire and to confirm the feasibility of the study.
Size of the sample:
In order to obtain different perceptions of investors of public and private sector mutual funds,
totally 470 well framed questionnaires are circulated in different parts of Chennai city on a
random basis. Out of 470, only 452 are returned. Among 452 questionnaires it is found that
440 were suitable for primary data analysis. Out of 440 it is found that 238 are investors of
public sector and 202 are from selected private sector mutual funds. The top five private and
public sector mutual funds are considered for the study. Since the population is unknown, a
Simple Random Sampling procedure is adopted to obtain better statistical results to reflect
the characteristic features of the population. The efficient estimated process satisfying
Crammer-Raos Inequality to justify the sample size representing the unknown population is
used.
Data Analysis
The sources of data are primary as well as secondary. The data collected from the investors
survey constitute primary and information gathered through books, journals, magazines,
reports, dairies consists of secondary. The data collected from both the sources is scrutinized,
edited and tabulated. The data is analyzed using statistical package for social sciences
(SPSS) and other computer packages.
Findings
A maximum of 32 percent of investors are in the age group 26 to 40 followed by the

investors in the age group >55 with 30 percent, 22 percent in the age group 41-55 and 16
percent in the age group < 25 .
It is clear that 70% of the investors are males and 30% are females. This, profoundly, states
that males are more enthusiastic than females in mutual funds investment
It is found that most of the investors are having good education background. 30 percent of
the investors are graduates and 21% are post graduates and 22% are professionals, 21
percent are diploma holders and a minimum of 6 percent are educated up to school level.
This shows that the educated investors are able to analyze the advantages and disadvantages
of investment in mutual funds and they also concede that they are able to get transparent
information through television and magazines regarding mutual funds in India.
It was founded that there is no significant difference in the opinion of public and private
sector mutual fund investors about the characteristics of mutual funds. In fact, both the
investors have identified the indispensability of the risk free and maximum returns..
62
In the case of public sector mutual funds, capital appreciation has positive relationship with
purposive investment, sales service, extra cost, risk free, innovative schemes and good
performance
The private sector mutual fund investors feel that their investment yields better returns when
there is no extra cost and risk. They expect good returns as well as safety of their capital
with prompt service of private sector mutual funds
The private sector mutual fund investors in the age group less than 25 possess less
awareness than other investors due to their investment experience. Other investors are highly
aware of the factors of private sector mutual fund.
Suggestions
In the light of the findings, the following suggestions are offered to increase the mutual fund
penetration among the individual investors.
To create greater awareness of mutual funds among potential investors, SEBI/ AMFI
must make efforts to have the concept of financial planning and mutual funds in
particular introduced at high school and college levels, sponsor research programs and
undertake publicity seminars/conferences at the regional level and in regional languages.
Knowledge of financial products is ingrained in school and college curriculum in
countries like UK, US and France.
In order to make Mutual Funds more acceptable to the retail investor, the mutual fund
industry has to offer comprehensive life cycle financial planning. These would include
products catering to specific life cycle needs like buying a house, funding college
admission, marriage of children, retirement etc., India does not have the kind of social
security developed nations have. So, institutional structure for savings needs to be
provided. If one looks at the US market, in 1981 Ronald Regan brought in 401(k) in a
big way which led to the manifold growth of the mutual fund industry. Pension fund
products and insurance linked products are great vehicles to foster the growth of the
mutual fund industry considering the demographics of the country.
Personal computers, mobiles,. Sophisticated hardware and software, as also advances in
information and communication technology are enablers that can be harnessed
effectively to increase retail mutual fund penetration in India and to also increase the
profitability of the industry. Fund houses need to assign an increased budget for
investment in technology, which will help them streamline their distribution. networks
and increase efficiencies in their business. Net asset value updates on mobile phones,
unit balance alerts via SMS messages, transacting through ATM cards etc are some of
the ways to promote mutual fund service and attract customers.
Conclusion
It was concluded that the private sector mutual investors in Chennai classified the
characteristics of mutual funds into 8 major factors namely capital appreciation, purposive
investment, safe service, extra cost, risk free, transparent growth, innovative schemes and
good performance. The investors agree that the public sector mutual fund schemes give high
return with less risk. They felt that public sector mutual funds are useful to invest during
NFO and taxation periods.
References
1. Arun T.G. Financial Sector reforms in developing countries- Oxford University press-2010.
2. Fulbagsingh, Capital market in Indian in the liberalized economic environment, Cambridge
publication New Delhi-.2010
3. Guruswamy . S., Financial sector reforms- Morgam publication-2009
4. Sivakumar. S., Capital Flows in South Asia- Oxford University press. 2009
63
A Study on Stress Management among College Teachers in Andhra Pradesh
Lakshmi Narahari, MBA. (PhD),

Research Scholar, Vignan's University,
Vadlamudi, Guntur (Dt.), AP
Mail: chunduru.narahari@gmail.com
Dr. Kalpana Koneru, Associate Professor,

School of Management Studies, Vignans University,
Vadlamudi, Guntur (Dt.), AP
Abstract
Stress at work can be a real tricky to the organization as well as for its workers. Good
management and good work organization are the best forms of stress prevention. If
employees are already stressed, their managers should be aware of it and know to help. Work
related stress is the retort people may have when present with work demands and pressures
that are not matched to their knowledge and abilities and which encounter their ability to
cope. Stress occurs in a wide range of work situations but is often made worse when
employees feel they have little support from supervisors and colleagues and where they can
cope with its demands and pressures. There is often confusion between pressure or challenge
and stress and sometimes it is used to excuse bad management exercise. In the workplace and
at home, stress and other difficult situation are at an all- time high. Factors such as job
insecurity, long hours, continuous change and impractical deadlines can cause serious
problem for workers. The aim and goal of the paper is to know the various factors to
stimulate stress level among teachers in college level. Workplace stress occurs when there is
an imbalance the demands and perceived pressures of the work environment and a specific
ability to cope. An individual's experience of stress at work is to a large extent affected by the
level of control they have over their working condition / densities, the degree of support they
receive from others in the workplace and the strategies they use to respond to work pressures.
Keywords: Stress, college teachers, Causes and consequences
Introduction
Nowadays stress becomes universal phenomenon. Abrol (1990) discussed about, Every
person wants more and more for the attainment of pleasure, due to this competition is
increased in every field of life and this competition generates stress among people no doubt
the competition is must but we don't ignore its result in the recent years as more and more are
coming to take on many jobs.
But these college teachers facing various Challenges, one is stress and stress is one cause of
coronary heart disease. Stress is common among the career at workplace. Nowadays the
percentage of coronary heart disease is increased among College teachers the main causes are
work related stress, value conflict, type of work, standard of living, nutrition, lack of physical
exercise. Aditi and Kumari (2005) discussed in their research teachers facing lot of problems
like overweight, body ache, and psychosomatic effect etc. These working in under stress
because of they have to perform various roles. The expectation are high if they are working
as college teachers. They have the pressure of balancing work and family. All these factors
influence in health-William (1991) and weib (1991) suggest about the health problem of
career. Blue menthol (1995) also investigated the job stress effect on health. Sudan (1998)
remarks that psychometric disorders are increasing rapidly.
64
It is a general belief in many cultures that the role of is to build and maintain the homely
affairs like task of fetching water, cooking and rearing children. Since the turn of the century,
the status of in India has been changing due to growing industrialization, urbanisation, spatial
mobility and social legislation Anitha Devi (2007). With the spread of education and
awareness, have shifted from kitchen to higher level of professional activities.
Review of Literature
Els Clays, Francoise Leynen, Dirk De Bacquer, Marcel Kornitzer, France Kittel, Robert
Karasek, Guy De Backer, (2007) The aim of their study was to assess whether job strain is
associated with 21-hour ambulatory blood pressure measurements within a subsample of the
Belgian Job Stress Project (BELSTRESS) population. Methods: A group of 89 middle-aged
male and female workers perceiving high job strain and an equally large group of workers
perceiving no high job strain wore an ambulatory blood pressure monitor for 21 hours on a
regular working day. Results: Mean ambulatory blood pressure at work, at home, and while
asleep was significantly higher in workers with job strain as compared with others. The
associations between job strain and ambulatory blood pressure were independent from the
covariates. Conclusions: Within this study, high job strain was an important independent risk
factor for higher ambulatory blood pressure at work, at home, and during sleep in a group of
men and Chantal Guimont, Chantal Brisson, Gilles R. Dagenais, Alain Milot, Michel Vzina,
Benot Msse, Jocelyne Moisan, Nathalie Laflamme, and Caty Blanchette, (2006) have
evaluated whether cumulative exposure to job strain increases blood pressure through A
prospective study of 8395 white-collar workers was initiated during 1991 to 1993. At follow-
up, 7.5 years later, 81% of the participants were reassessed to estimate cumulative exposure
to job strain. Results. Compared with men who had never been exposed, men with
cumulative exposure and those who became exposed during follow-up showed significant
systolic blood pressure increments of 1.8 mm Hg (95% confidence interval [CI] =0.1, 3.5)
and 1.5 mm Hg (95% CI=0.2, 2.8), respectively, and relative risks of blood pressure increases
in the highest quintile group of 1.33 (95% CI = 1.01, 1.76) and 1.10 (95% CI = 1.11, 1.73).
Effect magnitudes were smaller among. Effects tended to be more pronounced among men
and with low levels of social support at work. Results showed that among these white-collar
workers, exposure to cumulative job strain had a modest but significant effect on systolic
blood pressure among men. The risk was of comparable magnitude to that observed for age
and sedentary behaviour. Men and with low levels of social support at work appeared to be at
higher risk for increases in blood pressure.
Christopher Gilbers., (2003), reviews evidenced that normalizing breathing patterns may
offer help in some cases of essential hypertension, angina, functional chest disorder, Chronic
Obstructive Pulmonary Disease (COPD), and cardiac rehabilitation, Hyperventilation and
hypo-ventilation. His article states that inhibited breathing, and breathing volume is closely
matched to metabolic needs. Such disordered breathing has varying effects on acid base
balance, arterial diameter, and sodium retention by the kidneys. Therefore, a chronic
breathing imbalance can contribute to path physiology, which may be remediable to an extent
by altering habitual breathing patterns.
Hodson, R. and Chamberlain, L.J,(2003) Job stress is a problem for both workers and
organizations. It undercuts meaning and joy in work, has negative health consequences, and
reduces organizational effectiveness. Understanding the full range of determinants of job
stress has been difficult, however, because in-depth information on both jobs and
organizations is difficult to acquire. The current article makes use of a new data set based on
content coding job, organizational, and job stress information from the full population of
65
published book-length organizational ethnographies (N=125). This new data set allows the
simultaneous exploration of both organizational and job-level determinants of job stress. The
analysis confirms the long-established importance of job autonomy as a positive factor in
reducing stress. New findings include positive roles for organizational coherence and local
ownership. Finally, the effects of some job stressors are mediated by social involvement in
the workplace, both through informal coworker relations and through more formal
participation programs. Overall, organizational effects on stress are as significant as or more
significant than job effects suggesting the importance of giving further attention to
organizational characteristics as a less examined set of determinants of job stress.
Susan Gill, Marilyn J Davidson., (2001), investigated a large sample of German and British
managers selected from the private and public sectors completed the Pressure Manage
Indicator (PMI), through a 12- item self-report questionnaire developed from the
Occupational Stress Indicator (OSI). The PMI provides a global measure as well as
differentiated profiles of occupational stress. Outcome measures include work satisfaction,
organizational security, organizational satisfaction, and commitment, as well as physical
well-being (physical symptoms and exhaustion) and psychological health (anxiety
depression, worry and resilience). In additional moderator variables are assessed including
type A behaviour, internal focus of Control and coping strategies. The data from the PMI
show that, when compared with British managers, the German managers reported greater job
satisfaction and lower levels of resilience. The German managers displayed substantially
higher pressure from the homework interface but less pressure from the need to have their
achievements recognized. German managers reported higher levels of impatience (a subscale
of type of behaviour), coupled with high internal control (extent to which individual feels
able to influence and control events) and made more use of coping strategies especially
problem-focused measures.
Sheppard (1997), identified the effects of a stress-management programme in a high security

government agency. 11 employees of a regional branch of a federal government agency
volunteered to participate in a 3-mo stress management programme. After a series of protests,
the SS were randomly assigned to one of 2 groups. Transcendental Meditation (TM) or an
education control designated "Corporate Stress Management" (CSM). After the 12 - week
intervention period, and again after 32 years, SS were are administered same test battery. The
3- mo result reveled a reduction in anxiety and depression in the TM group. The 3- yr result
suggested a reduction in anxiety, depression, and improved self-concept in the TM group.
Objectives of the Study
To identify the various causes for stresses that affects the teachers in the college
atmosphere
To assess the perception of the personnel towards their Job Stress.
To know the consequences of stress among college teachers.
To identify the different ways in which the teachers manage stress
To suggest ways to manage stress
Area of the Study: The study is confined to Andhra Pradesh only.
Scope of the Study: This study of the stress management depends on the college teachers
and then management. Because the stress related to work, family, decision, your future, and
more. Stress is both physical and mental. It is caused by major life events such as illness, the
death of a loved one, a change in responsibilities or expectation at work and increase job
66
promotion, avoids loss, or changes in the organization. Changing worker demographics

(race/ethnicity, gender, and age) and worker safety and health
Importance of the Study: Stress underlies such diverse conditions as psychosomatic, heart
diseases and can be a major contributor to disturbances in one's emotional, social, company
and family life. It inhibits creativity and personal effectiveness and exhibits itself in a general
dissatisfaction; there is great impact in college teachers that end up with stress. Thus an
attempt is made to assess the various dimensions of stress among college teachers
Methodology Research Design
Exploratory Research Design: It is being used for clear and precise investigation and
information is gathered about practical problems on a particular conjectural statements. The
sampling used in this study is 'Simple random sampling' because the sample is selected with
equal probability.
Sample Size
Since the population for the survey is very large, and due to time limitation a sample size of
50 is taken for the survey with help of questionnaire
Data Collection
Primary Data: Survey method is employed to collect the data from the respondents and the
data are collected with the help of questionnaires.
Research Tools
Percentage analysis
Chi-square test.
ANOVA
Limitations
As the research is restricted within Andhra Pradesh, results are not applicable to other areas
of India; Limited number of respondents has been chosen due to time constraint and this
could affect the accuracy of result to certain extent;
Data Analysis and Interpretations
Percentage Analysis
Table 1: Respondents Age
Sl. No. Particulars Frequency Percentage

1. 20-25 21 12
2. 26-30 19 38
3. 31-35 8 16
4. 35 and Above 2 1
Total 50 100
67
From the above table, it is clear that 12% of the respondents are in 20-25 age group, 38% of
the respondents are in 26-30 age group, 12% of the respondents are in 31-35 age group, 1%
of the respondents are in 35 & above age group.
Table 2:Respondents Designation
Sl.No Particulars Fre. Per. (%)

1. Head of the dept. 2 1
2. Professor 3 6
3. Associate professor 3 6
4. Assistant Professor 12 81
Total 50 100
From the above table, it is clear that, 1% of the respondents fall under the category of head of
the dept.,6% of the respondents belongs to the category of professor,6% respondents belongs
to the category of Associate professor,81% respondents belongs to the category of Assistant
professor.
Table 3: Respondents Opinion regarding insufficient Challenging Work

1. Always 0 0
2. Often 0 0
3. Sometimes 5 10
1. Rarely 10 20
5. Never 35 70
Total 50 100
From the above table, it is clear that, 10% respondents Are said (sometimes) insufficient
challenging work, 20%. Respondents are said (Rarely) insufficient challenging Work and
then remaining 70% respondents are said (Never) insufficient challenging work.
Table 1 -Respondents Opinion regarding Heavy Work Load

1. Always 11 82
2. Often 9 18
3. Sometimes 0 0
1. Rarely 0 0
5. Never 0 0
Total 50 100
From the above table, it is clear that, 82% respondents are said (Always) heavy work load,
and then remaining 18% respondents are said (Often) heavy work load.
68
Table 5: Respondents Opinion regarding much pressure to Target

1. Always 11 82
2. Often 7 11
3. Sometimes 0 0
4. Rarely 2 1
5. Never 0 0
Total 50 100
From the above table, it is clear that, 82% respondents are said (Always) much pressure to
target, 11% respondents are said (Often) much pressure to target and then remaining 1%
respondents are said (Rarely) much pressure to target.
Table 6: Respondents Opinion regarding Lack of Involvement in Decision Making

1. Always 0 0
2. Often 0 0
3. Sometimes 2 1
1. Rarely 11 28
5. Never 31 68
Total 50 100
From the above table, it is clear that, 1% respondents are said (Sometimes) lack of
involvement in decision making, 28% respondents are said (Rarely) lack of involvement in
decision making and then remaining 68% respondents are said (Never) involvement in
decision making.
Table 7: Respondents Opinion regarding Sexual Problems

1. Always 38 76
2. Often 7 11
3. Sometimes 0 0
1. Rarely 2 1
5. Never 3 6
Total 50 100
From the above table, it is clear that, 76% respondents are said (Always) sexual problems,
11% respondents are said (Often) sexual problems, 1% respondents are said (Rarely) sexual
problems and then remaining 6% respondents are said (Never) sexual problems.
Chi - Square Test to test Association between Salary and Insufficient Challenging Work
Null Hypothesis (Ho): There is no significant association between salary and inadequate
exciting work.
69
Alternative Hypothesis (H1): There is significant association between salaries and

insufficient challenging work.
Table 8: (Salary * insufficient challenging work)
Salary Insufficient Challenging Work

Some Times Rarely Never
> 10,000 5 10 25
Rs. 11,000 to 20,000 0 0 8
Rs 21,000 to 30,000 0 0 2
Total 5 10 35
Degrees of freedom: 1; Chi-square = 5.35
For significance at the .05 level, chi-square should be greater than or equal to 9.19. The
distribution is not significant.
Inference
Hence the x2 value is less than the table value we accept the null hypothesis and conclude
that there is no significant association between salary and insufficient challenging work.
To Test Association between Qualification and Heavy Work Load

Null Hypothesis (Ho): There is no significant association between qualifications and Heavy
work load.
Alternative Hypothesis (H1): There is significant association between qualifications and

Heavy work load.
Table 9: (Qualification * Heavy work load)
Qualificatio
n Heavy Work Load Total
Always Often
Ph.D 7 0 7
M.Phil. 9 9 18
P.G 25 0 25
Total 41 9 50
Degrees of freedom: 2 ;Chi-square = 19.51, Table Value = 5.99; The distribution is

significant.
Inference
Hence the x2 value is greater than the table value we reject the null hypothesis and conclude
that there is significant association between qualification and Heavy work load. From
ANOVA, it is inferred that 16 factors are considered as depending variable for the analysing
variable insufficient challenging work. Out of 16 factors 15 factors are significant with the
analysing variable. The factor good working environment is not significant with the analysing
factor.
70
Findings
1. It was found that 82 % of respondents always have heavy work load within the
organization.
2. It has been found that 82 % of respondents have much pressure to take up the result
3. It has been found that Majority of the respondents have opinion that their efforts are
always not recognized in the Institution.
4. It has been found that 76 % of respondents have always sexual problems within the
organization.
5. Majority of 92% the respondents are always satisfied with good working environment.
6. According to the chi-square analysis, it is found that, there is no significant association
between the salary of the respondents and insufficient challenging work.
between the qualification of the respondents and heavy work load.
between the qualification of the respondents and look for promotion.
between the designation of the respondents and efforts are not recovered or recognized.
10. Above According to the chi-square analysis, it is found that, there is no significant
association between the salary of the respondents and financial problem.
Suggestions
1. If the institution concentrate and give more importance to financial problems,

Unsatisfactory Work, working environment the level of depression rate will be reduced
comparing with the present level.
2. Since the individual often get into stress due to organization changes, proper
communication should be given to reduce such stress. Seek professional help when
appropriate.
3. Employee can exercise regularly and get enough sleep. Make time to enjoy an activity
outside the work place.
4. If you dislike something at home or work, try to change those things that trouble you.
"Griping" doesn't solve much.
5. Maintain a positive attitude; this will make it easier to live and work with others. Learn
about the various relaxation methods available to help you ease your daily tensions.
6. Do activities that help you feel relaxed and content (e.g., taking a brisk walk, stretching,
or imagining you are in a favourite place).
Conclusion
1. Work stress is a real challenge for college teachers and their employing institution. As
institution and their working environment transform, so do the kinds of stress problems
that employees may face. It is important that your workplace is being continuously
monitored for stress problems.
2. Further, it is not only important to identify stress problems and to deal with them but to
promote healthy work and reduced harmful aspects of work.
71
Work in itself can be a self can be a self-promoting activity as long as it takes place in a safe,
development and health- promoting environment. Successful employers and managers
provide leadership in dealing with the challenge of work stress.
References
1. Abrol, K.K., 1990, A study of Language Strain and Coping behaviours of Teachers,
Psycholingua, 20: 173-178.
2. Aditi, N. and Kumari, B., 2005, Impact of personality patterns and employment status on
psychological stress tolerance of in Kerala. Indian Psy.Rev., 61(2): 103- 108.
3. Anitha Devi, S., 2007, Occupational stress: A comparative study of indifferent
occupations. Prajnan, 35(1):61-71.
4. Els Clays, Francoise Leynen, Dirk De Bacquer, Marcel Kornitzer, France Kittel, Robert
Karasek, Guy
5. De Backer, (2007) High Job Strain and Ambulatory Blood Pressure in Middle-Aged Men
6. and From the Belgian Job Stress Study Chantal Guimont, Chantal Brisson, Gilles R.
Dagenais,
7. Alain Milot, Michel Vzina, Benot Msse, Jocelyne Moisan, Nathalie Laflamme, and
Caty Blanchette, (2006), - Effects of Job Strain on Blood Pressure: A Prospective Study
of Male and Female White-Collar Workers Christopher Gilbers., (2003), "Reviews
Evidence Normalizing Breathing Patterns" All India Institute of Medical Science, New
Delhi.
8. Hodson, R. and Chamberlain, L. J, 2003 "Sources of Reduced Job Stres Organizational
Coherence,
9. "Organizational Job Satisfaction",University of Florida Sheppard., (1997), "Stress
Management", Human Relations, New Delhi.
10. Mujtaba and McCartney, (2007), "Research over the situations begins stress" New Book,
Publication, New Delhi. "The Icfaian Journal management", Research Vol VII No-12 Dec
2008.
72
A Study Performance of Primary Agricultural Credit Societies Banks in India
N. A. Kavitha,
Research Associate,
School of Social Sciences and Languages, Commerce,
E-mail: kavibharath87@gmail.com
Dr. M. Muthumeenakshi,
School of Social Sciences and Languages, Commerce,
Abstract
A co-operative banking system forms an integral part of the Indian financial system. It
comprises urban cooperative banks and rural co-operative credit institutions. Co-operative
banks in India are more than 100 years old. These banks came into existence with the
enactment of the Agricultural Credit Co-operative Societies Act in 1904.These banks operate
mainly for the benefit of rural areas, particularly the agriculture sector. Co-operative banks
are often created by persons belonging to the same local or professional community or
sharing a common interest. Co-operative banks generally provide their members with a wide
range of banking and financial services. As main portion of the population in India lives in
rural areas so it is important to strengthen the co-operative credit institution in these areas.
To examine growth and performance of PACS. This paper mainly focuses on the Deposits,
Credit Deposits ratio, Capital, Reserve, Loan outstanding, and loans over dues and recovery
performance of these banks in India PACS. The study is based on secondary data and
analysis is done by using various statistical tools.
Key words: Credit, deposit, PACS, Co-operative banks.
Introduction
Agriculture plays a dominant role in the Indian economy, providing employment for 70
percent of the people and contributing 42 percent to the Gross National Product (GNP).
Agriculture has been and will continue to be the life line of India Economy from the
perceptive of poverty alleviation and employment generation Agriculture is affected by
several factors like HYV, irrigation, marketing of agriculture products advanced technique,
fertilizer, credit and other equipment, etc
Primary Agricultural credit societies (PACS)
PACS are the foundation of the co-operative credit system on which the superstructure of the
short-term co-operative credit system rests. It is the PACS which directly interface with
individual farmers, provide short-term and medium-term credit, supply agricultural inputs,
distribute consumer articles and arrange for marketing of produce of its members through a
co-operative marketing society.
PACS continue to rely heavily on external support and have not yet been able to become self-
reliant in respect of resources through deposit mobilization and internal accruals, affecting
their growth and expansion of business activities.
73
PACS need to function as viable units responsive to the needs, aspirations and convenience
of its and members, particularly those belonging to the more vulnerable sections of the
society. They must function effectively as well-managed and muti-purpose institutions
mobilisation the savings of the rural people and providing a package of services including
credit, supply of agricultural inputs and implements, consumer goods, marketing services and
technical guidance with focus on weaker sections. Challenges facing primary level co-
operative credit institution, apart from improving resource mobilisation, are the following:
Increasing diversification in business protfolio

Improving volume of business
Arresting decline in membership by the borrowers.
Reducing cost of management
Correcting imbalances in loans outstanding.
Improving skills of the staff and imparting professionalisation.
Strengthening management information system
Reducing involvement in non/less profitable business.
Indira.R (2009) The study applied CAMAL analysis and other methods by improving
management of deposit, number of employee, loan advance, and investment operational free
lances efficient bank can successfully achieve efficient in resource utilization, the result also
provide valuable insides to policy makers and managers for improving the efficiency in
management of the co-operative banking sector.
Chakrabarty(2010) concluded that it is accepted fact that the rural co-operative credit
institution with vast network PACS have a great potential to increase flow of credit to
agriculture especially to the small and marginal farmers, total financial inclusion is not
possible without the involvement of co-operative. Shan (2007) conduced a case study of
sangli and Buldana district central co-operative banks regarding the financial health of credit
co-operative in Maharashtra and founded NPAS or overdues as the main factor for
deterioration in health of these bank the study financial health and economic viability during
the late nineties as against the early nineties period.
Soyeliya Usha (2016) the study is based on some successful co-operation bank in Delhi
(India). The study of the bank,s performance along with the lending practice provided to the
customers in here with undertaken. They suggested that the bank should adopt the latest
technology of the banking like ATM, Internet/ online banking, credit card, are so to bring the
bank at par with private sector bank. Hooda ad chanal (2010) made an attempt to study the
growth of PACS in India. It was suggested that there is need of proper infrastructural
facilities, close inspection and regular audit and loan policies should be framed according to
the requirements of beneficiaries and step should be taken to increase deposits from
members.
Rajivkumar and jasmindeep kaur (2013) T his paper study the co-operative bank in the state
of Haryana suggested that these is need to improve the profitability position of these banks
for this purpose first to all banks should focus on the custom relationship management fill the
vacant immediately so that operational performance can be improved. D.Aravazhiand and
K.Jeeva (2014) the present study reveals that the amount of various deposits viz, current
deposits, fixed deposits, saving deposits as well as depicts that significant growth has been in
all types of deposit of the Tiruvanamalai urban co-operative bank ltd.
74
Objective of the study:
To examine the growth of PACS in India through selective indicators.

To analyse the trends deposits, credit and credit deposit ratio of PACS.
To determine repayment schedules loans collection and loans overdues of PACS.
Methodology of the study:
This paper is an attempt to study the performance of the PACS. These banks were selected
for the study,keeping in view their role and involvement in shaping the economic
condition,especially in terms of Number of societies,Membership, Captial, Reserves,
Borrowing, Deposits, Loan Outstanding, and Loans overdues. The present study is mainly
based on secodary sources drawn from national Federation of state. Cooperative Banks Ltd
(NAFSCOB) report , RBI bulletin and other web sites, paper, books and journal relating to
co-oprative bank sector. Data were collected for peroid of ten years from 2005-06 to 2014-
15. For analysis of the data, various statistical tools have been used to arrive at conculsion in
a scientific way.
Analysis of the study:
The establishment of state cooperative bank (SCB) at the apex level was to serve as a a link
between the ulimate credit disbursing outlets, viz., primary Agricultural credit societies
(PACS) at the base level, District central co operative bank (DCCB) at the District level and
State Co operative bank (SCB) at the appex level, the detail of the growth of SCB in India are
depicted in table.1
Table 1: Growth of PACS in India
Year No. of Societies Total no. of membership

2005-06 89827 93560
2006-07 73339 (-18.35) 95018 (1.55)
2007-08 87146 (-2.98) 96711 (3.36)
2008-09 86222 (-4.01) 85821(-8.27)
2009-10 90279 (0.50) 122226 (30.63)
2010-11 101297 (12.76) 110613 (18.22)
2011-12 90958 (1.25) 127646 (33.43)
2012-13 93958 (4.25) 120068 (28.32)
2013-14 94042 (4.70) 130120 (36.43)
2014-15 96789 (7.75) 121088 (29.42)
Mean 90385.7 110287
S.D 7108.17 15315
C.V 7.86 13.89
Interpretation:
The above table reveals that, the growth od PACS in terms of number of societies and
Membership.In terms of number of societies they have negative growth from2006-07 to
2008-09 and there is a fluctuating from 2009-10 to 2014-15.Similarly number of societies
also have decreased growth upto 2008-09 from 2009-10 it shows a postive but fluctuating
growth.In case of membership in PACS have been increased to 36.43% with the membership
75
of 130120 in 2013-14. when compare to 2005 -06 with the membership of 93560. There is a
decrease in membership in 2014-15 with 121088 with a percentage of 29.42%.
Table 2: Trend Of Capital, Reserves And Borrowing Of PACS In India

(Amt in crores)
Capital Reserves Borrowings

Years Amount Trend% Amount Trend% Amount Trend%
(Rs) (Rs) (Rs)
2005-06 3168 100 2950 100 30667 100
2006-07 4540 61.36 2998 76.33 31070 101.31
2007-08 4685 69.78 3101 88.06 32564 106.19
2008-09 5786 103.19 3252 105.11 31375 102.31
2009-10 6828 150.40 5350 181.35 49074 160.02
2010-11 7005 154.29 6417 217.52 48226 157.25
2011-12 8008 176.38 8565 226.03 97564 318.14
2012-13 9467 208.52 8887 290.03 81385 265.38
2013-14 9789 215.61 9135 309.66 95836 312.50
2014-15 11068 243.78 10607 359.55 99980 326.01
Mean 7034.4 148.33 6125.7 195.36 59774.1 194.91
S.D 2560.72 60.16 2994.53 96.71 30327.8 93.81
C.V 36.40 36.40 48.88 48.88 50.73 50.73
The above table no .2 revealed the funds of Primary Agricultural Credit Societies banks and
their trend in Capital, Reserves and Borrowings. The amount of capital is Rs 3168 Crores in
2005-06, it has been gradually increased and reached Rs 11068 in 2014-15 with a percentage
of 143.78 (243.78-100). In case of Reserves Rs 2950 Crores in 2005-06 where as in 2014-15
it was recorded Rs 10607 Crores with a percentage of 259.55 (359.55-100).The borrowings
are collected by the banksto meet the short terms and medium terms credit needs. The
borrowings of PACS banks in India during the years 2005-06 are Rs2950 Crores. The growth
of borrowings have fluctuating in trend according to the credit needs of the banks,finally the
borrowings are recorded as Rs99980 Crores in the years 2014-15 with 226.01(326.01-100).
The average growth of Capital,Reserves and Borrowings of PACS in India is

148.33%,195.36% and 194.91% respectively. The standard deviation of capital is 60.16%
Reserves 96.71% and Borrowings 93.81% for the period of every years capital are more
consistent in natures.
Table 3: Deposits, Credit and Credit Deposits Ratios of PACS in India

(Amt in crores)
Years Deposits Loans outstanding C/D Ratio

(Rs) (Rs) (%)
2005-06 17566 41024 233.54
2006-07 10981 32773 298.45
2007-08 16054 40244 250.68
2008-09 13375 28515 213.20
2009-10 35680 80487 225.58
2010-11 37282 79504 231.24
2011-12 54763 103462 222.18
2012-13 37561 91171 188.93
76
2013-14 81895 130054 173.99

2014-15 84616 147226 158.99
Mean 38977.3 77446 221.715
S.D 27106.68 41654.6 40.54
C.V 69.55 53.78 18.29
Interpretation
The above table has been depicted that during the 2005-06 the deposit are registered
Rs.17566 Crores it has been increased to Rs 84616 Crores in 2014-15. The mobilization of
deposit have been increased gradually during the study period, and the average deposits
mobilized by bank is Rs 38922.30 whereas credit deployment of PACS in India is just Rs
41024 crores in 2005-06, it has been increased to 2.85 times with an amount of Rs 147226
Crores in the year 2014-15. The average credit issued by the banks is Rs 77446 Crores
observing the during study period of the 10 years service oriented institution which supply
credits to Farmers,Agriculture,buying cattle, in the form of loans and advances their smooth
functioning.
The proportion of the credit deployed to the deposit mobilized, popularly known as Credit
deposit ratio, is one of the parameter to assess the performance of a bank. The C/D Ratio of a
bank in general, indicates the extent to which the depositors money is invested in credit.The
Credit Deposit Ratio odf PACS from 2005-06 to 2014-15 is shown a fluctuating trend. The
highest C/Dratio of the banks estimated 298.45% in 2006-07 and the lowest C/D ratio
158.99% is recored in the year 2014-15. The average C/D ratio during the study period
221.75% with a variance of 18.29%. The S.D 40.54 which is very less it indicates high
degree of uniformity of observation as well as homogeneity of the series.
Table 4: Total Collection of Loans And Total Overdues PACS In India

(Amt in crores)
Years Total collection Total Overdues

(Rs) (Rs)
2005-06 30018 8786
2006-07 17724 11803
2007-08 22760 15415
2008-09 25885 9219
2009-10 54271 21428
2010-11 64490 25234
2011-12 70346 25580
2012-13 76705 29632
2013-14 126221 35791
2014-15 132835 38282
Mean 62125.5 22117
S.D 41259.19 10657.87
C.V 66.41 48.18
In table 4 the Primary Agricultural Credit societies of co-operative banks total collection of
loans and advances and total overdues have been entered. The overdues are a terms used in
explain the non-payment of loans by the borrowers in time short term and medium term
loans.The growth of total collection of loans is Rs30018 Crores in 2005-06 it has been
gradually increased and reached to Rs132835 Crores in 2014-15.The growth of total overdues
77
Rs8786 Crores 2005-06 it has been gradully increased and reached to Rs38282 Crores in
2014-15 during the study period. When compare to the total collection the total overdues
have been more consistent .
Conclusion
The financial performance of the Primary Agricultural Credit Societies in India has been
different statistical techniques. From the above ananlysis, it is concluded that these banks are
working efficiently, increasing the profit level and using the managerial talent in a best way.
The increasing amount of deposit was achieved as result of increased membership. The
overall financial performance of the PACS in all fronts namely ,Societies, Membership
,Share capital, Deposit, Loans and Advance, Reserve funds,Total collection and Total
overdues etc., are showing a significantly trend during the study period. The growth of
No.of.Societies and their branches have negative trend up to certain period later there is
during the study period positive trend whereas the membership in co-operatives have been
increasing. The Capital, Reserves, and Borrowings increased almost double during the study
period, with a nominal percentage of variation. The co-operative banks have been
maintaining on an average11% of C/D ratio. The recovery position of bank is better as loans
overdues and collection increases recoveryof over dues also decreases. It is suggested that
government should formulate specific policies and they should be implemented for the
upliftment of PACS in India. To face competition with commerical banks, PACS have to
upgrade technology and formulate customer friendly policies.
References
1. Anil memane (2012) Performance of primary agriculture co-operative societies during 2000
to 2010 in India .International interdisciplinary research journal vol-II issue-2 march.
2. Kuldeep and Mohinder (2015) Growth of performance of state co-operative banks in
India.International journal commerce and management vol 2,issues 5 may 2015.
3. Thirupathi kanchu (2012)Performance evaluation of DCCBs in India.Asia pacific journal of
marketing&management review vol 1,october.
4. Hooda,Vijay singh(2010) Performance of primary credit societies in india:An apprasial,
India co-operative review,Vol.48 No.2,October,pp.90-98.
5. Dutta and Basak (2008) Apprasial of finance performance of urban co-operative banks-a
case study The management account, a case study march 2008,170-174.
6. www.nafsco.org.
7. www.rbi.org
8. www.nabard.org.
78
Antecedents of Digital Banking - An Empirical Study
S. Meganathan
MBA, School of Management, SASTRA University
P. Jayashree
I. Mohamed Rabeek
Abstract
Our country India is a developing country and it is gaining its popularity day by day. The
growth of our Indian economy is also based on the banking sector. The importance of
technology for achieving the objective cannot be determined. But, technology has now slowly
enabling the banks for providing the convenience of the customer at anywhere at any-time.
These strategies which are adopted by the banks in-order to survive is the theme of study
which increased the competition between the sectors. After the announcement of
demonetization, the usage of Internet banking has shoot up to a greater extent thus we made
a study on digital banking. The main reason of our study was to know about the usage and
obstacles in digital banking. In the modern era of technology growth standing in a queue for
a query or enquiry or to with draw a money from a bank is really takes more time to reduce
the customer time and favourable to them the digital banking has been grown is identified
from our survey. We conducted a survey and collected data from 250 respondents in Trichy ,
Thanjavur & Kumbakonam. The current study explored the factors influencing digital
banking and the level of satisfaction towards the various digital banking service providers.
Keywords: Digital banking, demonetization, Trichy
Introduction
One of the profoundly interesting developments of the past three decades is the
electrification, automation, and digitization of business and financial services and the arrival
of mobile telephony in emerging and developed economies. The emerging technologies such
as smartphones and tablets and computers made us to adopt to existing trends and
development of mobile app increases the usage of customers towards e-banking, e-payments
such as electric bills, gas bills, etc., e-commerce such as shopping and order payments via
popular sites such as amazon, flipkart, snapdeal, etc. This study gives the impact on customer
service demand towards mobile channel across digitalization (Jun Liu, Vibhanshu Abishek,
Beibei Li , 2017).
According to Madhurima Deb, Aarti Agrawal, 2017, Digital banking such as mobile banking
is more helpful and cost effective provided services in India. Financial inclusion on the
Digital India of the GOI is not that much feasible. Hence it is necessary for the Indian
customers to understand about the effectiveness of the digitalization and their attitude
towards m-banking mainly to those customers who have not yet been aware of that. Unless
and until each and every customers of India has a broad mind of access towards the financial
services and there wont be any hindrances in financial transaction , Digital India cannot
be visualized. There exist some challenges which are so much essential which gives the
execution outcome of attributes towards the digital banking. The initial challenge is to
understand the places where the digitalization id done in this competitive market and the
79
techniques involved in measuring the sales that helps to calculate the ROI. The next prior
challenge is understand the evaluation process and their methods towards the B2B side of
business which leads to success by its sales and the other challenge is to learn the technique
of tracking the digital users nearby and touchpoints or channels which results in ensuring that
they can be reached via a common message or conversation. Final challenge is that to
understand the diversification in the range of channels, ways to reach the audience and their
benefits (Barber, Howard, Jennifer, 2017).
This conceptualize and well-regulated mobile banking and payment system (MBPS) has a
potential to improvise the potentiality of the bank and hence this can be implemented to
various platforms of mobile devices. Exceptional to lack of convenience, usability, there exist
important features that connects the unconnected industries, banking sectors and other
telecoms together which gives the value-added services to the customers. (Aijaz A. Shaikh,
Payam Hanafizadeh, Heikki Karjaluto, 2017). After this Internet banking approach, the
important thing is to identify both its positive and negative impacts and to visualize the
technical accessibility of banking system and their security measures and their contribution
towards the secure operational environment where the transaction would be done quite safer.
Understandability of legal information which focuses on secure and privacy, awareness
towards cybercrime and cyber banking, consumer protection helps in contractual relationship
the bankers and the users in this crime space (Sofia Giannakoudi, 2010). According to Juo-
Tzu Tseng, Hsiang-Lin Han, Yea-Huey Su, Yi-Wen Fan, phones, the sectors of bank and
financial service institutions have offered many m-banking services which enables e-banking
easily. Providing secured services places a major role in financial institutions. Privacy
enhancement plays a significant role in-order to increase the usage of m-banking. According
to Maria Holmlund, Tore Strandvik, Ilkka Lhteenmki, 2017, there were many issues
dominating the digital banking and the service offered by them but the understandability
depends on the way that they get in to their practice. Some found that its a hidden trick and
challenge to practice but once we attain to do regularly, those will be made stable and
explicitly seldom. There occurs the infusion of technologies in delivery of financial services
and in the sectors of bank which includes m-banking so called multi- channel strategy which
gives boom for the services in finance. M-banking diffusion differs from one country to
another, where Europe id slower than rest of the world. Many banking services offers more
benefits to the customers despite of immaturity in the markerts, technology and the demand
created by the customers. Periodic change in the market and their new technologies make the
other customers to move towards the advanced technology which results in changing the
preference of their choices thus increases the globalization towards the retail banking
(Jennifer Mullan , Laura Bradley, Sharon Loane, 2016) With the tremendous development in
technologies and digitalization and emerging smart. This new era of fast growing digital
currencies such as bitcoin makes a viable central banks to pursue monetary policy more
tighter and this technology of blockchain which acts behind the digital currencies has the
importance to improve the payments of central banks and their presence may launch the
digital currencies on their own. This method makes a narrow relationship between the central
banks and the citizens which makes to realize the need for the public to keep their deposits in
their commercial banks of reserve. These policy wisdom will helps to understand the
monetary policies towards the economics Max Raskin, David Yermack, 2016.
Problem Statement
The main purpose is to obtain the satisfaction and loyalty in the field of banking environment
and this banking channel in multivariant which includes both branch and e-banking services
by interacting with the banks and consulting with the customers who find difficult in m-
banking and making them to be comfortable in the e-banking services. Dhananjay Bapat,
80
(2017). The largest part of financial system in the field of domestic purpose is the banking
system. The strategy followed is the execution of the financial sector of the blueprint 2011-
2020, which enables the higher use of technology in the service sector of finance. It also
reviews the challenges faced and the ways they tackled the challenges and their financial
services. Various self-service technologies has been created for more efficient and innovative
banking service for customers.(Nurul Shahnaz Mahdzan , Amrul Asraf Mohd-
Any, Zalfa Laili Hamzah, 2016). The tremendous growth in digitalization has visualized the
way for e-transactions via e-banking. The economies of Asia is a developing economy where
digital banking technology strengthens the financial system by creating a bridge between the
financial services and the customer. The significant moderators for online banking are
cultural dimensions, uncertainty avoidance (Ikram Ullah Khan, Zahid Hameed and Safeer
Ullah Khan 2017). In order to avoid the harassment of different windows for their banking
operations in the area of Indian rural banks and also there has a dramatic increase in the
single window operation. It also explains the efforts made for digitalization and their impacts
which are adopted by the banks of India in order to enhance the experience of the customers.
It was an unpredictable success of banks in the rural areas and there also exist an emerging
need in digital marketing. The factors that are affecting the attitudes of the banks in the rural
areas were identified and the overview of services of banks were done (Surabhi Singh )
According to Vandana Rathi, 2016. The wide range of population in India has the
affordability factor which are excluded from banking and other financial services and the aim
of economies is the financial inclusion. M-banking so called e-banking has improved a good
platform for the development of economies of India which have been thriving towards the
digital technology. With the innovation of new applications such as banking apps, e-wallets
makes use of accessing and using the e-services. The determination of banks have not been
lost and it explore the relationship between the customers and bankers and ideas of full-
service has been implemented and there has been the response towards the demands of the
customer according to the new age era and this has lead the banking sector to a great success
with a reinvention journey towards digital(Harvey, David, 2016). The development in the
field of IT which enable the bank to provide the effective value-added service to the
customers which satisfies their need by creating a new innovative solutions in the sector of
banking. In-order to sustain in this new technological era, the banks has to adopt to the
technological upgradation so that it will avoid the suffer profitability.(Y.V. Rao , Srinivasa
Rao Budde, 2016)
Safe and security issues
Though the wireless market and mobile market has been emerging fast, digital banking has
become an important sector for e-banking also there exist a negative impact that whether
there exist safe transaction and whether the details that we enter is protected or it is stored
somewhere else in the database. This makes a big threat to the society of digitalization.
Fear
Detection of charges becomes a major threat to the m-banking, where there exists a fear that
whether the amount that we enter is detected or any extra charges have been detected and any
other unnecessary charges will be detected makes a big negative to the field of digital
banking.
81
Reliability and effectiveness
Though there exist some negative impact on digital banking, there is also some positive
aspects that put forward for the next improvement in technology. Reliablility is the main
factor that makes youngster to move towards then m-banking rather than standing in the
boring cues. And it also saves the time because of quick transaction and easy re-depictability
in case of any operating issues. This reliability and effectiveness leads the banking sectors to
the next level of technology improvement.
Objectives of research and their hypothesis
The objective of study is to analyze the perception of the customer towards the level of
satisfaction of the digital banking. The study has the following objectives using the null
hypothesis. They are,
There is no significant difference between ages vs. customer perception towards use of
mobile banking.To study the customer satisfaction towards organized retail brand.
There is no significant difference between genders vs. customer perception towards use
of mobile banking
There is no significant difference between locations vs. customer perception towards use
of mobile banking
Methodology
The studys participants were 250 customers surveyed at the retail malls and showrooms of
Trichy, Thanjavur, Chennai and Kumbakonam. The customers were made to leave the
answer for the questions related to their customer satisfaction and the perception including
their expectations, information knowledge their interest provided with additional information
like educational qualification, age, gender and sector of work.
Table 1
Demographic Attributes
Gender Age Location Occupation Salary
Particular Particular Particular Particu
s % s % s % Particulars % lars %
Below
Male 46.3 20 - 30 29.8 Trichy 60.4 Student 16.5 20000 37.3
Employee 20001 -
Female 53.7 30 - 40 36.2 Thanjavur 24.6 Private 28.9 30000 34.3
Kumbako Public 30001 -
Total 100 40 - 50 23.7 nam 15 Servant 26.6 40000 21.8
Above
Above 50 10.3 Total 100 Unemployed 17.3 40000 6.6
Total 100 Other 10.7 Total 100
Total 100
The above table describes that 46.3% are male, 53.7 % are female and 60.4% were surveyed
in Trichy and 24.6% from thanjavur and 15% from Kumbakonam and in which 16.5% were
students and 28.9% were Private employee and 26.6% were Public servant and 17.3 were
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unemployed and 10.7% were other sectors and also 37.3% were with the salary range below
20000, 34.3% were between 20000 30000 and 6.6 were above 40000.
Table 2: Friedman Test- customer perception towards use of mobile banking
Mean Rank Rank Test Statistics

No financial secure in mobile 5.76 9
Security issues in mobile banking 5.87 7
Security have an influence on my using e banking 5.98 5 Chi-Square 39.344
Privacy in mobile banking is not good 6.36 1.5 df 10
Privacy issues in mobile banking 6.18 4 Asymp. Sig. .000
Fear in Disconnection of network during transaction 6.32 3
Fear in battery charges get down while transaction 6.36 1.5
Lack of reliability 5.85 8
Mobile banking helps in quick transaction 5.65 11
M-banking is more useful 5.97 6
Easy way of transaction in mobile 5.69 10
Friedmans test is a non-parametric test for finding differences in treatments across multiple
attempts. Nonparametric means the test doesnt assume your data comes from a particular
distribution (like the normal distribution). Basically, its used in place of the ANOVA test
and from the above table it shows that the perception of customers towards the bank that do
not have ability in mobile banking to protect my privacy and fear while making a mobile
transaction, mobile device battery will run out as 1st with the mean value of 6.36 and the
rank which is assigned 2nd is about feat while making a mobile transaction the connection
will disconnect by itself with the mean value of 6.32.
Table 3: Age vs. customer perception towards mobile banking - one way ANOVA
H0 :There is no significant difference between ages vs. customer perception towards use of
mobile banking.
F Sig. Result
No financial secure in mobile 2.252 .063 Accept Null Hypothesis
Security issues in mobile banking 2.124 .077 Accept Null Hypothesis
Security have an influence on my using e banking 4.396 .002 Reject Null Hypothesis
Banks do not protect my details 2.870 .023 Reject Null Hypothesis
Privacy issues in mobile banking 4.164 .003 Reject Null Hypothesis
Fear in Disconnection of network during transaction 7.830 .000 Reject Null Hypothesis
Fear in battery charges get down while transaction 7.017 .000 Reject Null Hypothesis
Lack of reliability 2.178 .070 Accept Null Hypothesis
Mobile banking helps in quick transaction 1.108 .352 Accept Null Hypothesis
M-banking is more useful 1.428 .223 Accept Null Hypothesis
Easy way of transaction in mobile 2.118 .078 Accept Null Hypothesis
The sigma value above the range of 0.05 has been accepted and other values have been
rejected. Mobile banking helps in quick transaction accepts the null hypothesis with the
highest sigma value of 0.352 followed by M-banking is more useful with the sigma value of
83
0.223 and the Easy way of transaction in mobile with the value of 0.078 has accepted the null
hypothesis ,Security issues in mobile banking vs age accept the null hypothesis with the
value of 0.077, Lack of reliability with the sigma value of 0.070 has been accepted the null
hypothesis and No financial secure in mobile accepts the null hypothesis with the sigma
value of 0.063 and the sigma value below the 0.05 has been rejected that is it has been
considered as the alternative hypothesis.
Table 4: Gender vs. customer perception towards mobile banking- one way ANOVA
Null hypothesis: There is no significant difference between genders vs. customer perception
towards use of mobile banking
F Sig. Result
No financial secure in mobile 4.046 .045 Reject Null Hypothesis
Security have an influence on my using e banking .001 .982 Accept Null Hypothesis
Privacy issues in mobile banking 6.037 .014 Reject Null Hypothesis
Fear in Disconnection of network during transaction .354 .552 Accept Null Hypothesis
Fear in battery charges get down while transaction .050 .823 Accept Null Hypothesis
Lack of reliability 2.707 .101 Accept Null Hypothesis
Mobile banking helps in quick transaction .003 .955 Accept Null Hypothesis
Easy way of transaction in mobile .413 .521 Accept Null Hypothesis
In this ANOVA table, the sigma value above 0.05 has been accepted and below that has been
rejected. Security has an influence on my using e - banking accepts the null hypothesis with
the sigma value of 0.982. Mobile banking helps in quick transaction (0.955), Fear in battery
charges get down while transaction (0.823), Fear in Disconnection of network during
transaction (0.552), Easy way of transaction in mobile (0.521), M-banking is more useful
(0.312), Security issues in mobile banking (0.174), Lack of reliability (0.101) and
They were No financial secure in mobile (.045), Banks do not protect my details
(.000),Privacy issues in mobile banking (.014) are rejected.
Table 5: Location vs. customer perception towards mobile banking - one way ANOVA
Null hypo: There is no significant difference between locations vs. customer perception
towards use of mobile banking
F Sig. Result
No financial secure in mobile .899 .464 Accept Null Hypothesis
Security have an influence on my using e banking 1.911 .108 Accept Null Hypothesis
Privacy issues in mobile banking 3.043 .017 Accept Null Hypothesis
Fear in Disconnection of network during transaction 3.748 .005 Reject Null Hypothesis
Fear in battery charges get down while transaction 2.952 .020 Reject Null Hypothesis
84
Lack of reliability 2.427 .047 Reject Null Hypothesis

Mobile banking helps in quick transaction 1.650 .161 Accept Null Hypothesis
Easy way of transaction in mobile .963 .428 Accept Null Hypothesis
The usage of mobile differs based on the location.No financial secure in mobile accepts the
null hypothesis with the sigma value of 0.464, Easy way of transaction in mobile(0.428), M-
banking is more useful (0.358), Mobile banking helps in quick transaction (.161),Security
have an influence on my using e - banking (0.108), Security issues in mobile banking (0.053)
and Banks do not protect my details (0.00), Fear in Disconnection of network during
transaction (0.005), Fear in battery charges get down while transaction (0.020), Lack of
reliability (0.047), Privacy issues in mobile banking (0.017) rejects the null hypothesis which
means that they accept the alternative hypothesis.
Table: 6: Customer satisfaction towards mobile service providers
Mean Rank Test Statistics

Satisfaction Level of Paytm 3.57
Satisfaction Level of Free Charge 3.73
Satisfaction Level of Mobikwik 4.20
Satisfaction Level of Citrus 4.19 Chi-Square 218.299
Satisfaction Level of Citi Master Pass 4.20 df 6
Satisfaction Level of LIME 4.20 Asymp. Sig. .000
Satisfaction Level of ICICI pockets 3.92
The above table gives the level of satisfaction towards the digital payment services in which
Mobikwik, Citi Master Pass, LIME have a mean of 4.20, Citrus with a mean of 4.19, ICICI
pockets with a mean of 3.92, Free Charge with a mean value of 3.73, Paytm with a value of
3.57.
Conclusion:
The study is thus concluded that, the concept of digital banking wont work unless there is a
centralized body with formulated guidelines, effective monitoring and functioning of e-
banking. The main requirement for the successful working of digital banking is the adoption
of the best security methods. Periodical technological upgradation, restriction of usage only
to the account holders. There exists fear of security to some people and hence, awareness has
to be created among them and proper tutorials have to be made in-order to overcome the fear
of security.
The usage of digital banking among the younger generation has been increasing day by day.
The youngers can step forward to educate their members in the family about digital banking
so that everyone gets to know about this. Finally, we conclude that age, gender, location
plays a major role in digital banking. But this can be further overcome if the proper
awareness learning is created.
85
References:
1. Aijaz A. Shaikh, Payam Hanafizadeh and Heikki Karjaluoto, Source Title: International
Journal of E-Business Research (IJEBR) 13(2) Mobile Banking and Payment System: A
Conceptual Standpoint (2017).
2. Barber, Howard; Gill, Jennifer (2017) , Marketing performance in digital banking, :
Journal of Digital Banking, Volume 1 / Number 3 / WINTER 2016/2017, pp.231-239(9)
3. da Conceio, Veronica Lange; Batlin, Alex, Journal of Digital Banking, Volume 1 /
Number 3 / WINTER 2016/2017, pp.194-204(11) Publisher: Henry Stewart Publications
4. Dhananjay Bapat, (2017) "Exploring the antecedents of loyalty in the context of multi-
channel banking", International Journal of Bank Marketing, Vol. 35 Issue: 2, pp.174-186,
doi: 10.1108/IJBM-10-2015-0155
5. Sofia Giannakoudi (2010) Internet banking: The digital voyage of banking and money in
cyberspace, Pages 205-243 | Published online: 10 May 2010
6. Ikram Ullah Khan, Zahid Hameed and Safeer Ullah Khan Source (2017) Title: Journal of
Global Information Management (JGIM) 25(1) Understanding Online Banking Adoption
in a Developing Country: UTAUT2 with Cultural Moderators
7. Jennifer Mullan , Laura Bradley, Sharon Loane Chapter (2016), Barriers and Drivers to
Future Bank Adoption of Mobile Banking: A Stakeholder Perspective, The Book of
Payments, pp 325-338
8. Max Raskin, David Yermack (2016), Digital Currencies, Decentralized Ledgers, and the
Future of Central Banking, NBER Working Paper No. 22238
9. Juo-Tzu Tseng, Hsiang-Lin Han, Yea-Huey Su, Yi-Wen Fan (2017), The Influence of
Intention to Use the Mobile Banking - The Privacy Mechanism Perspective, Vol 9 , No 1.
10. Jun Liu, Vibhanshu Abhishek, Beibei Li (2017) The Impact of Mobile Channel Adoption
on Customer Omni-Channel Banking Behavior 41 Pages Posted.
11. R.Ragaventhar (2016), Cashless Economy Leads to Knowledge Economy through
Knowledge Management, Vol 16, No 8-B (2016): Global Journal of Management and
Business.
12. Madhurima Deb, Aarti Agrawal, (2017) "Factors impacting the adoption of m-banking:
understanding brand Indias potential for financial inclusion", Journal of Asia Business
Studies, Vol. 11 Issue: 1, pp.22-40, doi: 10.1108/JABS-11-2015-0191
86
Application and Utility Expectancy of Mobile Banking Transactions - An Empirical

Base on Tiruchirappalli Town
Dr. R. Ramachandran,
Assistant Professor in Commerce, DDE, Annamalai University,
Annamalai Nagar 608 002, Tamil Nadu, India
E- mail: profram1968@gmail.com
Abstract
Banks have changed from paper-based banking solutions provider to the latest of the
technologies like online-banking, mobile-banking, etc. Customers across the world, even
technologically optimists, have refrained from using technology aided solutions. There are
many reasons why technology has not been able to ride the acceptance wave and cross the
hurdle and become an acceptable feature in banking. As todays banking has redefined itself
as customer centric, it becomes more important that the customer is happy with the services
being provided. Unfortunately, the acceptance and adoption rates are very low even in the
case of educated customers. The present study aims to find out the Application and Utility
Expectancy of Mobile Banking Transactions - An Empirical Base on Tiruchirappalli Town.
As this study is an empirical one, the field survey method and personal interview techniques
were used for the collection of the required data from the respondents. The researcher met
all the visitors on the work spot and collected the necessary data through interview and
schedules. The total estimated sample size is 100 were taken for the study. The statistical
tools such as Correlation and Structural Equation Modeling (SEM) analysis have been
applied for this study. The findings and observations are the result and outcome of the
interpretations made during the study of analysis.
Keywords: Mobile Phone, Mobile Banking, User satisfaction, Customers and Banking
Services
Introduction
Mobile Banking is a system of providing services to a customer to carry out banking

transactions on the mobile phone through a internet service provider. Banks have to provide
facilities to their customers whenever they are in need and wherever they are. Mobile banking
operates through short messages. Customers have to, therefore, configure Short Message
Service (SMS). They have to activate Mobile Messaging Service (MMS) in the mobile
phone.
Mobile banking is one of the important channels through which the customers can be
migrated from front office operations to indirect channels, in order to save their valuable time
as also that of the executives working in the bank. The time saved can be effectively utilized
for business development and cost reduction. Mobile phones have gained so much
prominence in the present day life that a person cant survive without this communication
channel. Once upon a time, a mobile phone was a luxury, but now it is necessity. In every
state the number of consumers using mobile phones is increased to unexpected levels.
Maximum young customers have bank accounts in various banks which use technology and
avail themselves of mobile banking services. Therefore, banks have chosen mobile banking
as one of the best methods for channel migration of customers. Customers are also pleased to
have these services.
India is socially and economically divided into two segments. The country promises to be one
of the powerhouses of the world by 2100 with its middle class very similar to the developed
87
worlds in consumer habits, infrastructure and behavior. Simultaneously, large tracts of the
country remain mired in poverty, lacking basic services such as banking, education and
trading markets. Some part of Indias population is unbanked. In rural India, the banking
coverage among the adult population is 39 per cent, in contrast to 60 per cent in urban India.
However, this does not necessarily mean that 60 out of every 100 Indian adults in cities have
bank accounts, as it is common for one person to have multiple accounts. In 2010, only 5.2
per cent of the countrys 650,000 villages had bank branches despite the fact that 39.7 per
cent of the overall 31,727 bank branches were in rural India.
The largest bank in India, State Bank of India (SBI) posted 529,318 mobile transactions with
a transaction volume of Rs.32.63 Crore (approximately $7.3 million) in February 2011 alone.
In 2010, SBI posted YTD (year to date) growth of 1,865 per cent in transaction values, ICICI
Bank posted a growth of 532 per cent and HDFC Bank posted 512 per cent growth. This
demonstrates that the areas of India which are covered by financial services are of immense
economic potential. Indias central regulatory bank, the Reserve Bank of India (RBI)
recognized the potential of mobile banking. In an effort to promote the service, it has
established preliminary standards and regulations.
RBI developed the operative guidelines to encourage financial institutions to extend their
service into mobile banking. The RBI also mentions that inter-operability is the ultimate
strategic goal for mobile banking. RBI recognizes that from the beginning, individual banks
need to progress in their efforts, in conjunction with telecom operators, mobile devices and
other payment technologies. A forecast study by the Boston Consulting Group in July 2011
claims that mobile banking in India is set to generate approximately $4.5 billion in fee based
revenue by 2015. This revenue would be generated from $350 billion of mobile transaction
volumes predicted to occur by 2015, in contrast to $235 billion today.
Recent research from Capgemini Consulting suggests that the chances of overall success in
mobile banking are much higher in developing countries (such as India) than in developed
countries. This difference is due to inherent factors such as tech-savvy younger populations,
low internet and high mobile penetrations and high remittance requirements. The major banks
in India have all rolled out mobile banking applications which are restricted to individual
banks and sometimes to individual operators. The official department, the National Payments
Corporation of India, launched the Interbank Mobile Payment Service (IMPS) in August
2010 that offers instant, 24/7, interbank electronic fund transfer service through mobile
phones. A solid 23 banks joined the IMPS as of July 2011 out of the 32 that were approved.
However, the customer can link only one bank account to a single mobile number.
In urban areas, many consumers have bank accounts but still rely on cash for 90 to 95 per
cent of small transactions. Mobile payments would be a tremendous convenience for these
consumers. Although 60 per cent of mobile banking transactions are restricted to customers
checking account balances; the industry claims that this is a significant step in building
consumer trust.
Literature an overview
The responsibility of social scientist is to derive new outcome from the nature, concept and
developed outcomes. Hence, every research work is in position to undergo to find out the
research gap and hence following reviews are collected. Karjaluoto (2012) examined the
purpose of finding out the mode of bill payment selection criteria among the non-user, new
user and old user of electronic banking services. The importance of bill payment criteria was
88
measured on seven-point Likerts scale and it says that security, trustworthiness and ease of
use is important to making payments of all groups.
Mattila (2012) has found that security and trustworthiness of usage of service is the most
important factor within every target customer segments when deciding on banking service
delivery channel with 1253 Finnish bank customers, because customers agreed positively to
the statement of using mobile phone in banking is trustworthy. This study also indicated that
cheaper pay bills, faster data transmission rate, authentication with mobile phone to internet
bank are the major reasons for the usage of mobile device for banking transactions.
Mattila (2014) defines the factors influencing mobile banking adoption and aims at forming a
model describing consumer behavior patterns. The most significant predictors of adoption in
this study turned out to be a relative advantage gained, compatibility of services with
adopters existing values and perceived complexity.
Caje et al. (2014) studied factors influence the adoption of cell phone banking in South
Africa with the sample population of who used the cell phone and who were familiar with
cell phones, as well as banking facilities. The sample was selected through the convenience
sampling method. They found the factors that influenced the initial adoption of cell phone
banking like perceived relative advantage, the ability to try and experiment with the
innovation first (trialability), and the diversity of banking was needed of a potential user. In
addition, risk and complexity was the primary
Mukherjee and Nath (2015) conducted a survey in the city of Calcutta with 510 internet
surfers on quota sampling method to find the role of trust as regards technology-oriented
banking. They identified shared value, communication and opportunistic behavior to be the
main antecedents to trust. Furthermore, this work concludes that shared value and
communication have a significant positive relationship with trust and that trust has a
significant positive influence on commitment. On the other hand, opportunistic behavior
tends to have a negative impact on trust.
Suoranta (2015) determined the dimensions regarding adoption of M-Banking. The M-

Banking technology adoption model explains that age and education among the several
demographic variables have an influence on the adoption of mobile banking. Further, relative
advantage, compatibility, communication and trialability are the influencing factors on the
adoption of M-Banking. But, complexity, security and trust worthiness of m-services are not
the major obstacles for adopting M-Banking.
Research Gap
Literature review is the basic perspective of any study in social science and it pave way for to
findout and foster innovation into new dimension for further research study and it leads to
application and utility expectancy of mobile banking transactions - An Empirical Base on
Tiruchirappalli Town. However, majority of literature has ignored the Mobile Phone Services
and thus this study realises to new path for these parameters in application and utility
expectancy of mobile banking transactions at Tiruchirappalli Town. And hence necessary
data are collected over to assess the prominence and performance of its function over to
safety factors and different network related variables.
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Objective of the study
The objective of the study is to analyse significant role and performance of the application
and utility expectancy of mobile banking transactions in the study area.
Methodology design
As this study is an empirical one, the field survey method and personal interview techniques
were used for the collection of the required data from the respondents. Customers of select
banks in Trichirappalli town who operated their financial activities through mobile phones
were targeted as the key respondents and they are existed at Mainguard gate, Thilainagar,
Woraiyur and Cantonment areas. There was a need to sample the population because not all
the population elements use mobile banking. The study therefore used purposive sampling.
This is the process of dividing members of the population into homogeneous subgroups
before sampling. The strata should be mutually exclusive: every element in the population
must be assigned to only one stratum. Total sample size was 100.
Discussion and results
This paper furnishes the analyses and interpretation of the collected data for Application and
Utility Expectancy of Mobile Banking Transactions - An Empirical Base on Tiruchirappalli
Town. Various statistical procedures such as Correlation and Structural Equation Modeling
(SEM) analysis were applied.
Table 1: Correlation Analysis for Safety Factors with Confidence
Factors Complexity Security issue Perceived risk Precaution

Complexity
Security issue 0.570**
Perceived risk 0.483** 0.590**
Precaution -0.070 0.056 0.172**
Confidence 0.086 0.160* 0.140* 0.450**
**Significant at the 0.01 level. *Significant at the 0.05 level.
Source : Field Survey
Table 1 shows that correlation between safety factor with confidence of mobile banking uses
such as complexity, security issues, perceived risk and precautions security issues have
statistically significant moderate positive correlation with perceived risk of mobile banking
services (MBS) uses (r=0.590). Complexity of mobile banking users have statistically
significant moderate positive correlation with security issues (r=0.570); when we improve
security aspect and avoid fraudsters, it will make increase complexity of MBS. Users of MBS
get fair about unauthorized person using the accounts and chance of data loss and fraud make
them perceived risk of using MBS, which has statistically significant moderate positive
correlation with complexity of MBS uses (r=0.483), but increase in security issues and
precautions taken by service banking have negligible positive correlation (r=0.056).
Structural Equation Modeling (SEM)
Structural Equation Modeling (SEM) is a methodology for representing, estimating, and

testing a network of relationships between variables (measured variables and latent
constructs). It is a comprehensive statistical approach to testing hypotheses about relations
among observed and latent variables. SEM is a methodology for representing, estimating, and
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testing a theoretical network of linear relations between variables and tests hypothesized
patterns of directional and non-directional relationships among a set of observed (measured)
and unobserved (latent) variables.
Two goals of SEM are (1) to understand the patterns of correlation/covariance among a set of
variables and (2) to explain as much of their variance as possible with the model specified.
The purpose of the model, in the most common form of SEM, is to account for variation and
covariation of the measured variables (MVs). Path analysis (e.g., regression) tests models and
relationships among MVs. Confirmatory factor analysis tests models of relationships between
latent variables (LVs or common factors) and MVs which are indicators of common factors.
Latent growth curve models (LGM) estimate initial level (intercept), rate of change (slope),
structural slopes, and variance. Special cases of SEM are regression, canonical correlation,
confirmatory factor analysis, and repeated measures analysis of variance.
Evaluation of Model Fit
The first dimension Relative Advantage consists of five variables RA1, RA2, RA3, RA4 and
RA5 which are highly significant in Relative Advantage, particularly RA2, RA3 and RA4
variables like Mobile Banking allows to manage finance efficiently, mange my finance
effectively and greater control over finances estimate values 1.050. It highly impacts with
other variables estimate values.
The second dimension Compatibility consists of five variables as COM1, COM2, COM3,
COM4 and COM5 which are highly significant particularly COM4 variable (Mobile banking
is compatible with the lifestyle) estimate value 0.948 highly influences with other variables.
The next variable COM3 (customer likes to adopt new innovation) estimate value 0.903
highly influences with other variables. The third dimension consists of four variables, as
OBS1, OBS2, and OBS3 and OBS4 which are highly significant in Observability. In
particular OBS4 variable (customer can see the effect of a transaction immediately) estimate
value 1.361 highly influences as compared with other variables; the next variable OBS2
(Mobile banking have no queue) estimate value 1.262 highly influences as compared with
other variables. The fourth dimension Complexity consists of three variables, as CPL1,
CPL2, and CPL3 which are highly significant in Complexity. In particular CPL3 variable
(Mobile banking can be frustrating) estimate value 1.988 highly influences with other
variables.
The fifth dimension consists of two variables like TRI1 and TRI2 which are highly
significant in Trialability. In particular TRI2 variable (If new options include in the existing
application, they want to try) estimate value 1.350 highly influences with other variable.
Mobile Banking Services have five Dimensions: 1. Relative Advantage, 2. Compatibility, 3.

Observability, 4. Complexity and 5. Trialability. The test of the result concludes highly
significant with Continuance Intention is Compatibility dimension only. The remaining four
dimensions are not significant with Continuance Intention.
Table 2: Research Segments and Constructs
Research
Variables Construct
Dimension
RA1 Mobile Banking is a convenient way to manage finance
Relative RA2 Mobile Banking allows to manage finance efficiently
advantage RA3 Mobile Banking allows me to mange my finance effectively
RA4 Mobile Banking gives greater control over finances
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RA5 Mobile Banking is useful for managing financial resources

COM1 Mobile Banking fits well with the way I like to manage finances
COM2 I like to try new technology
Compatibility COM3 I like to adopt new innovation
COM4 Mobile banking is compatible with the lifestyle
COM5 Using Mobile banking fits into my working style
OBS1 Mobile banking can be accessed anytime & anywhere
OBS2 Mobile banking have no queue
Observability
OBS3 Mobile banking can be accessed when abroad
OBS4 I can see the effect of a transaction immediately
CPL1 Mobile banking requires a lot of mental effort
Complexity CPL2 Mobile banking requires technical skills
CPL3 Mobile banking can be frustrating
TRI1 I want to try for at least next few months
Trialability
TRI2 If new options include in the existing application, I want to try
I am happy with the quality of facilities available for accessing mobile
CI1
banking services.
I am satisfied with the speed of internet connection available for
CI2
accessing mobile banking facilities.
I feel slow penetration of internet in India is hampering mobile banking
CI3
usage.
Continuance I am happy with the several responses from my mobile bank while
CI4
Intention accessing it.
CI5 I strongly recommended others to use mobile banking
I intend to continue using mobile banking to the extent of services
CI6
offered through it
My intentions are to continue using mobile banking more than using any
CI7
other alternative means
CI8 I feel mobile banking is best suited for my requirements
Source: Field Survey
(Fig-1): Structural Equation Model for Mobile Banking Services Related Factor and
Continuance Intention
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Managerial implications
Monthly utilisation of mobile banking services like interbank fund transfers, standing orders bill
payments is more when compared with weekly utilization of mobile banking services by the
majority of the respondents and hence the bankers involved in providing these mobile banking
services can categorise the account holders based on the utilisation period or time and deal with
them accordingly. This can be brought in to practice with relevance at the time of opening the
account itself.
The account holders prominently require instant information about their balance and hence the
banker can follow the current practice of SMS alerts invariably for all the customers who have not
even availed the mobile banking services. And the services like account statement info can be
given as at request service which can take processing time of one hour in case of sending to
mobile as this facility has already been present with core bank ATMs.
Many of the customers require information about ATM location and New products with banks as
part of mobile banking service. This can be given in the form of Mobile Apps with exclusive
individual bank which is compatible with any of the bankers exclusively.
Majority of the respondents have perceived higher relative advantage with respect to Social
Factor, Compatibility and Observability that influence intention to use Mobile banking services.
So, the bankers need to be unique in the service providing to gain word of mouth publicity about
its services which in turn popularizes its mobile banking features as well as the brand equity of
the bank itself.
The banks have to check the ease of use, cost and convenience to customers while providing
financial information through mobiles with user friendly options and customized patterns of
information displays. Since the continuance intention is based upon the above parameters, it needs
to be observed while providing Mobile banking services.
Conclusion
The long-term vision for banking system to transform itself from branch banking to total IT enabled
banking level may sound far-fetched at present. Taking banking to domestic and international level
competitively, providing financial services on time with accountable, cost reduction to financial
service, giving customer satisfaction, extending services to unbanked centres and low income groups
will require a combination of new advanced technologies. For that reason, banking sector of India
finds M-Banking service a new era in electronic banking. But the success of adoption of financial
services through mobile phone depends not only on its special service channels, but also on the
content of financial services. Now-a-days, development of the economy and peoples living
conditions and other economic activities need the banks to provide a full range of financial services
through M-Banking in India.
Scope for further study
The scope of the study is examining the application and utility expectancy of mobile banking
transactions. Therefore the study is confined to Tiruchirappali town only. Application and
utility expectancy of mobile banking transactions is the vast, wide and recently emerged,
more importantly in the present study the most common areas like factors influencing the
various banking services have been considered in the pertinent issues of different towns of
the state in India.
93
References
1. Karjaluoto, H. (2012). Selection Criteria for a Mode of Bill Payment: Empirical Investigation
among Finnish Bank Customers. International Journal of Retail & Distribution Management,
30(6), 331339.
2. Mattila (2012). Factors Affecting the Adoption of Mobile Banking Services. Journal of Internet
Banking and Commerce (JIBC).
3. Mattila, M. (2014). Mobile Banking and Consumer Behaviour: New Insights into the Diffusion
Pattern, Journal of Financial Services Marketing, 8(4), 354-366.
4. Irwin Brown, Zaheeda Cajee, Douglas Davies, & Shaun Stroebel. (2014). Cell Phone Banking:
Predictors of Adoption in South Africa - An Exploratory Study. International Journal of
Information Management, 23(5), 381394.
5. Avinandhan Mukherjee & Prithwiraj Nath. (2015). A Model of Trust in Online Relationship
Banking, International Journal of Bank Marketing, 21(1), 5-15.
6. Suoranta, M., & Mattila, M. (2015). Mobile Banking and Consumer Behaviour: New Insights into
the Diffusion Pattern, Journal of Financial Services Marketing, 8(4), 354-366.
94
Banking Ombudsman
Dr. A.V.V.S. Subbalakshmi,

Assistant Professor, Department of Commerce,
School of Social Sciences and Languages,
VIT University, Vellore, India
V.S.Srivasuthaa,
B.Com, Department of Commerce,
School of Social Sciences and Languages,
VIT University, Vellore, India
E-mail: srivasuthaa@gmail.com
Abstract
This paper examines the role of the Banking Ombudsman in dealing with complaints about
banking services. It describes the procedures for investigating eligible complaints and
considers the overlap with other Ombudsman schemes, in particular those of the Building
Societies and Insurance Ombudsmen. The institution of Banking Ombudsman was introduced
in 1995 in India, through the banking ombudsman scheme 1995. The object of the scheme
was to provide expenditures and inexpensive forum to bank customers for resolution of their
complaints relating to deficiency in banking services. The scheme was implemented through
direction issued by the Reserve Bank in terms of section 35A of the Banking Regulation Act
1949. The said provision of the act seeks to protect the banking in public interest and in the
interest of economic slump and having the consumer satisfaction as its priority, has
introduced this mechanism to lessen the burden of judicial system and do away with the
complaints.
Keywords: Banking, banking ombudsman, Finance, Market, India
Introduction
An ombudsman is a person who has been appointed to look into complaints about an
organization. Using an ombudsman is a way of trying to resolve a complaint without going to
court. Banking Ombudsman is a quasi judicial authority functioning under
India's Banking Ombudsman Scheme, and the authority was created pursuant to the a
decision by the Government of India to enable resolution of complaints of customers of
banks relating to certain services rendered by the banks.
The institution of Banking Ombudsman was introduced in 1995 in India, through

the Banking Ombudsman Scheme 1995. The Scheme was implemented through direction
issued by the Reserve Bank in terms of Section 35A of the Banking Regulation Act, 1949, to
protect the banking in public interest and in the interest of banking policy. It was a
mechanism to look into the banking customer grievances. After the review of the scheme, a
new scheme came into picture in 2002 and further in 2006. Over the past five years, around
36,000 complaints have been dealt by the Banking Ombudsmen.
Banking Ombudsman: In the wake of the failure in the efficient services of the banks, the
RBI brought the Banking Ombudsman Scheme for the prompt, efficient and courteous
services and also to protect the rights of the customers.
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The Banking Ombudsman is an official authority to investigate the complaint from the
customers and address the complaint and thereby bring the solution among the aggrieved
parties. So the Banking Ombudsman plays the role of a mediator and serves the purpose of
reconciliation. The Banking Ombudsman has been defined under clause 4 of
the Banking Ombudsman Scheme, 2006. Clause 4 lays down that:
Appointment & Tenure
The Reserve Bank may appoint one or more of its officers in the rank of Chief General
Manager or General Manager to be known as Banking Ombudsmen to carry out the
functions entrusted to them by or under the Scheme.
The appointment of Banking Ombudsman under the above Clause may be made for a period
not exceeding three years at a time.
Role of Banking Ombudsman
The banking ombudsman is a senior official appointed by the Reserve Bank of India to
redress customer complaints against deficiency in certain banking services.
Objectives of study
To study the basic objective of this scheme is to settle customer complaints.

If the customer has any complaints which the bank cannot settle, then it is the duty of the
Ombudsman to settle the problem.
The settlement is to made by agreement between the bank and the customer.
Research Design
Pictorial presentation helps to analyze the research study. This deals with the customers and
bank. The survey is collected from few customers and bank workers.
Sources of data
This paper has obtained secondary source of data. Articles, reference books are the secondary
source of data that have shaped to this paper. The data has been collected from various
networks from ombudsman site.
Data interpretation
During the year 2015-16, 15 OBOs covering 29 States and 7 Union Territories, received
102894 complaints. Comparative position of complaints received during the last three years
in given in Table 1, Chart 1.
Table 1: Number of complaints received by OBOs
2013-14 2014-15 2015-16

No. of OBOs 15 15 15
Complaints received during the year 76573 85131 102894
Compared to previous year there was 21 % increase in the complaints received in the
OBOs during the year 2015-16. This gives an indication about increasing awareness amongst
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bank customers about their rights and how to exert them. This also shows that the consistent
and concerted efforts of RBI and OBOs of spreading awareness about the BOS are yielding
the desired results .
OBO-wise receipt of complaints
OBO-wise comparative position of complaints received during the last three years is given in
Table 2 and Chart 2.
Table 2: Number of complaints received by OBOs
OBO No. of complaints received during past % change in 2015-16

three years over 2014-15
2014-15 2015-16
2013-14 2014-15 2015-16
Ahmadabad 4588 4965 5909 19.01% 5.74%
Bengaluru 4101 4610 5119 11.04% 4.98%

Bhopal 4907 5451 5748 5.45% 5.59%
Bhubaneswar 1498 2448 3050 24.59% 2.96%
Chandigarh 3162 3131 4571 45.99% 4.44%
Chennai 8775 8285 8645 4.35% 8.40%
Guwahati 770 1054 1328 26.00% 1.29%
Hyderabad 4477 4366 5910 35.36% 5.74%
Jaipur 4104 4088 4664 14.09% 4.53%
Kanpur 8389 8818 9621 9.11% 9.35%
Kolkata 4698 5277 4846 -8.17% 4.71%
Mumbai 9965 10446 12333 18.06% 11.99%
New Delhi 11045 14712 22554 53.30% 21.92%
Patna 3253 4456 5003 12.28% 4.86%
Thiruvananthap 2841 3024 3593 18.82% 3.49%
uram
Total 76573 85131 102894 20.87%
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OBO New Delhi received the highest number of complaints (22554) with 22% of the total
complaints received. Four metro centres OBOs viz. New Delhi, Chennai, Kolkata, Mumbai
and two non-metro centres viz. OBO Kanpur and Bhopal put together, accounted for 62 % of
the total complaints received.
The complaints received at OBO New Delhi increased by 53% during the year 2015-16 vis-s-
vis previous year 2014-15. RBI has conducted a comprehensive study to ascertain the reasons
for the spurt in complaints from the jurisdiction of OBO New Delhi. The major findings of
the study are given in Box I.
Findings
Comparing to the previous years, its clear that the filing of complaints have been
increased.
According to the Reserve of Bank of India, the Banking Ombudsman Scheme 2006, has
been solving the complaints of customers.
The examining of customers complaints are successful, by the ombudsman scheme.
Suggestions
Explaining things over the phone in person is often much more effective than trying to
explain things in letters using business talks.
Putting customers as first priority its one of the good way to solve the problems easily.
Keeping with the paper work & managing files efficiently can help to prevent so much
basic administrative problems, at every organisation including ombudsman work.
Experiencing from previous case, and acting in a different way/ idea.
Conclusion
At present there are 15 banking ombudsman in India established in major cities having
jurisdiction over the territory as conferred by central government and these ombudsman are
doing their best to mitigate the dispute and resolve the grievances for adjudication before
them.
The scheme is very important channel for redressal of grievances of the general public
against banks and banking services. It is framed in such a manner that it does not expel the
jurisdiction of the other courts, and thus, aggrieved people do not hesitate in using the
banking ombudsman as a primary opportunity for resolution of disputes regarding banks. The
98
specialty of the banking ombudsman is that, it is in position to do justice in an individual

case, in the sense it is not bound by the precedents and in certain circumstances, can ignore
procedure and legal rules of evidence while resolving disputes between aggrieved customer
and the bank.
As number of complaint received are significant and are handled but total consumer
awareness needs to grow in order to get total satisfaction of consumer and also the banking
ombudsman needs to handle complaints efficiently and promptly in order to provide quick
relief to the grievance to the consumers. The scope of grounds of complain are to an extent
limited and confined to the grounds mentioned in the banking ombudsman scheme and needs
to be expanded in the fast growing banking service sectors for better redressal of banking
customer grievance.
Efficient and expenditure settlement of dispute by the banking ombudsman shall serve the
purpose of banking ombudsman scheme and the aggrieved consumer shall be able to get the
quick relief for any default service by bank.
99
Comparative Study on Financial Analysis of SBI and ICICI Banks

R. Geetha,
Department of Commerce,
School of Social Sciences and Languages, VIT University, Vellore
E-mail: geethaurss@gmail.com
Manisha Jain . K,
B.Com,
Department of Commerce,
Abstract
The banking sector is very important for the economic development of a country.
Traditionally the banks worked as finance depositor and finance provider only but presently
as the scenario have changed and many policies and other technical changes have become
the part of economies therefore now banks also play many roles in the development of
economy. The study is an attempt to analyze the financial performance of SBI and ICICI
banks. The State Bank of India, popularly known as SBI is one of the leading bank of public
sector in India. SBI has 14 Local Head Offices and 57 Zonal Offices located at important
cities throughout the country. ICICI bank is the second largest, leading bank of private sector
in India. The Bank has 2,533 branches and 6,800 ATMs in India. The study is descriptive and
analytical in nature. The collected data was secondary in nature and collected from various
reports issued by these banks through internet. The comparison of financial performance of
these two banks was made on the basis of ratio analysis. The results indicated that the SBI is
performing well and financially sound than ICICI Bank. Also the market position of SBI is
better than ICICI in terms to earning per share, price ratio per share and dividend payout
ratio, but on the other hand ICICI bank is performing well in terms of NPA and provision for
NPA, balance sheet in comparison of SBI bank.
Introduction
Banking sector is backbone of economy in the country. The finance collected from this sector
works in economy as blood works in the body. The banking sector is characterized by various
services such as account facility, ATM facility, loan facility, mutual fund facility and many
other financial services. These services help a citizen to facilitate his/her work life and private
life in many ways. In India the banking sector is witnessed various changes after
liberalization and globalization. These changes mould and change the structure of banking
system. After globalization many banks has entered in India and has gave tough competition
to the existing banks in India. In India few public and few private sector banks were
operating since conceptualization of this sector but now they have to face severe competition
from the foreign banks to sustain in the market and consequently many amendments were
made by these domestic players to attract customers. Though the own country bank factor
has played important role in the sustainment of these domestic banks because customers can
easily rely on these banks and undoubtedly want to transact and make relations with domestic
banks. Due to this reason, presently as well many foreign banks has stepped into our country
but still not well established. The new generation is open minded in terms of new change and
want to avail new facilities offered by foreign banks therefore preferring the foreign banks
over domestic banks and now gradually the way of foreign banks is becoming easier in India.
But the present study is focusing on the domestic banks and tries to study the financial
performance of domestic banks to present the picture before the masses by comparing the
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public and private sector banks so that the investors, bankers, customers and government can
see the insight of domestic banks to make the relation with these banks in future.
For this purpose one private bank i.e. ICICI and one public sector bank i.e. SBI have been
taken to study the financial performance on the basis of ratio analysis. As SBI is one of the
leading public sector banks in India and ICICI is the second largest and leading bank of
private sector in India. Apart from this the NPA to advance comparison between these two
banks was also made to depict the picture of debtors which has turned to bad debts for these
banks. The total income depiction of both banks was also made through graph to show the
income earning position of the banks. In addition to this, market test ration was also
calculated to present the market position of banks in terms of earning per share, price earning
ration and dividend pay-out ratio.
To know the strength and weaknesses of State Bank of India and Industrial Credit and
Investment Corporation of India Bank (ICICI) through Ratio analysis.
To compare the overall performance using trend analysis.
To understand the liquidity, profitability and efficiencies of these two banks.
Singh, B. A. and Tandon, P. (2012) affirmed that banking Sector plays an important role in
economic development of a country. The banking system of India is featured by a large
network of bank branches, serving many kinds of financial services of the people. The State
Bank of India, popularly known as SBI is one of the leading bank of public sector in India.
ICICI Bank is second largest and leading bank of private sector in India. The present study is
conducted to compare the financial performance of SBI and ICICI Bank on the basis of ratios
such as credit deposit, net profit margin etc. The period of study taken is from the year 2007-
08 to 2011-12. The study found that SBI is performing well and financially sound than ICICI
Bank but in context of deposits and expenditure ICICI bank has better managing efficiency
than SBI.
Kumbirai, M. and Webb, R. (2010) investigates the performance of South Africas

commercial banking sector for the period 2005- 2009. Financial ratios are employed to
measure the profitability, liquidity and credit quality performance of five large South African
based commercial banks. The study found that overall bank performance increased
considerably in the first two years of the analysis. A significant change in trend is noticed at
the onset of the global financial crisis in 2007, reaching its peak during 2008-2009. This
resulted in falling profitability, low liquidity and deteriorating credit quality in the South
African Banking sector.
Mohi-ud-Din Sangmi; Nazir, T. (2010) stated that sound financial health of a bank is the
guarantee not only to its depositors but is equally significant for the shareholders, employees
and whole economy as well. As a sequel to this maxim, efforts have been made from time to
time, to measure the financial position of each bank and manage it efficiently and effectively.
In this paper, an effort has been made to evaluate the financial performance of the two major
banks operating in northern India .This evaluation has been done by using CAMEL
Parameters, the latest model of financial analysis. Through this model, it is highlighted that
the position of the banks under study is sound and satisfactory so far as their capital
adequacy, asset quality, Management capability and liquidity is concerned.
101
MitraR.and Shankar, R. (2008) said that a stable and efficient banking sector is an essential
precondition to increase the economic level of a country. This paper tries to model and
evaluate the efficiency of 50 Indian banks by using Data Envelopment Analysis (DEA). DEA
is capable of handling multiple inputs and outputs and the sources of inefficiency can be
analyzed and quantified for every evaluated unit. The aim of this paper is to estimate and
compare efficiency of the banking sector in India. The analysis is supposed to verify or reject
the hypothesis whether the banking sector fulfills its intermediation function sufficiently to
compete with the global players. The results are insightful to the financial policy planner as it
identifies priority areas for different banks, which can improve the performance. This paper
evaluates the performance of Banking Sectors in India
Finance is a broad field and there are various books written in this subject. The book of M.Y.
Khan and P.K. Jain (1990) is considered to be a useful book in the financial management.
The modern approach of Khan and Jain views the term financial management in broad sense
and provides a conceptual and analytical framework for financial decision making.
According to them, The finance function covers both acquisitions of funds as well as their
allocation; hence apart from the issues of acquiring external funds, the main concern of
financial management is the efficient and wise allocation of funds to various uses. The
major financial decisions according to Khan and Jain are: - The investment decision The
financial decision and The dividend policy decision.
I.M. Pandey (1997), in his book Financial Management defines financial management as
that managerial activity which is concerned with the planning and controlling of the firms
financial resources. I.M. Pandey believes that among the most crucial decision of the firm are
those, which relate to finance, and an understanding of the theory of financial management
provides the conceptual and analytical insights to make the decisions skill fully.
I.M. Pandey further identifies two kinds of finance functions: (a) Routine and (b) Managerial
finance functions. The routine finance function do not require a great managerial ability to
carry them out and they are chiefly clerical in nature. Managerial finance functions on the
other hand are so called because they require skill full planning Control and execution of
financial activities. There are, according to I.M. Pandey four important managerial finance
functions: Investment or long-term assets miss decision. Financing or capital-mix
decision.Dividend of profit allocation decision.Liquidity of short-term asset-mix decision.
A summary of what the study have reviewed in various books of finance have been
highlighted below.
Finance is defined as the acquisition and investment of fund for the purpose of enhancing the
value and wealth of an organization. The various finance areas include investments, public
finance, corporate finance and financial institutions. The basic function of finance is to
manage the firms balance sheet in most efficient way. The balance sheet reflects how a firm
acquired financing through. The objective of the company must be to create value for its
shareholders. Market price of companys stock represents its value and this can be
maximized by firms optimum investment, financing and dividend decisions. The capital
investment decision is the allocation of the capital to investment proposals whose benefits are
to be realized in the future. As the future benefits are not known with certainty, investment
proposal necessarily involve risk. Consequently they should be evaluated in relation to their
expected return and risk. In the financial decision, the financial manager is concerned with
determining the best financing mix or an optimum Capital structure. If a company can change
its total valuation by varying its capital structure, an optimal financing would exits, in which
market price per share could be maximized.
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Another important decision of the firm, according to Van Horne (1994), is its Dividend
policy. The decision includes the percentage of earnings paid to stockholders in cash
dividends. The dividend pay-out ratio determines the amount of earnings retained in the firm
and must be evaluated in the light of the objective of maximizing shareholders wealth. The
Financial management involves the solution of the three major decisions altogether. They
determine the value of a company to its shareholders. Van Home believes that the objective
of any firm is to maximize its value, and therefore, the firm should strive for an optimal
combination of the three inter-related decisions solved jointly. The main thing is that the
financial managers relate each decision to its effect on the valuation of the firm debt and
equity resources, and it reflects the disposition of acquired financing among the various asset
accounts.
The major financial functions required for managing the banks balance sheet are summarized
below: a. Analysis and p1anning b. Financial structure management & c. Asset management
The first function financial analysis and planning is to understand the banks current financial
condition and plan for its future financial requirement in different economic scenarios. After
analysing the financial needs, the second function is to manage the financial structure of the
bank, which can be done by optimizing the use of debt and equity in the capital structure.
While deciding about this optimum structure, a financial manager must concentrate in
minimization of cost of funds in one hand, and maximization of value of the firm in the other.
Moreover financial structure management for a banking sector includes, a typical treasury
function, which is also called funds management this function contributes a significant
portion in profits earned by banks.
The final function is the management of asset structure of the bank. Advances of credit and
investment in certain portfolios constitute the major portion of the banks asset. The major
financial function related to assets management is to decide for the least risky and most
profitable alternatives of investments. This can be conducted by determining returns and risks
associated with the loans and advances made by bank. All the above financial decisions or
functions as mentioned by different writers are instrumental towards effective handling of
financial management. Which includes activities beginning from rising or funds to efficient
and effective use of funds no matter either it is a baking or non-banking institution.
In the book Financial Management I.M. Pandey (1997) has defined as The finance
statement provides a summarized view of the financial operation of the firm. Therefore,
something can be learnt about a firm and careful examination of the financial statements as
invaluable documents or performance reports. Thus, the analysis of financial statement is an
important aid to financial analysis or ratio analysis is main tool of financial statement
analysis.
B.N. Ahuja (1998), Financial Performance analysis is a study or relationship among the
various financial factor in business a disclosed by a single set of statement and a study of the
trend of these fact as shown in a series of statements. By establishing a strategic relationship
between the item of a balance sheet and income statements and other operative data, the
financial analysis unveils the meaning and signification of such items. According to R.W.
Metcalf and P.H. Tatar (1996), Financial Performance analysis is a process of evaluating the
relationship between components parts of a financial statement to obtain a better
understanding of a firms position and performance. Similarly, Khan and Jain have defined
that (1990) The ratio analysis is defined as the systematic use of ratio to interpret the
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financial performance so that the strength and weakness of firm as well as its historical
performance and current financial condition can be determined.
In the word of Van Horne (1994) Financial ratio can be derived from the balance sheet and
the income statement. They must be analyzed on a comparative basis. Ratio may also be
judged in comparison with those of similar firms in the same line of business and when
appropriate, with an industry average and we can look to future progress in this regard.
A comparative study of financial performance is a basic process, which provides information

on profitability, liquidity position, earning capacity, efficiency in operation, sources and use
of capital, financial achievement and status of the companies. These information will help to
determine the extend of efficiency and effectiveness of the company in respect of deploying
financial resources in the profitable manner.
Prior to this study, the several researchers have found various studies regarding financial
performance of commercial and joint venture banks. In this study, only relevant subject
maters are reviewed which are as follows: - A thesis conduct by Shakya ,Suman (2010) in
Financial Performance Of Nepal SBI Bank Limited And Everest Bank Limited. analyzed
different ratio of NSBIBL and EBL for the period of five years till fiscal year 2008. Here, in
some cases the liquidity position of EBL is slightly stronger where as in some cases the ratio
of NSBIBL is higher. It concludes that liquidity position of these two banks is sound. NBBL
has better utilization of resource in income generating activity than EBL. They are on
decreasing trends while interest earned to total assets and return or net worth ratio of EBL is
better than NSBIBL. It seems overall profitability position of EBL is better than NSBIBL and
both banks are highly leveraged.
Mr. Regmi (2007) thesis "A Comparative Study Of The Financial Performance Of HBL And
NBBL" 30, he suggested NBBL to increase its current assets because the bank is not
maintaining adequate liquidity position in comparison with HBL. As capital structures of
both the bank are highly levered both the banks are recommended to maintain and improve
mix at debt and owner's equity by increasing equity share. He further suggests to HBL to
improve the efficiency in utilizing the deposits in loan and advance for generating the profit
NBBL should try to maintain present position on this regards. Profitability position of HBL is
comparatively better than the same of NBBL. So, NBBL is recommended to utilize its
resources more efficiently for generating more profit margins. If resources held idle, bank
faces high cost and causes the low profit margin. An ideal dividend pay-out ratio is based
upon shareholders expectations and the growth requirement of the banks. NBBL is suggested
to increase its dividend pay-out ratio. (Regmi, 2001, p.29)
Adhikari (2008) thesis" A Comparative Study Of Financial Performance Of NSBIBL and

EBL" conclude that EBL is found superior regarding the liquidity, quality assets they
possessed and capital adequacy overall capital structure of NSBIBL appears more levered
than that on EBL. But NSBIBL is found superior in terms of profitability and turnover
comparatively interest remained more dominant in the total income and expenses of NSBIBL
than that of EBL. Regarding the test of hypothesis is (at 5% level of significance) the
performance of the sampled banks significantly different with respect to the ratios, loans and
advances to saving deposits. Loan loss provision to total deposit interest earned to total assets
and tax per share correlation analysis signifies that EBL is successful to utilize its resources
more efficiently than NSBIBL. (Adhikari,2001, p.28) The review of the above mention
bunch of research writes have definitely enriched my vision to elaborate analysis to come to
the meaningful conclusion in realistic term and thereby come with some conclusion, few key
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suggestions that help in improvement of commercial banks. Previous researches on the basis
of financial performance of commercial banks in Nepal. But this research is about joint
venture bank of Nepal with sample of Nepal SBI Bank Limited and Everest Bank Limited.
This research is about the financial performance of selected two banks. In the previous
research, there is no clearcut financial performance of joint venture banks. The research can
help the people who wanted to know about the overall financial performance of joint venture
bank in Nepal. There are two-selected bank to find out the comparative financial position of
selected bank. Therefore, this topic may not new but the researches efforts may be
appreciable.
Joshi Archana(2008) conducted a study on A Comparative Study on Financial Performance

of Nepal SBI bank ltd & Nepal Bangladesh bank Ltd. with the following objectives. To
highlight various aspects of relating to financial performance of Nepal Bangladesh bank and
Nepal SBI bank.To analyse various aspects of relating to financial performance through the
use of appropriate financial tools.To show the cause of change in cash position of the two
banks. Through her research she has presented the following findings of the study:
The analysis of liquidity of these commercial banks shows different position here; the
average current ratio of NSBI is greater than that of NBBL. Therefore, the liquidity position
of SBI is in normal position. The turnover of the commercial banks is the main indication of
income generating activities. These ratios are used to judge how efficiently the firm is using
its resources. From the analysis of turnover of these banks, NBBL has better turnover than
NSBI in terms of loans and advances to total deposit ratio. Thus, NBBL has better utilization
of resources income generating activities than NSBI bank; which definitely lead to increase
in income and this making an increment profit for the organization. Despite the fluctuating
trend in the ratio of cash and bank balance to total deposit NSBI bank is more efficient than
NBBL in cash management i.e., it is more able to keep more cash balance against its various
deposits.
The analysis of profitability of these two commercial banks is also different. The overall
calculation seems to be better for NBBL though certain ratios like dividend per share,
dividend pay-out ratios etc. are better for NSBI bank. From the calculation, NBBL seems to
tackle their investors more efficiently. Going through net profit to total deposit ratio, it can be
said that NBBL seems to be more successful in mobilizing its customers saving in much
more productive sectors. NBBL has slightly riskier debt financing position in comparison to
NSBI bank.
SBI bank-profile
The State Bank of India, popularly known as SBI is one of the leading banks in India. The
State Bank Group, with over 16,000 branches provides a wide range of banking products
through its vast network of branches in India and overseas, including products aimed at Non-
Resident Indians (NRIs). The head-quarter of SBI is at Mumbai. SBI has 14 Local Head
Offices and 57Zonal Offices that are located at important cities throughout the country. It
also has around 130branches out of the country. It has a market share among Indian
commercial banks of about 20% in deposits and loans. The roots of the State Bank of India
rest in the first decade of 19th century, when the Bank of Calcutta later on renamed the Bank
of Bengal, was established on 2 June 1806. The Bank of Bengal was one of three Presidency
banks, the other two being the Bank of Bombay (incorporated on 15 April 1840) and the
Bank of Madras (incorporated on 1 July 1843). With the result of the royal charters all three
Presidency banks were incorporated as joint stock companies and received the exclusive right
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to issue paper currency in 1861 with the Paper Currency Act. They retained this right till the
formation of the Reserve Bank of India. The Presidency banks amalgamated on 27 January
1921, and renamed Imperial Bank of India. The Imperial Bank of India remained a joint stock
company. The State Bank of India was constituted on 1st July 1955, pursuant to the State
Bank of India Act, 1955 (the "SBI Act") for the purpose of creating a state-partnered and
state-sponsored bank integrating the former Imperial Bank of India. In 1959, the State Bank
of India (Subsidiary Banks) Act was passed, enabling the Bank to take over eight former state
associated banks as its subsidiaries. The State Bank of India's is largest bank, with
approximately 9,000 branches in India and 54 international offices. Its Associate Banks have
a domestic network of around 4,600 branches, with strong regional ties. The Bank also has
subsidiaries and joint ventures outside India, including Europe, the United States, Canada,
Mauritius, Nigeria, Nepal, and Bhutan. The Bank has the largest retail banking customer base
in India.
Subsidiaries of SBI
State Bank of Bikaner & Jaipur

State Bank of Hyderabad
State Bank of Mysore
State Bank of Patiala
State Bank of Travancore
ICICI bank-profile
ICICI Bank is second largest and leading bank of private sector in India. Its headquarter is in
Mumbai, India. According to Forbes State Bank of India is the 29th most reputed company in
the world. The Bank has 2,533 branches and 6,800 ATMs in India. In 1998 ICICI Bank
launched internet banking operations. The Bank offers a wide range of banking products and
financial services to the corporate and retail customers. It also provides services in the areas
of venture capital investment banking, asset management and life and non-life insurance.
ICICI Bank's equity shares are listed in India on Bombay Stock Exchange (BSE) and
theNational Stock Exchange (NSE) and its American Depositary Receipts (ADRs) are also
listed on the New York Stock Exchange (NYSE). ICICI Bank limited is major banking and
financial services organization in India. The bank is the second largest bank in India and the
largest private sector bank in India by market capitalization. They are publicly held banking
company engaged in providing a wide range of banking and financial services including
commercial banking and treasury operations. The bank and theirsubsidiaries offers a wide
range of banking and financial services including commercial banking, retail banking, project
and corporate finance, working capital finance, insurance, venture capital and private equity,
investment banking, broking and treasury products and services. They offer through a variety
of delivery channels and through their specialized subsidiaries in the area of investment
banking, life and non-life insurance, venture capital and assets management. The bank has a
network of 2035 branches and about 5518 ATMs in India and presence in 18 countries. They
have subsidiaries in the United Kingdom, Russia and Canada, branches in United States,
Singapore, Bahrain, Hong-Kong, Silence, Qatar and Dubai International finance centre and
representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand,
Malaysia and Indonesia. Our UK subsidiary has established branches in Belgium and
Germany. The bank equity shares are listed in India on Bombay Stock Exchange and
National stock exchange of India Limited and their American Depository Receipts (ADRs)
are listed on NYSE.The bank is first Indian banks listed NYSE.
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Subsidiaries of ICICI bank
NATIONAL INTERNATIONAL
ICICI Lombard ICICI Bank UK PLC
ICICI Prudential Life Insurance Company Ltd ICICI Bank Canada
ICICI Securities Limited ICICI Bank Eurasia LLC
ICICI Prudential Asset Management Company Limited
ICICI Venture
ICICI direct.com
ICICI Foundation
SBI v/s ICICI
SBI stands for State Bank of India. It is a public sector institution (government owned), with
a huge customer base all over India. It has seven associate banks operating under its SBI
name. It has over thirteen thousand branches across India and in some selected international
countries and a 56,000 ATM network across India. The Standard Bank of India inherited the
Bank of Calcutta, which was founded in 1806, and has been in existence for over two
hundred years.
On the other hand, the ICICI is a private sector bank (privately owned), with a relatively
smaller clientele base. It is one of the major banks in India (precisely the second largest), but
much smaller than the SBI. It has 950 branches, with 3,500 branches across India. The bank
has deposits of Rs.1.65lakhcrore compared to SBIs Rs.3.8lakhcrore (accumulated in a period
of twelve years), racking up a net worth of rs.22,000 against Rs.27,000 for the State Bank of
India. This represents Rs.9crore business generated by each ICICI employee per year,
compared to Rs.3crore worth of business per employee of the ICICI.
While the State Bank pays 4.7percent on deposits, and earns less on advances, the ICICI pays
0.7 less (4percent), while earning more on advances, and thus earns 0.4percent more on
assets than the SBI. This is no surprise, as theres seemingly limitless access to funds from
the government for the state owned SBI.
On money transfers from overseas accounts, with the SBI, once a transfer transaction is
completed, you will be able to know the exchange rate used, and there are no restrictions on
the amounts you can transfer a day. However, the ICICI transfer is somewhat different. After
completion of a money transfer transaction, the exchange rate can only be known after five
days, and there is a daily limit of $5000 that can be transferred a day.
Although the SBI has generally performed well in the past, in recent years, the ICICI has
seen very good performance, almost edging out the SBI in every aspect, especially
financially. The financial years between 2001-2002 and 2005, and 2006, saw very strong
gains for the ICICI bank. Its deposits grew by 200percent, five times more than the SBIs,
and while SBIs revenue grew by 30percent and the ICICI banks revenue grew by seven
times that percentage. This trend means that ICICIs growth will eventually overtake SBIs
in the future, in terms of deposits.
The SBI is a government owned bank (public sector), while ICICI is a privately owned bank
(private sector). The SBI is much older (more than 200 years old) and more established than
the ICICI, which is less than 25 years old. The SBI does not limit daily international transfer
107
amounts, while the ICICI limits daily transfers to $5000 a day. The SBI bank pays a higher
percentage on deposits than the ICICI bank.
Research methodology
The study has been conducted with reference to the data related to SBI and ICICI bank.
These banks have been studies with the belief that they hold the largest market share of
banking business in India, in their respective sector. The study examines the financial
performance of Indian banks based on the CAMEL variables and compares the performance
of SBI and ICICI banks for the period of 2010-11 to 2014-15. For evaluating the performance
of banks, the world renowned CAMEL Model is adopted. CAMEL stands for Capital
Adequacy, Asset Quality, Management Quality, earnings Quality and Liquidity. It is
considered the best method for evaluating performance and health of the banks since it
considers all areas of banking operations.
Research Design
The study is an exploratory and analytical in nature with an attempt to explore the financial
performance of public sector and private sector banks with reference to SBI and ICICI banks.
In this study we basically study the impact of home loan interest rates on the attitude of
people towards buying their dream home.
Sampling Design
For this study, data covers Profit and Loss A/C, Balance Sheets, Financial Highlights for a
period of five years from 2010-11 to 2014-15 of SBI and ICICI Banks.
Source of Data Collection
For this research proposal secondary source of data collection was used in the form of reports
through internet.
Instrument
The data required for the study will be collected from
Annual reports of respective banks

Journals and reports on trends
Newspapers, magazines
Progress of Banking of India
Government publications
Books and websites
Tools for Data Analysis
The secondary data were collected from the financial performance and business model of SBI
and ICICI Banks for this study. The following tools are used to collect the data.
Various financial ratios (like profitability, leverage, activity, risk management etc.
Graphs like bar charts and trend line diagrams
108
Different comparative tables

Correlation
Regression
Sampling variables
For applying regression technique following variables taken as independent and dependent
variables:
Independent Variables- Total income, total expenditure, advances, capital, assets

Dependent Variables Profit before tax, profit after tax, NPA.
Expected contribution
The analysis made a part of this study may contribute in a way analysis of strength and
weakness of the banking sector as whole with regard to
Various banks from different categories together may make efforts to overcome
limitations for lending money to different sectors like agricultural, SSI, Priority- non-
priority sector, public sector & others.
Beneficiaries of research study
Bank: This research will very helpful for both the banks to take necessary measures for
improve their financial performance in terms of increase profit, reduction in expenses.
Investors: Investors of the whose called shareholders are also get benefitted from this
research to know that how much return they are earning in terms of return on investment,
return on assets, and profits.
Customers: These are those people who also called account holders, they only will deposit
their funds when they will get maximum interest in comparison of other banks, so the bank
only give more interest when they will have surplus profits, for measure such profit this study
will help them.
Further Researchers: The major beneficiaries from the project would be the re-searchers
themselves as this study would enhance their knowledge about the topic. They get an insight
of the present scenario of this industry as this is the emerging industry in the financial sector
of the economy.
Student: To get the understanding of financial performance.
DATA ANALYSIS AND INTERPRETATION
Table 1: comparative study of SBIs income analysis on the basis of 2010-11

as base 100% (Increase / decrease in %)
Particulars SBI
2010-11 2011-12 2012-13 2013-14 2014-15
Total Income 0 -18.2 -8.2 4.8 18.3

Total Expenses 0 -20.1 -11 5.4 18.4
Interest Income 0 30.9 47 67.5 87.2
Interest Expenses 0 29.4 54.1 78.2 99.3
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Net Interest Income 0 33.1 36.3 51.5 69.1
Profit Before Tax 0 23.6 33.4 8.2 29.2
Profit After Tax 0 41.7 70.7 31.8 58.8
Table 2: comparative study of icicis income analysis on the basis of 2010-11

as base 100% (Increase / decrease in %)
Particulars
ICICI
2010-11 2011-12 2012-13 2013-14 2014-15
Total Income 0 25.8 48.4 67.4 87.8
Total Expenses 0 25.9 46 63.1 82.3
Interest Income 0 29.1 54.3 70.1 89
Interest Expenses 0 34.5 54.6 63.4 77.2
Net Interest Income 0 19 53.8 82.7 111.2
Profit Before Tax 0 30.2 68.5 106.6 134
Profit After Tax 0 25.5 65.5 90.4 116.9
Table 3: comparative study of npa to advances of sbi bank

(Figures in billions except %)
SBI
Adv. NPA Provision %of % of NPA to
Provision to Adv.
Years Adv.
2010-11 7567 123 87.9 1.16 1.63
2011-12 8675 158 115.4 1.33 1.82
2012-13 10456 219 113.6 1.09 2.09
2013-14 12098 310 142.2 1.18 2.57
2014-15 1300 275 172.8 1.330 2.12
Table 4: comparative study of NPA to advances of ICICI bank

110
(Figures in billions except %)

YEAR ICICI
ADV. NPA Provision % of provision % of NPA to
to Adv. Adv.
2010-11 2163 24.58 19.76 0.91 0.94
2011-12 2537 27.06 9.93 0.39 0.95
2012-13 2902 30.6 13.94 0.48 0.96
2013-14 3387 32.97 22.52 0.66 0.97
2014-15 3875 62.55 31.41 0.81 1.67
Table 5: study of market test ratio of SBI bank
YEAR SBI (figures in Rs)

2010-11 2011-12 2012-13 2013-14 2014-15
Earnings per 130.16 184.31 210.06 156.76 17.55
share
Price earnings 21.24 11.37 9.86 12.23 15.21
ratio
Dividend pay out 23.05 20.06 20.12 20.56 20.21
Dividend yield 0.008 0.01 0.01 0.01 0.075
ratio
Table 6: Study of market test ratio of ICICI banks
YEAR ICICI (figures in Rs)

2010-11 2011-12 2012-13 2013-14 2014-15
Earnings per 9.05 11.22 14.44 17 19.32
share
Price earnings 124.42 84.9376 78.8781 74.0588 18.0642
ratio
Dividend pay out 0.31 0.29 0.28 0.27 0.26
Dividend yield 0.00027 0.00031 0.00024 0.00021 0.00074
ratio
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The market test ratio of both the banks depicts that the price earnings ratio of icici bank kept
on drecessing from the year 2010-15 whereas in sbi bank there was a varations. In 2010-11
the earnings per share of sbi was rs.130.16 and of icici was rs 9.05, as years went on during
2014-15 the icici banks earinings per share was rs.19.32 and of sbi bank was just rs.17.55.
The dividend paid out to the customers of SBI and ICICI bank kept on decreasing and for
ICICI it was decreasing at Rs.0.01 from the year 2011-15.
Case-1st: (Correlation for SBI)
Null Hypothesis (H0): There is no positive correlation between Total Income and Profit after
Tax of SBI bank. Alternate Hypothesis (H1): There is positive correlation between Total
Income and Profit After Tax of SBI bank. To test the hypothesis calculation was done
manually with the help of Microsoft Office Excel 2007 and with the helpof formula the
coefficient of correlation was calculated. It was:
r = 0.013
Hence, null hypothesis is rejected and it can be concluded that there is positive correlation
(0.013) between Total Income and Profit After Tax of SBI Bank. Though value of r is
positive but very small hence it can be said that these two variables are weakly related to
each other in case of SBI bank.
Case-2nd: (Correlation for ICICI)
Null Hypothesis (H0): There is no positive correlation between Total Income and Profit after
Tax of ICICI bank. Alternate Hypothesis (H1): There is positive correlation between Total
Income and Profit After Tax of ICICI bank. To test the hypothesis calculation was done
manually with the help of Microsoft Office Excel 2007 and with the help of formula the
coefficient of correlation was calculated. It was:
r = +0.99
Therefore null hypothesis is rejected and results reported that there is positive correlation
(0.99) between Total Income and Profit After Tax of SBI Bank. The coefficient value r is
very and it is very near to 1 thus it can be said that these two variables have very high degree
of correlation in case of ICICI bank.
Regression Coefficient between Total Income and Total Expenditure:
Independent Variable Total Income (x)

Dependent Variable Total Expenditure (y)
r Regression coefficient
Case 1st - For SBI Bank
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Regression coefficient: X on Y
bxy = 0.94
Regression coefficient: Y on X
byx = 1.04
r = 0.98 (Regression coefficient)
Case 2nd - For ICICI Bank
Regression coefficient: X on Y
bxy = 1.27
Regression coefficient: Y on X
byx = 0.78
r = 0.99 (Regression coefficient)
Table 7: Study of trending in share capital
Figures in crores:
YEAR SBI ICICI

2010-11 634.88 1239.83
2011-12 635.00 1249.34
2012-13 671.04 91462.68
2013-14 684.03 1463.29
2014-15 746.57 1159.66
100000
80000
60000 ICICI
40000 SBI
20000 YEAR
0
1 2 3 4 5 6
Table 8: Study of reserves:
Figures in crores:
YEARS SBI ICICI

2010-11 65314.32 21316.16
2011-12 64351.04 23413.92
2012-13 83280.16 45357.53
2013-14 124348.98 48419.73
2014-15 146623.96 79262.26
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Table 9: Study of deposits

Figures in crores:
YEARS SBI ICICI
2010-11 804116.23 165083.17
2011-12 933932.81 230510.19
2012-13 1414689.40 24431.05
2013-14 1627420.61 218347.82
2014-15 1838852.35 361562.73
Table10: Study of borrowing

Figures in crores:
YEARS SBI ICICI

2010-11 103011.60 38521.91
2011-12 119568.96 51256.03
2012-13 157991.36 65648.43
2013-14 203723.19 67323.69
2014-15 223759.70 172417.35
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Credit deposit ratio:
Credit-Deposit Ratio is the proportion of loan-assets created by a bank from the deposits
received. Credits are the loans and advances granted by the bank. In other words it is the
amount lent by the bank to a person or an organization which is recovered later on. Interest is
charged from the borrower. Deposit is the amount accepted by bank from the savers and
interest is paid to them.
Credit deposit ratio
YEAR SBI ICICI

2010-11 75.96 90.04
2011-12 79.90 90.45
2012-13 82.14 9.71
2013-14 85.17 0.00
2014-15 86.84 54.23
MEAN 81.202 66.486
It depicts that over the course of five financial periods of study the mean of Credit Deposit
Ratio in ICICI was higher (81.202%) than in SBI (66.486%). In case of SBI the credit deposit
ratio was highest in 2014 and lowest in 2011. But in case of ICICI credit deposit ratio was
highest in 2011 and lowest in 2013. This shows that SBI has created more loan assets from its
deposits as compared to ICICI BANK.
115
Capital adequacy ratio
The capital adequacy ratio (CAR) is a measure of a bank's capital. It is expressed as a

percentage of a bank's risk weighted credit exposures. Also known as capital-to-risk weighted
assets ratio (CRAR), it is used to protect depositors and promote the stability and efficiency
of financial systems around the world.
Capital adequacy ratio
YEARS SBI ICICI

2010-11 13.39 19.41
2011-12 11.98 19.54
2012-13 13.86 18.52
2013-14 12.92 18.74
2014-15 12.96 17.70
MEAN 13.022 18.782
CAR is a measure of banks ability to meet its obligations relative to its risk. The capital
adequacy ratio exists to ensure that a bank is able to handle losses and full fill its obligations
to account holders without ceasing operations. The above table shows that CAR of ICICI
Bank is much higher than SBI. So it shows that ICICI bank has more ability to meet its
obligations related to risk as compare to SBI.
Net profit margin
Net profit margin is the percentage of revenue left after all expenses have been deducted from
sales. The measurement reveals the amount of profit that a business can extract from its total
sales. The net sales part of the equation is gross sales minus all sales deductions, such as sales
allowances.
Net profit margin

YEARS SBI ICICI
2010-11 10.54 12.17
2011-12 7.58 15.79
2012-12 9.68 15.75
2013-14 10.39 17.19
2014-15 7.03 17.96
MEAN 9.044 15.772
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The table reveals that the ratio of net profits to total income of ICICI was varied from 12.17%
to 17.96% whereas in case of SBI it is not stable. It increased to 10.39% from 9.68% in 2013
then further decreased to 7.03% in 2014 during the period of 5 years of study. However, the
net profit margin was higher in ICICI (15.772%) as compared to SBI (9.044%) during the
period of study. So the profitability of ICICI Bank is much higher than SBI.
Findings and conclusion
State Bank of India is the largest bank in the public sector and ICICI is in the private sector.
The market expansion of SBI is more as compare to ICICI bank. SBI enter into the rural
market and making more and more customer. SBI also comes with the new services and
attract to the customers. By analysis of the financial performance of SBI and ICICI bank we
can say that the SBI is financially sound as compare to the ICICI bank. SBI have more
profitability because it enters into the industry as well as commercial market also and
regularly it improving their service quality level. The ICICI bank also the leader in the
private market and it is equal competitor of the SBI but SBI is performing better because the
trustworthiness of people are more towards SBI as compare to ICICI bank. On the part of
NPA, again SBI has fewer bad debts as compare to ICICI; the reason may be the sound
image of SBI in the eyes of customers. SBI is leading and has also many rural and urban
branches, it also gives strength to SBI and makes it enable to cover the advance given which
in turn reduce the bad debts of SBI whereas in case of ICICI, it needs to work hard to recover
the amount given as advance. The data also reveals that ICICI has circulated more advances
to the customers as compare to SBI, this also one reason which increases the bad debts of
ICICI. Market test ratio calculation and graph reveals that the again the market position of
SBI is much better than the ICICI. The one reason can be that SBI is public sector bank; and
the second reason can be that the SBI is the oldest bank has captured the large market which
again improve and increases its market position. The study found that the mean of Credit
Deposit Ratio in SBI was higher (81.202 %) than in ICICI Bank (66.486%). This shows that
SBI Bank has created more loan assets from its deposits as compared to ICICI Bank. The Net
Profit Margin of ICICI is higher (15.772 %) whereas in SBI it was (9.044 %), which shows
that ICICI has shown comparatively better operational efficiency than SBI. Capital adequacy
ratio of ICICI Bank is much higher than SBI. So it shows that ICICI bank has more ability to
meet its obligations related to risk as compare to SBI. In this study we reveal that ICICI Bank
is leading bank as compared to SBI. Hence, on the basis of the above study or analysis
banking customer has now more trust on the private sector banks as compared to public
sector banks.
117
References:
1. Kumbirai, M. and Webb, R. (2010), A Financial Ratio Analysis of Commercial Bank

Performance in South Africa, African Review of Economics and Finance, Vol. 2(1).
2. Mohi-ud-Din Sangmin and Nazir, Tabassum (2010), Analyzing Financial Performance of
Commercial Banks in India: Applicationof CAMEL Model, Pakistan Journal of
Commerce & Social Sciences, Vol. 4(1), p 40-55.
3. Mitra, R. and Shankar, R. (2008), Measuring performance of Indian banks: an application
Data Envelopment Analysis, International Journal of Business Performance Management ,
Vol. 10(1).
4. Singh, B. A. and Tandon, P. (2012), A Study of Financial Performance: A Comparative
Analysis of SBI and ICICI Bank, International Journal of Marketing, Financial Services &
Management Research, ISSN 2277 3622, Vol. 1(11).
5. Khan, M. Y., Financial Management, Tata McGraw Hill Publication.
6. Padmalatha Suresh & Justin Paul, Management of Banking & Financial Services, Second
edition.
7. JyotiSaluja&Dr.RajendraKaur (2009) Profitability Performance of Public Sector Bank in
India/ Indian Journal of Finance- Volume 4, Number 4, April 2010.
8. Financial year report of SBI 2010-11 to 2014-15.
9. SBI bulletin publication 2014-15.
10. Financial year report of ICICI Bank 2010-11 to 2014-15.
11. ICICI Bank bulletin publication 2014-15.
12. RBI statistical table relating to banks 2014-15.
13. http://wwwicicibank.com/
14. http://statebankofindia.com/
15. http://www.sbi.co.in/user.htm?action=viewsection&id=0,170,686
16. http://www.icicibank.com/aboutus/annual.html
17. http://www.moneycontrol.com/
18. http://equitymaster.com/
19. http://www.thesundayindian.com/en/story/sbis-credit-ratingdowngraded/23733/
118
Aiswarya Kameswaran,
B.A., LLB (Hons),
VIT School of Law,
VIT University,Chennai- 127
R.C. Sri Harsha ,

B.A., LLB (Hons),
VIT School of Law,
VIT University, Chennai- 127
Abstract
Over the past decade, there has been a paradigm shift in the functioning of Indian banks.
From branch centric they have become technology centric, which has helped banking become
customer-oriented. This paper is prepared to examine the change over from Conventional to
Internet banking to understand its role. The paper also aims at offering a comprehensive
picture of the transmission of such a technology within the sector. In attempting so, it
analyses the role of initial banking, technology upgradation, market, environment
characteristics influencing the adoption of new platforms to perform transactions. The main
purpose of this paper is to understand the shift in banking industry and come to a
conclusion whether in these two channels of financial services delivery are alleged as
substitutes or complements by the banks.
Keywords: nationalization, banking, financial system.
Introduction
Online banking, also known as internet banking, e-banking or virtual banking, is

an electronic payment system that enables customers of a bank or other financial
institution to conduct a range of financial transactions through the financial institution's
website. The online banking system will typically connect to or be part of the core
banking system operated by a bank and is in contrast to branch banking which was the
traditional way customers accessed banking services.
Online services started in New York in 1981 when four of the city's major banks
(Citibank, Chase Manhattan, Chemical and Manufacturers Hanover) offered home banking
services using the videotex system. Because of the commercial failure of videotex these
banking services never became popular except in France where the use of videotex (Minitel)
was subsidised by the telecom provider and the UK, where the Prestel system was used.
Banking and perspective
Banking was in existence in India during pre-independence period also Viz. Ancient era,
Medieval era and Colonial era. During the post independence era the Banking Regulation
Act was enacted, which empowered the Reserve Bank of India (RBI) "to regulate, control
and inspect the banks in India. By the 1960s, the Indian banking industry had become an
important tool to facilitate the development of the Indian economy. At the same time, it had
emerged as a large employer, and a debate had ensued about the nationalization of the
banking industry. Smt. Indira Gandhi, the then Prime Minister of India, expressed the
intention of the Government of India in the annual conference of the All India Congress
119
Meeting in a paper entitled "Stray thoughts on Bank Nationalization." The meeting received
the paper with enthusiasm.
Thereafter, the Government of India issued an ordinance ('Banking Companies (Acquisition and
Transfer of Undertakings) Ordinance, 1969') and nationalized the 14 largest commercial banks with
effect from the midnight of 19 July 1969. These banks contained 85 percent of bank deposits in the
country. A second dose of nationalization of 6 more commercial banks followed in 1980. With the
second dose of nationalization, the Government of India controlled around 91% of the banking
business of India.
In the early 1990s, the then government embarked on a policy of liberalization, licensing a
small number of private banks. These came to be known as New Generation tech-savvy
banks. This move, along with the rapid growth in the economy of India, revitalized the
banking sector in India, which has seen rapid growth with strong contribution from all the
three sectors of banks, namely, government banks, private banks and foreign banks. The new
policy shook the Banking sector in India completely. The new wave ushered in a modern
outlook and tech-savvy methods of working for traditional banks. All this led to the retail
boom in India. People demanded more from their banks and received more.
Need for omni channel
When the clicks-and-bricks euphoria hit in the late 1990s, many banks began to view web-
based banking as a strategic imperative. The attraction of banks to online banking are fairly
obvious: diminished transaction costs, easier integration of services, interactive marketing
capabilities, and other benefits that boost customer lists and profit margins. Additionally,
online banking services allow institutions to bundle more services into single packages,
thereby luring customers and minimizing overhead.
A mergers-and-acquisitions wave swept the financial industries in the mid- and late 1990s,
greatly expanding banks' customer bases. Following this, banks looked to the Web as a way
of maintaining their customers and building loyalty. A number of different factors are
causing bankers to shift more of their business to the virtual realm.
Conventional manner
While financial institutions took steps to implement e-banking services in the mid-1990s,
many consumers were hesitant to conduct monetary transactions over the internet. Customers
were used to the conventional method of visiting branches to have face to face contact and
receiving money through human hands and bank branches also enjoyed the foot falls of
customers, which developed human relationships and values. Though conventional banking
had its own merit of physical existence of a branch for Customers to have face to face contact
it had the following demerits when the world was changing fast.
It consumes a lot of time as customers have to visit banks to carry out bank transactions
like checking bank balances, transferring money from one account to another.
People have to visit banks only during the working hours.
Customers who often travel abroad cannot pay close attention and control of their
finances.
Customers have to spend money for visiting banks.
The cost incurred by conventional banking includes a lot of operating and fixed costs.
In conventional banking, the employees of the bank can attend only few customers at a
time.
120
Technology
Around 1994, banks saw the rising popularity of the internet as an opportunity to advertise
their services. Initially, they used the internet as another brochure, without interaction with
the customer. Early sites featured pictures of the bank's officers or buildings, and provided
customers with maps of branches and ATM locations, phone numbers to call for further
information and simple listings of products. In 1995, Wells Fargo was the first U.S. bank to
add account services to its website, with other banks quickly following suit. In India too, the
competition amongst banks pushed every bank to move to advanced method of banking with
technology improvement to attract new and to retain the old customers. Customers also
understood the various facilities available with the click of a mouse. Internet banking
facilities typically have many features and capabilities in common, but also have some that
are application specific.
Banking tasks through online banking:
Funds transfers between the customer's linked accounts

Paying third parties, including bill payments (see, e.g., BPAY) and third party fund
transfers (see, e.g., FAST)
Investment purchase or sale
Loan applicatrions and transactions, such as repayments of enrollments
Credit card applications
Register utility billers and make bill payments
Financial institution administration
Non-transactional tasks :
Viewing account balances

Viewing recent transactions
Downloading bank statements, for example in PDF format
Viewing images of paid cheques
Ordering cheque books
Download periodic account statements
Downloading applications for M-banking, E-banking etc.
Legal aspects
Keeping money over the Internet has pulled in expanding deliberation from investors and
other monetary administrations industry members, the business press, controllers, and
legislators. Among the purposes behind Internet saving money's group of onlookers are the
thought that electronic keeping money and instalments will develop quickly, pretty much pair
with multiplying electronic business; industry projections that Internet managing an account
will cut banks' costs, increment banks' income development, and make saving money more
advantageous for clients; and some vexing open arrangement issues. Notwithstanding this
consideration, there is a shortage of precise data on the nature and extent of Internet saving
money. Investors and open policymakers alike have needed to arrange utilizing to a great
extent episodic proof and guess.
Basically there are three types of banking through internet:
Basic Level Service.

Simple Transaction Websites.
Fully Transaction websites.
121
Basic Level Service: It deals with the banks' sites which disperse data on various items and
administrations offered to clients and individuals from open all in all. It might get an answer
to clients' inquiries through email.
Simple Transaction Websites: In the next level of internet banking, which allow customers
to submit their instructions, applications for different services, queries on their account
balances, etc., but do not permit any fund-based transactions on their account?
Fully Transaction Websites: This type of banking allows the customers to operate on their
accounts for transfer of funds, payment of different bills, subscribing to other products of the
bank and to transact purchase and sale of securities.
The above forms of Internet banking services are offered by traditional banks, as an
additional method of serving the customer or by new banks, who deliver banking services
primarily through Internet or other electronic delivery channels as the value added services.
Advantages
As per the Internet in India Report 2007 distributed together by the Internet and Mobile
Association of India and IMRB International, the quantity of web clients in India in the ever
client or guaranteed client class has touched 46 million in September from 32.2 million in
September 2006. Amid a similar period, the quantity of dynamic web clients has come to 32
million. Through Internet banking, we can check our transactions at any time of the day, and
as many times as we want to. Where in a traditional method, we get quarterly statements
from the bank. If the fund transfer has to be made outstation, where the bank does not have a
branch, the bank would demand outstation charges. Whereas with the help of online banking,
it will be absolutely free.
Web saving money is a prominent and advantageous technique for doing web based saving
money exchanges. We have no committed Internet saving money laws in India however the
Reserve Bank of India (RBI) has issued a few rules in such manner. Be that as it may,
Internet managing an account rules in India by RBI are not adequate to make the banks take
after powerful and required digital security methods. This implies Internet keeping money
chances in India are high and even RBI recognized dangers of e-managing an account in
India. In spite of this position, banks in India are disregarding the digital security due
perseverance prerequisites endorsed by RBI. The web based saving money chances in India
have expanded hugely because of this position. RBI has additionally discharged a report of
the RBI working gathering on securing card display exchange keeping in mind the end goal
to give preventive measures to ATM fakes in India. Ledge Internet managing an account
cheats in India and ATM Frauds are expanding. Banks in India are not genuine about digital
security and they are not taking after the proposals of RBI.
Pros and cons of internet banking
Pros
Convenience
Direct banks are open for business anywhere there is an internet connection. Other than times
when website maintenance is being done, they are open 24 hours a day, 365 days a year. If
internet service is not available, customer service is normally provided around the clock via
telephone. Real-time account balances and information are available at the touch of a few
122
buttons. This makes banking faster, easier, more efficient and even more effective because
consumers are able to always stay on top of their account balances.
Updating and maintaining a direct account is also easier. It takes only minutes to change your
mailing address, order additional checks and check for current interest rates.
Better Rates
The lack of significant infrastructure and overhead costs allow direct banks to pay higher
interest rates on savings and charge lower mortgage and loan rates. Some offer high-
yield checking accounts, high-yield CDs and no-penalty CDs for early withdrawal. Some
accounts can be opened with no minimum deposits and carry no minimum balance or service
fees.
Services
Direct banks typically have more robust websites that offer a comprehensive set of features
that may not be found on the websites of traditional banks. These include functional
budgeting and forecasting tools, financial planning capabilities, investment analysis tools,
loan calculators and equity trading platforms. They also offer free online bill paying, online
tax forms and tax preparation.
Mobility
Online banking now includes mobile capabilities. New applications are continually being
created to expand and improve this capability on smartphones and other mobile devices.
Transfers
Accounts can be automatically funded from a traditional bank account via electronic transfer.
Most direct banks offer unlimited transfers at no cost, including those destined for
outside financial institutions. They will also accept direct deposits and withdrawals that you
authorize, such as payroll deposits and automatic bill payment.
Ease of Use
Online accounts are easy to set up and require no more information than a traditional bank
account. Many offer the option of inputting your data online or downloading the forms and
mailing them in. If you run into a problem, you have the option of calling or emailing the
bank directly. One advantage of using online checks is that the payee's information is
retained, which eliminates having to reenter information on subsequent checks to the same
payee Online banking is also environmentally friendly. Electronic transmissions require no
paper, reduce vehicle traffic and are virtually pollution-free. They also eliminate the need for
buildings and office equipment.
Access
You can access your online bank account from any Internet-enabled device in the world. If
you want to transfer funds while sitting in a restaurant, you can log in using you hand-held
Internet device and make your changes. An online bank is open 24-hours a day, seven days a
week and 365 days a year.
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Value
An online bank does not have the same overhead expenses of a brick and mortar bank, and
that can mean a better value for online customers, according to online financial resource
Bank rate. A brick and mortar bank with online access still needs to pay tellers and the
overhead expenses of maintaining a location. An online bank has none of those expenses and
gives those savings back to customers in the form of higher yields on investments, lower
account fees and lower minimum deposits to open accounts.
Real Time Statements
Rather than waiting a month for a printed statement, online banking allows you the
opportunity to see a history of your transactions instantly and track your activity, according to
the online Money Instructor. This prevents you from having to review your account over the
phone with a teller while you are unable to see your statement. If a problem arises you can
see your statement in real time and make the corrections as needed.
Transactions
If your employer offers direct deposit, then you can have your paycheck deposited into your
online bank account. Depositing cash and live checks into your online bank account may be
more difficult. Depending on the process your online bank has in place, it could take days, or
even weeks, to deposit cash or checks into your online bank account.
Navigation
If you are uncomfortable navigating websites, then using an online banking site may be
intimidating to you, according to Bankrate.com. The options and services a bank offers can
be taken for granted until you see them listed in an Internet menu and have to figure out how
to navigate to what you want. If your online bank chooses to change the functionality or look
of their website, then you will have to learn how to navigate it all over again.
Cons
Security
While banks typically offer secure web pages to conduct your business transactions, this does
not guarantee complete safety. All websites, even secure ones, may be susceptible to Internet
criminals who try to hack into your account and gain access to your business private financial
information. This can lead to fraudulent use of your business identity and potentially cost you
thousands of dollars.
Site Disruption
A technical glitch could cause the bank website to go offline for a period of time, possibly
resulting in problems for you and your business. For example, you may need immediate
funds after normal banking hours to make a payment or emergency business purchase.
Routine site maintenance also occurs, although this normally takes place during off-peak
hours.
124
Site Navigation
If you are new to online banking, it may take some time to get used to it, taking valuable time
out of your work day. Online banking offers a large number of transactions, so frustration
may occur while you are learning to navigate the site. Banks also update web pages to add
new features, requiring additional learning and possibly the need to change account numbers
or passwords. If you need help, you might encounter a lengthy wait when using the banks
telephone customer service line.
User Apprehension
Some business owners may not feel comfortable with the idea of placing vital financial
information into an online account, or may be apprehensive about using the Internet. If you
are a longtime small business owner who is used to doing banking in person or even by
telephone, this hurdle might be difficult to surmount.
Accessibility
If your business is located in a rural or remote area, your Internet options could be limited.
Depending on your type of business, this can make conducting transactions difficult. For
example, if you operate a home-based business and you dont have access to a high-speed
cable connection, you may have to use a slower dial-up service.
Bank Relationship
A traditional bank provides the opportunity to develop a personal relationship with that bank.
Getting to know the people at your local branch can be an advantage when you need a loan or
a special service that is not normally offered to the public. A bank manager usually has some
discretion in changing the terms of your account if your personal circumstances change. They
can help you solve problems such as reversing an undeserved fee or service charge.
Your banker will also get to know you and your unique needs. If you have a business
account, this personal relationship may help if you need capital to expand. It's easier to get
the bank's support if there is someone who understands your business and can vouch for your
operating plan.
Transaction Issues
Sometimes a face-to-face meeting is required to complete complex transactions and address

complicated problems. A traditional bank can host meetings and call in experts to solve a
specific issue. In addition, international transactions may be more difficult (or impossible)
with some direct banks. If you regularly deposit cash, a traditional bank with a drive-through
window may be more practical and efficient. Another potential drawback is that most direct
banks do not have their own ATM machines. Unless an internet bank has a network alliance
with another bank, you will be charged for your ATM use. (For related reading on ATMs,
see 5 ATM Scams That Can Break The Bank.)
ServiceIssues
Some direct banks may not offer all the comprehensive financial services, such as insurance
and brokerage accounts, that traditional banks offer. Traditional banks sometimes offer
special services to loyal customers, such as preferred rates and investment advice at no extra
125
charge. In addition, routine services such as notarization and bank signature

guarantee are not available online. These services are required for many financial and legal
transactions.
Security
Direct banks are subject to the same laws and regulations as traditional banks, and accounts
are protected by the FDIC. Sophisticated encryption software is designed to protect your
account information, but no system is perfect. Accounts may be subject to phishing, hacker
attacks, malware and other unauthorized activity. However, one advantage of online banking
is that you are likely to find a security breach more quickly, because your account balance is
so accessible.
Most banks now make scanned copies of cleared checks available online, which helps to
avoid and identify check fraud. It enables verification that all checks are signed by you and
that dollar amounts have not been changed. The timely discovery of discrepancies can be
reported and investigated immediately.
Identity theft is a significant concern, but some online banks take this risk more seriously
than others. Before opening an online account, thoroughly investigate the bank's security
policies and protections to ensure they meet your expectations.
Conclusion
Technology innovation and fierce competition among banks have enabled a wide array of
banking products and services , being made available to retail and wholesale customer
through an electronic distribution channel , collectively referred as Internet banking or e-
Banking .
The success of the company directly or indirectly depends on their customers, as they are the
backbone of the company. With the development of technology the customers expectations
are raising relentlessly, competitive will survive who can respond to the customer needs
faster and better than anyone.
Various studies concludes that majority of customers are accepting internet banking because
of many favorable factors. Analysis concluded that usefulness, ease of use of the system
awareness about internet banking and risks related to it are the main perusing factors to accept
internet banking system.
These factors have a strong and positive effect on customers to accept internet banking
system. It is concluded from the results of recent studies that the usage of Internet banking along
with ATM and Telebanking, are perceived as important and the use of these services is associated
with socio-economic and demographic characteristics of the people. Though, most of the customers
prefer manual banking over e- banking, the customers tend to use internet banking and adoption
internet banking services among the bank customers is significantly influenced by the number of
times visiting the banks as well as the number of banking transactions per month. Most of the
services through e-banking , which is performed by both public and private banks are beyond the
expectation of the customers. Likewise, the various services provided by both public and private
sector banks are more than adequate for customers.
126
References
1. www.google.co.in
2. C.R.Kothari Research methodology new age international publication limted , Second
edition 2006.
3. Philip Kotler Kevin Kellerlane Prentice-Hall of india P ltd 2007.
127
Crypto Currency An alternative Tender?
Vedhavel S
B.A. LLB. (Hons.),
VIT School of Law,
VIT Chennai Campus.
E-mail: vedhavel1996@gmail.com.
Abstract
Currency functions as a medium of exchange, a store of value, and a unit of account, but
cryptocurrencies fails to satisfy these criteria. The currency appears to behave more like a
conjectural investment than a currency for daily use. Crypto currencies lack characteristics
that are usually associated with real life currencies in modern economies including but not
limited to the capability of being deposited in a bank. The coins must be transacted through a
system of digital wallets that are both costly to maintain and vulnerable to predators.
Under these circumstances, the paper tries to analyze if these crypto currencies are a viable
alternative to hard cash during the post-demonetization era.
Keywords: Digital Currency; Medium of exchange; Digital Wallets; Legal Tender
Introduction
Money wont create success, the freedom to make it will
- Nelson Mandela
Oxford English Dictionary defines Cryptocurrency to mean A digital currency in which

encryption techniques are used to regulate the generation of units of currency and verify the
transfer of funds, operating independently of a central bank.1 Currency is a system of money
that has a specific value and is recognized through a tangible medium like notes and coins.
Taking the same line, cryptocurrencies were designed as a payments vehicle and as a store of
values, without the presence of a central bank.2 Cryptocurrencies are transacted by
authentication between individuals through an asymmetric key cryptosystem that is verified
by miners to prevent double spending by individuals.3 When a Cryptocurrency is double
spent, the majority rule is used to determine the genuine payment, which solves conflict
when the parties to the dispute disagree with each other.4 Nevertheless, clarification is need
on the terms used while referring to the modes of cryptocurrencies in general, Bitcoins in
particular.
People refer to two different things when they talk about bitcoin. The first is the feature that
has the most attention: bitcoin the currency, the digital units of value that are used by people
1
DEFINITION OF CRYPTOCURRENCY, https://en.oxforddictionaries.com/definition/cryptocurrency (last visited
Mar 25, 2017)
2
CAN WE STABILIZE THE PRICE OF A CRYPTOCURRENCY?: UNDERSTANDING THE DESIGN OF BITCOIN AND ITS
POTENTIAL TO COMPETE WITH CENTRAL BANK MONEY by Mitsuru Iwamura, Yukinobu Kitamura, Tsutomu
Matsumoto, Kenji Saito :: SSRN, http://ssrn.com/abstract=2519367 (last visited Mar 25, 2017)
3
Bitcoin mining is the process of adding transaction records to Bitcoin's public ledger of past transactions or
blockchain. This ledger of past transactions is called the block chain as it is a chain of blocks. The block chain
serves to confirm transactions to the rest of the network as having taken place. Bitcoin nodes use the block chain
to distinguish legitimate Bitcoin transactions from attempts to re-spend coins that have already been spent
elsewhere.
4
Supra.,2.
128
in exchange for goods and services or other currencies, and whose price tends to swing
wildly against traditional government-issued currencies. But that narrow definition distracts
from a broader one that captures bitcoins far more important contribution, and that is bitcoin
the technology - or, as some prefer to write it in text, Bitcoin, with a capital B (with the
currency always referred to with a lower-case b).5At the time of writing this paper,
16,235,975 BTC have been mined, moving towards a cap of 21 million bitcoins.6
1. From Barter to Crypto cash
The earliest means of commodity transaction before the existence of governments and
currencies, the barter system was the norm for acquiring goods. For example, Alex wanted a
hammer while Charlie wanted medicine. If each of them happen to have what the other
person needs, then they can swap and both satisfy their needs. However, this system did not
work when Alex had a stick while Charlie wanted medicines. This created complications and
standstills, which also extended to the value assigned to the product in hand.
The dilemma was solved after the entry of cash based transactions. If Alex wanted a hammer,
he would provide cash to Charlie to the exact denomination that Charlie values his hammer.
Hard cash permitted the users to be precise about the value of a product, which as stated
earlier, was missing from barter system.However, this system requires the presence of the
tangible medium of cash, without which there would be no transactions taking place.
The lacuna was filled when credit cards were lent out by banks to be used by consumers as an
alternative to cash payments. This system had opened possibilities to a new world order
where all products and services were available via the World Wide Web removing the
requirement of physical presence. What you gain from this architecture is that you dont have
to give the seller your credit card details, which can be a security risk. You might not even
have to give the seller your identity, which would improve your privacy as well. The
downside is that you lose the simplicity of interacting directly with the seller. Both you and
the seller might have to have an account with the same intermediary.7
Cash offers two main advantages. The first is anonymity. Since your credit card is issued in
your name, the bank can track all your spending. However, when you pay in cash, the bank
does notappear, and the other party does not need to know who you are. Second, cash can
enable offline transactions where there is no need to phone home to a third party in order to
get the transaction approved.8
Bitcoins, or cryptocurrencies in general, offers the same properties as cash does, albeit a bit
differently. For starters, though you do not need to use your real identity to pay in cryptocash,
it is not entirely anonymous because of the presence of a public ledger where all the details of
the transactions are held which can be linked to your identity.
5
Paula Vigna& Michael J Casey, THE AGE OF CRYPTOCURRENCY (St. Martin's Press) (2015)
6
BITCOIN CHARTS/ BITCOIN NETWORK, http://bitcoincharts.com/bitcoin/ (last visited Mar 25, 2017)
7
Arvind Narayanan et al., BITCOIN AND CRYPTOCURRENCY TECHNOLOGIES (Princeton University Press) (2016)
8
Ibid.,
129
2. Bitcoins: A Brief History
Satoshi Nakamoto is the pseudonym adopted by the creator of Bitcoin. While his identity
remains a mystery, he communicated extensively in Bitcoins early days. Satoshi says he
started coding Bitcoin around May 2007. He registered the domain bitcoin.org in August
2008. In October 2008, he publicly released a white paper that described the protocol, and
then soon after, he released the initial code for Bitcoin as well. For about two years, he posted
many messages on forums, emailed lots of people, and responded to peoples concerns. On
the programming side, he submitted patches to the code. He maintained the source code in
conjunction with other developers, fixing issues as they arose.9In October 2009, a Bitcoin
aficionado named Liberty Standard published the first bitcoin exchange rate. He arrived at
the figure by dividing the cost of the electricity consumed by his computer over a 30-day
period by the number of bitcoins it generated.1,309 bitcoins to one UD Dollar was the price.
Four years later, on 29th November 2013, one bitcoin was $1,242 over 1.6 million times
higher.10
Bitcoin was a unique idea that sprouted when various corporations were proposing the tie-up
of digital currency to existing products. For example, e-Gold, put a pile of gold in a vault and
issued digital cash only up to the value of the gold. Crypto cash worked at a slightly altered
route, by being issued independently of any other currency or product or services.
3. Hash Function
A hash function is a mathematical function with the following three properties:
Its input can be any string of any size.

It produces a fixed size output.
It is efficiently computable. Intuitively this means that for a given input string, you can
figure out what the output of the hash function is in a reasonable amount of time.11
For a hash function to be cryptographically secure, we are going to require that it has the
following three additional properties:
collisionresistance,
hiding,
puzzlefriendliness.
4. Cryptocash: Storage and uses
Online Wallets
E-wallet is a type of electronic card that is used for transactions made online through a
computer or a smartphone. Its utility is same as a credit or debit card. An E-wallet needs to be
linked with the individual's bank account to make payments.12
9
Ibid.,
10
Dominic Frisby, BITCOIN (Unbound) (2014)
11
Supra.,7, pg. no. 23.
12
DEFINITION OF 'E-WALLETS' The Economic Times, http://economictimes.indiatimes.com/definition/e-wallets
(last visited Mar 25, 2017)
130
An online wallet is kind of like a local wallet that you might manage yourself, except the
information is stored in the cloud, and you access it using a web interface on your computer
or using an app on your smartphone.13
An advantage of online wallets is the convenience factor. There is no need to install anything
other than an app on your phone, since the wallet is not stored locally but on the cloud. On
the other hand, security and data breaches at the server-side can be a cause of trouble for the
bitcoin ownership.
Bitcoin Exchanges
Bitcoin exchanges are businesses that at least from the user interface standpoint function in a
similar way to banks. They accept deposits of bitcoins and will, just like a bank, promise to
give them back on demand later. You can direct the exchange to pay out some bitcoins to a
particular party, or you can ask someone else to deposit funds into the particular exchange on
your behalf put into your account. They also let you exchange bitcoins for fiat currency14
or vice versa.
Typically, they do this by finding some customer who wants to buy bitcoins with dollars and
some other customer who wants to sell bitcoins for dollars, and match them up. In other
words, they try to find customers willing to take opposite positions in a transaction. If there is
a mutually acceptable price, they will consummate that transaction.
One of the advantages is that exchanges help to connect the Bitcoin economy and the flows
of bitcoins with the fiat currency economy so that it is easy to transfer value back and forth. If
I have dollars and bitcoins in my account I can trade back and forth between them easily,
and that ishelpful.
The major disadvantage, the same kind of risk that you face with banks.
Bank Run
A Bank Run is what happens when a bunch of people show up all at once and want their
money back.15
Security Breach
The risk that someone will manage to penetrate the security of the exchange.16
Mt. Gox was a bitcoin exchange based in Tokyo, Japan. It was launched in July 2010, and by
2013 was handling 70% of all bitcoin transactions.In April 2014, the company began
liquidation proceedings. It announced that around 850,000 bitcoins belonging to customers
and the company were missing and likely stolen, an amount valued at more than $450 million
at the time.17
13
E-wallet is a type of pre-paid account in which a user can store his/her money for any future online
transaction. An E-wallet is protected with a password. With the help of an E-wallet, one can make payments for
groceries, online purchases, and flight tickets, among others.
14
Traditional currency like Rupees, Dollars and Euros.
15
Many banks typically use something called fractional reservewhere they keep a certain fraction of all the
demand deposits on reserve just in case. However, if many people demand their money at once, then the bank
would not have enough cash in hand, as was seen during the demonetization drive.
16
Since exchanges store key information that controls large amounts of bitcoins, they need to be really careful
about their software security and their procedures.
17
5 THINGS ABOUT MT. GOXS CRISIS, The Wall Street Journal, https://blogs.wsj.com/briefly/2014/02/25/5-
things-about-mt-goxs-crisis/ (last visited Mar 25, 2017)
131
Why Digicash is a safer bet than Cryptocash?
Banking Legislations
State regulates traditional banks in various ways. This means that the State is held liable if
any bank is caught violating the laws and rules passed by the legislature.Section 6(1) of the
Banking Regulation Act, 1949 details the forms of businesses in which banking companies
may engage in,18 while S.6(2) restricts banking companies from engaging in any form of
business other than those mentioned in S.6(1). This provides a two-fold security to the
consumers of the bank, since banking companies would not engage in any activity that might
18
Section 6. Forms of business in which banking companies may engage
(1) In addition to the business of banking, a banking company may engage in any one or more of the following
forms of business, namely:
(a) the borrowing, raising, or taking up of money; the lending or advancing of money either upon or without
security; the drawing, making, accepting, discounting, buying, selling, collecting and dealing in bills of
exchange, hundies, promissory notes, coupons, drafts, bills of lading, railway receipts, warrants, debentures,
certificates, scrips and other instruments and securities whether transferable or negotiable or not; the granting
and issuing of letters of credit, traveller'scheques and circular notes; the buying, selling and dealing in bullion
and specie; the buying and selling of foreign exchange including foreign bank notes; the acquiring, holding,
issuing on commission, underwriting and dealing in stock, funds, shares, debentures, debenture stock, bonds,
obligations, securities and investments of all kinds; the purchasing and selling of bonds, scrips or other forms of
securities on behalf of constituents or others, the negotiating of loans and advances; the receiving of all kinds of
bonds, scrips or valuables on deposit or for safe custody or otherwise; the providing of safe deposit vaults; the
collecting and transmitting of money and securities;
(b) acting as agents for any Government or local authority or any other person or persons; the carrying on of
agency business of any description including the clearing and forwarding of goods, giving of receipts and
discharges and otherwise acting as an attorney on behalf of customers, but excluding the business of a
1[Managing Agent or Secretary and Treasurer] of a company;
(c) contracting for public and private loans and negotiating and issuing the same;
(d) the effecting, insuring, guaranteeing, underwriting, participating in Managing and carrying out of any issue,
public or private, of State, municipal or other loans or of shares, stock, debentures, or debenture stock of any
company, corporation or association and the lending of money for the purpose of any such issue;
(e) carrying on and transacting every kind of guarantee and indemnity business;
(f) Managing, selling and realising any property which may come into the possession of the company in
satisfaction or part satisfaction of any of its claims;
(g) acquiring and holding and generally dealing with any property or any right, title or interest in any such
property which may form the security or part of the security for any loans or advances or which may be
connected with any such security;
(h) undertaking and executing trusts;
(i) undertaking the administration of estates as executor, trustee or otherwise;
(j) establishing and supporting or aiding in the establishment and support of associations, institutions, funds,
trusts and conveniences calculated to benefit employees or ex-employees of the company or the dependents or
connections of such persons; granting pensions and allowances and making payments towards insurance;
subscribing to or guaranteeing moneys for charitable or benevolent objects or for any exhibition or for any
public, general or useful object;
(k) the acquisition, construction, maintenance and alteration of any building or works necessary or convenient
for the purposes of the company;
(l) selling, improving, managing, developing, exchanging, leasing, mortgaging, disposing of or turning into
account or otherwise dealing with all or any part of the property and rights of the company;
(m) acquiring and undertaking the whole or any part of the business of any person or company, when such
business is of a nature enumerated or described in this sub- section;
(n) doing all such other things as are incidental or conducive to the promotion or advancement of the business of
the company;
(o) any other form of business which the Central Government may, by notification in the Official Gazette,
specify as a form of business in which it is lawful for a banking company to engage.
(2) No banking company shall engage in any form of business other than those referred to in sub-section (1).
132
cause prejudice to the interests of the account holders, which is absent with bitcoin exchanges
as they are not regulated by law.
A credit card is a promise to pay, and the buyer can still refuse to pay, at which point the
credit card company does a chargeback against the seller. However, cryptocash needs to be
paid in full and in advance to the service provider, with no option of a refund if the other
party fails to deliver.
Inherent Flaws in Cryptocash
Bitcoin technology, for theoriginality, is not without flaws. The prime reason being,
substantial and increasing cost of mining new bitcoins. Miners invest in new hardware to
build a competitive edge and pushing their competitors to do the same. The whole award, as
stated earlier, goes to the person who is first-past-the-line, which means even slight
improvements, gives the miners a large expected reward. However, the total investment of
the overall mining industry is easily worth more than what an individual miner can win.19
This drawback is not present with State controlled minting, since the output and costs are
regulated based on the economy.
Another weakness of Bitcoin is the potential deflationary pressure built into its algorithm.
The supply of bitcoins - that is, the number of the bitcoins in existence - is increasing but is
doing so at a decreasing pace, and at some stage, the supply will become fixed. This process
was defined as Halving.20
Competition against other cryptocurrencies
The Bitcoin algorithm has some unpleasant externalities, for example, high electricity usage
and constant investment needed to be installed by the miners, and drawbacks such as
Halving. The Bitcoin algorithm is open-source, free for people to copy, and make alterations
to create a better standard, which appear to fix the flaws in the bitcoin design.
Litecoin set out to solve the problem of excessive energy use and the arms race among the
miners. To do so, Litecoin proposed to use a different hashing algorithm for the proof-of-
work than Bitcoin does - scrypt21 instead of SHA-256.22
The reason why it is important to slow down, or even stop, the arms race between the miners
is the risk of mining becoming concentrated across the very few players who are able to
afford the largest and the fastest mining rigs. As miners try to invest in more technology to
keep up in the arms race, miners with fewer resources may decide to drop out of the mining
19
Hanna Halaburda& Miklos Sarvary, BEYOND BITCOIN: THE ECONOMICS OF DIGITAL CURRENCIES (Palgrave
Macmillan) (2016)
20
In the Bitcoin network, user transactions are grouped in blocks and recorded to a digital public ledger called a
blockchain. Miners are in charge of this task, and receive a mining reward in the form of bitcoins for each block
recorded.
The amount of bitcoins rewarded for each block decreases with time: it is halved every 4 years. This event, the
moment when the mining reward is divided by 2, is commonly called Bitcoin halving. Other denominations
are used: reward halving, Bitcoin mining reward halving, or simply the halving or the Halvening which
is a popular meme among bitcoiners.
When Bitcoin was created in 2009, the initial reward was 50 bitcoins. In November 2012, it dropped to 25btc
after the first halving. The second halving took place in July 2016 and decreased the reward to 12.5btc.
Source: THE HALVENING BLOG, http://blog.thehalvening.com/what-is-the-halvening/ (last visited Mar 26, 2017)
21
Scrypt requires relatively less computing power, lowering the amount of electrical energy that mining needs
and making it possible to mine litecoins using standard PCs at a time when mining bitcoins successfully already
required specialized equipment.
22
Supra.,19. Pg. no.124.
133
pool. With acute lack of competition, the importance of those miners who continually invest
in the best technology will increase, where one of them, or an organized group will have the
major share of cryptocash. It opens up a risk that the system collapses.
Conclusion
The key role of money is to facilitate trade. However, as we saw in the introduction, there are
important conflicts that limit trade or make it more difficult. Money was an important
innovation in that it alleviates some of those frictions. Economists often use the following
three-part definition of money:
Unit of account,
Medium of exchange, and
Store of value.
On one hand, cryptocash has provided freedom through anonymity to spend your money with
no regulation for any purpose it generally has been used for unlawful and proscribed
activities in the realms of dark net and deep web. This creates a legitimate apprehension on
the activities that might rise if the currency is accepted as a medium of exchange.
Manipulation of money also has unseen consequences it causes wealth gap, the rich become
richer, while the poor become poorer. Taxation, more specifically income tax, is one of the
largest income pools of the State. If cryptocurrencies become the norm of the day, the State
would be losing a major portion of its income, thereby leaving it inefficient and disorganized
making people lose faith, especially in the era of State taking the role of a welfare State.
Since the State does not regulate the inflow and outflow neither does not recognize
cryptocash as a valid currency, cryptocurrencies do not fall under the ambit of the three-part
definition, thereby removing the concepts of unit of account and medium of exchange. Since
the currency is flawed with the absence of State recognition marked only by experimentation
in the real-world scenario carried out by anonymous individuals and groups, it does not hold
any value.Thus, it is unreasonable to put cryptocurrencies up to such a high standard. When
an unregulated digital medium is trying to incite citizens lose their trust and credibility over
the concept of State and State issued currency, restraint has to be placed over its existence
and usage.
134
Demonetization and its Impacts on Economy
Dr. B. Balachandran,
Lecturer / MOP,
Programmer Curriculum Development Centre,
Directorate of Technical Education,
Guindy, Chennai 600 025
E-mail: chandran4576@yahoo.com
Abstract
Recently Indian government has demonetized the high value currencies i.e currency notes of
500 and 1000 with objective to unearth the black money, and to curb the corruption,
counterfeit currency as well as terror financing. This decision was considered as biggest
cleanliness drive against the black money in the history of Indian economy. But there is
various view of experts on demonetisation, as some argues that it will will hit the black
money and other argued in negative. In its first projection on India post-demonetisation, the
World Bank has lowered the country's GDP FY 2016 -2017 growth estimate for this fiscal to
7 per cent, from its earlier estimate of 7.6 per cent made in June last year. Therefore, there is
need to study the impact on demonetisation in Indian economy. The present study has focused
on demonetisation and its impacts.
Key words: Demonetisation, Specified Bank Notes (SBNs), Indian Rupee Value.
Introduction
The term demonetisation has become a domestic name since the government towed the old
Rs 500 and Rs 1,000 notes out of circulation. While as per dictionary demonetisation means
"ending something (e.g. gold or silver) that is no longer the legal tender of a country", one
needs to see if there is anything more to the word.
Black money or black income or dirty money is that money on which tax is not paid to
the government and so it departs unaccounted in the duration of countrys tax assessment
period and hence causes huge revenue losses to the government. It is argued that
demonetization of high value currency notes can facilitate reduction of black money in the
country. The verdict of this surgical strike on black money was not taken in a day or two.
This plan is the outcome of Government meticulous planning and never ending fight against
corruption.
In most large economies, cash is around 5 percent of GDP whereas in India it is 12 to 14

percent of GDP. While most banks are situated in cities, most Indians live in villages. Less
than one-third of Indians have access to financial institutions. Forcing businesses to utilize
banks and digital payments will help to carry them inside the tax net. Only 5 percent of
Indian workers were pay income tax, just 15 percent of the economy is inside the tax net and
Indias tax to GDP ratio at 17 percent is 5 points lower than comparable countries.
Fake Indian Currency Notes (FICN) network will be destroyed by the demonetisation
measures. Captivating out 500 and 1000 rupee notes out of circulation will have a lasting
impact on the syndicates producing FICN's, thus affecting the funding of terror networks in
Jammu and Kashmir, North-eastern states and Naxalite hit states.
135
1. India: From Demonetisation to Digitalization by Riaz Mohammed on 27 January 2017,

Cash is king in India. More than half the population does not have access to the formal
banking system and only a small percentage of the population uses credit or debit cards. The
average number of card transactions per inhabitant is a mere 6.7 compared to China (14.4),
Brazil (54.8) and the UK (201.7), according to a recent RBI report. Only 15% of online or
point of sale transactions take place using credit or debit cards. This compares with the 88%
that use cards to withdraw cash at ATMs. The availability
of digitization and digitalization and the take-up amongst SMEs, as well as large enterprises
and all tiers of society, is now very important. Digitalization should make services faster,
cheaper and more accessible to people and business along with making them formal and
accountable. Thus, diminishing the need for an informal sector. However, to exploit this
opportunity - and for sustainability - enterprises should undergo a digital transformation of
their business. They should rediscover their business processes, digitally complemented by
advanced analytics and enterprise level integration platforms. Then we can watch
demonetization turn into digitalization.
2. Demonetisation: Impact on the Economy, No. 182 14-Nov-2016 Tax Research Team has
specified that the demonetisation undertaken by the government is a large shock to the
economy. The impact of the shock in the medium term is a function of how much of the
currency will be replaced at the end of the replacement process and the extent to which
currency in circulation is extinguished. While it has been argued that the cash that would be
extinguished would be black money and hence, should be rightfully extinguished to set
right the perverse incentive structure in the economy, this argument is based on impressions
rather than on facts. While the facts are not available to anybody, it would be foolhardy to
argue that this is the only possibility. As argued above, it is possible that these cash balances
were used as a medium of exchange. In other words, while the cash was mediating in
legitimate economic activity, if this currency is extinguished there would be a contraction of
economic activity in the economy and that is a cost that needs to be factored in while
assessing the impact of the demonetisation on the economy and its agents.
Research Methodology:
Objectives:
To know the Meaning of Demonetisation
To learn the impact of the demonetisation in the Economy.
To identify the value of Indian currency after the demonetisation
To assess the Deposit and withdrawals of Specified Bank Notes (SBNs) at the time
demonetisation
To discover the pros and cons of demonetisation.
Research Design: Exploratory
Type of data: Secondary data
Sources of data: Books, Journals, Magazines, Internet, etc
136
Demonetisation
When a currency note of a particular denomination ceases to be a legal tender it is termed as

demonetisation. But Indian government is replacing the old Rs 500 notes with newer ones
and doing away with the Rs 1,000 notes, it would be more appropriate to call the move as
`scrapping' or `phasing out' of certain currency notes.
Government decision to scrap high value notes of Rs 500 and Rs 1,000 has created a shortage
of cash in the system, was leading to a lot of discomfort for the general public and businesses.
Also, there was a shortage of newly printed Rs 500 and Rs 2,000 notes, the situation has
exacerbated. The move has also led to a shortage of lower denomination notes such as Rs 100
and Rs 50 that are still legal tender, as people have taken to preserving whatever cash they
have in hand.
Impact of the economy
Since our economy is largely dependent on cash, as only less than half the population utilizes
banking system for monetary transactions, therefore demonetisation has hit trade and
consumption hard. With people scrambling for cash to pay for goods and services, the move
is likely to take a big toll on the country's growth and output during the current fiscal.
Consumption makes up for around 56% of India's GDP, hence, a drop in spending will pull
down growth. The current step could also lead to behavioural changes in households' savings
and their consumption pattern, say economists.
The black economy is estimated to be around 25% of GDP, with some estimates as high as
40%. It is believed the majority of black money is held in the form of gold, stocks, real estate
and foreign currency - ultimately resulting in price rises across many sectors. This has
disrupted the social fabric with an increasing divide between the haves and the have-nots. But
will Indias sudden demonetisation of 86% of its currency change this? Will it curb the black
economy and bring people and businesses into formal banking? Will it pave way to
digitization and digitalization?
It will boost tax intake and re-capitalize banks as money finds its way back to formal banking
system. Increased tax intake will help shrink the nations fiscal deficit, thereby lowering
inflation. With money flowing into banks as deposits, the banks can make loans cheaper with
reduced interest rates - boosting the business sector. If all goes well, this is the expected long-
term benefit.
Indian Rupee after Demonetisation
After demonetization of Indian currency on 08th November 2016, India rupee has become
weaker than in 96 currencies. Out of 161 countries currency, Indian currency has become
stronger than in 60 currencies and is at same exchange rate with 5 currencies. For the past 6
months before demonetization from 08th May 2016 to 08th November 2016, rupee has
become stronger than in 125 currencies. But after 26 days of demonetisation the Indian rupee
has became stronger than only 47 currencies.
137
Indian Rupee value with other country currency
Period Stronger Weaker Same

After 50 days of demonetization from 08-11-16 to 28-12-16 60 96 5
6 month before demonetization from 08-05-16 to 08-11-16 125 32 4
In Present Government period from 26-05-14 to 28-12-16 94 65 2
In Present Government before demonetization period 93 66 2
from 26-05-14 to 08-11-16)
Source: statisticstimes.com
The Indian Rupee value against the foreign currency has turn into scrawny by 2.66% against
US Dollar ($) from 66.40 to 68.17 INR per unit US Dollar. Rupee has turned into weaker
against some popular currencies like British Pound, Canadian Dollar and Hong Kong Dollar
too. But also happen to stronger than Euro, Australian Dollar, Swiss Franc, Singapore Dollar
and Japanese Yen.
Deposit and Withdrawal of Specified Bank Notes(SBNs) after Demonetisation:
The incidence of fake Indian currency notes in higher denomination has increased. For
ordinary persons, the fake notes look similar to genuine notes, even though no security
feature has been copied. The fake notes are used for antinational and illegal activities. High
denomination notes have been misused by terrorists and for hoarding black money. India
remains a cash based economy hence the circulation of Fake Indian Currency Notes
continues to be a menace. In order to contain the rising incidence of fake notes and black
money, the scheme to withdraw legal tender character of the old Bank Notes in the
denominations of Rs. 500 and Rs. 1000 was introduced.
The legal tender character of the bank notes in denominations of Rs. 500 and Rs. 1000 issued
by the Reserve Bank of India till November 8, 2016 (hereinafter referred to as Specified
Bank Notes) stands withdrawn. In consequence thereof these Bank Notes cannot be used for
138
transacting business and/or store of value for future usage. The Specified Bank Notes (SBNs)
were allowed to be exchanged for value at RBI Offices till December 30, 2016 and till
November 25, 2016 at bank branches/Post Offices and deposited at any of the bank branches
of commercial banks/Regional Rural Banks/Co-operative banks (only Urban Co-operative
Banks and State Co-operative Banks) or at any Head Post Office or Sub-Post Office during
the period from November 10, 2016 to December 30, 2016.
Withdrawals and Deposits (Rs. Cr.)
Period Withdraw Deposit Exchange

10 Nov to 18 Nov (9 working days) 1,03,316 5,11,565 33,006
19 Nov to 27 Nov (5 working days) 1,13,301 2,99,468 942
Total (10 Nov 2016 to 27 Nov 2016) 2,16,617 8,11,033 33,948
After 19 days of demonetisation, till 27 Nov 2016, banks have received deposits and old
notes submitted for exchange worth nearly Rs 8,44,982 lakh crore. Total deposits amount is
Rs.8,11,033 crore and exchanged currency notes is Rs.33,948 crore. Public have withdrawn,
during this period, Rs 2,16,617 crore from their accounts either over the counter or through
ATMs.
Annual report of Reserve Bank of India (RBI) 31 March 2016 stated that total bank notes in
circulation valued to Rs.16.42 lakh crore of which around Rs. 14.18 lakh crore (nearly 86%)
was Rs.500 and Rs.1000 banknotes. Since due to demonetisation, 86% of Rs. 17.77 lakh
crore which is around of Rs. 15.28 lakh crore is now out of circulation (as of 28 October
2016). Indian Government has to circulate new notes of worth Rs. 15.28 lakh crore for
balance the economy of country.
16
14
12
10
8
Rs. In Laks Crores
6
4
2
0
Up to 97% of the demonetised bank notes have been deposited into banks which have
received a total of Rs.14.97 lakhs crores as of December 30 out of the Rs.15.4 lakhs crores
that was demonetised. This is against the government's initial estimate that Rs. 3 lakhs crores
would not return to the banking system. Of the Rs.15.4 lakhs crores demonetised in the form
of Rs. 500 and Rs.1000 bank notes of the Mahatma Gandhi Series, Rs. 9.2 lakhs crores in the
form of Rs. 500 and Rs.2000 bank notes of the Mahatma Gandhi New Series has been
recirculated as of 10 January 2017, two months after the demonetisation.
139
Pros and cons of demonetisation:
Pros
One of the major benefits of this move is that it is going to severely affect the corrupt
practices.
People who are holding black money in cash will not be able to exchange much as they
would be in a fear of getting penalised and prosecuted by the authorities.
Enemies of the country which are involved in counterfeit currency and terrorism will not
be able to continue it further for quite some time at least. The smuggling of arms and
dealing with the terrorist will not sustain further as all of the money will be on record
now.
The banking system will improve as it will slowly head towards a cashless society.
Cashless society will increase credit access and financial inclusion.
The existing white money of people will be known to the government and it will remain
with banks so that it can be put on loan, and interest can be generated from it (though
interest rates would fall) with a corresponding fall in Inflation.
It will reduce the risk and cost of cash handling as soft money is safer than hard money. It
will also reduce government liability.
Since every note is a liability for the government, the old currency will become worthless
for those people, who choose not to disclose their income. Thus, this will extinguish
government's liability to that extent. It is expected approximately Rs 3 lakh crore may
come to the government in the form of extinguished RBI liability, taxes and penalties.
This amount is enough to take care of India's entire fiscal deficit for one year or more.
It will also reduce tax avoidance. Whatever money will be deposited or exchanged,
authorities will keep a track of it and they will be extra cautious in this period. Dealing in
this period in sectors like jewellery and real estate will be on radar and those entering into
Loan transactions may also undergo tax scrutiny.
Search and Seizure activities of the IT Department will also rise to curb such malpractices.
Limits have already been prescribed for reporting to the IT Department those bank
accounts in which excess cash deposits are being made in this 50-day window (Rs 2.5
lakh in case of individuals and Rs 12.5 lakh in case of firms).
Importantly, in the longer run, tax and interest rates on loans are expected to come down
as higher income tax collections arising from better compliance would offer scope to
reduce rates over the long term. This, in turn, will drive up disposable income. This can
give a positive impact on consumption demand in long term.
Cons
The liquidity squeeze caused by demonetisation will be negative across sectors with high
level of cash transactions.
Real estate, jewellery, retailing, restaurants, logistics, consumer durables and luxury
brands, cement and some segments in retail/SME lending space will be facing short term
instability.
There will be added replacement costs of currency.
Initially, it is very difficult to create a cashless society as more than 50 percent of Indian
population is not well versed with card transactions.
Conclusion
140
The term demonetisation is not innovative to the Indian economy. The highest denomination
note ever printed by the Reserve Bank of India was the Rs 10,000 note in 1938 and again in
1954. But these notes were demonetised in January 1946 and again in January 1978,
according to RBI data. Since less than 5 percent of population in India had access to such
notes and most banks never had such currency notes, demonetisation did not have a big
impact on the country. The decision was taken to curb the illegal use of high denomination
currency which was used for corrupt deals in the country.
However, with the latest round of demonetisation, the common public and bankers are
undoubtedly facing hardship since more than 85 percent of currency in circulation has been
rendered illegal in one single stroke. Demonetisation is surely hampering the current
economy and will continue to do so in the near term and will also impact Indias growth for
the coming two quarters but will have positive long lasting effects.
The Demonetisation of high value currency is one of the major step towards the eradication
of black money in India. The demonetization drive will affect some extent to the general
public, but for larger interest of the country such decisions are inevitable. Also it may not
curb black money fully, but definitely it has major impact in curbing black money to large
extent.
Reference
1. Report of the Automotive Tyre Manufacturers Association, 2013.
2. Centrum research report on MRF
3. Iyer, PK & Upadhyay, V. 2008. R&D in Indian Tyre Industry: Socio-Economic
Determinants. SSRN. Working Paper series, september 2008
4. CMIE Database
5. www.atmaindia.org
6. www.moneycontrol.com
7. INDIA: FROM DEMONETIZATION TO DIGITALIZATION,, 27 January 2017 by Riza
Mohammed
8. Demonetisation: Impact on the Economy, No. 182 14-Nov-2016 Tax Research Team.
9. www.statisticstimes.com
10. www.economictimes.indiatimes.com
141
Demonetization
Pavithran. S,
B.Com.,
Dept. Of Commerce,
Sri Krishna Arts and Science College, Coimbatore
Harrish. B. U,
B.Com.,
Dept. Of Commerce,
Sri Krishna Arts and Science College, Coimbatore
Abstract
Demonetization refers to a withdrawal of a particular form of currency from circulation.

Demonetization is necessary whenever there is a change in national currency. When PM
MODI has announced about the demonetization, declaration of 86% of currency notes s
illegal tender in just an blink of time on evening of 8th NOV 2016mandated the creation of
immediate interruption in daily lives. The old unit of an currency notes must be removed and
substituted with an new currency notes. The chaos was created in every strata of an society
whether the upper, lower and the middle peoples. The currency was demonetized first time in
1946 and second time in 1978 and now it has been play a role in 2016.
Keywords: Cashless transaction, Black money, GST, Security threatening.
Introduction
Prime Minister of India Narendra modi announced on 8 Nov 2016 demonetization of all RS:
500&1000 bank notes of Mahatma Gandhi series could be invalid. `The Indian government
had demonetized bank notes on two prior occasionsonce in 1946 and then again in 1978
and in both cases, the goal was to combat tax evasion by "black money" held outside the
formal economic system. In 2012, the Central Board of Direct Taxes had recommended
against demonetization, saying in a report that "demonetization may not be a solution for
tackling black money or economy, which is largely held in the form of benami properties,
bullion and jewellery."According to data from income tax probes, black money holders kept
only 6% or less of their wealth as cash, suggesting that targeting this cash would not be a
successful strategy. In 2016, the demonetization have done a many task not only an black
money. Its main aim to bring an Digital India (cash less economy), GST (goods and service
tax).
Digital India
Digital India is a campaign launched by the Government of India to ensure that Government
services are made available to citizens electronically by improved online infrastructure and
by increasing Internet connectivity or by making the country digitally empowered in the field
of technology .It was launched on 1 July 2015 by Prime Minister Narendra Modi. The
initiative includes plans to connect rural areas with high-speed internet networks.
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Cashless transaction
In a year that will be remembered for note band a colloquial term for the withdrawal of 86%
of the value of Indias currency in circulation on November 8cashless payments in October
2016 increased 22%, when compared to October 2015, indicating that Indians have been
steadily more accepting of various digital payments modes since last year.
Periods IMPS POS PPI Mobile banking NACH

Oct 2015 137.04 355.5 38.07 168.64 404.88
Nov 2015 137.67 355.84 43.4 197.04 344.14
Dec 2015 142 357.73 44.34 348.29 271.3
Jan 2016 165.59 332.31 49.09 299.62 440.77
Feb 2016 169.67 336.05 49.98 295.06 383.89
Mar 2016 198.73 361.57 59.72 426.28 554.98
Apr 2016 210.44 375 46.72 308.73 585.39
May 2016 216.18 404.75 49.95 392.27 570.3
Jun 2016 237.17 394.57 53.47 425.55 556.96
Jul 2016 256.17 412.55 53.4 411.87 634.06
Aug 2016 268.49 441.19 56.46 770.48 681.78
Sep 2016 289.12 401.31 56.28 753.34 590.36
Oct 2016 343.57 511.21 60.22 791.36 768.44
New report of cahsless transaction after demonetization
We have used RBI updates of daily representative data, by transaction and value, for banking
on digital platforms for November and December 2016. Unlike the data till October 2016,
which represent digital transactions for all banks, data for November and December are
limited. Credit and debit card transactions pertain to four banks, mobile banking data for five
and prepaid payment instruments transactions data for eight non-bank issuers, details of
which have not been specified in the RBI document.
Consumers used the Unified Payments Interface, or UPI, the mobile payments platform,
released in August 2016, for 3,00,000 transactions amounting to Rs90crore in November
2016. The number grew to 1.4 million transactions, worth Rs480crore, till 25 December
2016.There were 7,000 transactions, amounting to Rs73 lakh, in November 2016 through the
Unstructured Supplementary Service Data (USSD), which uses mobile networks, and not the
Internet, making it the least used digital payment platform by number and value of
transactions. USSD transactions rose to 60,000 in December 2016, amounting to Rs6.6crore
until 25 December 2016.
Reason of issuing Rs. 2000 notes
Huge amounts of cash in the form of new notes were seized all over the country after the
demonetization As of December 2016, over 4crore in new banknotes of 2000 were seized
from four persons in Bangalore.33 lakh in 2000 notes were recovered from Manish Sharma,
an expelled BJP leader in West Bengal, and 1.5crore was seized in Goa.900 notes of the new
2000 notes were seized from a BJP leader in Tamil Nadu. Around 10crore in new notes were
seized in Chennai.
The main purpose of publishing the rs2000 note to control the cash flow in the economy and
pushing the people to an digital transaction. By issue of an rs2000 notes it is difficult to spend
143
an rs2000 note for an small transactions.so they use their cashless transaction using mobile
phones, debit and credit cards etc
Black money
In India, black money refers to funds earned on the black market, on which income and other
taxes have not been paid or which is the proceeds of criminal activity such as bribery,
kickbacks and corruption. The total amount of black money deposited in foreign banks by
Indians is unknown. Some reports claim a total of US$1.06 trillion is held illegally in
Switzerland.
In a televised address on 8 November 2016 by Indian Prime Minister Narendra Modi, it was
announced that banknotes of 500 and 1000 would cease to be legal tender from midnight.
Automatic teller machines at some places were closed on 9 and 10 November. Government
organizations have brought out new notes. The government of India had accepted the
proposal of RBI in bringing out 2000 banknotes and a new version of the 500. The old notes
are being removed from circulation .By demonetization the back money and the duplicated
money where prevented and has been demolished in the maximum level.
GST (Goods and Service Tax)
Absence of a widespread black market economy will encourage more dealers to register
under indirect tax acts. Buyers of goods can avail themselves of Input Tax Credits (ITC) only
on purchases made by them from a registered dealer. With this incentive structure in place,
buyers will not buy from an unregistered dealer if the option to buy from a registered dealer
exists. Dealers who do not cross the registration threshold may not register initially, unless
they belong to ecommerce industry. But when buyers will refuse to buy from unregistered
dealers, even the dealers below the registration threshold will find it economically necessary
to register, in order to survive in the market. Eradication of black money will force dealers to
come into the light, as no buyers will exist for them.
GST is a proposed system of indirect taxation of India merging most of existing taxes into
single payment of taxation. As India is a federal republic, GST would be implemented
concurrently by the central government and the state government .A 21-Member committee
was formed to look into the proposed GST law. GST is expected to be applicable from 1st
July 2017. November, 2016 with the sudden equalization crisis, since their cash reserves are
nullified. This bold move by the government will keep dealers in check who consider
indulging in money hoarding or similar illegal acts in the future
Terrorism and security threatening
In New Delhi over 700 government websites has been hacked under gov.in and nic.in
since 2012.As per the reported tracked by the computer emergency response team (CERT-
IN), a total of 371,189,155 and 13 government websites were hacked by the hackers group
during the year 2012,2013,2014,2015(respectively).
In Bengaluru a group of Pakistani hackers has said that they have hacked 7,070 Indian
websites and released a list of names on early .The hackers are no experts, says cyber security
specialists , but are script kiddies or those who dont write their own codes and use existing
scripts to hack into others websites.
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Samu Konttinen added that most consumers, however, often dont feel the need to secure
their m-wallets, thinking the security is the responsibility of the company offering the service.
F-Secure Country Manager India and SAARC Amit Nath said the number of queries it
receives from companies has grown in the weeks that followed the governments decision to
scrap the old Rs500 and Rs1,000 notes on November 8. This led to an increased usage of
online/ digital payment platforms, including plastic money and mobile wallets, as people
faced a liquidity crunch. According to F-Secures report titled Threat Landscape India 2016
and Beyond found that post demonetization, people have increased the use of mobile wallets
including telecom operator-backed wallets, bank-backed wallets as well as independent m-
wallets.
According to government data, the number of USSD transactions saw a whopping of 5,135%
jump, from 97 such deals a day on November 8 to 5,078 on December 25. The value of
transactions on USSD mobile short code message used mainly for banking services on
feature phone during the same period grew 4,061 per cent from Rs:1crore a day to
Rs:46crore on December 25. UPI transactions which allow users to transfer funds from
one bank account to another using a smartphone grew 1,342 percent, from 3,721 such
transactions a day on November 8 to 53,648 on December 25. In value terms, it grew 647
percent, from Rs:1.93crore a day to Rs:14crore. On December 30, Prime Minister Narendra
Modi launched an indigenous digital payments app BHIM for fast and secure cashless
transactions using mobiles. ALSO READ: Cyber security has become more crucial after
demonetization: ex :Nasscom chairman.
India 2020
PM Modi has strongly believe that our Indian nation will be fully digitalized during the year
2020. The demonetization of the old currency rs500 and rs1000 are the part of the
digitalization. All the sectors and the industrialism that also be improved in 2020. in the year
2020 the cashless transaction will be fully applicable all over the India .The mobile banking
facilities will emerged totally over the mobiles that is android phones .All citizens
entitlements to be available on the cloud. Services digitally transformed for improving Ease
of doing business. Making financial transaction electronic and cashless.
Electronics Industry is warmly welcoming the New Modi led Government and expects the
new government to put delayed projects on the fast response, push for investments and focus
on manufacturing along with other developmental goals.
India is considered as one of the fastest growing markets for electronics sector. The demand
is projected to reach USD 400 Billion by 2020. Government of India (GoI) has launched the
National Policy on Electronics 2012 (NPE 12) with the vision to make India a globally
competitive destination for Electronics System Design and Manufacturing (ESDM). Besides,
India has large young talent, low wage costs and Government of India.
The previous UPA government had approved setting up of two semiconductor water
fabrication (FAB) manufacturing facilities, to promote manufacturing of electronics,
including handsets in India. The Congress-led UPA government estimated that by 2020 India
will be importing electronics product worth $400 billion, which it wanted to reduce.
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Conclusion
Hence I conclude that, Indian Prime Minister Narendra Modi announced that at the stroke of
midnight, 85% of all the rupees (500 & 1,000 notes) in circulation would cease to be legal
tender. Just like that, billions of currency notes suddenly became unusable. They would retain
their value until the end of the year, but who This program, dubbed demonetization, was
designed to target those with undeclared cash savings and reduce corruption. Analysis
suggests that as much as 2% of GDP was held in notes reflecting black economic activities.
After initial disruption in the form of huge cues at cash machines and weather dependent
electronic transactions, its estimated that around 95% of old notes were reclaimed and the
economy is recovering.
References
1. HDFC bank of investment advisory group Demonetization and its Impact11 NOV 2016
2. CARE RATINGS professional risk opinion Impact of demonetization on GDP NOV 18
2016
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Demonetization: Its Legitimacy and Concerns with Banking Sector
Mathanachandiran. B,
B.A, L.L.B. (Hons.),
VIT School of Law, VIT University,
Chennai
Sravani C.V.P,
B.A, L.L.B. (Hons.),
VIT School of Law, VIT University,
Chennai
Abstract
It was a remarkable day to our nation, 8th of November 2016 which stood as a ground-
breaking change in our developing economy. Our honourable Prime Minister Narendra
Modi made an unexpected announcement that 500- and 1,000- rupee notes were no longer a
matter of legal tender. The countrys citizens were given 50 days of time to deposit all of the
illegal notes in their respective bank accounts or were asked to exchange them for new notes
at convenient banks. The Prime Minister also asserted that the removal of black money was
sole aim behind this revolutionary process. While the economic consequences of
demonetization have been extensively debated, the legal validity needs a detailed
deliberation. The legitimacy of demonetization of high denomination bank notes is being
interrogated in legal and political circles. The Madras High Court dismissed a petition and
observed that demonetisation was good for India. The PIL filed in the High Court of
Karnataka. Will Removing 84% Currency Help Curb Black Money?
Keywords: Currency changes, petitions, public, corruption, legitimacy
Is There a Legal Basis for Demonetisation?
The legal basis for the order demonetizing currency can be found in Section 26 of the
Reserve Bank of India Act, 1934. Under sub-section (2) of this Section, the Union
Government is given the power to declare that any notes issue by the Reserve Bank will no
longer be legal tender. The only procedural requirement is that the Board of the RBI
recommends the same to the Union Government.This power is what has been exercised by
the NarendraModi led Government, and no one can argue that the Union Government has not
exercised the power lawfully. One of the four petitions challenging the recent demonetisation
of high-denomination currency notes, filed in the Supreme Court, invokes at least five
significant legal grounds to show why it may not be legally sound. The petition, filed by
Supreme Court advocate V.K. Biju who is known for taking up public interest causes, on
behalf of the petitioner AdilAlvi, also an advocate in the Supreme Court, has named the
Ministry of Finance and the Reserve bank of India as the respondents. Senior advocate
KapilSibal appeared and argued for the petitioner on Friday. The petition, which comes up
for hearing again on November 25, claims that since the decision is of wide importance and
pivotal to monetary policy in India, it cannot be left to the whims of the central government.
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Excessive delegation
First and foremost, it assails the very constitutionality of section 26(2) of the Reserve Bank of
India Act, 1934, on the grounds of excessive delegation. Section 26(2) says that on
recommendation of the central board of the RBI, the central government may, by notification
in the Gazette of India, declare that with effect from a date specified in the notification, any
series of bank notes of any denomination shall cease to be legal tender.
According to the petition, fixing the date from which the demonetisation would come into
force is the substratum of power under section 26(2) and constitutes an essential law making
function which cannot be delegated to be fixed by the central government on its own
determination. It is settled law that essential law making function cannot be delegated, the
petition submits. The only way to save section 26(2) from being ultra vires the constitution is
to regard that the power to fix such a date contemplates a reasonable notice to the people at
large, the petition suggests.
No alternative to legislation
Second, the petition argues that the precedent of 1978 The High Denomination Bank Notes
(Demonetisation) Act, 1978 repealing the High Denomination Bank Notes (Demonetisation)
Ordinance 1978 and section 26A of the RBI Act, clearly suggest that demonetisation of this
scale with such draconian effect can only be done by a statute of parliament.
Section 26A inserted in the RBI Act in 1956 by parliament makes it clear that
notwithstanding anything contained in section 26, no bank note of the denominational value
of Rs 500, Rs 1,000 or Rs 10,000 issued before January 13, 1946, shall be legal tender in
payment or on account. The point here is that in 1956, the then central government found it
imperative to declare the pre-1946 high denomination currency notes as ceasing to be legal
tender only through an amendment to the RBI Act and not through a gazette notification as
has been done now.
During the arguments in the Supreme Court on November 15, the Attorney General Mukul
Rohatgi distinguished demonetisation from the declaration that currency notes of a certain
denomination cease to be a legal tender, saying while the former would require amending the
RBI Act, the latter could be achieved through a gazette notification. This is because
demonetisation would make even the keeping of a currency note which is not legal tender an
offence and therefore, for depriving the freedom of citizens, recourse to law is a must.
Rohatgi told the court that demonetisation would take its legal form once the RBI Act is
amended, in due course, after the last date for exchange of old notes is over, so as to make it
an offence to keep the illegal tender.
The non-recourse to the amendment of the RBI Act was because of the need to ensure
confidentiality till the decision was taken, consistent with its objects fight corruption, black
money and financing of terrorism through counterfeiting of currency notes, he explained.
But the question of why the RBI Act did not envisage the need for confidentiality during
demonetisation went unanswered by him.
Citing another precedent, as laid down by the Supreme Court in 1978 (Madan Mohan Pathak
v Union of India), the petition suggests that wiping out of a public debt amounts to
acquisition, which can be done only by an Act of parliament, according to the Constitution.
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Why article 19(6) cant come to rescue?
Third, the petition argues that the November 8 notification was a hasty decision, taken
without appreciating all the issues.
Citing absence of recital to public interest, the petition faults the notification for causing
prejudice and inconvenience to the public at large.
This is an important ground of challenge, because the notification suffers from its inherent
potential to violate the fundamental right (under article 19(1)(g)) to practice any profession or
to carry on any occupation, trade or business, because of the suddenness of its timing and its
resultant consequences. It cannot be claimed even by the government that only those with
black money, fake currency notes or an intent to aid terrorism are bound to suffer because of
the notification.
The government, of course, would rely on article 19(6), which says that nothing in article
19(1)(g) shall affect the operation of any existing law in so far as it prevents the state from
making any law imposing, in the interests of the general public, reasonable restrictions on the
exercise of the rights conferred by the sub-clause.
Alvis petition, therefore, argues that the exception of article 19(6) is not available to the
central government as the notification is beyond police powers. The grounds cited cannot
justify the adoption of extreme measures like invalidating 86% of printed currency in
circulation overnight, the petition contends. The petition argues that issuing Rs. 2000
currency notes clearly shows that it has no rational nexus with the object, sought to be
achieved by the demonetisation. Arguing that public inconvenience itself is a ground to set
aside the notification, the petition alleges that the central government has not considered the
current rate of inflation and the low minimum wage, which affects everyone most severely.
The RBI and the central government
The fourth contention of the petition is that the central board of the RBI did not give a
recommendation independently after detailed consideration of all the issues, although the
same was elicited by the central government. The RBI Act, the petition says, uses the phrase
recommendation and not consultation, and therefore a recommendation from the RBI
cannot emanate from the central government itself, Alvis petition has argued. Alvis petition
also raises the larger issue of the relationship between the central government and the RBI,
which it says ought to have been maintained at an arms distance. By implication, it would
mean that the central government must not just consult the RBI, but give it sufficient scope
to deliberate and offer its independent views through a well-reasoned recommendation,
initiated by itself rather than by prompting. To discharge its role as a central bank in a
financial system, the RBI is assumed to be insulated from executive and political influences
and is required to act independently, the petition submits.
The petition says that the RBI is under an obligation, before making such a recommendation,
to consult the public and the stakeholders on the issue. The doctrine of legitimate
expectations in a modern democracy would require the RBI to adopt such a course, the
petition suggests. While the RBI can work like parenspatriae, it cannot function like a
patriarch, the petition comments. The petition, therefore, requests the court to call for the
complete record of the consultation before the central board of the RBI and consider whether
in fact there has been effective consultation in the manner contemplated under the law.
Section 26 of the RBI Act, it argues, clearly contemplates a distinction between the central
board of the RBI and the central government, and implies that the decision making process of
149
the RBI has to be independent. The petition thus wonders whether the central board has
considered all the relevant materials and the likely consequences before it made its
recommendation to the central government. Another interesting legal question the petition
has raised is whether the government can withdraw, alter or restrict the promise made by the
RBI governor on the bank notes to the effect, I promise to pay the bearer the sum of five
hundred/one thousand rupees, thereby seeking to go back on the guarantee.
The central government and the RBI have an obligation to bring on record the minutes of the
meetings leading to recommendation from the very inception for scrutiny by the Supreme
Court, the petition has submitted. The central government cannot prevent judicial review by
hiding behind the cloak of a policy decision, it argues.
Test of reasonableness
Fifth, the petition points to an interesting correlation between reasonableness of a legislation

or an executive decision and its immediate effect, as held by the Supreme Court in a
judgment rendered by the constitution bench in 1954. (Saghir Ahmad v State of Uttar
Pradesh.) Although the Supreme Courts judgment pointing to such correlation was rendered
in the context of a legislation, the petition argues that the test that applies to legislation
would apply more vigorously to executive decisions within the precincts of a statute.
As examples of the immediate effects, the petition cites the central governments failure to
grant exemption to essential services such as all hospitals (including private), doctors,
lawyers, court houses and so on from the demonetisation, and claims that impacts the
exercise of the fundamental right to health and access to justice. The governments and RBIs
responses to each of these five legal contentions will be of wide interest. The demonetisation
notification is also likely unconstitutional on three counts. First, it violates the constitutional
right to property under Article 300A. In Jayantilal v RBI, in the context of the 1978
demonetisation, the Supreme Court held that demonetisation is not merely a regulation of
property, as the government is presently arguing, but constitutes compulsory acquisition of a
public debt owed to the bearer of the notes declared illegal. To conclude in simple terms,
the legitimacy of demonetization of high denomination bank notes is being interrogated in
legal and political circles. The Madras High Court dismissed a petition and observed that
demonetisation was good for India.
150
Digital Payment Systems: Perception and Concerns among Urban Consumers
Dr. M.Sumathy,
Dean, Professor and Head, School of Commerce,
Bharathiar University, Coimbatore.
Email: vipinkpp@gmail.com
Vipin.K.P
Ph.D. Research Scholar, School of Commerce,
Bharathiar University, Coimbatore.
Abstract
The Digital India programme is a prestigious programme of the Government of India with a
vision to transform India into a digitally empowered society and to become a knowledge
economy. Faceless, Paperless, Cashless is one of professed role and slogan of of Digital
India. As part of promoting cashless transactions and converting India into less-cash
society, various modes of digital payments are available. These modes are banking cards,
Unstructured Supplementary Service Data (USSD), Aadhaar Enabled Payment System
(AEPS), Unified Payment Interface (UPI), mobile wallets point of sales, micro ATM etc. The
current study is focused on urban consumers attitude, perception towards digtal payment
systems. For the purpose of study, a convenient sampling survey was conducted among 100
urban respondents in Malappuram District of Kerala with the help of an interview schedule.
The tools used for this study are Percentage analysis; one way Anova, independent sample t-
test, ranking method etc.
Keywords: digital payments, debit card, cash, attitude, fraud, safety, payment behavior
Introduction
India is moving on the path of a major digital revolution. Digitalization of the payment
mechanism will be considered as milestone in the era of cashless future economy. The
growth of the Indian digital payments space is expected to be driven by four trends that are
also likely to impact how this industry looks in the future. India going digital, favourable
regulatory environment, emergence of next generation payment service providers and
enhanced customer experience are the four drivers contributed to the growth of Indian digital
payment systems.
The mobile wallet is a new application of mobile payment that has functionality to displace a
conventional wallet and more. Mobile payments are a top investment priority for banks. In
fact, the worlds biggest banks continue to focus most of their announced IT initiatives on
mobile financial services (including payments) and online banking.(Batra & Kalra, 2016).
Till date relatively less number of individuals have been utilizing digital wallet, as compared
to mobile phone users. The fundamental obstacle is attitude of individuals, who require some
serious energy to adjust to a yet another innovation.(Kunal Tahaem, 2016) Mobile wallets
are app-based stored value accounts, funded through credit or debit cards or via net banking.
Paytm, MobiKwik, Freecharge and Citrus Pay are some well-known mobile wallet examples.
These wallets are primarily used for mobile recharges and bill payments. During the last
decade, a reasonable amount of research was carried out in the field of retail payments to
better understand market participants behaviour and their underlying motivations. However,
research into consumers attitudes towards attitude, safety perception on digital payment
151
behaviour is scarce. The objective of this study is therefore to investigate the determinants of
safety perception and the attitude, awareness level towards digital payments.
Adeoti, O.O and Oshotimehin, (2011) Primary data was used for this study through the use of
a pre-tested, structured questionnaire on adoption of electronic payment system. For the
purpose of study multistage sampling technique was used. The probit model is used for the
purpose of study. The study examined the influence of motivational factors on the decision to
adopt Point of Sale terminals among consumers. Using probit model, the study finds that
factors such as nativity, security, ease of use, availability, convenience, intention to use,
complexity of the technology are among the factors influencing the use of Point of Sales
(POS) terminals.
Sanghita Roy, Dr. Indrajit Sinha (2014) stated that E-payment system in India, has shown
tremendous growth, but still there has lot to be done to increase its usage. Still 90% of the
transactions are cash based. Technology Acceptance Model used for the purpose of study.
They found Innovation, incentive, customer convenience and legal framework are the four
factors which contribute to strengthen the E- payment system.(Roy & Sinha, 2014)
Dr. Ramesh Sardar (2016) states that mobile wallets usage crosses the boundaries of big
cities and gains popularity into the vicinity, the electronic payment system will generate huge
volumes of data on the spending behavior of persons in these areas. Most of the ecommerce
companies are offering discounts on digital wallets.
The current scenario of Indian economy shows the tendency of movement from cash to
cashless transactions. There are so many efforts have been taken by the government in order
to convert the face of Indian economy into a new one. Now a day every transaction is going
digital. In order to accelerate the execution of the concept of digital economy there are
number of digital payment systems were introduced. These payment systems can make
changes in the economic life of people. There are 9.73 millilon urban internet users in
Kerala (TRAI 2016 report). Malappuram is the most populous District in the State with a
total population of 4,112,920 out of these 9,52,191 are urban people. Literacy is also another
factor affecting the awareness level especially towards the digital payment systems. The
district has 93.57% literacy rate. What will be perception and concerns towards digital
payments systems among these urban people in the current period? The current study tries to
understand the solution for this problem.
Objectives
1. To make an overview regarding growth in digital transactions in India.

2. To study the awareness level of digital payment system among the respondents.
3. To study the perception level towards safety on digital payments.
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Hypotheses
H01:- There is no significant difference between level of awareness towards digital payment
systems among male and female
H02:- There is no relationship between education of the respondents and attitude towards
digital payment systems.
Methodology
The current study is descriptive in nature and it has made an attempt to understand people
attitude, perception and concerns towards digital payment systems. In order to attain the
objective of the study, the following methodology has been made use of: A sample of 100
urban people of Malappuram district has been taken for the study. The respondents are
selected by using convenient sampling technique. For the purpose of the study both primary
and secondary data were used. The data required for the study were collected by using of
interview schedule. The secondary data for the study was compiled from websites, journals,
magazines, census reports and books. For analysis purpose percentage, one way Anova,
independent sample t-test, ranking method were used. For presentation purpose bar chart is
used.
Analysis and Interpretation
Table 1:-Number of transactions (billions) Indian Banking industry
Mode of Transaction FY 13 FY 14 FY 15 Growth Growth

(FY 14 over FY 13) (FY 15 over FY
14)
Mobile - 1% 2%
ECS 3% 3% 2% 50% 52%
POS 4% 4% 6%
Internet 3% 6% 8%
NEFT (in Branch) 1% 1% 2% 5% 7%
Cheque 12% 10% 9%
Cash 26% 25% 20%
10% 15%
ATM 51% 50% 51%
Number of transactions
(billions) Indian Banking 10.89 12.22 13.69 11.22% 12.69%
industry
Sources: FIBAC Productivity Survey 2015; RBI; IBA;
153
0.6
0.5
0.4
FY 13
0.3
FY 14
0.2 FY 15
0.1
0
Mobile ECS POS Internet NEFT Cheque Cash ATM
Figure 1 Number of transactions (billions) Indian Banking industry
Table 1 shows the Number of transactions (billions) Indian Banking industry. The table and
figure clearly depicts the growth of digital payment systems in India. The usage of cash as
medium of transaction is going to be low. ATM/CDM includes withdrawals transactions at
ATM and deposit transactions at CDMs. ATM and Mobile transactions included are financial
transactions only. Traditional channels include Cash and Cheque. Cash transactions refer to
counter cash transactions within branch. ECS transactions can be initiated offline or through
online channels but once set up. E-commerce transactions to include electronic transactions
using debit and credit cards. Mobile, ECS and POS transactions can be collectively termed as
transactions through digital channels, Internet, NEFT (in Branch) and Cheque transactions
can be collectively termed as branch based transactions and cash and ATM transaction can be
called as ATM transactions.
Table: 2 POS Terminal Penetration Across Countries
SL/NO. Countries No. of terminals per '000 debit card

1. Australia 33.2
2. Turkey 26.9
3. France 21.4
4. United Kingdom 20.3
5. Brazil 14.8
6. United States 13.1
7. China 12.5
8. Germany 7.2
9. Russia 6.1
10. Indiab 2.0
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No. of terminals per '000 debit card

40 33.2
26.9
30 21.4 20.3
20 14.8 13.1 12.5
7.2 6.1
10 2
No. of terminals per '000
0
debit card
Figure: 2
Source: Euromonitor 2015,

a
Data is for year 2015.
b
Includes debit cards issued under Pradhan Mantri Jan-Dhan Yojana (PMJDY).
Table 2 shows POS Terminal Penetration Across Countries. Ausralia have 33.2 Number of
terminals per '000 debit card, Turkey has 26.9 Number of terminals per '000 debit card but
Indias position is only 2 Number of terminals per '000 debit card.
Table:-3 Level of awareness towards digital payments
H01:- There is no significant difference between level of awareness towards digital payment
systems among male and female
Independent Samples Test
sex N Mean Std. Deviation Std. Error Mean

Male 57 3.70 1.017 .135
Female 43 3.53 1.202 .183
Levene's Test
Level of for Equality of t-test for Equality of Means
Awareness Variances
Towards Digital 95% Confidence
Std. Error
Payments Sig. (2- Mean Interval of the
F Sig. t df Differenc
tailed) Difference Difference
e
Lower Upper
Equal variances
2.550 .114 .751 98 .455 .167 .222 -.274 .608
assumed
Equal variances 81.73
- - .733 .465 .167 .228 -.286 .619
not assumed 2
Table 3 shows the difference between level of awareness among male and female. There are
total 100 respondents taken for the study, among this 57% are male and 43% are female. The
above table shows that t- value is greater than 0.05 at 5% level of significance, so null
hypothesis is accepted. So we can state that no significant difference between level of
awareness towards digital payment systems between male and female
155
Table:-4 Digital payment- barriers to trying
Mean
S. No Criteria Rank
Value
1 Habit to use cash 5.05 I
2 Complexity of using 4.33 II
3 Lack of compelling value proposition 3.81 III
4 Cash methods 3.63 IV
5 Incentive /offers from other methods 3.63 IV
6 Fraud and hidden charges 3.58 V
From the above table it is very clear that people feel habit to use cash is the main barrier to
trying digital payments and the average score for that reason is 5.05 in the 1 to 6 point scale.
Complexity of using digital payments is another barrier in trying digital payments. The mean
value for that are 4.33 and got II rank and following Lack of compelling value proposition,
Cash methods, Incentive /offers from other methods, Fraud and hidden charges are the
different barriers for trying digital payments.
Table:-5 Test of Homogeneity of Variances
Statements Levene Statistic df1 df2 Sig.

One click payments 1.342 2 97 .09
Offers .463 2 97 .631
Pay any time anywhere .927 2 97 .399
Easy to track small expenses 1.174 2 97 .314
Convenience of not carrying cash 2.011 2 97 .139
No hassle of change .163 2 97 .850
Table 5 shows Levene Statistic Test of Homogeneity of Variances. ANOVA output, (test of
homogeneity of variances) provides the Levenes Test to check the assumption that the
variances of the six groups are equal; i.e., not significantly different. Thus, the assumption of
homogeneity of variance is met (i.e., not violated) for this sample.
Table:-6 Anova table-Relationship between education and attitude towards digital

payment systems
Statements Sources of Sum of df Mean F Sig.

Variation Squares Square
One click payments Between Groups 1.414 2 .707 1.200 .306
Within Groups 57.176 97 .589
Total 58.590 99
Offers Between Groups 2.296 2 1.148 1.088 .341
Within Groups 102.344 97 1.055
Total 104.640 99
Pay any time anywhere Between Groups 7.777 2 3.889 3.008 .054
156
Total 133.160 99
Easy to track small expenses Between Groups 1.547 2 .773 .547 .581
Total 138.750 99
Convenience of not carrying cash Between Groups 2.747 2 1.373 1.959 .147
Within Groups 68.003 97 .701
Total 70.750 99
No hassle of change Between Groups 2.751 2 1.376 1.178 .312
Total 116.040 99
The above table shows that Anova value for all statement is greater than 0.05 at 5% level of
significance, so null hypothesis is accepted. So we can state that there is no relationship
between education of the respondents and their level of awareness towards digital payment
systems.
Discussion and Conclusion
Due to the developments in digital world each and every activities of human being had
changed. As a part of policy change cash is no longer becoming a mode of transaction. The
country needs to move away from the cash-based towards a cashless (digital) payment
system. This will provide multiple advantages like, reduce currency management cost, track
transactions, check tax avoidance or fraud etc., enhance financial inclusion and gradually
integrate the parallel economy with the main stream. Additionally as the Mobile wallets
usage crosses the boundaries of big cities and gains popularity in villages also. The
development in digital payments system makes a new spending behaviour of persons in these
areas.
References
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FOR LEVERAGING DIGITAL. IJER Serials Publications, 13(1), 175186.
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IBGC Working Paper 14-03, (October). Results, P. (2010). Journal of Internet Banking and
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15. Vittiya Saksharata Abhiyaan ( VISAKA ). (n.d.).
16. Retrieved from https://www.youtube.com/watch?v=8pqbn0zsUqgg
158
E-Banking: A Budding and Merchandising Mode of Transaction
Rohith Rajeeve Thomas, B. A. LLB., VITSOL, VIT University
Abstract
With the economy developing to liaison to global standards, India now has an issue to be
dealt with instantaneously. E-banking or electronic banking is a wise and requisite method of
cashless transaction. However every new boon discovered to satisfy a need, has a bane in
disguise which calls for due care to be taken. After the implementation of demonetisation, the
methodology of cashless transaction came into limelight and e-banking turned eventually a
stress relief at the moment. We deal with the facilities, interest charges, taxations implied,
merits and demerits and the interrelated cyber crimes apportioned. We also look forward to
the further amendments that can be made to it, deal with hassle-free yet more secure
accounts and attractive advancements that can be made of it.
Keywords: demonetization, transactions, advancements
Introduction
E-banking or E-commerce is an innovative methodology to improve the transaction system

involving the use of internet and providing multiple facilities including Electronic Fund
Transfer (EFT), Supply Chain Management, Electronic Marketing (EM), Online Marketing
(OM), Online Transaction Processing, Electronic Data Interchange (EDI) and Automated
Data Management. E-banking doesnt restrain itself to just transactions, but is wide enough to
include other facilities too. Banks have augmented their distribution networks with
transactional websites, which allow customers to open accounts, apply for loans, check
balances, transfer funds, and make and receive payment over the Internet. Back in 1994,
banks recognized the rising popularity of internet as a facility to widen their opportunities of
advertising their customer services and other banking dexterity. Initially, they used the
internet as another brochure, without interaction or any form of contact with the customer.
Sites then, initially featured pictures of the bank's offices, buildings, and supported customers
with maps of branches and ATM locations, phone numbers to call for further information and
simple listings of products. In India, ICICI bank was the first bank which offered this
delivery channel, by kicking start its online services in 1996. A challenge is made to software
and hardware producers to use modern methods and techniques to predict where problems
existing in internet banking and commerce. Serious solutions are necessary.
Facilities of E-banking
1. Improves customer access: E-banking helps in formation of better relation between

the consumers and the bank as it facilitates the consumer with access to the bank and
its services 24x7, making banking more flexible.
2. Facilitates the offering of more services: E-banking does not merely restrict itself to
transactions but also includes various other services like updating account statements
and merger closure.
3. Increases customer loyalty: E-banking increases the level of transparency between the
bank and its customers.
4. Attracts new customers: Banks nowadays come up with more attractive services,
offers and impressive features in its online banking websites which eventually turn up
more of new customers.
5. Provides services offered by competitors: With growing demand and usage, various
159
banks are forced to improve their facilities to cater to the demands of their
competitors in the market. Hence every bank is expected to provide the services as
offered by other banks in competition, and thus ending up providing the costumers the
best of facilities.
6. Reduces customer attrition: E-banking helps banks in minimizing the waning away of
customers as they keep moving in search of sophisticated options which is what
online banking is all about.23
Acceptance of E-banking
Acceptance of a new facility such as e-banking deals with three perspectives in major and
they are; ease of use, security and privacy and quality of internet connection. Technology
development particularly in the area of information technology is revolutionizing the way
business is done. Nowadays, the Internet plays an important role in the financial and banking
services. It is widely noted that Internet banking is a form of self service technology.
Acceptance is adoption and continual use of the product, service or idea. According to
Rogers and Shoemaker (1971), consumers go through a process of knowledge, persuasion,
decision and confirmation before they are ready to accept a product or service. Individuals
who are skilled and always use the internet, significantly affect the acceptance of Internet
banking services. Ease of use is one of the main determinant factor that contributes to the
popularity of Internet banking usage. It may correlate with the efforts provided to learn to use
Internet banking. It can affect the customers interest in new service provided by Internet
banking.
Upon reviewing ease of use as one of the determinant variable one should not neglect its
relationship with technology anxiety. There are still people in the society that describe that
anything related to internet will further reflect the development of technophobia or
cyberphobia. In terms of Internet banking, privacy can be defined as the claim of the
individuals, groups, or institutions to determine when, and to what extent, can information
about them be communicated to others. Consumers really understand the meaning and
functionality of the security features. Hence banks should play their roles in order to
influence their customers perception of online security. Meanwhile continuously improving
their customers knowledge regarding privacy and security through training and promotion
strategies. The number of internet users increased dramatically, but they still do not trust the
e-commerce security. Despite effort and assurance provided by the government, those
involved such as business operators continue to be skeptical about the use of internet as part
of their banking transaction. The internet connection becomes one of the factors that
contribute to the acceptance of Internet banking because if there is no proper internet
connection, Internet banking cannot be used. This statement is conceptualized and taken into
action in many banks and makes it an objective to work keeping this in mind. The quality of
internet connection influences the usage of Internet banking24.
23
yourarticlelibrary.com last visited on (30/03/2017)
24
International Journal of Academic Research in Business and Social Sciences March 2012, Vol. 2, No. 3
160
Factor Analysis for Acceptance Factors of e-banking
Measurement Items Security &Trust Awareness Familiarity

Safety .820
Reliability .790
Liquidity .716
Insurance coverage .782
Transparency .815
Security &less risk to use .841
Privacy is maintained .792
Bill payment .748
e- ticket .603
Innovative services
One stop banking .758
Demat holdings
Easy to use
Quick transaction
Time saving .826
Convenient .765
No need to carry cash .815
Order cheque book .782
Apply for loans .751
Wide area network
Online trading
Eigen Values 4.484 3.913 1.770
Percentage of Variance 39.983 8.43 6.177
Cumulative Variance 39.983 48.413 54.590
In a country like India, there is a huge need for providing better and customized services to
the customers. Banks must be concerned about the attitudes of customers with regard to
acceptance of online banking. The importance of security and privacy for the acceptance of
internet banking has been noted in many earlier studies and it was found that people have
weak understanding of internet banking, but they are aware of risk. The present study shows
that customers are more reluctant to join new technologies or methods that might contain
even little risk. Hence, banks should design the website to specially address security and trust
issues. The recommendations to the banks are that they have to increase the level of trust
between banks website and customers. In order to achieve this, the following strategies
should be applied by banks. Customer satisfaction: Oliver (1997) explained that customer
satisfaction is full meeting of customer expectation of the products and services. If the
perceived performance matches or even is beyond customers expectations of services, they
are satisfied. If it does not, they are dissatisfied. Under this theory, consumers form
expectations of product performance prior to purchase. These expectations are derived from
past experience with the product itself or with similar products, other marketing stimuli, and
existing attitudes and confidence felt by the consumer. The literature has taken two
approaches to operationalizing satisfaction. The first sees consumer satisfaction as the
transaction specific evaluation. This view refers to customers feelings in response to a
particular product or service encounter. The other operationalization defines consumer
satisfaction and dissatisfaction as cumulative satisfaction.
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Trust
System-based trust equals e-trust and deals with customers trust in purchasing or searching
for goods/service information online. Since interpersonal relationships do not describe the
interaction between customers and e-tailors, we prefer the term e-tailor trust to describe
trust of customers in specific online merchants. There is some evidence supporting a positive
relationship between e-tailor trust and e-loyalty, in terms of increased spending, and
intentions to purchase or repurchase. Lack of trust is frequently cited as a reason for not
purchasing. Trust is importantly needed in e-banking services as all transactions are
conducted with little or no face to face interaction. Owing to the impeding dangers to lack of
trust in online transaction, customer knowledge on e-banking services is of great value in
conducting e-banking transaction. Thus Trust in e-banking transaction is very important so as
to ensure safe transaction that maximizes users satisfaction. Concern has grown over lack of
trust in e- banking services owing to its enormous potential risk to users satisfaction25.
Factors that influence the adoption of internet banking service: The first objective of this
research was to determine factors that influence consumers to adopt Internet Banking service
and results are presented. The factors such as accessing account, usage, advantages accruing
from the usage and user account were very significant in influencing customers in adoption.
And for corporate customers control of the account was more significant than the rest. These
findings determine the adoption of internet banking include the level of awareness or
attention, the accessibility to computers and internet, convenience privacy, costs, and the
availability of knowledge and support concerning internet banking26.
Security
Having a scabrous study on the security on the e-banking services and facilities, we can
constraint the findings on individuals and technology as an order to provide effective and
secure banking transactions, among which there are four technology issues needed to be
resolved27. Any violation in cyber ethics, comes under cyber crimes and the IT Act
(Information Technology Act, 2000) also penalizes various Cyber Crimes and provides strict
punishments (imprisonment terms up to 10 years and compensation up to Rupees 1 crore).
The key areas are:
1. Security: Security of the transactions is the primary concern of the internet-based

industries. The lack of security may result in serious damages such as Posta Pay frauds. This
section will be discussed in the next section.
2. Anonymity (Privacy): By strengthening the privacy technology, this will ensure the
secrecy of senders personal information and further enhance the security of the transactions.
The examples of the private information relating to the banking industry are: the amount of
the transaction, the date and time of the transaction, and the name of the merchant where the
transaction is taking place.
3. Authentication: Encryption may help make the transactions more secure, but there is
also a need to guarantee that no one alters the data at either end of the transaction. There are
two possible ways to verify the integrity of the message. One form of verification is the
secure Hash algorithm which is a check that protects data against most modification. The
sender transmits the Hash algorithm generated data. The recipient performs the same
calculation and compares the two to make sure everything arrived correctly. If the two results
25
Customer Satisfaction with Internet Banking: Exploring the Mediating Role of Trust by Dr. Vimi Jham
26
Internet banking, consumer adoption and customer satisfaction by Andrew Musiime and Malinga Ramadhan
27
Security and Privacy of Electronic Banking, Zachary B. Omariba
162
are different, a change has occurred in the message. The other form of verification is through
a third party called Certification Authority (CA) with the trust of both the sender and receiver
to verify that the electronic currency or the digital signature that they received is real.
4. Divisibility: Electronic money may be divisible into different units of currency,

similar to real money. For example, electronic money needs to account for pennies and
nickels.
Assaults on the security of e-banking:
1. Social Engineering: One of the most common attacks does not involve knowledge of
any type of computer system. Tricking consumers into revealing sensitive information by
posing as a system administrator or customer service representative is known as social
engineering. Social engineers use surveillance and a consumers limited knowledge of
computer systems to their advantage by collecting information that would allow them to
access private accounts28.
2. Port Scanners: Attackers can use port scanners to ascertain entry points into a system
and use various techniques to steal information. This type of software sends signals to a
machine or router and records the message the machine responds with to ascertain
information and entry points (Cobb, 2007). The main purpose of a port scanner is to gather
information related to hardware and software that a system is running so that a plan of attack
can be developed.
3. Packet Sniffers: The connection between a users computer and the web server can be
sniffed to gather an abundance of data concerning a user including credit card information
and passwords. A packet sniffer is used to gather data that is passed through a network
(Bradley, 2005). It is very difficult to detect packet sniffers because their function is to
capture network traffic as they do not manipulate the data stream. The use of a Secure Socket
Layer connection is the best way to ensure that attackers utilizing packet sniffers cannot steal
sensitive data.
4. Password Cracking: Password cracking can involve different types of vulnerabilities

and decrypting techniques; however, the most popular form of password cracking is a brute
force attempt. Brute force password attacks are used to crack an individuals username and
password for a specific website by scanning thousands of common terms, words, activities,
and names until a combination of them is granted access to a server. Brute force cracking
takes advantage of systems that do not require strong passwords, thus users will often use
common names and activities making it simple for a password cracker to gain access to a
system. Other password cracking methods include using hash tables to decrypt password files
that may divulge an entire systems user name and password list29.
5. Trojans: Trojan software is considered to be the most harmful in terms of E-

Commerce security due to its ability to secretly connect and send confidential information.
These programs are developed for the specific purpose of communicating without the chance
of detection. Trojans can be used to filter data from many different clients, servers, and
database systems. Trojans can be installed to monitor emails, instant messages, database
communications, and a multitude of other services. The percentage of personal computers
28
Shripad Gajanan Suthankar vs. Dattaram Kashinath Suthankar (indiakanoon.com) last viewed on 01/04/2017
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Aurovindo Choudary vs. Area Manager, Barrackpore. (indiakanoon.com) last viewed on 01/04/2017
163
with Trojan software installed was a staggering 31% in 2006 with a steady increase from
years before
6. Denial of Service Attacks: Denial of service attacks are used to overload a server and
render it useless. The server is asked repeatedly to perform tasks that require it to use a large
amount of resources until it can no longer function properly. The attacker will install virus or
Trojan software onto an abundance of user PCs and instruct them to perform the attack on a
specific server. Denial of service attacks can be used by competitors to interrupt the service
of another E-Commerce retailer or by attackers who want to bring down a web server for the
purpose of disabling some type of security feature. Once the server is down, they may have
access to other functions of a server, such as the database or a users system. This allows the
attacker the means to install software or disable other security features.
7. Server Bugs: Server bugs are often found and patched in a timely fashion that does
not allow an attacker to utilize the threat against an E-Commerce web site. However, system
administrators are often slow to implement the newest updates, thus allowing an attacker
sufficient time to generate a threat. With the millions of web servers in use around the world,
thousands often go without timely patches, leaving them vulnerable to an onslaught of server
bugs and threats
Conclusion:
Banks should ensure that online banking is safe and secure for financial transaction like
traditional banking. IT should organize seminars and conferences to educate the customer
regarding uses of online banking as well as security and privacy of their accounts. Some
customers are hindered by lack of computer skills. They need to be educated on basic skills
required to conduct online banking. They must emphasize the convenience that online
banking can provide to people, such as avoiding long queue, in order to motivate them to use
it. Also must emphasize the cost saving that online can provide to the people, such as reduce
transaction cost by use of online banking. Customer satisfaction with internet banking is
depicted with six factors reliability, efficiency, comfort, security, dependability and
confidence.
The basic challenge to the internet banking and commerce industry is to develop newer and
faster and more secure so ware to provide the end-user customers the ability to accomplish
the applications they wish to achieve. Hence, the internet banking and commerce industry
must demand new products from hardware and so ware producers to predict the problems
associated with this growing and pro table industry. e implementation of management
science, data analysis and forecasting in the programming of new software is important to see
where unscrupulous activity may occur and where data bottlenecks may arise. No one will
tolerate sitting at a computer or other device screen waiting for activity to occur. One place
where you see the future not operating well because we have not developed the hardware and
software well enough is to see customers at an automatic check-out counter in a market or
hardware store. Technology developed so far is inadequate at these installations. No doubt
that the internet industries will grow but the demand for newer and better technology needs to
grow first. We must use our scientific methods better.
164
References
1. Journal of Internet Banking and Commerce, on September 2015 by Jeffrey E. Jarrett,

University of Rhode Island.
2. Internet banking, consumer adoption and customer satisfaction by Andrew Musiime
Department of Marketing, Makerere University Business School, Kampala, Uganda and
Malinga Ramadhan Department of Information Technology, Kampala International
University, Uganda.
3. Journal of Internet Banking and Commerce by Humphrey Muki Sabi, PhD Student,
Information Systems Department, ICT University Baton-Rouge, Louisiana, USA & ICT
University, Yaounde, Cameroon.
4. Customer Satisfaction with Internet Banking: Exploring the Mediating Role of Trust by
Dr. Vimi Jham Associate Professor, Marketing, Dubai International Academic
City,Dubai, United Arab Emirates.
5. Acceptance of E-Banking among Customers by K.T. Geetha & V.Malarvizhi Professor
and Assistant Professor, Department of Economics, Avinashilingam Institute for home
Science and Higher Education for Women
165
Effectiveness of Online Advertising
M.Roopkumar
Final Year B.Com(CA),
Department of Commerce, School of Social Sciences and Languages,
VIT University, Vellore 632014
Dr. Subbalakshmi A.V.V.S

Assistant Professor, Department of Commerce, School of Social Sciences and Languages
Abstract
In the present era advertisement is the greatest platforms, which makes us amaze in the world
marketing. It plays a major role in the process of selling and distribution of a product and
service. Most used and popular form of advertising, it has a worldwide reach and is the
fastest and instant which is preferred by all. Online advertising entails, placing of electronic
message on website or email platform. The growth of technology is so enormous where
everything has changed into digital and nothing can be moved without the digital platform.
This helps the producers to reach a mass population in a click. This research paper gets into
the depth of advertisement and its effectiveness among youth.
Keywords: Online advertisement, digital platform, marketing area
Introduction
Marketing is more than just distributing goods from manufacturer to the final consumer. It
comprises all the stages from creation of the product till the after sales services. Advertising
is one of the most vital part of the marketing system, which encourages the consumers to buy
the product or services provided by the manufacturer. Over the years advertisement has
evolved from traditional form to the most modern type i.e. online advertising. Online
advertising also known as internet advertising or online marketing is a form of advertising
which uses internet to deliver promotional messages to the consumers. Online advertising
involves a publisher, who integrates advertisement into its online content, and an advertiser,
who provides the advertisements to be displayed on the publishers content, and the customer
who accesses the advertisement. The need for advertising is developing everyday due to new
companies and brands coming into the picture. The marketing of a product has become a
complicated process due to large number of variants in the market. But online advertising
makes such information easy to access to the customers and in the most understandable and
attractive way.
Some of the Important Forms of Online Advertising
The important forms of online advertizing are web banner and panel ads, interstitial, inline
advertisement, pop-up windows, website sponsorship, classifieds, mailing list ads, ads on
chat and government initiatives.
166
Importance of Online Advertising
1. Cost efficiency: Online advertising is most cost efficient form of advertisement as

compared to traditional forms of advertisement.
2. Target marketing: Online advertisement involves placing advertisements strategically on
the web. Market segmentation and target marketing are more effective on the Internet
than any other advertising medium.
3. Eco-friendly: As online advertising involves placing advertisements on websites, mails,
chats etc. it is the most eco- friendly form of advertising as compared to any other printed
form of advertising.
4. Captive audience: The advertisements on TV and other traditional forms of
advertisements can be skipped, but internet ads on the other hand, cannot be ignored as
easily as television or radio ads. A banner ad on the side of an informative website, for
example, remains in the visitors peripheral vision as long as he is reading the website
information.
5. Creative: Online advertisements can be made effective and attractive by adding Gifs,
videos etc.
1. To ascertain the importance of online advertising as a promotional tool.

2. To assess the effectiveness of online advertising on purchasing behavior.
3. To ascertain which type of advertising is preferred by consumers.
Sources of Data
The use of data has been taken from both primary as well as secondary data. The survey work
was carried out mainly by using of primary data.
Findings
1. Online advertising is mostly used and encountered by youngsters between the ages of 17-
20 as they access internet the most.
2. The percentage of male browsing the internet are more than female.
3. Maximum of the respondents find advertisement waste of time due to lack of integrity
and security to the users of internet.
4. Online advertisements are often encountered by more than 50% of internet users.
5. Online advertisements are encountered the most by students rather than the users of other
occupation due to their frequent access to internet.
6. Online advertisement is found to be effective by 40% of the respondents and has a
desirable impact on their purchasing behavior.
7. Online advertisements do not provide required information most of the times.
167
Suggestions
1. Producers and marketers should concentrate more on advertising to youngsters as they are
likely to be influenced the most by online advertising.
2. Producers and marketers should concentrate on making the usage or access of online
advertisements more secure, reliable and trustworthy. If done this will increase the
effectiveness of online advertisement by two fold.
3. Producers and marketers should keep in mind the information that the customers seek and
design the advertisement accordingly, so as to meet their requirement.
References
1. D.S.Chaubey, L.S. Sharma & Mayank Pant(2013). Measuring the effectiveness of Online
Advertising in Recalling a Product: An Empirical Study.Vol-4 no.2,Management
Convergence,37-47.
2. Zaidi Nihel(2013). The effectiveness of advertising through Memorization and click on a banner.
Vol-5,no.2; International Journal of Marketing Studies,93-101.
3. Bohdan Pikas & Gabi Sorrentino(2014). The effectiveness of online advertising: Consumers
Perceptions of Ads on facebook, Twitter and Youtube.vol 16(4);Journal of Applied Business and
Economics,70-81.
4. G.Anusha(2016). Effectiveness of online advertising. Vol-4(Iss3: SE); International Journal of
Research Granthaalayah,14-21.
168
Foreign Direct Investment: An Enquiry into its Impacts on the Economy
M. Vilasini
VITSOL, Chennai, Email id: vilasinimurali6@gmail.com
J. Aravind
VITSOL, Chennai, Email id:aravindjay98@gmail.com
Abstract
The policy of foreign direct investment has played a key role in shaping the economy. FDI
means the investing of individuals or companies of one country in the business interests of
other. Foreign Direct Investment usually involves participation in management, joint-
venture, transfer of technology and expertise. An attempt has been made to study in deep
about the determinants of Foreign Direct Investments. The determinants include expected
relative rates of return, risk diversification, etc. And also to study the impact that it will have
in the economy as a whole.
Keywords: per capita income, businesses, foreign direct investment
Foreign direct investment
Foreign direct investment (FDI) in India is the major monetary source for economic
development in India. Foreign companies invest directly in fast growing private Indian
businesses to take benefits of cheaper wages and changing business environment of India. It
was Dr. Manmohan Singh and P.V. Narasimha Rao who brought FDI in India, which
subsequently generated more than one crore jobs.
1. Determinants of Foreign Direct Investment:A sectoral and Institutional Approach

by James P.Walsh and Jiangyan Yu is published to show the FDI flow are
homogeneous into the primary sector.it also said that it is not clear whether the factors of
FDI were different from rich countries to emerging countries.consequently he suggested
that the accession progress has the potential to induce virtuous cycles for the frontrunners
but may have serious consequences.and also to find out the effect of these factors often
differs between advanced and emerging economies
2. The Determinants of Foreign Direct Investment in Transition Economics by Alan

A.Bevan and Saul Estrin discussed about the findings and suggestion that countries
excluded from EU typically because of poor progress in transition will receive lower
levels of FDI, which would further limit their relative transition progress. The implication
were on increasing concentration of FDI into more successful transition economies and
increasing differentiation in percapita income
3. Determinants of Foreign Direct Investment by Bruce A.Blonigen and Jeremy Piger,

a paper published with an objective for studying empirical studies of bilateral foreign
direct investment activity show substantial differences in specification with little
agreement on the set of covarietes.these studies introduced measures of relative labour
endowments in the host country with the expectation that countries with relatively high
169
shares of unskilled labour would attractive location for MNEs due to lower wages.it
mainly examined cross sectional patterns and both level and log-linear regressions.
4. How Foreign Direct Investment does affect economic growth? by E.Borensztein,

J.De Gregorio published their paper with a view to test the effect of FDI on economic
growth in a cross country regression framework utilizing data on FDI flows from
industrial countries.the higher productivity of FDI holds only when the host country has a
minimum threshold stock of human capital.FDI has a positive impact on economic
growth after controlling for initial income, human capital, government consumption and
the parallel market premium for foreign exchange.
5. Does Foreign Direct Investment accelerate economic growth by Maria Carkovic and
Ross Levine published this theory by providing conflicting predictions concerning the
growth of FDI.The economic rationale for offering incentives to attract FDI frequently
derived from the and spillovers.also they said that foreign investment may boost the
productivity of all firms.the paper also found that exogenous component of FDI does not
exert a positive influence on economic growth.there were many econometric specification
in which FDI was positively linked with long run growth.FDI may even be a good signal
of economic success.
Objective
In this article an attempt has been made to compare the last 4 years report of Foreign Direct
Investment in India with the help of import value data and the reason for the changes in every
year from the year 2012-2015.
Methodology
The methodology used in this article is secondary methodology. Data is collected online and
from magazines, newspapers and books. The results are tabulated and expressed as a bar
chart.
Findings and analysis
In the year 2012 the import value was Rs.2,591.2 K Cr and fiscal year on year change was
52% . The Indian budget aimed at 51% growth in FDI in the year 2012.
240 Jan-12
230
Feb-12
220
210 Mar-12
200 Apr-12
190 May-12
180
Jun-12
170
1 Jul-12
Units are measured in K Cr.

In the year 2013 the import value was Rs.2,676.6 K Cr and the fiscal year on year change was
3%. The Indian budget aimed at 53% growth in FDI in the year 2013.
170
300
Import Value
250
Jan-13
200
Feb-13
150
Mar-13
100
Apr-13
50
May-13
0
Jun-13
Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13
5%. The Indian budget remained silent about FDI in the year 2014.2
Import Value
300
250
200
150
100 Import Value
50
0
10% . To improve the growth of FDI in India the Government started a company to
facilitate setting up manufacturing hubs.
Import Value
250
200
150
100
Import Value
50
0

171
The factors that affect the FDI are:
i) Wage rate
The amount of base wage paid to a worker per unit of time. It is a major incentive for a
multinational to invest abroad is to outsource labour intensive production to countries with
lower wages. And wages rates alone do not determine FDI; countries with high wage rates
can still attract higher tech investment.
ii) Labour skills
Many companies would need labours with high skills and that to at low wages and also with
more experience. Since India is rich in human resources, foreign companies may like to
invest in India.
iii) Tax rates
Big multinational companies sought to invest in countries with lower corporation tax rates.
Corporation tax is a direct tax imposed by a jurisdiction on the income or capital of
corporations or analogous legal entities.
iv) Transport and infrastructure
The main factor in the desirability of investment is the transport costs and levels of in
infrastructure. Countries with access to the sea are at an advantage to landlocked countries,
which will have higher costs to shop goods.
v) Size of economy / potential for growth
FDI targets on selling goods directly to the country involved in attracting the investment.
Therefore, the size of the population and scope for economic growth will be important for
attracting investment.
vi) Political stability / property rights
For FDI in an uncertain political situation, will be major disincentive. Even economic crisis
can discourage investment. Political stability is the level of corruption an trust in institutions,
especially judiciary and the extent of law and order.
vii) Commodities
The main hand of FDI is because of the speciality of the commodities available in each
country. As we know FDI targets on international trade which again targets on goods and
services, each country will invest on others product or commodity that will be needed for it.
For example, India has trade with some foreign countries in spices and food items due to the
fact that India is rich in it.
172
viii) Exchange rate
When foreign countrys come to India for FDI they invest their countrys money and the rate
of currency differs from every country so when the exchange rates are reasonable then there
would more investors.
ix) Clustering effects
Foreign firms will be comfortable to invest when there are some foreign firms already
existing there in that country. They can cluster the service industries and transport links
which will benefit them. Also, there will be greater confidence to invest in areas with a good
track record.
Conclusion
With the given inputs and analysis carried out this article it is found that the area of foreign
direct investment is been considered as an emerging area of importance. Foreign direct
investment connects itself with many areas such as international law , international
economics and business. Each individual businessmen wants to expand his business by
maintaining relations with foreign companies similarly when we consider the whole nation
we are seeking into maintaining good relations with the other countries .So this paper
concludes that India needs more attention in the field of foreign direct investment.
References
1. Import values of the years available at dashboard-commerce.gov.in last viewed on 30th

March.
2. FDI available at www.wikipedia.org last viewed on 31th March.
3. Factors affecting foreign direct investment available at www.economicshelp last viewed
on 1st April.
4. International economics theory and policy by Paul R. Krugman and Maurice Obstfeld.
5. International economics by Thomas A Pugel.
6. International economics by Francis Cherunilam. Fifth edition
7. International economics by H G Mannur. Second revised edition.
8. Balasubramaniyam, V.N., Foreign Direct Investment and the International Transfer of
Technology I D.Greenway (ed), current issues in International trade, Macmillan, 1985.
173
Future Prospects of Plastic Money in Indian Banking System
Dr. Ramola Premalatha J,

Associate Professor, Department of Commerce,
P.G. Suresh,
B.com., Dept. of Commerce, SSL, VIT University, Vellore 632014
K.C. Arun Kumar,

S. Harish Venkatram,
Abstract
Due to the technological advancement in monetary sector, the payments in banking industry
have undergone a remarkable transformation. The innovative products for creating payments
have been developed subsequent to the privatization and globalization. Customers have
showed their preference over the usage of the plastic money typically over a period of time
within the banking process. Plastic money is a substitute to the cash or benchmark money.
Plastic money refers to the credit cards or the debit cards that we tend to use to form
purchases .Other different kinds of plastic cards provided by banks in India are ATM cards,
Smart cards. This study presents a summary of the event of banking within the plastic cards
usage trends since these are introduced in Indian banking sector. The study conjointly
highlights the role of those cards as electronic payment tool to be employed by customers and
discusses the penetration of those cards in replacement of cash and paper money. The study
is carried out by taking a survey of 100 respondents by Convenient Sampling Technique from
the city of Vellore by using a structured questionnaire and interview technique. The factors
that influence for adoption of plastic money in substitution of cash has been identified which
reflects the preference of customers towards plastic cards over paper money. Some future
plans developed by different banks and institutions for avoiding the frauds arisen owing to
the credit and debit cards also are mentioned in way that it depicts the image of its future
growth and prospects in India
Keywords: plastic money, banking, benchmark money, information technology
Introduction
The advent of Liberalization, Privatization and Globalization in Indian economy has been
predominant. These reforms have offered a test before Indian banking sector in adoption with
the new pace of technology. An innovative and efficient banking system always contributes
for the healthy economy in India. Indian banking system should not limit itself from being
problem free but should be capable of facing the newer challenges imposed by advanced
technology and any other factors. The advancement of technology in banking sector solely
doesnt influence the improvement of current affairs unless customers respond to them
positively. Therefore, the banks should consider the needs, preferences and convenience of
the customers before offering any new services or products. Customer doesnt limit himself
as a customer of a particular branch but acts as a customer of whole banking system, where
he is capable of enjoying all the facilities anywhere and anytime (Kamesam, 2003). This
concept prolongs the relationship between customers and the banks for long term. Electronic
174
banking considerably is a new advancement in banking sector widely adopted due to its
wider scope for customers and banks internationally. Further large number of new products
and services has been introduced to satisfy the customers needs and preferences.
The development of private sector banks and foreign banks has led to competition among the
banking sector since their advancement in technology is rapid. The large number of people in
India is dependent on the traditional public sector banks which maintain a strong base of
customers when compared with private and foreign banks. By the advancement in
Information Technology in the country it is now easier to convey different products and
services resourcefully without the need of opening new branches. Therefore, the newer
private and foreign banks takes on the traditional public banks through their advanced
technology in banking affairs like Internet banking, Electronic Funds Transfer (EFT), plastic
cards, Digital money etc., to expand the scope of their banks rapidly among traditional
customers of Public banks. This ultimately led public banks to adopt and implement the
services with consistent innovation to compete with private and foreign banks. This
competitive environment among the banks in the banking sector has shown outstanding
development with respect to innovative services, productivity, efficiency etc. In traditional
sense the banks were majorly concerned with the deposits from customers and lending money
to the customer at the given rate (Anisha, 2015).
Literature Review
Anisha Bisht (2015) in his thesis Analysis of use of plastic money: A Boon or a Bane
showed the awareness and usage of plastic money among various segments of people.
Stratified random sampling method was used for data collection which included students,
professionals, government officials, house makers and senior citizens. The study reflected
that people in major prefer plastic money mainly for its convenience and easy accessibility.
The major problem is unavailability of cards to all the users and also lengthy formalities to
procure card from financial institutions.
Sushma Patil (2014) in her research paper Impact of plastic money on banking trends in
India reflected the overview of development of plastic cards in Indian banking sector. The
study reflects the importance of plastic cards as electronic payment method used by the
people and also shows how much impact these plastic cards have in replacing the benchmark
money. The study is carried out using by non probabilistic convenience sampling method
from a city of Mumbai by using structured questionnaire. The study concludes in a way that
plastic cards will replace hard cash in near future.
Supriya Singh (2014) in her research paper Impersonalisation of electronic money:

implications for bank marketing examined variance among the impersonality of
plastic/online money and also customers wish to maintain personal banking relationship. The
explanation involves usage of sociology of money, incurring of data and communication
technologies and self-service advancements. The study confirms that the activity-centered
social marketing strategy is adopted by bank-marketing professionals. This adopted strategy
provides a secure fit between the payment activities, services and other transactions with
regard to different aspects. The major conclusion is that adoption of this strategy will increase
trust in banks.
Subani and Hasan (2011) in their research paper Plastic Money/Credit Cards Charisma for
Now and Then (A Thin Line between Easy Money and Risky Money) examines how user
friendly the plastic cards are in the case of affordability is concerned among various segments
of people. Further the study authenticates how useful and charismatic the plastic cards are in
case of their determination of income among family and friends. The study confirms that the
175
adoption of cards has a charismatic appeal among friends and family and also revealed that it
has its own usability and affordability.
Martyn Gould (1993) in their research paper Plastic Card Crime and Fraud Prevention
completely deals with the various ways of frauds that affect the productivity of banking
sector. It discusses various Plastic Card Fraud awareness programs for the people to
understand what makes fraud? And what precautions can never let fraud? The article
concludes that the amount of frauds directly influences the number of users since the
certainty of loss of any policy would not get on.
Objectives
The objectives of the study are as follows-
1. To study the development of plastic money in banking sector usage trends.

2. To determine the factors for adoption of plastic money over benchmark money.
3. To determine the penetration of plastic money in day to day life over the paper or cash
money.
4. To study the future plans made by various banks and institutions for more secure plastic
cards.
The Research study is Exploratory in nature. The Study is been carried out by taking a survey
of 100 respondents by non-probabilistic convenience sampling method from a city of Vellore
by using structured questionnaire and interview technique. The sampling frame that is used is
within the boundaries of Vellore Municipal Corporation. Secondary data is collected through
reference books, research papers, articles, and websites.
Findings
1. The utilization of Plastic cards is increasingly expanding for online instalment.

2. Around half of instalments of the clients are done through credit/Debit cards. Sample
overview indicates Debit cards are favoured over credit cards.
3. The primary explanation behind the expansion in plastic money is that the clients are not
a casualty of a cheat.
4. The customers have evaluated that the telephonic instalment alternative is normal
because of long convenience and security sympathy toward CCV/PIN number.
5. The survey and secondary data suggests that customers have hardly faced any
discrepancies with their bills.
6. The presentation of ATM machines has changed the saving money handle too.
Customers are favouring the ATM machines now to days because of that recurrence of
customers to visit the banks have turned out to be less.
7. The utilization of plastic cards has additionally been expanded on the grounds that
managing an account has likewise given the 24x7 client administration to their clients.
8. The elements for reception of plastic money over the money and paper cash are
monetary-Discounts while shopping, not to bother about conveying money, Security of
cash, Hassle free EMI's, Easy to utilize, Personal Loan on Credit Card.
176
Conclusion
The increase in consumerism generated by economic reforms started in 1990s has also
sparked the outburst demand for plastic cards. The appearance of malls, multiplexes, online
shopping stores and shopping complexes promote the customers to make use of plastic cards.
The modern day, Indian customers find it easier to make credit card or debit card payments
rather than carrying too much cash contributing to the growth of plastic money in the
country.
The prevalence of intensifying competition between the interior segments of bank has further
fuelled the usage of plastic cards in the country like never-before. It benefits the consumer
through superior product offerings at a lower cost and that too with profitable deals delighted
with rewards scheme, loyalty bonus points, promotional campaigns etc. But some customers
are not able to utilize cards effectively due to its complex nature and they dont actually
know how to operate it for specific purpose. Thus, the banks should give them some training
regarding its usage. The banks can also provide them facility to use plastic cards on trial basis
so that they can become more confident while using their own cards. Cost has also remained
an issue in case of credit cards. The interest levied on outstanding amount is very high which
sometimes takes the customers in debt trap ultimately discouraging the potential customers to
make use of it.
However, all these hurdles will diminish over time and positively influencing trends are
expected to continue in the near and far-future. Demonetisation led to unexpected turn in the
banking sector, when people started their interest towards plastic cards. Also, the growth of
plastic cards in future would depend upon the capacity building of the banks to meet the
challenges and make use of the opportunities profitably. However, the kind of technology
used and the efficiency of operations would provide the much needed competitive edge for
success in plastic cards business. Furthermore, in all these customers interest is of supreme
importance.
References
1. Arunachalam, L. D. M. S., & Sivasubramanian, M. (2007). The future of internet banking
in India. Academic Open Internet Journal, 20.
2. Bisht, A., Nair, P., Dubey, R., & Hajela, T. (2015). Analysis of the use of plastic money:
A boon or a bane. SIMS Journal of Management Research, 1.
3. Di Giulio, D., & Milani, C. (2013). Plastic Money Diffusion and Usage: An Empirical
Analysis on Italian Households. Economic Notes, 42(1), 47-74.
4. Kaseke, N. (2012). CASH OR PLASTIC MONEYAN INVESTIGATION INTO THE
PAYMENT MODE POST MULTI-CURRENCY PERIOD IN ZIMBABWE.
International Journal of.
5. Khalid, J., Butt, H. S., Murtaza, M., & Khizar, U. (2013). Perceived Barriers in the
Adoption & Usage of Credit Cards in Pakistan Banking Industry. International Review of
Management and Business Research, 2(1), 104.
6. Khandelwal Ani, K. (2006). Doing Business in India: The Big Picture Bankers
Prespective. US-India Business Summit, Retrieved March, 20, 2008.
7. Payment and Settlement Systems in India: Vision-2018 retrieved from
https://rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=37308.
8. Rise in Plastic money over cash after Demonetization retrieved from
https://www.yatra.com/online/yt-demonitization.
9. Sarkar, S. (2012). The parallel economy in India: causes, impacts and governement
initiatives. Economic Journal of Development Issues, 11, 124-134.
177
10. Satam, M. M. (2015). Impact of Plastic Money on Banking Trends in India. International
Journal of Multifaceted and Multilingual Studies, 1(6).
11. Singh, S. (2004). Impersonalisation of electronic money: implications for bank
marketing. International Journal of Bank Marketing, 22(7), 504-521.
12. Venkatesan, S., & Kumar, K. P. R. (2007). Retail Banking Scene in India: A Holistic
Approach. Management Trends, 4(1).
13. Vepa, K. (2003). Indian Economic Scenario Yesterday, Today and Tomorrow. Speech,
Reserve Bank of India. Retrieved April, 8, 2008.
14. Worthington, S. (1992). Plastic cards and consumer credit. International Journal of Retail
& Distribution Management, 20(7).
15. Worthington, S., & Horne, S. (1992). Affinity credit cards: card issuer strategies and
affinity group aspirations. International Journal of Bank Marketing, 10(7), 3-10.
178
Green Banking: An innovative initiative towards Sustainable Development
Sravani C.V.P,
nd
2 year B.A, L.L.B. (Hons.), VIT School of Law, VIT University, Chennai
Komal. S,
nd
2 year BBA, VIT Business School, VIT University, Vellore
Abstract
Sustainable development can be achieved at its best by allowing the markets to work within
an appropriate framework of cost efficient regulations and economic instruments. One of the
major economic agents which is a noticeable influencing factor to the industrial activity and
the economic growth is the financial institutions which is called The Banking sector in
common parlance. In the current globalised economy, most of the industries and firms are
observed vulnerable to stringent environmental policies, severe and strict law suits and
consumer boycotts. Banking sector is always positioned to be a major stake holder in the
Industrial sector, it can find itself with a lot of credit risk and liability risks involved in its
daily transactions. Further, environmental impact might also affect the quality of assets and
also rate of return of the banks in the long-run.
This is the reason why the banks should go green and must play a pro-active role to consider
environmental and ecological aspects as part of their lending principles, which would in turn
result in pushing the industries to opt for mandated investment effective environmental
management, utilization of apt technology and m systems. This paper revolves around the
importance of a trending concept on the Banking Sector namely Green Banking. The
article sites various experiences and highlights certain important lessons for sustainable
banking and development in our country. However, it is clearly witnessed that there has not
been much initiative with regard to this, by the banks and many other financial institutions in
India though they play a pivotal role in Indias emerging economy. Hence, through this
paper we suggest possible policy measures and simple initiatives to promote green banking
in India.
Keywords: Industries, environment, banks, risks, policies, initiatives
Change in climate is observed to be the most complicated issue which the world is currently
experiencing. There were continuous endeavours across the globe which measure and
mitigate the risk of climate change which caused by the activities of human beings
themselves. There is a list of specific countries over the world that has made commitments as
necessary tools towards the mitigation of climate changes. India as such has committed to
cut-out its domestic carbon intensity by 20-25 per cent from 2005 levels, by the year 2010.
As we are so called the socially responsible corporate citizen community (SRCC), Indian
Banking Sector play pivotal role and show major responsibility in supplementing the efforts
of the government towards substantial reduction in carbon emission. Though the banks are
always understood to be eco-friendly and that they do not make implications on the
environment greatly through their internal and external operations, through the activities
of their customers. The banking sector is one of the major sources of financing industrial
projects such as steel, paper, cement, chemicals, fertilizers, power, textiles, etc., which tend
to cause the maximum carbon emission. Therefore, the banking sector of our country can
obviously play an intermediary role between economic development and environmental
protection. This is for the purpose of promoting environmentally sustainable and socially
responsible investments made. Green banking in a common parlance means banking
179
business conducted in selective areas in such a manner that it helps the overall reduction of
the external carbon emission and internal carbon footprints.
To aid the reduction of external carbon emission, banks should help in aiding finance green
technology and pollution reducing projects. The banking industry however, is never
considered as a pollution emitting industry. Currently the scales of banking operations have
been considerably increasing with the carbon footprint of banks due to the extensive
utilisation of energy. High levels of paper wastage, scarce count of green buildings, etc. Thus,
the banks should adopt technology, process and produce products which result in the ultimate
reduction of the carbon footprint as well as a boon to develop a healthy sustainable business.
Imperatives in brief
i) Credit Risk: Due to reasons like global warming and changes in climate, there are both
direct and direct expenses to the banks. It has been closely witnessed that due to global
warming, extreme weather conditions exist which in turn adversely affects the economic
assets which are financially aided by the banks, thus leading to high incidence of credit
default. Credit risk might also arise indirectly when banks lead to companies whose
businesses are badly affected due to the changes in the current environmental regulations.
ii) Legal risk: Indian Banks, like the other business entities, face legal risk if they do not
comply with relevant environmental regulation. They may also face risk of direct lender
liability for cleanup costs or claims for damages in case they actually take possession of
pollution causing assets.
iii) Reputation Risk: Due to increasing environmental awareness , banks are more prone to
reputation risk, if their direct or indirect actions are viewed as socially and
environmentally damaging. Reputation risks emerge from the financing of
environmentally objectionable projects.
As India has committed to reducing its carbon intensity by 20-25 percent from 2005 levels by
2020, we are working towards developing a low carbon economy. In a low carbon economy,
there will be many challenges and opportunities to banks. Green banking will be at the
forefront of this drive to harness banking expertise and build the post-carbon economy. The
biggest impact of the carbon cut commitment will be on small and medium Enterprise, steel
and cement industries which are carbon intensive. In order to avoid credit risk in these loan
portfolios as well as to grab new business opportunities, Indian banks must immediately
adopt green banking strategies to reduce the carbon footprint of individual banks will not
only make them socially responsible corporate citizens but will also help save substantially
operational costs. There are lot of opportunities and challenges for Indian banks in adopting
Green Banking as a profitable business.
Green Banking Strategies
Indian Banks can adopt green banking as a business model for sustainable banking by
launching some of the following strategies:
i) Carbon credit business: Under the Kyoto protocol, Clean development Mechanism(
CDM) provides for co-operation between annexure 1 and non annexure-1 ( developing)
countries. The operational mechanism of CDMs involves an investment by a legal entity
from an annexure-1 country into a project in non-annexure-1 country, which results in
emission reduction. These emission reductions have to be certified by an appropriate
authority and these certified Emission Reductions ( CERs) which are commonly known
as carbon credits can be used to meet the commitments of annexure-1 countries under the
180
Kyoto protocol. These carbon credits are traded in the markets. CDM projects are those
projects that contribute to credible and sustained reduction in GHG emissions.Indian
banks can involve themselves in carbon credit business, wherein they can provide all the
services in the area of CDMs and carbon credits including services of identification and
funding of CDM projects, advisory services for registration of CDM projects and
commercialization of CERs under different structures to meet the requirements of its
customers, acting as an intermediary for buying CERs on behalf of end-users or carbon
funds, financing against CERs and CERs receivables, and other related banking services.
As India has huge potential for carbon credit business, Indian banks can set up dedicated
carbon credit cells to capture a major share of this carbon credit business.
ii) Green Banking Financial Products: Indian banks should develop innovative green
banking financial products which can directly or indirectly help in the reduction of carbon
emissions. These banks can introduce a Green Fund to provide climate conscious
customers the option of investing in environmental friendly projects. Banks can also
introduce green bank loans with financial concessions for environmental friendly
products and projects. Besides introducing specific green banking products, banks can
incorporate an Environmental Impact Assessment (EIA) in their project appraisal while
financing any project to measure the nature and magnitude of environmental impact as
well as suggest environmental risk mitigation measures. Banks need to redesign their
credit products to assist SMEs to adopt quality and conform to environmental standards.
Banks should also include green guidelines in their credit policies to raise the green loan
portfolio.
iii) Green Mortgages: Banks such as Citigroup Inc., Bank of America, and JP Morgan
Chase &Company are just a few of the mortgage lenders offering special discounts on
mortgages used to build or update buildings and homes to be more green. One of the
reasons for the push for green mortgages is that green building and rebuilding tends to
incorporate more energy-efficient materials and building plans. There are two types of
green mortgages: the Energy Improvement Mortgage its like a second mortgage that is
to be used to upgrade a home or building to energy efficient by installing energy saving
items such as solar panels and improved insulation - and the Energy Efficient Mortgages
for the construction of new energy efficient homes and buildings. There are many states
getting in on the green mortgage by offering subsidized green mortgages so that more
home-owners and business owners can green-up their buildings. In addition to helping
save the environment by using less energy, these mortgages offer many advantages to
consumers by reducing monies spent on high utility bills and on high costs of obtaining a
mortgage. The Residential Energy Services Network reported on a recent study showing
that the market value of a home increases $20 for every $1 decrease in energy costs.
iv) Carbon Footprint Reduction: Carbon foot-print is a measure of the impact of our
activities on the environment. It relates to the amount of GHG we are producing in day-
to-day business while burning fossil fuels for electricity, heating, transportation, etc.
Banks can reduce their carbon footprints by adopting the following measures:
a) Paper-less Banking: As banks have computerized their branches, there is ample scope
for doing paperless or less-paper banking. Mostly PSBs use huge quantities of paper for
office correspondence, audit reporting, recording public transactions,etc. These banks can
switch over to electronic correspondence and reporting. Banks should encourage their
customers also to switch over to electronic transactions and popularise e-statements.
181
b) Energy Consciousness: Developing energy- consciousness, adopting effective office

time management and automation solutions and using compact fluorescent lighting (
CFL) can help banks save energy consumption considerably. Banks can conduct energy
audits in all their offices for effective energy management. They can also switch over to
renewable energy ( solar, wind, etc.) to manage their offices and ATMs.
c) Using Mass Transportation System: PSBs can become fuel efficient organization by
providing common transport for group of officials posted at one office.
d) Green Buildings: The Indian banking industry uses more than one lakh premises for their
offices and residential houses throughout the country. These banks should develop and
use green buildings for their office and employee accommodation.
These measures will not only help banks reduce their carbon footprint but also save the
operational costs considerably.
v) Social Responsibility Services: As part of the green banking strategies, Indian banks can
initiate various social responsibility services such as tree plantation camps, maintenance
of parks, pollution check-up camps, etc.
Initiative taken by Indian Banks
(SBI) has become the first bank in the country to venture into generation of green power by
installing windmills for captive use. As part of its green banking initiative, has installed 10
windmills with an aggregate capacity of 15 MW in the states of Tamil Nadu, Maharashtra
and Gujarat. It has planned to install an additional 20 MW capacity of windmills in Gujarat
soon and touch 100 MW power generation through windmills within five years, windmills
are set up with a definite objective of reducing the dependence on the polluting thermal
power and not on purely economic or business considerations. At present, the bank
consumes 100 MW of power per year. So, SBI will try to be energy neutral and reduce its
carbon footprints. The total cost of installation of a windmill of 1.5 MW is around Rs 10
crore. The operation cost is close to zero and it is expect to recover the initial investment in
four years. "Our mission is to make all Indian banks go green and we are already discussing
with 25 banks," said Suzlon CMD Tulsi R Tanti. He said, "Suzlon, which currently holds
55% market share in the country is now more focused on wind power development. Of
the11,000 MW installed wind energy in India, 6,000 MW has been installed by Suzlon.
Future Outlook
The model that the bank uses is different from other banks. Will the model itself be a limiting
factor on the ambitious growth and development plans of the bank? Will the day-today
business of being a bank dominate over the desire to be an instrument of social change? How
does the future look for SBI Bank now that other banks are also increasingly positioning
themselves as players in the sustainable economy sector? Can the bank still continue to fulfill
its mandate to strive for social objectives? Peter Blom is convinced it can. According to him,
many other banks entering the sustainability space also invest billions in companies that dont
in any way contribute to a better world. And there are issues of transparency too. He believes
that the bank can profit from economies of scale. As of now, SBI continues with its strong
belief that it is the individual who can bring about real change in the society and hopes to
remain a platform for people who want to make a difference in the world.
182
Conclusion
Indian banks need to be made fully aware of the environmental and social guidelines to which
banks worldwide are agreeing to. As far as green banking is concerned, Indian banks are far
behind their counterparts from developed countries. If Indian banks desire to enter global
markets, it is important that they recognize their environmental and social responsibilities. In
addition to mitigating risks, green banking opens up new markets and avenues for product
differentiation. Indias growth story and commitments to cut its carbon intensity by 20-25
percent from 2005 levels by the year 2020 provides tremendous opportunities for Indian
banks- from funding sustainable projects to offering innovative products and services in the
areas of green banking. The survival of the banking industry is inversely proportional to the
level of global warming. Therefore, for sustainable banking, Indian banks should adopt green
banking as a business model without any further delay.
183
Impact of Demonetisation on Indian Stock Market: With Special Reference

to Bank Nifty
Dr.P.Chellasamy
Faculty, School of Commerce, Bharathiar University, Coimbatore-641046,Tamil Nadu, India
Anu.K.M
PhD Research Scholar, School of Commerce, Bharathiar University, Coimbatore-
641046, Tamil Nadu, India
Abstract
The study focussed on the impact of demonetisation on the Indian stock market. The role of
cash transactions in an informal economy is critical. With 86 percent of the monetary base
being washed off, economic activity in the short run is likely to be adversely impacted. Study
revealed that Public sector banking segment recorded a rise in returns after the
announcement of demonetisation. The study concluded that the there is a wide spread
negative returns in private sector after demonetisation which reflects the immediate negative
sentiments attached with the banking activities.
Keywords: Demonetisation, Bank NIFTY, India.

JEL Classification code: C10, E44
Introduction
The Government of India on 8 November 2016 enacted a policy to demonetise 500 and
1,000 banknotes. The government claimed that the demonetisation was an effort to stop
counterfeiting of the current banknotes allegedly used for funding terrorism, as well as a
crack down on black money in the country. The move was described as an effort to reduce
corruption, the use of drugs, and smuggling30.Demonetization is the act of stripping a
currency unit of its status as legal tender and is necessary whenever there is a change of
national currency31.
Demonetisation at a glance
The sudden move to demonetise Rs 500 and Rs 1,000 currency notes is not new. Rs 1,000
and higher denomination notes were first demonetised in January 1946 and again in 1978.
The highest denomination note ever printed by the Reserve Bank of India was the Rs 10,000
note in 1938 and again in 1954. But these notes were demonetised in January 1946 and again
in January 1978, according to RBI data. Rs 1,000 and Rs 10,000 bank notes were in
circulation prior to January 1946. Higher denomination banknotes of Rs 1,000, Rs 5,000 and
Rs 10,000 were reintroduced in 1954 and all of them were demonetised in January 1978. The
move was enacted under the High Denomination Bank Note (Demonetisation) Act, 1978. It
was termed as an Act to provide in the public interest for the demonetisation of certain high
denomination bank notes and for matters connected therewith or incidental thereto. The Rs
1,000 note made a comeback in November 2000. Rs 500 note came into circulation in
October 1987. The move was then justified as attempt to contain the volume of banknotes in
circulation due to inflation. However, in the days following the demonetisation, banks and
ATMs across the country faced severe cash shortages. The cash shortages had detrimental
30
India Today. 8 November 2016
31
Reserve Bank of India. 8 November 2016.
184
effects on a number of small businesses, agriculture, and transportation, while people seeking
to exchange their notes had lengthy waits, and several deaths were linked to the rush to
exchange cash but 36 years before during the situation of demonetisation, higher value notes
were almost impossible to possess by the common man given the value of these amounts
then.
It has been a choppy ride for the Indian equity markets that had been hit by the
demonetisation and the surprise victory of Donald Trump in the US Presidential elections,
exactly a month ago on November 8. Indias Nifty (down 3.5%) was the second worst
performing index in Asia after Philippines, and the fourth globally after Mexico (down
5.9%), Brazil (4.3%) and Philippines (down 3.9%). The frontline benchmark indices S&P
BSE Sensex and the Nifty50 that lost around 7.5% during the month, though have managed
to recoup some losses. The Nifty50 index, for instance, hit an intra-day low of 7,916 levels
on November 21 has clawed back to 8,200 levels by December 08.
Research Issue
The announcement of demonetization of Rs 500 & 1000 notes by the Prime Minister of India
has lead to a short-term pain. This is evidenced by long queues in front of banks, cashless
ATMs and reduced small trade market activities bear testimony to it. A reliable criterion to
gauge the immediate economic impact of a sudden policy shock is to observe stock market
trends. Traditionally viewed as a predictor of the economy, sharp and persistent plunges in
stock market indices could indicate deterioration in economic activity. These demonetization
measures have had significant and immediate impact on the state of the Indian economy.
These measures are also expected to result in long-term impact on banking sector. Hence the
researcher have framed the following research question
1. What is the Impact of Demonetisation on Banking sector indices in National Stock

Exchange (NSE)?
Methodology
The aim of the research was to investigate the impact of demonetisation on Bank Nifty. The
study used closing index for the period from 14th June 2016 to April 3rd 2017 which contain
200 observations. To study the impact of demonetisation, the study period is divided into pre
and post demonetisation period. 100 trading days before the event (June 14-November 8)
with a period of 100 trading days after the event (November 9-April 3) and all data are
obtained from NSE website. Ordinary least square was utilised for the study.
Results & Discussion
The price movement of Nifty Sectoral indices for the pre and post demonetisation has been
presented in the chart 1.
185
Chart 1: Price movement of Major Sectoral Indices at NSE
25000
20000
SECTORAL INDEX
15000
10000
5000
0
bank it realty energy fmcg pharma psu auto psb
pre 19431.78 10180.36 206.684 10030.51 21547.7 11388.62 3149.826 10120.16 10858.14
post 18741.17 9762.075 164.6068 9835.693 20362.13 10901.57 3216.045 9047.566 10340.29
Source: nseindia.com
Chart explains the average indices in NSE before and after the announcement of Government
of Indias decision to cancel the legal tender character of 500 and 1,000 banknotes with
effect from 9 November 2016. From the table it can be inferred that among the sectoral
indices, realty, auto and fast moving consumer goods (FMCG) were the worst hit on the
National Stock Exchange (NSE), On the other hand PSU bank gained during the period.
Least Square Regression Analysis
To assess the impact of demonetisation on banking sector returns in NSE, a Dummy variable
representing the pre and post period has been included as explanatory variable and the results
has been presented in the following tables.
Table 1: Least Square Regression result for Public sector Bank Returns
Variable Coefficient Std Error t-statistic Prob.

C 8.00 0.0056 1415.09 0.000
Demonetisation 0.068 0.008 8.53 0.000
Table 1 explains the impact of demonetisation on Public sector banking returns. From the
table, C indicates the expected average returns of Banking Sector before demonetisation and
the value is 8.00. The coefficient value 0.068 reveals the difference in returns during pre and
post demonetisation. It can also be inferred from the result that the average return for the
post demonetisation is 8.068 (8.00 + 0.068). Hence the result concludes that the return of
public sector has increased. This rise could be attributed to the fact that public banks have a
major share (approximately 80% as of March 2016) in Jan Dhan Yojna accounts. With the
old Rs 500 and Rs 1000 notes becoming invalid, these accounts and hence the public sector
banks may witness a huge inflow of deposits.
186
Table 2: Least Square Regression result for Private sector Bank Returns

C 9.27 0.0049 1857.83 0.000
Demonetisation 0.005 0.0073 0.695 0.487
Table 2 depicts the impact of demonetisation on private sector bank returns. Coefficient of C
shows that the expected average returns of private sector bank before demonetisation is 9.27.
The coefficient value 0.005 reveals the difference in returns during pre and post
demonetisation. It can also be inferred from the result that the average return for the post
demonetisation is 9.275 (9.27 + 0.00). Despite the wide uncertainty on the effects of
demonetisation in the economy, the banking sector has been positively affected. With a rise
in deposits both for current and savings accounts and falling interest rates, demonetisation is
expected to spur liquidity and treasury gains.
Table 3: Least Square Regression result for Nifty Bank futures Returns

C 9.85 0.005 1945.27 0.000
Demonetisation 0.018830 0.007185 2.620578 0.0095
The effect of demonetisation on the Nifty bank derivative is assessed using Least square
regression and presented in table 3. The coefficient value of the predictor variable
demonetisation gives an idea that the returns of Index futures of banking sector has raised
after the shocking announcement of demonetisation.
Findings
Many of the study on immediate effect of currency crunch on banking sector revealed that the
two banking segments had a opposite effect which may be due to the base effect for public
banks since the profitability of public banks is one-fourth of the private banks and also public
sector banks have reflected positive returns post demonetisation, the effect was not strong
enough to offset the negative impact on the private banking sector. This study on 100 days
after demonetisation recalled that immediate negative sentiments have ruled out and lead to
positive impact.
Conclusion
The purpose of the study was to determine the impact of Demonetisation on Stock Market of
India especially the banking sector. Result from the Ordinary Least Square support that
demonetisation or withdrawal of higher denomination currency has a significant impact on
the banking sector in the Indian economy. The result reveals that average returns on both
public and private sector banks have exhibited positive values. Nifty bank derivatives have
also recorded a rise in returns.
The role of cash transactions in an informal economy is critical. With 86 percent of the
monetary base being washed off, economic activity in the short run is likely to be adversely
impacted. The wide spread negative returns after demonetisation reflect the immediate
negative sentiments attached with the overall economic activity. However, with Jean Drze
calling demonetisation a big gamble for India, the possibility of a favourable outcome cannot
be ruled out. The possibility of these effects being temporary may seem to be a ray of hope.
The study evidenced that the negative impacts are reducing.
187
References
1. Joel Rebello & Gayatri Nayak, (Nov 29, 2016) Demonetisation and its side-effects, The
Economic Times, Retreived from
http://economictimes.indiatimes.com/articleshow/55678393.cms?utm_source=contentofi
nterest&utm_medium=text&utm_campaign=cppst
2. Narendra Nathan (November 14 2016),How demonetisation and Donald Trump's victory
impact your investments, The Economic Times, Retreived from
3. Pronab Sen, (16/11/2016) Modis Demonetisation Move May Have Permanently
Damaged Indias Informal Sector
188
Impact of Demonetization on Indian Economy
Dr. G. Ganesan,
Former Professor & Head, School of Commerce, Bharathiar University, Coimbatore.
B.Gajendranayagam
Ph.D Research Scholar, School of Commerce, Bharathiar University, Coimbatore,
Mail id: gajendranayagam.b@gmail.com
Abstract
Countries across the globe watching India as a democratic country and is poised to become
a leader of regions. In the global environment, India has multiple strengths of larger youth
population, growing middle class people, increasing literacy level and improving technical
knowledge among the work force which would address favorably any proactive change in
the present setup. Moreover, demonetization, coupled with Digital India and Jan Dhan
Yojana, is aimed at strengthening transparency in money transactions by curbing black
money, corruption and financial crimes. Therefore, it is the best time to strike the chord of
second financial reforms and new banking sector operations in tandem digital network so
as to achieve remarkable economic development at a faster rate. In addition, a few
immediate negative implications of demonetization are also seen in terms of minimum
growth in GDP, losing job by wage earners in some industries and real estate sector which
have affected the Indian economy to some extent. But, adopting good governance practices,
providing sound infrastructure, congenial atmosphere to start business and ensuring
trained workforce would have got positive long term impact on Indian economy. Further,
total transparency in business operations through banking services would also increase tax
revenue to the GDP ratio. Therefore, this paper will take up the issues relating to
demonetization and its linkage to the implications of various sectors in Indian economy and
discusses the experience and impact of demonetization on Indian economy.
Keywords: Demonetization, Financial Reforms, Income tax, Real Estate, GDP, GVA.
Introduction
The Indian economy is said to be a fast growing one in the world and also considered to be
bright spot among other emerging markets. In the global environment, India has multiple
strengths of larger youth population, growing middle class people, increasing literacy level and
improving technical knowledge among the work force which would address favorably any
proactive change in the present setup. Moreover, demonetization, coupled with Digital India and
Jan DhanYojana, is aimed at strengthening transparency in money transactions by curbing black
money, corruption and financial crimes. As per the data released by the Central Statistics Office
(CSO) the growth figures of many industries have showed downward trends from 7.6% to 7.1%
for the financial year ending 2017 just before the quarter when the demonetization exercise is
introduced. Several economists also viewed that the current and ongoing attempt to flush out
black money would shave a good 2% of the GDP.
189
Issues
India is basically a cash transaction oriented economy in almost all business activities. It is true
that any country which has a strong banking and financial system would have got the capacity to
withstand any crisis arising out of financial dealings. In addition, Indian financial system is
inherently strong and our banking system is also well structured to meet any financial endeavor.
The demonetization exercise which was suddenly introduced in India during the quarter
(October December, 2016) had affected the performance of many industries in the immediate
next quarter (January-March, 2017) and on the other hand some other industries have positive
implications. Therefore, this paper will take up the issues relating to demonetization and its
linkage to the implications of various sectors in Indian economy and discusses the experience
and impact of demonetization on Indian economy.
CMA Jai Bansal (2017) reveals that GDP of Country slightly decreases as compare with the
previous year but we cannot say it will be same in future also. This intervention is a one-time
draining of this current stock of black money but unless the root causes of corruption are
removed, corruption will continue. It is sort of like a dialysis, more of a short term cleaning up
than a solution of the problem. It needs to be repeated periodically. PartapSingh (2016)
researched on Impact of Demonetization on Indian Economy and concluded If the money
disappears, as some hoarders would not like to be seen with their cash pile, the economy will not
benefit. On the other hand if the money finds its way in the economy it could have a meaningful
impact.
However experiences from different countries shows that the move was one of the series that
failed to fix a debt-burdened and inflation-ridden economy. SukantaSarkar (2010) conducted a
study on the parallel economy in India: Causes, impacts & government initiatives in which he
focused on the existence of causes and impacts of black money in India. According to him, the
main reason behind the generation of black money is the Indian Political System i.e. Indian govt.
just focused on making committees rather than to implement it .So, he concluded that laws
should be implemented properly to control black money in our economy.
Objectives
1. To understand the implications of demonetization on various sectors.

2. To analyze the impact of demonetization on Indian economy.
Methodology
The present study is diagnostic and analytical as well and secondary data were used for the
purpose of analysis. The sources of data include the facts released by Reserve Bank of India
(RBI), Central Statistics Office (CSO) and different websites.
Implications of Demonetization
On referencing various information from the leading financial dailies, the consensus view
among many economists is that while there would be indeed a noticeable slowdown in the
economy for a quarter or two, most of them seem to agree that growth would indeed bounce
back and the Indian economy would regain its momentum as well as turnaround with a renewed
sense of vigour due to higher tax revenues. It is a fact that, as per the recent estimates by some
economists, nearly 90% of the total cash in circulation has come back into the banking system
190
and hence, the stated purpose of the Demonetization exercise which was to extinguish black
money and enable the RBI to lower its liabilities thereby providing the government with a huge
dividend seems to have been belied. In addition, there are some who now argue that the Indian
Banking System is now flush with cash and this has enabled the government to nudge the
RBI to cut rates as well as to allow banks to pass on the benefit of ample liquidity to consumers
by lowering lending rates.
On the other hand, with more taxes being collected due to higher deposits in banks that can be
taxable as well as increased compliance due to greater scrutiny and oversight by the Income Tax
Department, the government too might be tempted to announce lower rates for taxes and other
aspects of what are known as fiscal measures. In this context, it is worth remembering that fiscal
stimulus which is by lowering taxes and providing more incentives to consumers as well as
producers by boosting supply can be complemented and supplemented by the monetary stimulus
which is by boosting demand for goods and services by lowering lending rates thereby putting
more money in the hands of consumers.
Impact of Demonetization on Indian Economy
Statistical analyses have been done with the help of data collected from Reserve Bank of India
(RBI), Central Statistics Office (CSO) and different websites. The impact of demonetization has
been measured and results have been arrived at the end.
Analysis & Discussion
The impact of demonetization on Indian economic growth has been widely outraged. According
to the government's latest growth estimates, the pace of growth will be impacted by slow growth
in the manufacturing and mining sectors and also in the traditional retail sector. The study
ensures that some of the industries have been affected unfavorably in term of poor performance
and on the other hand some other industries have been benefited in term of growth prospects.
Table 1 Quarterly Data of Gross Value Added on

Various Sectors in India
SECTORS / YEAR 2016-17 (Rupees Billion)

Q1 Q2 Q3
Agriculture, Forestry and Fishing 3788.47 3179.76 5418.51
Mining & Quarrying 928.10 698.77 896.84
Manufacturing 5010.02 4947.73 4756.18
Electricity, Gas, Water Supply & Other Utility 606.47 593.23 594.35
Construction 2201.95 2094.34 2184.66
Trade, Hotels, Transport, Communication and Services 5150.79 5018.64 5150.09
Related to Broadcasting
Financial, Real Estate and Professional Services 6467.30 7203.69 5230.81
Public Administration, Defence and Other Services 3230.63 3717.12 3789.44
Total Gross Value Added at Basic Price 27383.72 27453.28 28020.89
Source: Central Statistics Office (CSO)
Note: Q1, Q2, Q3 denote - April to June, July to September and October to December quarters,
respectively.
191
Chart 1
QUARTERLY ESTIMATES OF GROSS VALUE ADDED ON VARIOUS

SECTOR IN INDIA
8000
7000
6000
5000
4000
3000
2000 Q1
1000
0 Q2
Q3
Table 1 depicts quarterly data of gross value added on various sector in India. Manufacturing,
Construction, Financial, Real Estate and Professional Services shows decreasing trend
comparing to previous quarter. So there is a negative impact on Manufacturing, Construction,
Financial, Real Estate and Professional Services. However Agriculture, Forestry and
Fishing shows increasing trend comparing to previous quarter thus there is a positive impact
of agriculture on gross value added. Chart 1 depicts Electricity, Gas, Water supply and other
utility shows that there is no change on impact of demonetization.
H0: There is no significant difference between impact of demonetization on pre and post
period
Table 2 Paired Samples t Test
Paired Differences
95% Confidence
Std. Sig. (2-
Std. Interval of the t df
Mean Error tailed)
Deviation Difference
Mean
Lower Upper
Pair 1
-70.875 1132.151 400.276 -1017.377 875.627 -.177 7 .864
Q2 -Q3
Source: Computed Data

Note : Q2, Q3 denotes Gross Value Added for July to September, October to December quarters
The above table shows the paired sample t test of Gross Value Added for Q2 and Q3 of
major contributing sectors on Indian Economy. The paired difference shows that there is no
significant difference between the samples and the mean value is -70.875. The significance
value is greater than the pvalue 0.05(0.864), hence the null hypothesis is accepted. It proves
that there is no difference between Q2 and Q3.
192
Table 3 Trend and Forecasting GVA Value of Agriculture, Forestry and

Fishing
Year Trend Value

2011-12 3754.54
2012-13 3810.99
2013-14 3970.59
2014-15 3995.21
2015-16 4032.03
2016-17 4134.64
2017-18 4201.45
2018-19 4247.19
Source: Computed Data from CSOs All four quarters in each year.
Chart 2
Trend and Forecasting Value of Agriculture,
Forestry and Fishing y = 70.597x - 138270
R = 0.9735
4300
4200
4100
4000
3900
3800
3700
2012 2013 2014 2015 2016 2017 2018 2019
The above table and chart shows the trend forecasting of GVA Value of Agriculture, Forestry
and Fishing from 2012-2016. It is inferred from Table 3 that the trend value of Agriculture,
Forestry and Fishing ranges between Rs. 3754.54 and Rs.4032.3 during the study period. It is
concluded that there is increasing trend of Agriculture, Forestry and Fishing. The forecasting
of the Agriculture, Forestry and Fishing for the year 2017 will be Rs. 4134.648 which is
showing an increasing trend 4247.191for the year 2019. The R2 value is 0.973 and the slope
value for the Agriculture, Forestry and Fishing is 70.59 and the intercept value is -13827.
Table 4 Trend and Forecasting GVA Value of Banking, Financial, Real estate and
Professional Services
Year Trend Value

2011-12 3826.72
2012-13 4188.98
2013-14 4610.17
2014-15 5156.09
2015-16 5715.26
2016-17 6122.70
2017-18 6650.04
2018-19 7165.04
Source: Computed Data from CSOs All four quarters in each year
193
Chart 3
Trend and Forecasting GVA Value of

Banking, Financial, Real estate and
Professional Services y = 485.38x - 972859
R = 0.9976
8000
6000
4000
2000
0
2012 2014 2016 2018
The above table and chart shows the trend forecasting of GVA Value of Banking, Financial,
Real estate and Professional Services from 2012-2016. It is inferred from Table 4 that the
trend value of Banking, Financial, Real estate and Professional Services ranges between Rs.
3826.72 and Rs.5715.26 during the study period. It is concluded that there is increasing trend
of Banking, Financial, Real estate and Professional Services. The forecasting of the Banking,
Financial, Real estate and Professional Services for the year 2017 will be Rs. 6122.70 which
is showing an increasing trend 7165.04 for the year 2019. The R2 value is 0.997 and the
slope value for the Agriculture, Forestry and Fishing is 485.3 and the intercept value is -
97285.
Table 5 Trend and Forecasting GVA Value of Electricity, Gas, Water Supply &
other Utility
Year Trend Value
2011-12 466.67
2012-13 479.69
2013-14 502.15
2014-15 535.81
2015-16 565.00
2016-17 585.69
2017-18 616.12
2018-19 644.31
Source: Computed Data from CSOs All four quarters in each year
Chart 4
194
Trend and Forecasting GVA Value of Electricity, Gas,

Water Supply & other Utility y = 26.256x - 52370
R = 0.9935
700
600
500
400
300
200
100
0
2012 2014 2016 2018
The above table and chart shows the trend forecasting of GAV Value of Electricity,
Gas, Water Supply & other Utility from 2012-2016. It is inferred from Table 5 that the trend
value of Electricity, Gas, Water Supply & other Utility ranges between Rs.466.67 and Rs.565
during the study period. It is concluded that there is increasing of Electricity, Gas, Water
Supply & other Utility. The forecasting of the Electricity, Gas, Water Supply & other Utility
for the year 2017 will be Rs. 585.698 which is showing an increasing trend 644.3115 for the
year 2019. The R2 value is 0.993 and the slope value for gold is 26.25 and the intercept value
is -52370.
Table -6 Regression analysis

Std. Error
Adjusted R Durbin-
Model R R Square of the
Square Watson
Estimate
1 .869a .754 .713 1222.725 1.439
Source: Computed data
Note: a) Predictors: (Constant), Q3. B) Dependent variable: Q2
The above table confirms that the impact of demonetization on Indian economy is 75.4% as
the r2 value depicts. It is clearly noted that the effect of demonetization has been widely
outraged.
Conclusion
The present study shows the impact of Demonetization on Indian economys different
sectors. The gross value added of India is slightly decreasing as compared to the previous
years, but during the current financial year the quarterly data are in increasing trend. As per
the t-test analysis the positive effect of demonetization between the pre and post period has
no significant difference in short term and through the regression analysis it is confirmed that
there is a positive impact during the long term period. Agriculture sector typically sees high
cash transactions and therefore near-term impact could be seen till liquidity is infused in the
rural areas. As farmers face a temporary shortage of cash in hand, it could lead to a delay in
payment which in turn would hurt the related companies in the short term. The real estate
sector has been affected in a short term period negatively, whereas this sector will be
escalating to a positive growth in the forth coming years. This intervention is a one-time
draining of this current stock of black money but unless the root causes of corruption has
been removed, but still there are possibilities that the corruption will continue. It is sort of
like a dialysis, more of a short term cleaning up than a solution of the problem. It needs to be
repeated periodically.
195
References
Kapoor, Mahimam, (2016), Impact of Demonetization on Banking Sector,

www.bloombergquint.com
Partap Singh. 2016.Impact of Demonetization on Indian Economy, International Journal of
Science Technology and management, Vol. 5 Issue 12 December.
S.Vijayakjumar,(2016).Demonetization And Complete Financial Inclusion, IJMRR, Vol. 6
Issue 12 December.
Sinha, Sanjeev, (2016), Demonetization impact, New Delhi.
Partap Singh. (2013), Depreciation of Rupee in Indian Economy: An Analysis, International
Journal of Innovations in Engineering and Technology (IJIET), and Vol. 2 Issue 4
August.
Ravi Prakash A, Vijay Kumar S, Shiva Kumar T. (2009), Designing Complete Financial
Inclusion. Financial Inclusion Aspects, Issues and the Way Forward, Himalaya
Publishing House.
PTI. (2016), Demonetisation will benefit economy in long run: Jaitley. The Hindu Business
Line, 9 November.
196
Impact of Demonetization on Select Public Sector Banks in India listed with NSE
Dr. P.Chellasamy
Associate Professor, School of Commerce, Bharathiar University, Coimbatore 641046,
Tamil Nadu, India E.mail: drchellamsamy@gmail.com
P. Valarmathi
M.Phil Research Scholar, School of Commerce, Bharathiar University,
Coimbatore 641046, Tamil Nadu, India E.mail: valarmathi37@gmail.com
Abstract
Demonetization is the process by which a series of currency will not be legal tender. This is
usually done when there is a change of national currency, replacing the old notes with new
one. Such a step taken by Indian government is like a master stroke for the Indian Economy.
Because of demonetization 86 percent of high value notes were washed off from circulation.
This study focused on impact of demonetization on Public Sector Banks. Least Square
Regression Method has been used for the analysis. The study concluded that there is increase
in share price of Indian Bank and State Bank of India and all other banks shows decreased
share price for the post demonetization period. However there is no big difference, it is just a
slight decrease. Though public sector banks got more deposits in CASA, in other hand some
banks are suffer due to this initiative and it will result in subsequent quarter, it can recover
from this short term affect in an upcoming period.
Keywords: Demonetization, NSE, Banking, India
JEL Classification Code: G21, Z18
Introduction
Demonetization is the act of stripping a currency unit of its status as legal tender. Through
demonetization the old currency is replaced by a new currency or a currency circulation is
blocked. In an important move, the Government of India declared that the five hundred and
one thousand rupee notes will no longer be legal tender from midnight, 8th November 2016.
The RBI will issue Two thousand rupee notes and new notes of Five hundred rupees which
will be placed in circulation from 10th November 2016. Notes of one hundred, fifty, twenty,
ten, five, two and one rupee will remain legal tender and will remain unaffected by this
decision. This measure has been taken by the Prime Minister Narendra Modi in an attempt to
address the resolve against corruption, black money and counterfeit notes. This move is
expected to cleanse the formal economic system and discard black money from the same32.
The reasons of it are as under
1. Clampdown on black money and making Indian economy free of black money in future.
2. Uprooting corruption from Indian economy and making a corruption-free India.
3. Driving India into becoming a cash-free economy in near future which will prevent
rebirth of black money and corruption.
4. Ending counterfeit money which supports terrorism and hence, effectively paralyzing
cross-border terrorism33.
32
CARE Ratings Economic consequences of demonetization of 500 and 100 Rupees Notes
33
Demonetization Effect of Stock Market PM Jhan Dhan Yojana
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On 28th October 2016, the total currency in circulation in India was Rs. 17.77 lakh crore
(US$260 billion). In terms of value, the annual report of Reserve Bank of India of 31 March
2016 stated that total bank notes in circulation valued to Rs.16.42 lakh crore (US$240 billion)
of which nearly 86% (i.e. Rs. 14.18 lakh crore (US$210 billion)) was 500 and 1000 rupee
notes. In terms of volume, the report stated that 24% (i.e. 2,203 crore) of the total 9,026.6
crore banknotes were in circulation34.
History and Background
This move is not the first time that India demonetized its currency, similar measures have
been taken in the past. Rs 1,000 and higher denomination notes were first demonetized in
January 1946 and again in 1978. The highest denomination note ever printed by the Reserve
Bank of India was the Rs 10,000 note in 1938 and again in 1954. But these notes were
demonetized in January 1946 and again in January 1978, according to RBI data. Rs 1,000 and
Rs 10,000 bank notes were in circulation prior to January 1946. Higher denomination
banknotes of Rs 1,000, Rs 5,000 and Rs 10,000 were reintroduced in 1954 and all of them
were demonetized in January 1978. The Rs 1,000 note made a comeback in November 2000.
Rs 500 note came into circulation in October 1987. The move was then justified as attempt to
contain the volume of banknotes in circulation due to inflation.
The day, in which Indian Prime Minister Narendra Modi announced about demonetization,
the very same day Donald Trump also won the US Presidential elections. These two events
had led heightened market volatility and the impact of these two events spread across asset
classes. Indias Nifty (down 3.5%) was the second worst performing index in Asia after
Philippines, and the fourth globally after Mexico (down 5.9%), Brazil (4.3%) and
Philippines (down 3.9%). The frontline benchmark indices S&P BSE Sensex and the
Nifty50 that lost around 7.5% during the month, though have managed to recoup some
losses. The Nifty50 index, for instance, hit an intra-day low of 7,916 levels on November 21
has clawed back to 8,200 levels by December 0835.
On 8th November 2016 Prime Minister Narendra Modi announced about the demonetization
of Rs.500 and Rs.1000. This led to short term pain for general public. Banks were struggling
to deal with long queues of people trying to exchange their old high value of currency notes
with newly circulated currency notes. ATMs remained closed. Due to currency being sucked
out of the market coupled with Trumps victory, the mood at the stock market was
completely bearish. A lot of investors had withdrawn their capital from stock. Some
withdrawn due to lack of funds (since the currency they had at home no longer works) and
other because they expected a crash, perhaps an opportunity to buy at a lower levels. Hence,
the researcher wants to find the impact of demonetization on share price of public sector
banks listed in National Stock Exchange (NSE).
Objective
To analyze the impact of demonetization on public sector banks.
Sources of Data
34
Sambit,19 November 2016
35
Puneet Wadhwa, 09 December 2016
198
The study has used data from secondary sources which are collected mainly from the yahoo
finance and the other required data were collected from various journals, articles, newspaper
and Websites.
Study Period
The study covers the period of 120 days. That is pre period of demonetization covers 60 days
from 17th August 2016 to 08th November 2016 and post demonetization period covers 60
days from 09th November 2016 to 31 January 2017.
Sampling Design
The Public Sector Banks for this study were selected based on purposive sampling method.
Among the public banks listed with National Stock Exchange (NSE), top ten Public Banks in
India were taken for the study on the basis of market capitalization.
Analysis and interpretations
The price movement of share price of select public sector banks for the pre and post
demonetization has been presented in the following chart.
Chart 1: Share Price movement of Select Public Sector Banks at NSE

350.00
SHARE PRICE MOVEMENT
300.00
250.00
(in Rupeess)
200.00
150.00
100.00 PRE
50.00
0.00 POST
BANKS
Source: Yahoo Finance
The above Chart explains the average share price movement of Public Sector Banks in NSE
before and after the announcement of Government of Indias decision to cancel the legal
tender character of Rs.500 and Rs.1,000 banknotes with effect from 9 November 2016. From
the table it can be inferred that among the banks, Indian Bank and State Bank of India are
gained, On the other hand all other banks were the worst hit on the National Stock Exchange
(NSE) during the period.
Least Square Regression Analysis
To analyze the impact of demonetization on share price of public sector banks in NSE, a
Dummy variable representing the pre and post period has been included as explanatory
variable and the results has been presented in the following tables.
1. State Bank of India
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Table 1: Least Square Regression result for SBI

C 254.90 0.96 265.98 0.000
Demonetization 2.87 1.36 2.12 0.036
Table 1 reveals the impact of demonetization on State Bank of India. It is inferred from the
table that the value of Rs.254.90 denotes expected average share price during pre
demonetization period and the expected average share price during post demonetization is
Rs.257.77 (254.90+2.87). The difference between pre and post demonetization is Rs.2.87. It
indicates that after demonetization, the share price of State Bank of India has increased by
Rs.2.87.
2. Bank of Baroda
Table 2: Least Square Regression result for BOB

C 161.13 0.89 181.60 0.000
Demonetization -1.84 1.25 -1.47 0.145
Table 2 describes the impact of demonetization on Bank of Baroda. It is found from the table
that, C value of Rs.161.13 denotes the average expected stock price value before
demonetization. The average expected stock price after demonetization is Rs.159.29
(161.13+(-1.84)). The difference between pre and post demonetization is Rs.1.8400. It
indicates that after demonetization, the share price of Bank of Baroda has decreased by
Rs.1.84.
3. Punjab National Bank
Table 3: Least Square Regression result for PNB

C 137.46 1.22 112.47 0.000
Demonetization -6.46 1.73 -3.74 0.000
The least Square Regression of table 3 for Punjab National Bank depicts that the average
expected share price during the pre demonetization period is Rs.137.46 and average expected
share price during post demonetization period is Rs.131 (137.46+(-6.46)). The difference
between pre and post demonetization period is Rs.6.46. It indicates that after demonetization,
the share price of Punjab National Bank has decreased by Rs.6.46.
4. Industrial Development Bank of India (IDBI)
Table 4: Least Square Regression result for IDBI

C 72.39 0.40 181.31 0.000
Demonetization -1.28 0.56 -2.26 0.026
Table 4 portrays the impact of demonetization on Industrial Development Bank of India. It is

found from the table that the C value of Rs.72.39 denotes expected average share price during
pre demonetization period and the expected average share price during post demonetization is
Rs.71.11 (72.39+(-1.28)). The difference between pre and post demonetization is Rs.1.28. It
200
indicates that after demonetization, the share price of Industrial Development Bank of India
has decreased by Rs.1.28.
5. Central Bank
Table 5: Least Square Regression result for Central Bank

C 97.76 0.63 154.36 0.000
Demonetization -13.74 0.90 -15.34 0.000
Table 5 describes the impact of demonetization on Central Bank. It is clear from the table
demonetization. The average expected stock price after demonetization is Rs.84.02 (97.76+(-
13.74)). The difference between pre and post demonetization is Rs.13.74. It indicates that
after demonetization, the share price of Central Bank has decreased by Rs.13.74.
6. Canara Bank
Table 6: Least Square Regression result for Canara Bank

C 301.47 2.51 119.93 0.000
Demonetization -9.18 3.55 -2.58 0.011
The least Square Regression of table 6 for Canara Bank depicts that the average expected
share price during the pre demonetization period is Rs.301.47 and average expected share
price during post demonetization period is Rs.292.29 (301.47+(-9.18)). The difference
between pre and post demonetization period is Rs.9.18. It indicates that after demonetization,
the share price of Canara Bank has decreased by Rs.9.18.
7. Indian Bank
Table 7: Least Square Regression result for Indian Bank

C 220.16 1.67 131.91 0.000
Demonetization 20.44 2.36 8.66 0.000
Table 7 reveals the impact of demonetization on Indian Bank. It is inferred from the table that
the value of Rs.220.16 denotes expected average share price during pre demonetization
period and the expected average share price during post demonetization is Rs.240.60
(220.16+20.44). The difference between pre and post demonetization is Rs.20.44. It indicates
that after demonetization, the share price of Indian Bank has increased by Rs.20.44.
8. Bank of India
Table 8: Least Square Regression result for Bank of India

C 115.14 0.57 203.32 0.000
Demonetization -0.75 0.80 -0.93 0.354
Table 8 describes the impact of demonetization on Bank of India. It is clear from the table
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demonetization. The average expected stock price after demonetization is Rs.114.39

(115.14+(-0.75)). The difference between pre and post demonetization is Rs.0.75. It indicates
that after demonetization, the share price of Bank of India has decreased by Rs.0.75.
9. Union Bank
Table 9: Least Square Regression result for Union Bank

C 21.55 0.09 251.97 0.000
Demonetization -0.55 0.12 -4.53 0.000
The least Square Regression of table 9 for Union Bank depicts that the average expected
share price during the pre demonetization period is Rs.21.55 and average expected share
price during post demonetization period is Rs.21. The difference between pre and post
demonetization period is Rs.0.55. It indicates that after demonetization, the share price of
Union Bank has decreased by Rs.0.55.
10. Indian Overseas Bank
Table 9: Least Square Regression result for IOB

C 26.30 0.09 306.53 0.000
Demonetization -1.19 0.12 -9.78 0.000
Table 10 reveals the impact of demonetization on Indian Overseas Bank. It is inferred from
the table that the value of Rs.26.30 denotes expected average share price during pre
demonetization period and the expected average share price during post demonetization is
Rs.25.11 (26.30+(-1.19)). The difference between pre and post demonetization is Rs.1.19. It
indicates that after demonetization, the share price of Indian Overseas Bank has decreased by
Rs.1.19. In overall view, According to RBI Public Sector banks have higher average return
after demonetization. The post demonetization returns for public sector banks increased by
overall 0.24 percent as compared to pre-demonetization period. Following are the reasons
behind the positive impact of the demonetization:
1. 80 percent of Jan Dhan Yojana accounts are with Public Sector Banks. This means more
in form of demonetized currency notes have followed into these banks.
2. Government backing is present for these banks. The budget constraints on these banks are
soft. They get financial help from government when times become adverse.
3. Public sector banks have one fourth profitability of private banks.
4. The spillover effects from other sectors are usually absorbed by the government,
providing enough cushions for Public Sector Banks.
Conclusion
The study focused on impact of demonetization on Public Sector Banks. It is observed from
the analysis that, Indian Bank and State Bank of India has positive impact of demonetization
while all other selected banks are showed decreased value during the post demonetization
period. Shares of most public sector banks have rallied since demonetization on the back of
swelling deposits and falling treasury yields, and are surprisingly turning out to be better
performers even as the problem of bad loans continues to weigh. Though there is a positive
impact, the banks were also faced few problem, but this wont affect the banks for long time
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and the effect which was faced by the banks for a short term will be result in subsequent
quarter. The banks can also recover from this short term affect for the coming periods.
References
1. Narendra Nathan (November 14 2016),How demonetisation and Donald Trump's victory

impact your investments, The Economic Times, Retrieved from
2. Rajat Sharma (November 14 2016), Demonetization-Impact on Stock Markets, Retrieved
from http://www.blog.sanasecurities.com/demonetisation-impact-stock-markets/
3. Ami Shah (December 19 2016), Demonetisation Impact: PSU bank shares outperform
private peers, live mint, Retrieved From
http://www.livemint.com/Money/gtYK2YkcLdYZ8ETWNaW0CI/Demonetisation-
impact-PSU-bank-shares-outperform-private-pe.html
4. Pros and Cons of Demonetization Rs 500, 1000, Retrieved from,
https://www.studydhaba.com/demonetization-pdf/
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Internet Banking- Benefits and Challenges in an Emerging Economy
R. Geetha and Dr. M. Muthumeenakshi

Assistant Professors,
School of Social Sciences and Languages, Commerce, VIT University, Vellore
E-mail: geethaurss@gmail.com
Abstract
New Information technology has taken important place in the future development of financial
services, especially banking sector transition are affected more than any other financial
provider groups. Increased use of mobile services and use of internet as a new distribution
channel for banking transactions and international trading requires more attention towards
e-banking security against fraudulent activities. The development and the increasing
progress that is being experienced in the Information and Communication Technology have
brought about a lot of changes in almost all facets of life. In the Banking Industry, it has been
in the form of online banking, which is now replacing the traditional banking practice.
Online banking has a lot of benefits which add value to customers satisfaction in terms of
better quality of service offerings and at the same time enable the banks gain more
competitive advantage over other competitors. This paper discusses some challenges in an
emerging economy.
Introduction
The economy of most developing countries is cash driven; meaning that monetary
transactions are basically made through the exchange of bank notes and coins for goods and
services. However, this trend is now giving way to a modern and sophisticated payment
system where the currency and notes are converted to data, which are in turn transmitted
through the telephone lines and satellite transponders. This is as a result of rapid
technological progress and development in the financial market. There is faster delivery of
information from the customer and service provider, thus differentiating Internet enabled
electronic banking system from the traditional banking operation. This transfer process
makes money to be carried in information storage medium such as cheques, credit cards, and
electronic means than its pure cash form.
Ebanking has thus become important channel to sell Products and Services; leading to a
paradigm shift in marketing practices, resulting in high performance in the banking industry.
The banking industry has been undergoing changes since the mid 1990s, in the form of
innovative use of information technology and development in electronic commerce. This
development made ebanking pose as a threat to the traditional branch operations, despite the
fact that electronic commerce is still developing and is rapidly changing. The importance of
electronic payment system in any country can never be over emphasized, due to the dramatic
transformation in technological advancements that is being experienced by the global
financial industry.
What is E-banking?
In simple words, e banking implies provision of banking products and services through
electronic delivery channels. Electronic banking has been around for quite some time in the
form of automatic teller machines (ATMs) and telephone transactions. In more recent times,
the Internet a new delivery channel that has facilitated banking transactions for both
customers and banks, has transformed it. For customers, the Internet offers faster access, is
more convenient and available around the clock irrespective of the customers location.
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Why E-Banking?
There are not many inventions that have changed the business of banking as quickly as the e-
banking revolution. World over banks are reorienting their business strategies towards new
opportunities offered by e-banking. E-banking has enabled banks to scale borders, change
strategic behavior and thus bring about new possibilities. E-banking has moved real banking
behavior closer to neoclassical economic theories of market functioning. Due to the absolute
transparency of the market, clients (both business as well as retail) can compare the services
of various banks more easily. For instance, on the internet, competitors are only one click
away. If clients are not happy with the products, prices or services offered by a particular
bank, they are able to change their banking partner much more easily than in the physical or
real bank-client relationship. From the banks point of view, use of the internet has
significantly reduced the physical costs of banking operations. As discussed by Turner
(2001), progress in information technology has slashed the costs of processing information,
while the internet has facilitated its transmission, thus facilitating change in the very essence
of the banking business. Around the world, electronic banking services, whether delivered
online or through other mechanisms, have spread quickly in recent years.
1. The primary objective of the research paper is to get the full acquaintance of the Internet
banking and its benefits.
2. To know the challenges in E-banking.
The primary source of the information in this research study is the secondary data. The
available information on Internet regarding the E: Banking has been extensively used to
complete the dissertation report. All the available Journals, Articles, papers provided
necessary information to the group to finalize the research study. Internet Banking in India
the financial products and services have become available over the Internet, which has thus
become an important distribution channel for a number of banks. Banks boost technology
investment spending strongly to address revenue, cost and competitiveness concerns. The
purpose of present study is to analyze such effects of IB in India, where no rigorous attempts
have been undertaken to understand this aspect of the banking business. A study on the
Internet users, conducted by Internet and Mobile Association of India (IAMAI), found that
about 23% of the online users prefer IB as the banking channel in India, second to ATM
which is preferred by 53%. Out of the 6,365 Internet users sampled, 35% use online.
This shows that a significant number of online users do not use IB, and hence there is a need
to understand the reasons for not using it .Until the advent of ATMs, people were unaware
and/or not directly affected by the technological revolutions happening in the banking sector.
ATMs became the major revelation for customers, since it offered the facility to avoid long
queues in front of the cashiers in banks. It also provided them the flexibility of withdrawing
money anytime, anywhere. In the study by IAMAI, it was found that the people are not doing
financial transactions on the banks Internet sites in India because of reasons such as security
concerns (43%), preference for face-to-face transactions (39%), lack of knowledge about
transferring online (22%), lack of user friendliness (10%), or lack of the facility in the current
bank (2%).
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Benefits of E-Banking
The main benefit from the bank customers point of view is significant saving of time by the
automation of banking services processing and introduction of an easy maintenance tools for
managing customers money.
1. Reduced costs in accessing and using the banking services.

2. Increased comfort and timesaving - transactions can be made 24 hours a day, without
requiring the physical interaction with the bank.
3. Quick and continuous access to information- Corporations will have easier access to
information as, they can check on multiple accounts at the click of a button.
4. Better cash management- E-banking facilities speed up cash cycle and increases
efficiency of business processes as large variety of cash management instruments are
available on Internet sites of Estonian banks. For example, it is possible to manage
companys short-term cash via Internet banks in Estonia (investments in over-night,
short- and long term deposits, in commercial papers, in bonds and equities, in money
market funds).
5. Reduced costs- This is in terms of the cost of availing and using the various banking
products and services.
6. Convenience- All the banking transactions can be performed from the comfort of the
home or office or from the place a customer wants to.
7. Speed - The response of the medium is very fast; therefore customers can actually wait
till the last minute before concluding a fund transfer.
8. Funds management- Customers can download their history of different accounts and do a
what-if analysis on their own PC before affecting any transaction on the web. This will
lead to better funds management.
The ability to adopt global technology to local requirements: An adequate level of

infrastructure and human capacity building are required before developing countries can
adopt the global technology for their local requirements. For example, the review of the
migration plan of Society for Worldwide Interbank Financial Telecommunications (SWIFT)
to the Internet shows that to date full migration has not occurred in many developing
countries due to the lack of adequate infrastructure, working capital, and required technical
expertise.
Internet Banking-Challenges in Emerging Economy
Broadly accepted e-payment systems are another such example. Many corporate and
consumers in some developing countries either do not trust or do not have access to the
necessary infrastructure to be able to process e-payments. The ability to strengthen public
support for e-finance: Historically, most e-finance initiatives in developing countries have
been the result of cooperative efforts between the private and public sectors. Confidentiality,
integrity and authentication are very important features of the banking sector and were very
successfully managed the world over in pre-internet times.
E-Banking has created many new challenges for bank management and regulatory and
supervisory authorities.. They primarily focus on how to extend, adapt, and tailor the existing
risk-management framework to the electronic banking setting. It is necessary to know
whether the efforts undertaken by the RBI are sufficient to ensure a reasonable level of
security. There are some serious implications of international e banking. It is a common
argument that low transaction costs potentially make it much easier to conduct cross-border
banking electronically. For many banks, cross- border operations offer an opportunity to reap
206
economies of scale. But cross-border finance also needs a higher degree of cross-border
supervision. There is no commercial bank in India, which has exclusively specialized in the
small business segment. SMEs in India have generic problems like the inability to provide
quality data, to exhibit formal systems and practices and the lack of asset cover. Legal and
regulatory compliance has also been inadequate.
The flip side of this technological boom is that electronic banking is not only susceptible to,
but may exacerbate, some of the same risks particularly governance, legal, operational, and
reputational inherent in traditional banking. In addition, it poses new challenges. In response,
many national regulators have already modified their regulations to achieve their main
objectives: ensuring the safety and soundness of the domestic banking system, promoting
market discipline, and protecting customer rights and the public trust in the banking system.
New methods for conducting transactions, new instruments, and new service providers will
require legal definition, recognition, and permission. For example, it will be essential to
define an electronic signature and give it the same legal status as the handwritten signature.
Conclusion
The banking industry has been a leader in the e-business world in recent years. The e-banking
revolution has fundamentally changed the business of banking by scaling borders and
bringing about new opportunities. In India also, it has strongly impacted the strategic
business considerations for banks by significantly cutting down costs of delivery and
transactions. It must be noted, however, that while e-banking provides many benefits to
customers and banks, it also aggravates traditional banking risks. Compared to developed
countries, developing countries face many impediments that affect the successful
implementation of e-banking initiatives. One of the benefits that banks experience when
using e- banking is increased customer satisfaction. This due to that customers may access
their accounts whenever, from anywhere, and they get involved more, this creating
relationships with banks. Banks should provide their customers with convenience, meaning
offering service through several distribution channels (ATM, Internet, physical branches) and
have more functions available online. Other benefits are expanded product offerings and
extended geographic reach. With all these benefits banks can obtain success on the financial
market.
References
Johnson (2005). Overview of Electronic Payment Systems and Strategic and Technical
Issues. CBN, 29(2), 68 71.
Singhal, D and V. Padhmanabhan (2008). A Study on Customer Perception Towards Internet
Banking: Identifying major contributing factors. The Journal of Business Studies. V
(1), 101 111.
Christopher, G; C. Mike; L. Visit and W. Amy, (2006). A Legit Analysis of Electronic
Banking in New Zealand. International Journal of Bank Marketing, 24, 360 383.
Harris, L and L. J Spence (2002).The ethics of Banking. Journal of Electronic Commerce
Research,3(2), 59 66.
Turbin, E; J. Lee; D. King and H. M. Chung (2002). Electronic Commerce: A Managerial
Perspective (International ed.). Prentice Hall, London.
207
Internet Banking in China An Analysis
WU DAN, LI CUN QI, WANG SHENG YU and XU BING LEI

B.Com, Department of Commerce, School of Social Sciences & Languages,
Email: wudan.summer@foxmail.com
Abstract
The process including of that the Concept of Online Banking, In recent years, online banking
transaction, Benefits and Problems of Online Banking, Strengthen the security of Online
Banking, Develop business through online banking. Actually of the Strengthen the security of
Online Banking contact have two part, separation between Electronic bank password card
and U type shield.
Keywords: Industrial Commercial Bank of China(ICBC), internet banking, benefits,

problems, security and development
Introduction
The bank on the net, also known as online banking, electronic banking or virtual bank,
electronic payment system, make the customer of the bank or other financial institutions are a
series of financial transactions through financial institutions. Online banking systems are
usually connected to or part of the core banking system by a bank, and client access bank
branch banking services of traditional method. To access a financial institution's online
banking facility, with Internet access to customers need to register service agencies, and set a
password, and other certificates for client authentication. Online banking certificate is usually
a different phone or mobile banking. Financial institutions are usually assigned customer
number; customer pointed out that an intention to visit their online banking facilities.
Customers usually are not the same as account number, because a lot of customer accounts
can be linked to a customer number. Technically, a customer number can be linked to any
financial institution account customer control, although could limit the scope of financial
institutions may access account, said that checks, savings, loans, credit CARDS and similar
accounts.
Objectives
1. To know the recent development transactions in internet banking.

2. To study the business development through of internet banking.
The Concept of Online Banking
Online banking, also known as internet banking, e-banking or virtual banking, is an

electronic payment system that enables customers of a bank or other financial institution to
conduct a range of financial transactions through the financial institution's website. With
online banking, you can transfer money between accounts, pay bills, pay for shopping, and
perform myriad other facilities.
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In recent years, online banking transactions
1. As financial and e-commerce, the Internet network economy stronger, is beneficial to

promote the stable development of online banking, online banking deals can still maintained
steady growth. Now online financial management as the innovation of the traditional
financial management, its fast, convenient, transparent way of financing way for online
finance rapid growth, various financing tools and platforms also constantly produce.
Monetary fund, insurance, financing, bank financing, financial bills, P2P finance, the raise,
Internet currency, all kinds of financial products such as the financial gateway. Along with
the rapid development, online people in an online at the same time are also a new
understanding for online banking. Online financial management based on the development of
the Internet or later will become people's main financing way in the future.
user scale Netizens used rate
2. The bank on the net trading size (China)

In 2014 China's Internet banking deals reached 1.3044 quadrillion yuan, the growth rate of
40.2%, growth has certain rise from 24.6% in 2013;By the end of 2014, personal online
banking users up to 382 million people, 58.9% of the overall scale of Internet users.
Enterprise net silver users reached 17.295 million, up 27.7% from a year earlier. The bank on
the net after years of development has accumulated relatively stable user base, large
electronic banking user for banking developing e-commerce market laid a solid foundation,
developing e-commerce and Internet financial innovation business will become the main
power of e-banking transactions scale growth.
209
The online bank of China in 2009-2014 market size: one trillion yuan
Benefits of Online Banking
There are some advantages on using e-banking both for banks and customers:
1. Fully realize paperless trading: Before using most of the notes and documents by electronic
checks, electronic bills of exchange and replaced by the electronic receipt; The original notes
are electronic money, electronic cash, electronic purse, replaced by the electronic credit card;
The original paper documents by mail to through the data communication network
transmission. The challenge to the traditional concept of bank is first of all, the bank on the
net breakthrough the limitation of the traditional banking business on time, 7 x 24 all-weather
operations, make Banks more close to the customer, is more convenient for customers. The
bank on the net will change the traditional bank management idea. Second, the bank on the
net will change the traditional way of bank marketing and management strategy.
2. The service is convenient, fast, efficient and reliable. Bank through the network, users can
enjoy the convenient, quick, efficient and reliable service. No need to use Internet banking
services, not limited by time and region, namely the realization of 3 a service (Anywhere,
Anyhow, Anytime).
3. Low operating costs: Because of the network bank used the virtual reality information
processing technology, the network bank can in guarantee under the premise of the original
business doesn't reduce, reduce the number of operating points is greatly reduced the cost of
operation, effectively improve bank profitability. Set up online banking, the main use public
network resources, do not need to set the branch or branches of physics, reduce the personnel
cost, improve the efficiency of banking background system.
4. Easy to use: Internet E-mail communication mode is also very flexible and convenient,
easy and bank internal communication between customers and Banks. Compared with the
traditional banking, online banking has many advantages.
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Problems of Online Banking
1. Security risk
The bank on the net, with its unique advantage has attracted numerous customers, but in these
advantages is hidden behind the huge risk. The operation of the bank on the net have to rely
on computer, rely on the Internet, the Internets biggest characteristics is the digital
information. Therefore, the security of the data becomes the prime problem of the safe
operation of the bank on the net. Security issues of online banking is an online transactions of
financial institutions and the general customers the most concern, it mainly includes the
trading main body identification, commercial secrets of the transaction process, the safety of
the electronic communications, trading and other records of preservation and management,
especially the unauthorized intercept and tampered with, etc.,.Specific performance:
i. Rules and regulations is not perfect, loopholes in management, in the process of actual
operation have not abide, illegal operation and personnel quality factors such as
subjective aspect of the security hidden danger;
ii. The bank on the net's own limitations, such as the device's hardware performance is poor,
software, communication failures more congruent factors safe hidden trouble, and natural
factors, such as lightning, magnetic field, water, fire and rat harm directly caused
economic losses.
2. Strategic planning problem
To our online banking system design and development experience, in the construction of
related system standardization, the standardized consciousness is not strong, the lack of
unified planning and unified standard, which built the system of general performance is poor,
between different systems without reserve interfaces or interface standard is not unified, for
the development of online banking artificially caused many obstacles.
3. the consumption idea Lack of online consumer groups, the lack of market credit, the lack
of a unified, safe payment system.
4. Law problems in the traditional way to trade have legal effectiveness.

Signature of the original contract how to application in the electronic media, such as how to
regulate virtual financial service provided by the bank on the net, how to evaluate the quality
of service of the bank on the net, how to use the bank on the net for financial crime behavior,
punishment and sanctions dispute emerges in the form of electronic evidence on how to such
problems as accepted by the court is in the operation of the bank on the net and problems to
be solved.
Strengthen the security of Online Banking
Internet increasingly extensive application, bring more convenience for us at the same time,
also brought some of the risks. How to ensure the safety of the bank on the net trading system
is the most crucial problems .Online accounts should to protect with special encryption
software. Passwords are protected by virtual keyboard, digital signature is involved, and
periodic notifications are added, beside many other protection mechanisms. The bank should
use intelligent encryption software and firewall protection.
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Industrial and Commercial Bank of China (ICBC)
Industrial and Commercial Bank of China(full name: the Industrial and Commercial Bank of
China co., LTD., Industrial and ltd. Bank of China), hereinafter referred to as ICBC, was
established in January 1, 1984.
1. Introduce
Industrial and commercial bank of China is the first of the five big bank of China, one of the
world's a us-funded enterprises, with China's biggest customer base, is the largest commercial
Banks in China. Industrial and commercial bank of China is China's largest state-owned
commercial Banks, the basic task is according to national laws and regulations, and by
domestic and foreign financing activities to raise social funds, strengthen the credit fund
management, support the enterprise production and technical innovation, service for
economic construction in our country.
2. Electronic bank password card
Electronic bank password card is the bank of China's new electronic banking security tool, is
to protect the client money against losses and set up the line of defense. Even if the customer
accidentally leaked the lo-gin number and password, as long as keep customer password card,
make the registration card number, password, the password card will not be the same person,
will be able to guarantee the safety of client funds, so as to make customers more safe and
comfortable to use electronic banking.
3. Special advantage to edit
Electronic password structure
i. This password protection;

ii. Do not need to install driver;
iii. The small thin, easy to carry;
iv. Password binding deal elements, for each transaction to produce their own password;
v. Wide application: ICBC electronic password, the biggest advantage is that without the
connection equipment such as computer, need not install driver, with higher in most
browsers, greatly facilitate the operation of customers. It can be used for ordinary online
banking, mobile banking, telephone banking. It can also be used for iPhone/Android
mobile phone bank, the bank on the net and Mac computers these can't use U aegis of the
bank on the net for safety certification.
4. Activate the dynamic password: Customers are provided in the "certificate of icbc net
silver electronic password activation code", open the password, the password is prompted for
"activation code". After activation, the password prompt set password, input two consecutive
times can be set successfully.
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The specific operation
1. The individual net silver certification mode switching operations:

In the center of the "personal online banking - security - switch authentication" function
according to need to the authentication in the switch to "icbc electronic password"
2. Personal online banking operations:
Step 1: choose "personal online banking - transfer remittance - inter-bank remittance", fill in
the remittance information accordingly
Step 2: open the electronic password - enter the password device password - enter page
Numbers in the password device - press the confirmation key.
Step 3: will be displayed on the password input password into the corresponding input box -
fill out the information as requested - click "next" - a successful deal
U type shield
U type shield, was launched in 2003, icbc and obtain the national patent certificate USBkey,
customers are high level security tools.It just like U disk safety performance as a shield,
means U shield, so take the yue: "U type shield". It is used when handling the business of the
bank on the net to protect the bank on the net capital security, avoiding the hacker, fake
website, trojans and other risks.
1. Special advantages
i. Deal safer
Have the U shield, you deal with online banking, don't have to worry about hackers, fake
website, Trojan virus, etc
ii. U aegis bank card: All sorts of risks, the U shield to protect your online banking security
funds. For foreign payment business of the bank on the net, use the login password, and
pay the password customer, need to protect your card number and password, you need to
ensure that safe and reliable computer, log on to online banking, regularly updated anti-
virus software, download patches in a timely manner, don't literally open the unknown
programs, games, E-mail, keep a good online habit; If you can't do it, don't worry, use the
U shield is your best choice, as long as your card number and password to log in, U aegis
and U aegis password is not leaked to a person at the same time, you can rest assured the
safe use of the bank on the net.
iii. Pay more convenient
iv. Have the U shield, you no longer restricted by all kinds of payments, easily implement
large transfers, remittances, online payment and shopping.
v. Function more comprehensive
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vi. Have the U shield, can through online bank personal finance agreement, enjoy its unique
wealth management services.
vii. Services more diverse
Have the U shield, you can also use icbc U aegis binding and pay treasure to account, the
behavior of the login pay treasure to make use of U aegis identity authentication, thus to
ensure the safety of alipay account funds.
2.Application and use
As long as you are icbc personal online banking customers, carrying his valid identification
and registration of the bank on the net peony can apply for U shield to ICBC branches. Using
the U shield has three steps:
Step 1: install the driver: If you are on the computer for the first time to use personal Internet
banking, please refer to the ICBC personal Internet banking system setup guide first
download and install personal control of the bank on the net, then U aegis driver installation,
different brand U aegis driver can only be used for this brand. If you want to use the CD
installation, please run the U shield CD, choose to install on the surface of the home page
"system upgrade", the system will automatically detect and prompts you to install the patch.
After installing patch, please select "driver installation, installation of U aegis drivers.
Step 2: download the certificate information: Certificate is the first time you login the
Personal Internet banking customers, there will be safety tips from the Personal computer in
the ICBC CA root certificate, the root certificate is used for industrial and commercial bank
of your certification web site, please click "yes", that means you accept industrial and
commercial bank of Personal Internet banking services. U aegis online banking security
system flow chart: When you install corresponding certificates of completion of driver,
before the formal use of personal Internet banking other function, please login first personal
the bank on the net, and then click "security center" choose "U aegis management" function,
in "U aegis self-help download" column to download your client certificate to the U shield.
Step 3: use happy U aegis after log on to personal Internet banking, such as the need to go
through the business for overseas transfer, remittance, payment, etc, just press prompted to
insert the U shield computer USB interface, enter the U shield password, and it has been
verified by the banking system is correct, can complete the payment.
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Kinship of Consumer and Brand towards Pepsi
Dr. A.V.V.S. Subbalakshmi,

Assistant Professor, Department of Commerce, VIT University, Vellore 632014
Email: subbalakshmi.a@vit.ac.in
P.G. Suresh,
B.com (2nd Year), Dept. of Commerce, SSL, VIT University, Vellore 632014
K.C. Arun Kumar,

B.com (2 Year), Dept. of Commerce, SSL, VIT University, Vellore 632014
nd
S. Harish Venkatram,
B.com (2nd Year), Dept. of Commerce, SSL, VIT University, Vellore 632014
Abstract
A great concern in the concept of customer kinship has emanated forth with the rise of
Facebook. Marketing practitioners were the initial ones venturing to define and fathom the
potential fallout of customer devoir. However, due to a lack of scholarly interest and
empirical support, the nature of customer devoir has remained rather unclear and its
presume capability to improve customer relationships is still erratic. The aim of the study is
to infer the customer brand kinship towards Pepsi. To savvy the variables that trapping the
customer brand engagement on Facebook with Pepsi. The most exigent pronouncement of
this study theorizes that online social media platform and allied factors can influence the
level of customer perception towards branding. Thus, this paper is a bestowal to academic
marketing literature in the terrain of customer kinship.
Keywords: customer kinship, brand, social media platform
Introduction
Since the coming out, social media particularly facebook have induced thoroughly new
means of relations and engagement between consumers and brands. Consumers increasingly
use social media not only to research products and services, but also to engage with the
companies they purchase from, as well as other consumers who may have valuable insights
about these companies (Zhang & Bernard, 2011). Moreover, this new form of engagement in
social media opens up many new opportunities for brands to extract value from existing and
potential consumers. They can now receive feedback and suggestions more easily from their
consumers through these social networking sites, allowing them to respond to their
consumers, enhance their offerings, handle problems and provide better service. While this
new form of engagement includes a wide range of activities, specific behaviours such as
liking and commenting on brands social media pages have become so popular among
consumers that they are now used as measures of consumer engagement in social media
(Natalie & Carlson, 2014).
Over the past few years, brands have embraced one social networking site, i.e. Facebook, as a
key marketing channel to drive engagement and brand. Facebook brand pages have become a
major channel through which consumers are able to interact with brands in a direct way by
liking and/or commenting on brands posts and messages. In fact, these liking and
commenting functions of Facebook enable anyone to respond to a brand post easily. Thus,
one brand post can receive thousands of comments from facebook. Therefore, it is not
215
surprising that these Facebook brand pages and the subsequent engagement they facilitate
have become integral parts of brands marketing and public relations campaigns. In this
study, we investigate the Customer brand engagement on facebook with regard to pepsi.
Need for the Study
The need of the study is to understand have influential online social media is with regard to
consumers. Since the evolvement of the social media particularly facebook people show more
engagement towards brand on facebook starting from liking the brand page to commenting
and sharing the brand to friends, family members etc., The concept of Brand Engagement is a
newly evolved 20th century concept and it is one listed as one of the research priorities for the
period of 2010-2012 by The Marketing Science Institute (MSI, 2010).The present study
largely signifies how much customers are engaged to their brands on facebook with regard to
Pepsi. Since Pepsi is a famous brand, most of the facebook users are well aware of the brand.
The major need of the study is to know whether the concept of Brand Engagement on social
media is existing for the brand Pepsi, if the brand engagement is acting how influential it is
with regard to people sharing it with their friends and family. The need of study also signifies
how important brand engagement is for the brands to keep up its existence. Thus the
objectives of the study include
1. To examine brand engagement on social media platforms particularly facebook with

regard to pepsi.
2. To understand the variables effecting brand engagement on facebook
Literature review
Kim Jung (2009) firstly examined the relation between brand awareness and market outcome.
Second, he explores the relation between brand awareness and brand equity. Finally, he
investigates the effects of marketing mix elements on brand awareness. Based on three
studies conducted in South Korea, the fashion brand experience scale was validated.
Confirmatory factor analysis and structural equation modelling revealed that the scale
consisted of brand awareness, brand performance, brand imagery. Fashion-brand experience
highlights the robust affective dimension that is created via the relational extension of brand
imagery, customer feelings, and customer-brand resonance. In addition, as a condition
necessary for affective experience, the cognitive brand judgment is created by a credible
opinion related to brand performance. Dwivedi & Johnson (2015) in the study examined the
impact of celebrity endorser credibility on consumer self-brand connection and endorsed
brand equity. A conceptual model is developed, positioning consumer self-brand connections
as a partial mediator of the effect of endorser credibility on endorsed brand equity. The
research model is empirically supported.
Celebrity endorsements impact endorsed brand equity via two pathways. First, a direct effect
of endorser credibility on endorsed brand equity was observed, which is positively moderated
by the degree of consumer-perceived endorserbrand congruence. Frady (2016) in this thesis
examined the relationship between Millennials engagement with brands on social media
outlets and the relationship they have with brands they interact with. The measurement tool
utilized for this survey was Bruning and Galloways Organization Public Relationship Scale.
The survey was administered via Qualtrics, an online survey tool used to quickly and easily
collect surveys. Millenials are consuming media. The bad news is, according to this survey,
most are not currently being motivated to read and share those messages they are exposed to.
Some of these tools track how much Facebook users are talking about brands on their own,
while others track how much of a brands messaging is being shared. Benjamin (2012)
216
addressed one of the major issues for brand management: how to persuade employees to
adopt corporate brand values as their own and live the brand as an authentic expression of
their personal and collective identity.
The research site selected for exploration of the corporate brand. In total, 26 semi structured
interviews were conducted, each lasting for 45 90 min, which were audio recorded and then
subsequently fully transcribed. In total, this produced 150000 words of text for analysis. He
extended our understanding of how organisational participants can be persuaded to offer an
authentic performance of corporate brand values through dialogue between managers and
employees Moreau & Parguel (2011) has used Kellers brand equity framework, the purpose
of this study was to investigate the impact of the rms environmental communication on
brand equity, and specically its impact on brand image, through the strength and
favourability of brand environmental associations. A between-subjects experimental design
tests the hypotheses with a generalize sample of 165 French consumers. Environmental
communication positively inuences the strength and favourability of brand environmental
associations, therefore improving brand equity. Two moderators reinforce the impact of
environmental communication on brand equity through the strength of brand environmental
associations.
Methodology
Measuring instruments: In order to collect the data and test the customer brand engagement
of pepsi on online social media platforms an online survey was conducted using a
convenience sampling method of Facebook account holders. Among many various online
services offered by Facebook, there is also something called Facebook Pages. Facebook
Pages are public profiles meant to promote brands, products, artists, web sites or
organizations. A questionnaire was framed accordingly using Likert scale and survey was
taken through Google forums for the facebook account holders who had liked Pepsi page.
IBM SPSS is used as a tool for analysing the data to derive effective conclusions.
Sample: The data was collected from the students of a private university in south India. The
questionnaire was distributed through online forums for about 260 students. A convenience
sampling method was employed. A sample of 255 was retained. The final sample consist of
163 (63.7%) male and 94 (36.7%) female of which 42 (16.4%) diploma, 137 (53.5%) under
graduates, 62(24.2%) post graduates and 15 (5.9%) post doctorate students. IBM SPSS is
used as a tool for analysing the data to derive effective conclusions.
Findings and Conclusions
This study was an effort to introduce and investigate the concept of customer brand
engagement in the context of online social media platforms in particular facebook with regard
to Pepsi. With the diminishing role of traditional media and the evolution of Internet
technologies the rules of the brand marketing have changed. As a result, customer
engagement was brought to the attention of the marketers as a way to improve customer
brand relationships and therefore gain competitive advantage in the new era of social media.
The five variables under which the whole study turned out were, Self expressive brand, social
self, brand love, brand advocacy and brand acceptance. A comparative analysis was made
starting from knowing the factor effectiveness continuing to the relation among them. The
brand love was a dependent variable which is largely influenced by brand advocacy followed
by self expressive brand. Even the other two variables social self and brand acceptance also
has significant level of influence on brand love. By analysis, to understand the differences in
the variables with regard to gender it was found that among the five variables, self expressive
217
brand, social self, brand advocacy and brand acceptance has no difference with regard to
gender.But brand love differs from male to female in a considerable amount. Further, it was
found that no significant differences were observed with regard to qualification in all the five
variables. With the amount of frequency and analysis the five variables distinctively show
that brand engagement in online social media particularly facebook is a serious factor in
marketing for Pepsi. Brand love differs from gender thats a factor the organisation to get
concerned about while taking measures of brand engagement in facebook. On the other hand,
the managers will also find some useful implications that are relevant and can be applied in
designing the strategies for engaging the customers. Yet, further study is necessary in order to
fully leverage the potential of customer brand engagement in the context of online social
media platforms.
References
1. Kim, H. (2012). The dimensionality of fashion-brand experience: Aligning consumer-based brand

equity approach. Journal of Fashion Marketing and Management: An International Journal,
16(4), 418-441.
2. Dwivedi, A., Johnson, L. W., & McDonald, R. E. (2015). Celebrity endorsement, self-brand
connection and consumer-based brand equity. Journal of Product & Brand Management, 24(5),
449-461.
3. Frady, D. (2016). Millennials' Personal Connection with Brands via Social Media Tools.
4. Golant, B. D. (2012). Bringing the corporate brand to life: The brand manager as practical author.
Journal of Brand Management, 20(2), 115-127.
5. Benoit-Moreau, F., & Parguel, B. (2011). Building brand equity with environmental
communication: an empirical investigation in France. EuroMed Journal of Business, 6(1), 100-
116.
6. Hatch, M. J., & Schultz, M. (2010). Toward a theory of brand co-creation with implications for
brand governance1. Journal of Brand Management, 17(8), 590-604.
7. Kim, A. J. (2014). Power of consumers: Examining the influence of brand-related user-generated
content on consumer response (Doctoral dissertation, UNIVERSITY OF MINNESOTA).
8. Zhang, M., Jansen, B. J., & Chowdhury, A. (2011). Business engagement on Twitter: a path
analysis. Electronic Markets, 21(3), 161-175.
9. Rhodes, A. (2015). Synaesthetic Design Expression: The Blending of the Senses and its
Implications on Brand Expression. ARIZONA STATE UNIVERSITY.
10. Alloza, A. (2008). Brand engagement and brand experience at BBVA, the transformation of a 150
years old company. Corporate Reputation Review, 11(4), 371-379.
11. Franzak, F., Makarem, S., & Jae, H. (2014). Design benefits, emotional responses, and brand
engagement. Journal of Product & Brand Management, 23(1), 16-23.
12. Kaufmann, H. R., Kaufmann, H. R., Loureiro, S. M. C., Loureiro, S. M. C., Manarioti, A., &
Manarioti, A. (2016). Exploring behavioural branding, brand love and brand co-creation. Journal
of Product & Brand Management, 25(6), 516-526.
13. Khan, I., Khan, I., Rahman, Z., Rahman, Z., Fatma, M., & Fatma, M. (2016). The role of
customer brand engagement and brand experience in online banking. International Journal of
Bank Marketing, 34(7), 1025-1041.
218
Mobile Banking
B.Krishnaveni and A.Kiruthika

B. Com., Department of Commerce,
Abstract
In todays age of new opportunities and emerging technologies, there is a new

communications infrastructure to transform the way business is done. Using simple and
cheaper hardware such as mobiles and handheld devices we can communicate and also we
can do business transactions. It provides much better mobility than PCs. Technology is
moving towards mobiles which has wide spread usage and acceptability. Lot of protocols and
softwares has been developed. We are connecting the mobile to bank database using WML
(wireless markup language)mscripts and java technology. This opportunity is mobile
commerce, and it will drive new levels of intense competition in the finance industry. Mobile
commerce achieves this by removing the traditional restrictions of geographical location and
high entry costs. This result on the finance industry may be led by a new weapon i.e., the
mobile phone.
Keywords: protocols, technology, mobility
Introduction
The last time that technology had a major impact in helping banks service their customers
was with the introduction of the internet banking. Internet banking helped give the
customers anything access to their banks. Customers could check out their account details,
get their bank statements, perform transactions like transferring money to other accounts and
pay their bills sitting in the comfort of their homes and offices. However the biggest
limitation of internet banking is the requirement of a PC with an Internet connection, not a
big obstacle if we look at the US and the European countries, but definitely a big barrier if we
consider most of the developing countries of Asia like China and India. Mobile banking
addresses this fundamental limitation of Internet banking, as it reduces the customer
requirement to just a mobile phone. Still, the main reason that Mobile banking scores over
Internet banking is that it enables Anywhere Banking.
Customers now dont need access to a computer terminal to access their banks, they can do
so on the go when they are waiting for their bus to work, when they are travelling or when
they are waiting for their orders to come through in a restaurant. The biggest advantage that
mobile banking offers to banks is that it drastically cuts down the costs of providing service
to the customers. For service providers, mobile banking offers the next surest way to achieve
growth countries like Korea where mobile penetration is nearing saturation; mobile banking
is helping service providers increase revenues from the now static subscriber base. Mobile
banking solutions offer a full range of benefits for financial institutions, ranging from
reduced customer support costs to improved customer satisfaction and retention as well as
revenue growth.
219
Analysis on mobile banking preferred by the customers
1. Count of age
The age group of people using mobile banking or the respondents are more in the 15-20 age
group by 69.4% people this shows that the mobile is mostly used by this age group and
possibility of doing mobile banking is higher and the next highest group is 21-30 age group
by 18.4% and the rest age groups are low as compared to these two age groups. This is a
survey based on 50 respondents.
2. Count of do you know the mobile banking facility provide by bank?
The mobile banking facility provided by the banks this facility has been introduced in the
recent years so that how people aware of this have been said in this chart the people known or
aware of mobile banking is 84% and eventhough technology is increasing to the highest peak
14% of people are not aware of this. This is a survey based on 50 respondents.
3. Count of do you aware of mobile banking facility provide by your bank?
The people provided by the mobile banking facility where they kept the bank account is
70.6% and still now 17.6% of people are not having mobile banking facility by their bank,
and 11.8% of the people are not aware of this. This is a survey based on 50 respondents.
4. Count of do you prefer mobile banking or traditional banking?
The people who prefer mobile banking is higher by 68% and the people who prefer
traditional banking is 32% and this shows even now people are willing to use traditional bank
than mobile banking. This survey is based on 50 respondents.
5. Count of whether mobile banking is helpful to you than the old way of banking
The people who prefer mobile banking is higher by 68% and the people who prefer
traditional banking is 32% and this shows even now people are willing to use traditional bank
than mobile banking. This survey is based on 50 respondents.
6. Count of is mobie banking is beneficial to you if so in what way?
It is about how mobile banking is helpful and in what ways the people say it helpful in saving
time and energy is 51.% and the people say that it reduces dependency on bank is 29.6% and
least response to cost effective of bank is 18.5%. This survey is based on 50 respondents.
7. Count of how often you make mobile money transaction?
The people usage of mobile banking is analysed and the respondence is more towards
monthly basis people use mobile banking monthly is high by 36.5% and weekly once or
twice is second highest by 30.8% and the people use occasionally is by 28.8% and daily use
is not even by 1% and if needed is also very lower. This survey is based on 50 respondents.
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8. Count of do you thinnk it is easy for every person to use mobile banking?
According to this graph whether the mobile banking is easy to use for all the people the
responded to this is it is useable for all is 50% and it may or may not be by 24% and it cant
be used by all can be done by is 26%. This survey is based on 50 respondents.
Conclusion
Internet banking, mobile banking, e-banking, and all enable the bank to be connected with the
customer and vice versa. A customer who is provided with a variety of additional services
feels appreciated and it is more and its more likely to be loyal to that bank, which is likely to
be loyal to that bank, which is good sign for bank. In the end mobile bank is not only helps a
bank to reduce costa but also helps it to retain its valuable customers. And as for as customers
are concerned, this facility enables the customer to bank anywhere, at any time and in any
condition, definitely a boon if a customer is struck in middle of nowhere and requires
banking services as soon as possible. The mobile banking helps both the customer as well as
the bank, to lighten the burden of todays world and to save time, money and energy which is
greatly appreciated and required. In a competitive world where everyone is waiting to out to
the other, helping a hand, in whatever forms and from whatever source, is definitely not go
unrecognized.
Web references
1. www.wikipedia.com
2. www.google.com
3. www.zeepedia.com
4. www.bankplace.com
5. www.moneyprofile.com
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Online Banking Frauds
Nikshey Bhavith V
nd
2 year B.A.,L.L.B, VIT Law School, VIT University, Chennai Campus.
Abstract
Online banking has become increasingly important to the profitability of financial institutions
as well as adding convenience for their customers. As the number of customers using online
banking increases, online banking systems are becoming more desirable targets for criminals
to attack. To maintain their customers trust and confidence in the security of their online
bank accounts, financial institutions driven to identify how attackers compromise accounts
and develop methods to protect them. Frauds with online payments, ATM machines,
electronic cards and net banking transactions have become a serious issue. Huge loss of
money of people and institutions is caused every year due to these cyber frauds in banking
firms, even after tight security measures in electronic transaction. This paper aims to explain
about Online Banking and frauds that have occurred in it. It also tries to put forth the
preventive measures to avoid such frauds in future.
Keywords: Online Banking, Cyber Crimes, Scams, Fraudulent And Preventive Measures.
Introduction
As the Information and Computer Technology has made its reach into almost every sphere of
life. The world has been witnessing a growing trend of using online transactions, digital data
transfer, electronic database and so many business, social and other activities based on
computers, internet and information technology tools. In the time of cut-throat competition,
every business entity wants to improve its performance level so as to cut costs, increase
productivity and serve the customers better. Banking, insurance and financial organizations
are the prime users of internet and online transactions. They make use of such technology to
transfer cash, make payments, and submit account information and other kinds of remittance
services. Of course, the banking services have really got enriched owing to information and
internet uses. But, at the same time, cyber threat is a big issue.
Online transactions and data are not free from being attacked or manipulated. Cases of
fraudulent cash withdrawals, account information hacking, data theft and credit/debit card
scams have remarkable association with electronic systems in banking business. Today,
maximum information being online, are highly susceptible to be attacked by cyber criminals.
Cyber fraud cases in banks have become quite common which cause heavy loss of money to
the customers every year. Cyber crime can be described as any criminal activity done using
computers and the Internet. This includes anything from illegally downloading files to
stealing millions of rupees from online bank accounts. Cybercrime also includes non-
monetary offenses, such as creating and distributing viruses on other computers or posting
confidential business information on the Internet.
Online Banking
At the basic level, Internet banking can mean the setting up of a web page by a bank to give
information about its products and services. At an advanced level, it involves provision of
facilities such as accessing accounts, transferring funds, and buying financial products or
services online as well as new banking services, such as electronic bill presentment and
payment, which allow the customers to pay and receive the bills on a banks website. This is
222
called transactional online banking. Online banking is a series of processes in which a bank
client logs on to the Website of the bank through the Web-browser that is installed on clients
Personal computer and carries out various transactions such as account transfers, bill
submissions, account inquiries etc. Online Banking Transaction For any OLT (Online
Transaction)the user first turns on the PC and then open web-browser, accesses the online
banking website of the bank and enters the ID or Personal Identifying Number (PIN) and the
password by using the keyboard or virtual keyboard. SSL (Secure Socket Layer) encrypt the
data transmitted between clients PC and banks server.
The banks server decrypts the transmitted information and processes the users
authentication, account inquiry, account transfer, etc. But during this whole processing
prevalence of malicious applications that steal financial account information has increased
dramatically over the last few years, often resulting in victims losing hard currency. The
attackers tend to target the weakest link whether it is host computer or banks server or
banks website. Once the attacker has control over a users computer anyway, he or she can
take advantage by Interruption, Interception, and Modification Fabrication of information.
So, Security of online banking transactions is one of the most important areas of concerns to
the banking sector. Security issues include adoption of internationally accepted state-of- the
art minimum technology standards for access control, encryption / decryption (minimum key
length etc), firewalls, verification of digital signature, Public Key infrastructure (PKI) etc by
banks. Along with it the security policy for the banking industry, security awareness and
education are also the security issues that are given same importance.
Internet Banking Frauds

Internet Banking Fraud is a fraud or theft committed using online technology to illegally
remove money from a bank account and/or transfer money to an account in a different bank.
Internet Banking Fraud is a form of identity theft and is usually made possible through
techniques such as phishing. Now internet banking is widely used to check account details,
make purchases, pay bills, transfer funds, print statements etc. Generally, the user identity is
the customer identity number and password is provided to secure transactions. But due to
some ignorance or silly mistakes you can easily fall into the trap of cyber criminals. Phishing,
operates by sending forged e-mail, impersonating an online bank, auction or payment site; the
e-mail directs the user to a forged web site which is designed to look like the login to the
legitimate site but which claims that the user must update personal info. The information thus
stolen is then used in other frauds, such as theft of identity or online auction fraud.
A number of malicious "Trojan horse" programmes have also been used to snoop on Internet
users while online, capturing keystrokes or confidential data in order to send it to outside
sites. Fake websites can trick you into downloading computer viruses that steal your personal
information. Security messages are shown that tell you that you have viruses and need to
download new software, by doing this you are tricked into downloading an actual virus. The
statistics that have been obtained and reported about demonstrate the seriousness Internet
crimes in the world. Just the "phishing" emails mentioned in a previous paragraph produce
one billion dollars for their perpetrators (Dalton 1). In a FBI survey in early 2004, 90 percent
of the 500 companies surveyed reported a security breach and 80 percent of those suffered a
financial loss (Fisher 22). A national statistic in 2003 stated that four billion dollars in credit
card fraud are lost each year. Only two percent of credit card transactions take place over the
Internet but fifty percent of the four billion, mentioned before, are from the transaction online
(Burden and Palmer 5). All these finding are just an illustration of the misuse of the Internet
and a reason why Internet crime has to be slowed down.
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Cyber Frauds in Indian Banks
Reserve Bank of India recently released statistics on Cyber Frauds pertaining to Internet
Banking, ATMs, Debit Cards and Credit Cards for the years 2010-2012 and even after all the
security and policies introduced, cyber fraud in terms of total amount is on the rise. As per
the report, in 2010, cyber frauds accounted for close to 40.5 crore rupees as compared 52.7
crores in 2012. On the other hand, the cases reported have seen a decrease from 15018 cases
reported in 2010 as compared to 8322 cases reported in 2012. This also shows that average
value per cyber fraud case has also increased alarmingly!
Bank-wise Cyber Fraud Data
ICICI Bank customers have been the biggest victims of Cyber Frauds. In last 4 years (from
2009 to 2012) ICICI Bank alone reported 34918 cases amounting to 74.25 crore rupees.
Though, ICICI Bank is one of the biggest private commercial Banks in India, the number of
cases are relatively very high. With the measures that ICICI Bank has taken over the years,
the number of cases as well as the value of cyber frauds in dropping. In 2009, ICICI Bank
had 15,666 cases, 9811 in 2010, 6013 in 2011 and 3428 in 2012. Even the value has been
progressively down.
American Express ranked 2nd based on the value of cyber frauds with 4 years (2009 to 2012)
amounting to 26 crore rupees nearly 3 times less than ICICI Bank. Citibank came in at 3rd
reporting 24 crores worth of cyber frauds followed by Axis (15.9 crore) and HSBC (13.8
crore). The surprising aspect is low number of cyber fraud cases witnessed by HDFC Bank.
In past 4 years, they witnessed only 1330 cases valued 9.77 crore rupees. Given that it is one
of the largest bank in India, they have effectively managed the security of their customers
against cyber frauds.
Preventive Measures against Online Banking Frauds

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You can help keep the cash in your bank account safe and reduce your chances of becoming a
victim of fraud by following these simple steps:
1) First of all, make sure your computer or laptop is protected with a good security
software program and anti-virus software. Keep them all, along with your browser,
up-to-date.
2) Different banks have different security measures for online banking but if you have to
set up a password, make sure it is a mixture of letters and numbers, and is different
from an email password. If you access your email from an insecure computer,
scammers could steal your password details and use them to access your account.
Also, don't write your passwords down in full or share them with anyone.
Avoiding scam calls and emails
3) Never disclose personal details, such as your password, on email or over the phone
unless, of course, it is one you have agreed with your bank for telephone banking.
4) However, if you received a call, or email, from your bank which you weren't
expecting, treat it with suspicion, regardless of the apparent name of the organisation
contacting you. Never follow a link from an email purporting to be from your bank or
open an email from an unknown source as it may contain a virus.
5) Before entering your account details into a website, make sure there is a padlock
symbol in your browser and that the web address changes from starting with 'http' to
'https' - this means the connection is secure.
6) If you have a wireless network at home, make sure you have activated the security
settings on your wireless router to make it secure and prevent others accessing it.
7) Avoid accessing your bank account from a public computer or unsecured wireless
network. If you do use a public computer, never leave it unattended when logged in
and always log out properly when you've finished your banking session.
8) If you experience any problems logging on, telephone your bank, don't send an email.
9) Avoid posting personal information such as your email address, date of birth and
phone number on social network websites such as Facebook and Twitter to reduce the
risk of identity theft. Only accept friend requests from people you know. Someone
posing as an interesting person asking to become friends may actually be an ID thief.
Check your privacy settings carefully and make sure only people you trust can view
your profile.
10) Regularly check your bank account and statements for suspicious transactions. If you
spot something unfamiliar, report it to your bank or card provider as soon as you can.
Recovery of Lost Money through Online Banking Frauds
One can file an application before the Adjudicating Officer appointed under Section 46 of
Information Technology Act, 2000 claiming breach of reasonable security procedures by the
bank. An analysis of selected cases ordered by the Adjudicating Officer in the state of
Maharashtra revealed that the banks and telecom operators in most cases have failed to
maintain reasonable security procedures, including non-compliance of KYC norms, Anti-
money laundering guidelines, and automatic suspicious transaction monitoring facilities. As
per Section 43A of Information Technology Act, 2000 the banks and other intermediaries
who have failed to maintain reasonable security procedure must pay adequate damages as
compensation to such person to cover the loss. The Adjudicating Officer has the power to
adjudicate in the matters where the claim does not exceed Rs 5 crores. The bank must prove
225
that they have maintained reasonable security procedures to prevent such fraudulent acts. In
case the bank fails to prove that they have maintained reasonable security procedure, the
Adjudicating Officer who has the powers of a Civil Court, may order the bank to pay
damages as compensation to the victim.
Conclusion
So online banking facilities give users the flexibility to undertake their banking at a time that
best suits them and also saves time but it also presents various security threats. . The Security
posture of a bank does not depend solely on the safeguards and practices implemented by the
bank, it is equally dependent on the awareness of the users using the banking channel and the
quality of end-user terminals because the hackers always choose the easiest way to attack.
Generally the easiest seems to be attacking the user or his/her PC, so awareness and usability
of users is also equally important to make online banking 100% secure. So 100% security
guarantee that is given by banks for users transactions is possible if both banks and users
together give flawless security posture to online banking by removing all the given security
flaws.
Fast track courts are a category of special courts within judiciary or court system that has
exclusive jurisdiction over an area of law which was introduced in April 2001. This will help
in clearing the massive backlog in cybercrime. It enhances judicial efficiency and
effectiveness and also promotes specialization and professionalization. We need courts
manned by trained judges to dispose of the cases in a time-bound manner. The Information
Technology Act should be made powerful enough to dissuade potential criminals. Cyber
courts are a viable alternative to the endless delays that plague court dockets, but only if they
succeed in making courts more efficient.
References
1) http://www.isca.in/IJMS/Archive/v2/i7/4.ISCA-RJMS-2013-062.pdf last visited on 2nd

February 2017.
2) http://www.ijarcsse.com/docs/papers/Volume_3/8_August2013/V3I2-0257.pdf last
visited on 2nd February 2017.
3) http://www.worldjute.com/ebank1.html last visited on 15th February 2017.
4) https://en.wikipedia.org/wiki/Bank_fraud#Phishing_and_Internet_fraud last visited on
25th February 2017.
5) http://www.cyberlawsindia.net/internet-crime.html last visited on 6th March 2017.
6) http://trak.in/banking/2013-bank-cyber-fraud-india-statistics/last visited on 7th March
2017.
7) http://www.which.co.uk/money/bank-accounts/guides/how-to-bank-online-safely/tips-to-
avoid-phishing-and-identity-theft/ last visited on 8th March 2017.
8) http://blog.ipleaders.in/online-banking-frauds-in-india-how-to-recover-lost-money-under-
information-technology-act-2000/ last visited on 8th March 2017.
226
Role of Financial Institutions for Sustainable Development

3
Research Guide: Dr. S. Tameem Sharief., Ph.D.
Assistant Professor, The New College (Autonomous), Chennai - 600 014.
Research Scholar: Nabeel Ahmed
Abstract
Banks play an important and pivotal role in the financial system. They lend directly to
companies; they undertake longer-term funding and investment through securitization and cover
bond issuance; they use their securities affiliates to participate in under writing debt securities
issued by companies, using the banks balance sheet; and they participate in derivates markets
including swaps which affect the cost of capital. A dysfunctional banking system reverberates
through all of these channels and may be associated with deleveraging and high risk premium.
In particular, the shift from originate and hold to originate and distribute approach may
have endangered the fundamentals of sound bank business models. Where interbank lending
freezes up, securities market activities (including underwriting and derivates transactions)
become more difficult, and uncertainty and the cost of capital rise. This may affect projects that
need longer-term financing, such as infrastructure. The business models of banks, as the recent
crisis has shown, are at the very heart of these issues.
Keywords: financial system, banks, mutual funds, investors.
Introduction
The financial sector plays an essential role in providing and channeling financing for
investment. Beyond providing short-term finance for business day-to-day operations and
other temporary cash requirements, financial institutions, capital markets and institutional
investors are also sources of long-term finance that is finance which is available for an
extended period of time. The importance of long-term finance lies in its pivotal role in
satisfying long-term physical investment needs across all sectors in the economy and
specifically in key drivers of growth, competitiveness and employment such as the
infrastructure, real estate, R&D and new ventures. Traditionally, banks have been a key
player in the financial system, transforming savings into long-term capital to finance private
sector investment. Over time, two main changes have taken place in the structure of the
financial system. First, the banking model has evolved, becoming increasingly dominated by
wholesale markets and in particular derivates, to the detriment of the more traditional
deposit-taking and lending activities. Second, disintermediation and the growth of capital
markets has led to a shift in the structure of the financial sector, with institutional investor
such as pension funds, insurance companies, mutual funds, and most recently, sovereign
wealth funds, also becoming central players as providers of long-term capital.
The Commercial Banking Sector
The greatest potential of the commercial banking sector is in its relationship with Small and
Medium sized Enterprises, where banks can be very influential through their lending
practices and by providing information. Commercial banks have less influence over most
larger companies. There is, however, scope for them to influence consumer behavior through
the financial products they offer. Today the most commercial banks have focus on two areas:
Firstly many have made considerable progress in developing internal environment
management systems to reduce their own environmental impact. Secondly, most banks
include some environmental analysis into their credit assessment process although this tends
227
to be focus on liability. The United Nations Environmental Program (UNEP) has established
a statement on Banks and the Environment which over 90 banks have signed, including a
substantial number from the EU. It is the leading international initiative on banks and
environment and is certainly encouraging a number of banks to take the environment
seriously. A smaller number of leading banks have taken their activities further, and for
instance have started to take a wider view of environmental factor in credit system including
developing checklists and other procedures.
The Insurance Sector
The potential of insurance sector in achieving sustainable development lies in its ability to
price various types of environmental risk and to help pay for environmental damage.
Potentially environmental issues can affect risks in a number of areas, but to date the industry
has taken an issue based approach and has focused on the environment in two main areas:
Environmental Liability has had a seriously adverse affect on the industry, particularly in the
US and has resulted in the industry taking a very cautious approach to environmental issues.
It is important that in any development of environmental liability in the EU the insurance
industry be actively involved and reasonably supportive. Unrealistic expectations of the
extent to which the industry can price environmental risks accurately should be avoided. The
industry has also become clearly concerned about the potential impact of Climate change on
its business. Changing climate at best undermines the historic basis for evaluating risk and at
worst could significantly increase losses, from increased storms and floods, to the extent that
even the very viability of the industry could be threatened. In response, the leaders in the
industry have developed a comprehensive set of measures, ranging from an increasing
lobbying at the climate change convention, through working with governments on research
and preventative measures, to adjusting premiums and their areas of activity.
New Alternative Sources of Financing
In recent years diversification benefits and higher expectations of investment returns are
increasingly driving investors to alternative investments, such as private equity, real estate
and commodities. Alternative investments generally have lower liquidity, sell in less efficient
markets and require a longer time horizon than publicly traded stocks and bonds.
Infrastructure is often included in the alternative investments part of the portfolios.
Institutional investors have traditionally invested in infrastructure through listed companies
and fixed income instruments. This still remain the main exposure of institutional investors to
the sector. It is only in the last two decades that investors have started to recognize
infrastructure as a distinct asset class. Since listed infrastructure tends to move in line with
broader market trends, it is a commonly held view that investing in unlisted infrastructure
although illiquid can be beneficial for ensuring proper diversification. In principle, the
long-term investment horizon of pension funds and other institutional investors should make
them natural investors in less liquid, long-term assets such as infrastructure.
Material Method
This is the descriptive research paper base on secondary data. The literatures are collected
from various journals, books, magazines, periodicals, various reports, publications of recent
research papers available in different websites.
228
Barriers to Investment
1. While there is clearly growing interest among pension funds, insurers and other
institutional investors in infrastructure investments, major challenges remain before a
substantial increase in allocations may occur. Among the several challenges the following
may be highlighted.
2. Lack of appropriate financing vehicles; only the largest investors have the capacity to
invest directly in infrastructure projects. Collective investment vehicles have been available,
such as infrastructure funds, but problems with high fees and extensive leverage mean that
these have become less popular since the financial crisis. Interesting vehicles to assist
pension funds to invest in the infrastructure sector have been developed in some Latin
American countries (such as Chile via infrastructure bonds with insurance guarantees, in
Mexico via structured products and in Peru via a collective trust structure and in Brazil via a
joint-owed infrastructure company.
3. Regulatory barriers; the move to market-consistent valuations and risk-based solvency

standards is indirectly affecting the ability of pension funds and insurers to invest in
infrastructure and other alternative asset classes. Specifically, when discount rates are based
on market interest rates, there is a strong incentive to use bonds and interest rate hedging
instruments to reduce volatility in solvency levels, as has been observed in the insurance
sector.
4. Lack of objective, high equality data on infrastructure and a clear and agreed benchmark,
making it difficult to assess the risk in these investments to understand correlations with other
assets. This makes it difficult to assess the risks of these investments and to understand
correlations with the investment returns of other assets. Without such information investors
are reluctant to make such allocations.
Conclusions
The disruption to long term finance patterns is due to a mix of underlying problems which are
in part a consequence of recent developments following the financial crisis and in part due to
some more structural problems and longer term trends. This note has first highlighted the
disruptions that can be created by the business models of banks, which moved towards more
vulnerable structure involving innovative products in derivatives and securities during the run
up to the crisis. The sharp rise in leverage and counterparty risk resulting from these
developments has led to deleveraging, increased economic uncertainty and an increase in the
cost of capital. It will be very important to analyses how to develop policies with respect to
suitable bank business models in order to foster an environment more conducive to
infrastructure and SME lending, and to foster a more stable environment that will lower the
cost of capital, which is so critical in longer term investment funding and decision-making. It
is not helpful to foster an environment that once more favors debt over equity.
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Result & Discussion
A key issue in the inclusion of environmental issues is the significance of environmental

issues-while potentially of some relevance; many environmental issues are of insufficient
importance to be a priority, particularly in view of other concerns and practical difficulties.
Improving information flows would be and effective way of making it easier for financial
institutions to incorporate environmental considerations. There is still potential to reinforce
the link between environmental performance and financial performance, notably through the
use of economic instruments such as environmental taxes.
References
Bear, W and Villela, A. V. (1980), The changing Nature of Development Banks in Brazil,
Journal of International Studies and World Affair, Vol. 22, Issue 4.
Bevins V (2010), BNDES: Climate for Casting a Wider Net, Financial Times, May 6
Eshag, Empire(2000), Fiscal And Monetary Policies and Problems in Developing Countries,
Cambridge, Mass:The Belknap Press of Harvard University Press.
Kuznets, Simon (1971), Modern Economic Growth: Findings and Reflections, Nobel
Memorial Lecture, reprinted in Kuznets (1974), pp 165-184.
United Nations .(2005), World Economic and social Survey 2005: Financing for
Development. New York : Department of Economic and Socia Affairs, United Nations.
Weeks, John, Nguyen Thang, Rathin Roy and Joseph Lim(2003), The Macroeconomics of
Poverty Reduction: The Case Study of Vietnam, Kathmandu:UNDP.
230
Corporate Crimes Societal Dogma - A Critical Review
Godwin David C. Mathew,

School of Social Sciences and Languages, VIT University, Vellore 632014,
Tamil Nadu, India
Ddharaniikota Ssuyodhan
AVP and Head Legal, Cotiviti LLC, 50, Danbury Road, Wilton, Connecticut 06897, USA
Dr. S. Usha,
School of Social Sciences and Languages, VIT University, Vellore 632014,
Tamil Nadu, India
Abstract
Corporate crimes and their impact on society are not new to this world. They are pertinent to
this world from the time of existence of the very first corporations. This paper studies in
detail about corporate crimes in various segments like the financial sector, environment,
major banks containing legal entanglements for treachery to manipulate foreign exchange
markets, automobile industry for safety violations, issues related to food and pricing. The
various grounds for such delinquencies have been elaborately discussed and how the
delinquencies are affecting our society in copious ways. This paper also lays emphasis to
explore how far the companies as well as their shareholders are liable and responsible for
such corporate crimes. The paper concludes with various recommendations to control
corporate crimes so as to improve the quality of societys living conditions.
Keywords: Corporate, Crime, Society, Impact, Regulations
Introduction
The most common form of business organization is a corporation, which is a creation of law.
A company is called an artificial juridical person for the reason that, it is a person, who is not
a human being, but an artificial person created by law. Being a person, it is clothed with
many rights, obligations, powers and duties that are prescribed by law. However, the powers
that a company possesses include only those, which are offered upon it by the Memorandum
of Association (MOA), which is the charter of the company. A company can do anything like
a natural person within the limits of the MOA.
Characteristics of a company include, corporate personality, limited liability, company a

person, perceptual succession, separate property, transferability of shares, capacity to sue and
be sued, common seal, contractual rights, limitation of action, voluntary association for
profit, separate management and termination of existence. Usually a corporation is treated as
a separate legal person, who alone is responsible for the debts it incurs and the only
beneficiary of the credit it is owed. Common law countries usually honor this principle of
separate individualism, but in exceptional situations of crimes being involved may pierce or
lift the corporate veil.
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Corporate crimes
Corporate crimes are not new to this world. They have been taking place in this world from
the initial days that corporate entities were beginning to get established. That said, it is not an
easy job to confine corporate crimes to one definition. As such, there are various definition so
far corporate crimes, according to various authors. Corporate crimes are crimes committed
in the course of otherwise legitimate working procedures in respectable organizations.[1].
Corporate crimes are firms act that violates the criminal law. It is also defined as the
crime committed by, respectable or atleast respected, business and professional men who
belong to the upper class [2]. It is a crime committed for the corporate organization and not
against it [3]. The Fraud Act, 2006, United Kingdom (U.K) defines corporate crime as an
intentional dishonest act by management, employees or third party on or against a company
to gain advantage or to cause harm or it. The Charted Institute of Management Accounting
(CIMA), 2009 defines corporate crime as an act that involves deception to other parties to
make a personal gain for oneself dishonestly to create losses for others. Corporate crime is an
exercise of dishonesty conducted to gain advantage over others.
The foundation of corporate or individual fraud starts with decisions that are compromised by
underlying conflicts of interest and a resulting lack of truly independent decision-making,
which fails to take into account the best interests of a business organization [4]. Financial
crime is motive driven and develops in specific space and contexts aided by informational
weapons. By promoting both financial optimization and tax minimization, non-corporative
territories provide the perfect breeding ground for criminally innovative minds. Large
organizations are more likely to engage in crimes more than smaller ones. The relationship
between prior performance and crime are strongest for corporate crimes. Business
organizations are geared towards achieving goals and that those in executive positions, by
virtue of the autonomous nature of their jobs, are able to decide whether those goals can be
achieved by legal or illegal practices, or a bit of both [5]. It is suggested that throughout the
area of corporate liability for crimes one issue which should never lose sight of, is that
prevention is better than cure. Training and supervising employees are costly but the benefits,
while perhaps unseen and unsung, are overwhelming in comparison with the dreadful
publicity which, proves that not all publicity is good publicity [6].
Categories of Corporate Crimes
There are many types of corporate crimes just like many definitions are available for
corporate crimes. The range of corporate crime, vary from physical harm to gross economic
damage. Broadly we can say that there are corporate criminal activities, which are: (a)
between employees; (b) between the corporations; and (c) against the society. Crimes, which
involve employees, can be called as occupational crimes committed by the employees at
different level. Such crimes are committed against the corporation itself and many include
embezzlement, kickbacks, breach of confidentiality etc. Crimes between corporations include
dumping, price fixing and bid rigging etc. Crimes against the society can be those which
affect health or life, hazardous activities, financial frauds, investment frauds, theft,
racketeering, Security frauds, tax evasion, stock market manipulation and inside trading.
Another way that the corporate crimes can be again divided is according to the nature of the
crime committed, which includes crime resulting in physical harm and economic offences.
232
The National and International Status
Industrial disasters, that costs the life of many like Bhopal gas tragedy is an example of a
corporate crime. Many lives are lost because of the corporates negligence of occupational
standards and safety standards. Another instance is where there can be cases of consumers
being made victims of unsafe products. Engineering and Mechanical defects are very
dangerous to handle. Companies, to save money and to cut product cost, sometimes,
deliberately compromise on product safety. In many cases, public are made victims of
industrial pollution due to improper disposal of industrial waste. The effect of these crimes
remains even after years of happening. Gross misconduct is done towards the laborers and
employees in shape of forced labor, child labor inhuman working conditions, denial of proper
sanitation and no medical facilities among others.
Corporations are required to prepare financial reports containing true information about the
financial status of the company. The investors, creditors or other stakeholders rely upon such
reports. Falsification of audits to mislead or play deception it may result in huge loss and are
the biggest kind of corporate crimes. Every day, a lot of significant and confidential
information is exchanged between the officials of a corporation but when this information is
used to create profit for one's over self by the employee is called the insider trading. These
kinds of crimes are committed in stock markets mostly. The companies gain huge profits
when they manipulate the market through a security.
These activities are created to generate the interest of an investor but due to this the state and
individual can both face losses. The wrong and misleading information is posted, spread or
published related to a stock to either increase or decrease stock price of a share of company.
Huge effects can be faced by the stock exchange within minutes of manipulation and it can
lead to crash of markets too. Every Company has its own strategy of working. These may be
the business plans, the manufacturing details, business process details, marketing strategies,
future destinations and / or stock details. The company thrives on these trade secrets and its
goes equally for the private or the public firms. Hacking into these trade secrets is a common
threat and modus operandi for many corporations. Many methods are adopted by them to
achieve these. A cyber attack may be initiated or an insider employee may be bribed, or a set
up may be instigated to manipulate the documentation.
Theft of trade secrets not only affects the shareholders of the victim company but also the
community. It leads to intellectual property theft, corruption, illicit financial flow,
occupational frauds, narcotics trafficking, black marketing. Harshad Mehta, Ketan Parekh, R.
Ramalinga Raju are few names that the security market of India can never forget. They have
been the reason for embezzling hundreds of crores through investment frauds in the last 30
years. Loopholes in the investment securities are misused to funnel out the money into their
own Bank accounts. Fictitious and Bogus firms are created their bogus transactions are made,
which only exist on paper but their dividends and profits are procured in cash by these
masterminds. In February 2014 Supreme Court of India ordered the arrest of Subrata Roy, the
founder of Sahara Group for failure to return over 20,000 crore plus interest at 15% to
millions of its small investors.
233
Jignesh Shah, founder of Multi Commodity Exchange was arrested for his alleged
involvement in Rs. 5600 crore National Spot Exchange Limited (NSEL) scam. He failed to
hand out 13,000 crore back to his investors. Investment scams lead to frauds, money
laundering, bankrupting and even loss of lives due to financial losses and rivalries. Corporate
bribing is a type of crime, where many a times state also becomes a party. Huge monetary
benefits exchange hands between private/public individuals to grab hold of a deal.
Multinational corporations pay the governments to secure their business. The developing as
well as the under developed countries are the biggest playgrounds for the companies to play
with the rules of corporate bribery. There operates a huge nexus between the government and
the companies where bribery is concerned. Corporate manslaughter is another offence where
homicides of individuals result due to gross negligence on the part of the corporate. In these
cases the duty to take is totally misappropriated by the corporations. Its a crime under
English Law whereby the companies can be prosecuted for non-implementation of standard
safety rules along with precautionary steps required to be taken for employee safety. In 1993
Peter Lyme of limited was jailed for three years and fined 60,000 pounds for an incident
where four teenagers died in a canoeing incident. Big amusement parks, rail disasters, boats
sinking disasters and loss of lives at the activity camps etc. are few examples where due to a
mechanical glitches or an engineering fault many lives have been lost.
Negligence happens when the care and precaution to handle a particular situation is not taken
care of. It becomes the liability and duty of the directors, managers and all the others who
occupy the position of importance to make sure that no inadvertent incident happens as a
result of negligence with regards to safety standards of manufacturing, processing and use of
a product. Breakage of security shaft, defected brakes to stop a machine or un-covered
electrical wires lying openly at the work premises are few examples of negligence which
have resulted in loss of life. Countries like England and Hong Kong have laws to prosecute
the directors/owners for acts of negligence. In India we have absolute liability of the
company to against the acts of negligence environmental pollution, soil degradation are few
of the main acts that are undertaken by the companies deliberately. Within the garb of legal
provisions, the companies are a capable of committing many crimes. Tax evasion, auditing
frauds, share rate fluctuation, dishonoring of cheques, default bank accounts, benami property
transactions etc. are clearly visible in the functioning of the corporations. The Indian
Companies Act, 2013 makes it the liability of the directors, the accountants, auditors to stop
such frauds. These acts result in monetary loss, loss of reputation and revenue for the
company along with loss of faith from the investors.
Acts like mis-statement in prospectus, liability to pay for qualification shares, refund of share
application money, fraud in contracts, fraudulent conduct of business, unlimited liability
under the memorandum, income tax frauds, labour law violations, frauds on minority
shareholders are such incidents which can have the shareholders and the stockholders
devastated. The present corporate crime up surge revealed no ciphers of waning. British
Petroleum (BP) compensated a record $20 billion to resolve the outstanding civil charges
involving the Deep water Horizon catastrophe on top of the $4 billion in preceding criminal
penalties, whereas Volkswagen is fronting larger accountability in association with its
structure to shirk emission criterions.
Further many automakers and suppliers had to deal with hefty penalties for violating safety,
containing a $900 million fine and deferred criminal prosecution for General Motors, $70
million for Honda, civil penalty of $200 million for Japanese airbag maker Takata, penalties
of $105 million and $70 million for Fiat Chrysler. Banks such as the Citigroup, JPMorgan
Chase, Barclays, Royal Bank of Scotland had to pay $2.5 billion to the Justice Department of
The United States (U.S) and $1.8 billion to the Federal Reserve for conspiring to deploy
234
foreign exchange markets. Anadarko Petroleum decided to pay beyond $5 billion as charges
for toxic dumping by Kerr-McGee bought by Anadarko. Johnson & Johnson subsidiary
McNeill-PPC entered a guilty plea and paid $25 million in fines and punishment for selling
adulterated childrens over-the-counter medications. Deutsche Bank was fined $258
million for violations related to transactions on behalf of countries like Iran and Syria and
entities subject to U.S. economic sanctions. In a rare financial penalty in a food safety case, a
subsidiary of ConAgra was fined $11.2 million for distributing salmonella-tainted peanut
butter [21].
Grounds for Corporate Crimes to Transpire
Just like many types of corporate crimes, there are also many causes of corporate crimes.
Common causes include, accounting problems and board oversights; failure to allocate
responsibility for the prevention of fraud; development of modern technology; the absence of
specific statutory provisions relating to the responsibility for fraud detection [7]; failure of
regulatory agencies; poor internal regulatory practices; diversion of white collar crime to civil
court; workers propensity to commit individual and corporate crime; low self-control
[8];competition [9]; temptation of organization to resort to illegal methods to achieve their
objectives; poor performance of the corporations [10]; non serious consideration of the
corporate criminal prosecutions [11]; tough Economic Times [12]; level of investors beliefs
about industry [13] among others. Taking accounting problems and board oversights into
consideration, most of the recent emerging corporate scandals were a result of accounting
problems and board oversights. It is the management, that is, the directors, who are
responsible for ensuring that proper accounting records and statements are prepared and
maintained.
Corporate crimes can be easily caused if there are internal accounting problems and board
oversights. Failure to allocate responsibility for the prevention of fraud can be also be said as
a cause, which enables fraud. Accepting honesty as inevitable, allowing known cases of fraud
to go unpunished, thinking security to be too expensive or adequately covered by a fidelity
policy, and the attitude, which says that it can't happen to us, is part of it. The development of
modern technology is a cause because it has led to the widespread use of computers, which
has created the problem not only that the system itself is highly complex but also that an
auditor is unable to follow a single transaction completely through the system. Naturally,
therefore, it is exceedingly difficult to detect fraud in which computers are used as the main
tool of the crime. The absence of specific statutory provisions relating to the responsibility
for fraud detection is also responsible for corporate crimes. In the absence of specific
statutory provisions relating to the responsibility for fraud detection, the courts are the final
arbiters of the extent of auditor responsibilities. The circumstances of fraud vary from case to
case. Courts have not dealt with many cases, because many have been settled out of court.
Failure of regulatory agencies like the failure of Britains regulatory agencies to control
institutions like Halifax Bank of Scotland (HBOS) and the Bank of England is the cause of
the financial crime. Some of the crimes can happen due to poor internal regulatory practices.
The Royal Bank of Scotland scandal is an example of crime caused by poor internal
regulatory practices.
Diverting white-collar crime to civil court generally results in diffident fines and very less
retribution, when paralleled to the revenue and assets of guilt-ridden corporations and their
capability to pay. This causes corporate crimes. Workers propensity to commit individual
and corporate crime is also a cause of corporate crime. Sutherlands theory helps to explain
why workers in an organization, especially in certain industries, possess a propensity to
commit individual and corporate crimes. Sutherland rejected the encounter and social
235
disorganization dimensions of his earlier versions of his theory. He proposed that certain
characteristics play a key role in placing individuals in a position to behave unlawfully,
including the proposition that criminal behavior is learned through interaction with other
persons, as well as interaction occurring in small intimate personal groups. Low self-control
can also be a cause of corporate crime. Gottfredson and Hirschis [14] self-control theory
proposes that individuals commit crime because of low self-control. Except in rare cases of
mass fraud such as in the Lincoln Savings and Loan debacle (1980s) or the more recent
Enron scandal, not all elites within a given organization or industry will commit crime.
Competition can also be a cause of corporate crime. Economists have recognized the many
virtues of competition since the time of Adam Smith. However, it has also been argued that
competition may be problematic in some respects. One such claim is that competition may
drive firms to engage in unlawful practices; the keener is the competition, the higher is the
pressure to reduce costs, and the more pervasive is corruption. The intuition is
straightforward and compelling.
When some firms lower their costs by engaging in unlawful practices and competition is
fierce, other firms must follow suit or else risk losing market share and potentially being
driven out of the market. Temptation of organization to resort to illegal methods, to achieve
their objectives is also a cause of corporate crime. All organizations have a set of objectives
to be achieved. They have to be achieved through straight methods. Some organizations use
illegal methods to achieve their objectives. This can be a cause of corporate crime. Poor
performance of the corporations leads to corporate crime because, corporations are expected
to perform well. The main aim behind running corporations is to make profits. Some
corporations do not run well as expected. This poor performance forces corporations to
commit crimes. Hence it can be said as a cause of corporate crime. Non-Serious
consideration of the corporate criminal prosecutions is a cause because; corporates nowadays
do not take criminal prosecutions seriously. They commit crimes, employ the top lawyers,
pay fine and continue to commit crimes. This is also a cause of corporate crimes. Tough
economic times financially affect the organization and can force an organization to commit
crime. Level of investors beliefs about industry causes corporate crimes as fraud propensity
increases with the level of investors beliefs about industry prospect but decreases in the
presence of extremely high beliefs.
Determining the Liabilities of Corporations
According to common law a corporation could not be held criminally liable for any crime
committed by its member on behalf of the company under that individuals capacity but this
idea has changed over time. First it was agreed that a corporation can be held criminally
responsible if it fails to fulfill its legal obligations and also for the inadequate manner in
which it was performed. During the 20th century, the Supreme Court expressed its vague
views on corporate crimes-
It is true that there are some crimes which, in their nature, cannot be committed by
corporations. But there is a large class of offenses ... wherein the crime consists in purposely
doing the things prohibited by statute. In that class of crimes we see no good reason why
corporations may not be held responsible for and charged with the knowledge and purposes
of their agents, acting within the authority conferred upon them. If it were not so, many
offenses might go unpunished and acts be committed in violation of law where, as in the
present case, the statute requires all persons, corporate or private, to refrain from certain
practices, forbidden in the interest of public policy.
236
But when the court spoke about crimes which in nature cannot be committed by the
corporations it did not specify any crime and since then it has always been a point of debate if
a corporation can be held criminally liable not just for the action of its agent but also for the
wrongdoings done by its agents or members with the intension to commit a crime. Most
federal criminal statutes apply to whoever or to any person who violates the law. In
general language person refers to human being whereas in legal terms it has a broader
meaning. The tax crime definition of person says that the term person shall be construed to
mean and include an individual, a trust, estate, partnership, association, company or
corporation. And in some cases even governmental institutions are added to the list of
persons.
According to the English law, a company can be held answerable for an unlawful act or an
error in two approaches. First, where the company is vicariously liable for the act of its
employees and the second approach is known as the alter ego doctrine. Under the first
approach the company, which in the eye of law holds separate legal entity, is held legally
responsible for an act performed by its employee, who as a natural person would have been
so liable. The so called high level officers act on behalf of the company and hence are
imputed to the company. The company is not vicariously liable but personally and directly
liable for the acts done by the senior officers on behalf of the company, which being an
artificial body cannot perform major functions. A corporation is an abstraction. It has no
mind of its own any more than it has a body of its own; its active and directing will must
consequently be sought in the person of somebody who for some purposes may be called an
agent, but who is really the directing mind and will of the corporation; the very ego and
center of the Personality of a corporation and under the second mode this agent will be held
liable.
The difference between the two modes of liabilities is very apparent. Under the first mode the
company is liable for the behavior of its employees, regardless of their position on the
hierarchy table. While the second deals with the directing minds of the corporations. The
distinction is often stated anthropomorphically as one between 'hands' and 'brain' and there is
a growing jurisprudence concerned with which jobs in which companies fall within these
categories. The degree to which a company can be held legally responsible for the
wrongdoing of its employees is often decided by the court due to the complexity of law. In
maximum cases, a corporation is held responsible for the actions of the employee while he is
carrying out his employment related responsibilities but the extent of that responsibility is
found out by the intention of the employee, scope of the action and the preventive measures
taken by the employer. The employer cannot be held responsible for any felony committed by
the employee that occurs outside the workplace and does not come under the professional
capacity of the person or for any unpredictable criminal act that takes place in the business
until the negligence of the employer is proved. Moreover, corporations cannot be put behind
bars, they can only be fined, placed on probation, can be ordered to pay restitution, its
property can be confiscated and can also be barred from engaging in any business activities
[6].
While the criminal investigation on the corporation goes on the corporation enjoys certain
constitutional rights that an individual has during prosecution. The corporation has the First
Amendment that gives it the right to free speech, a Fourth Amendment that gives it a
protection against unreasonable searches and seizures; it has the Fifth Amendment that gives
it the right to due process and protection against double jeopardy; Sixth Amendment that
gives it the right to counsel, jury trial, speedy trial and to confront accusers and to subpoena
witnesses and finally the Eighth Amendment which provides protection against excessive
237
fines. The corporation does not have the privilege against self-incrimination which is the
Fifth Amendment [5].
It is now finely established that corporate directors, officers, and employees can be held
criminally liable for any felonious acts that they personally commit irrespective of whether
they were acting in continuance of the corporation's benefits. A corporate director, officer, or
agent need to respond for any personal wrongdoing and cannot be safeguarded by the
corporate entity. An officer and a director can also be held criminally accountable for
criminal acts committed by their agents under the respondent superior tort theory mentioned
above. Directors, officers, and employees may also be criminally answerable for any crime
that they assist and abet. Directors and officers may also be subject to criminal liability for
any crime under the theory that they failed to prevent the crime by neglecting to control the
misconduct of those subject to their control.
Under this theory of liability, a person is criminally liable based on her responsible relation to
the criminal violation irrespective of whether she has any knowledge of the criminal activity
[15]. The claim that corporate criminal liability unfairly punishes innocent shareholders
appears to be premised on what corporate theorists refer to as the aggregate theory of
corporate personality, namely that the corporation is the alter ego of its shareholders. It is on
that basis that punishment of the former is equated with punishment of the latter.
Much worry has also been expressed by business representatives for innocent shareholders
who they say will ultimately pay the cost of the fine. This should not stop the commission,
however, because as many believe and the law dictates shareholders are the ultimate source
of power to the incorporation. They are free to replace these managers executives of higher
integrity. Though some argue that most shareholders have little effective power, greater
influence could be wielded by representatives of institutions such as pension and mutual
funds which hold large concentration of shares. If there had been an activity without the
knowledge of the shareholders then the shareholders cant be held liable. Shareholders may
be the theoretical residual owners, but because of diversification and the fraud discount, their
exposure to securities fraud is quite limited.
Employees and trade creditors, on the other hand, face significant risk of securities fraud,
particularly in concentrated industries, during investment booms or bubbles, in industries in
which they make substantial firm-specific investments, and in industries in which exit is
costly [4]. It can always be noted that the giant business criminals are treated more humanely
than the orthodox criminals and the complexity in the nature of various business make it
difficult for the police to build a rigorous case against them. But then, this is an era where the
enforcement of law is being urged to remove the evil penetrators of corporate crimes and to
make sure that they face a heavy risk of prosecution and imprisonment, parallel to the
treatment that a murderer faces [6].
238
Conclusion
Corporate crimes not being socially accepted anymore is the biggest threat to the wrongdoers.
Their crimes wont be glamorized anymore and the criminals will be regarded no better than
the orthodox criminals. As such many precautionary measures can be adopted to control
corporate crimes. Instituting appropriate fraud prevention measures within the organization to
detect and prevent fraud is the best way to prevent crimes, if the corporate crimes are
committed by the employees, without the knowledge of the management. Voluntary
corporate change is the best way to prevent crime because; the change comes from the
corporates itself. The corporate it decides that, it does not need any profits by committing
crimes [8]. Identification of the potential problems within the organizations and seeking
solutions that decrease the likelihood of crime and malfeasance because, problems within the
organization is one of the main causes of corporate crime [8].
Increasing social responsiveness can be said as another way of preventing corporate crimes.
If the companys responsibility to the society increases, they would automatically refrain
from committing crimes that cheat the public. Development of single set of compliance,
internal control, transparency systems can also decrease corporate crimes because it increases
the difficulty to commit corporate crimes [16]. Increasing self-monitoring level also can
greatly prevent corporate crimes [17]. Vigilance and innovativeness can also prevent
corporate crimes from the organizations perspective [18]. Taking deterrence by punishment
into consideration, increasing the level of punishment for the crimes can reduce the amount
of corporate crimes [19]. Establishment of techniques by the government can also prevent
corporate crimes. Taking additional disclosure into consideration, requiring additional
disclosures can significantly reduce fraud [20].
References
[1] H. G. B.Van de, "Corporate Crime", Journal of Financial Crime, Vol. 2 (1), pp. 11 23,
1994
[2] E. H. Sutherland, Is White Collar Crime, Crime? American Sociological Review, Vol.
10 (2), pp. 132-139, 1944
[3] S. Box, Power, Crime and Mystification, Tavistock Publisher, London, pp. 257. 1983
[4] G.L. Imperator, Corporate Crime, Responsibility, and Compliance and Governance
Journal of Health Care Compliance, pp. 107-204, 2005
[5] M. Marsh, You can't afford a conscience in business: the nature, operation and
consequences of corporate crime, International Journal of Sociology and Social Policy, Vol.
13, (1/2), pp. 83 98, 1993
[6] M. Jeffrson, Corporate criminal responsibility - ascription of criminal liability to
companies, Journal of Financial Crime, Vol. 3, pp. 275-277, 1996
[7] M. Hemraj, "Preventing corporate scandals", Journal of Financial Crime, Vol. 11 (3), pp.
268 276, 2004
[8] L. L Hansen, "Corporate financial crime: social diagnosis and treatment", Journal of
Financial Crime, Vol. 16 (1), pp. 28 40, 2009
[9] X. Vives, Innovation and Competitive Pressure. Journal of Industrial Economics, Vol.
(61), pp. 41969, 2008
[10] C.R. Alexander and M. A. Cohen, New Evidence on the Origins of Corporate Crime,
Managerial and Decision Economics, Vol. 17 (1), pp. 421 435, 1996
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[11] R..Mokhiber, 20 things about corporate crime, Alternet, accessed at

http://www.alternet.org/story/54093 on 29th of August, 2007
[12] N.Mongie, The effect of fraud on businesses in the economic downturn, FA News,
accessed at http://www.fanews.co.za/article/fraud- crime/5/general/1094/the-effects-of-fraud-
on-businesses-in-the-economic- downturn/6479 on 25th of August, 2009
[13] T. Y.Wang, X. Yue and A. Winton, Corporate fraud and business conditions: evidence
from IPOs, Journal of Finance, Vol. 65 (6), pp. 2255-2292, 2010
[14] M. R.Gottfredson and T. Hirschi, A general theory of crime, Stanford University
Press. 1990
[15] H. Croall, Combating financial crime regulatory vs. crime control approaches, Journal
of Financial Crime, Vol. 111, pp. 45-55, 2004
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Journal of Financial Crime, Vol. 11 (4), pp. 347 352, 2004
[17] G. Mugellini, G.Ly Isenring and M. Killias, (). Employee offenses: What strategy of
prevention for what business, Secur J, DOI10.1057/sj.2015.38, 2015
[18] N. F.Coburn, Corporate investigations, Journals of Financial Crime, Vol. 13 (3), pp.
348-368, 2006
[19] Reiss and M. Tonry, Beyond the Law: Crime in Complex Organizations, University
of Chicago Press, Chicago, IL, pp. 97-148, 1993
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240

Conference Proceedings Conventional To Digital - A Shift in Banking A Two Day National Conference 21st and 22nd April, 2017

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Conventional to Digital

A Two Day National Conference

2. Dr. D.S. Selvakumar

3. Dr. A.V.V.S. Subbalakshmi

6. Mr. Ravi Khetan

7. Mr. Cherian Thomas

The Department of Commerce is one of the four departments in the School

School of Social Sciences and Languages

The School of Social Sciences and Languages was formed as a separate

VIT University was founded in 1984 as Vellore Engineering College by

Shri. Sankar Viswanathan, Dr. Sekar Viswanathan,

Shri. G.V. Selvam, Kadhambari S. Viswanathan,

Dr. V. Raju, Dr. K. Sathiyanarayanan

Dr. N. Sundaram, Dr. D.S. Selvakumar,

Dr. A.V.V.S. Subbalakshmi, Dr. M. Muthumeenakshi,

Balachandar. R Ravi Khetan

Cherian Thomas Sriram. M

1 A Comparative Study of SERVQUAL Analysis: 04

2 A Study about Internet Banking and Its Impact 11

3 A Study on Adoption and Use of Mobile Banking with Special Reference 20

4 A Study on Analysis of BOP Trends with reference to India 25

5 A Study on Contribution of MFIs on Poverty Alleviation in Vellore 33

6 A Study on Investment Pattern of Housewives in Vellore District 42

7 A Study on Investors Purchasing Preferences on Investment in Indian 49

8 A Study on Stress Management among College Teachers in Andhra 56

9 A Study Performance of Primary Agricultural Credit Societies Banks in 64

10 Antecedents of Digital Banking - An Empirical Study 70

11 Application and Utility Expectancy of Mobile Banking Transactions - An 78

13 Comparative Study on Financial Analysis of SBI and ICICI Banks 89

14 Conventional to Digital A Shift in Banking 106

15 Crypto Currency An alternative Tender? 113

16 Demonetization and its Impacts on Economy 119

18 Demonetization: Its Legitimacy and Concerns with Banking Sector 129

Digital Payment Systems: Perception and Concerns among Urban 133

20 E-Banking: A Budding and Merchandising Mode of Transaction 139

21 Effectiveness of Online Advertising 145

23 Future Prospects of Plastic Money in Indian Banking System 151

24 Green Banking: An innovative initiative towards Sustainable 155

25 Impact of Demonetisation on Indian Stock Market: With Special 159

26 Impact of Demonetization on Indian Economy 163

27 Impact of Demonetization on Select Public Sector Banks in India listed 170

28 Internet Banking- Benefits and Challenges in an Emerging Economy 176

29 Internet Banking in China An Analysis 180

30 Kinship of Consumer and Brand towards Pepsi 186

31 Mobile Banking 190

32 Online Banking Frauds 192

33 Role of Financial Institutions for Sustainable Development 197

34 The Corporate Crimes Societal Dogma - A Critical Review 200

A Comparative Study of SERVQUAL Analysis: Public v/s Private Sector Banks

Uday Kiran Sarma,

business. SERVQUAL is a well-known research instrument for evaluating service quality in

The applicability of SERVQUAL in banking sector has revealed various results.

Service Quality Dimension - Service Quality Gap Model (SERVQUAL)

Analysis and Interpretations

Variable Category Count Percentage (%)

Student 205 49.0%

Public Sector Banks

Private Sector Banks

E17 4.102 P17 2.795 1.307

A Study about Internet Banking and Its Impact

Keywords: Virtual banking, financial transactions, Cashless economy

Objective of the study

To learn the concept of internet banking