Chapter 2

Literature Review

1|Page
2.1 Talent Management: Concept

2.2. Significance of Talent Management

2.3

2|Page
2.1 INTRODUCTION
A literature review is a text of a scholarly research work, which includes
the current knowledge including substantive findings as well as theoretical and
methodological contributions to a particular topic proposed for research work.
Literature review uses secondary data and do not report new or original
experimental work. It throws light on the issue under consideration and contributes
significantly in framing the methodology and research design for the issues to be
studied under the proposed research study. It also helps in deciding the virginity of
the proposed research work.

2.2 REVIEW OF LITERATURE

2.2.1 DEPOSIT MOBILISATION OF COMMERCIAL BANKS:
Narayan Maharana, Suman Kalyan Choudhary and Ashok Kumar
Panigrahi (2015) through their research study attempted to assess the trends and
the growth pattern of deposit mobilisation of scheduled commercial banks in
Bhubaneswar over a period of six years i.e. from the year 2008-09 to 2013-2014.
The sample consisted of one public sector bank, viz., Bank of Baroda and one
private sector bank, viz., Axis Bank. The researchers did not justify the reasons for
the selection of these banks. Mobilising deposits through intensive collection is an
important function of banks. Banks need to adopt innovative techniques for
mobilisation of deposits. The researchers based their study on assessing time
deposits, savings deposits and term deposits to study the growth pattern and trends
of deposit mobilisation. The major source for collecting secondary data with
reference to number of deposit accounts and total amount of deposits mobilised by
banks were extracted from RBI bulletins. Primary data was collected from the
depositors of the banks under consideration in order to ascertain the factors that
hold importance for them in preferring a bank for depositing their money and to
also study the impact of the various strategies adopted by the banks for deposit
mobilisation. The major findings of the study are stated as follows:
(a) It was observed that there was a considerable increase in the current and
term deposits of the Bank of Baroda over the study period. Savings deposits
showed an average compound growth rate of 14.34%. In the case of Axis
bank, the current deposits and term deposits were found to be lower with

3|Page
 savings deposits being higher as compared to Bank of Baroda. Thus, it was
concluded that Axis Bank attracted more saving deposits in comparison to
Bank of Baroda. However, the CAGR of total deposits of Bank of Baroda
was found to be higher than Axis Bank.

(b) With reference to nature of depositors in form of their professional status, it

was found that the employee depositors of Bank of Baroda were more as
compared to Axis Bank, whereas with regards to depositors from the
business sector, Axis Bank had more of them as compared to Bank of
Baroda. Also, it was concluded that Axis Bank had a higher possibility in
securing term deposits as the percentage of retired/unemployed depositors
was found to be higher.

(c) With reference to the operations of deposit accounts, it was found that the
average operations of current account deposits were higher as compared to
all other types of accounts in both the banks. Therefore, it was concluded
that the cost of servicing the current deposit account is more than the
operation of any other deposit account.

(d) With reference to behavioural style of bank staff, it was found that the
employees of both the banks were best in guiding customers about any new
schemes introduced by their bank followed by employees possessing
adequate information about all new developments in their respective bank
and the banking industry as a whole.

Overall, it was concluded that Bank of Baroda performed much better than
Axis Bank throughout the period of study. 1

2.2.2 DEPOSIT MOBILISATION AND SOCIO-ECONOMIC IMPACT:

1
Maharana Narayan, Choudhary Suman Kalyan and Panigrahi Ashok Kumar, (2015), ‘Deposit
Mobilisation of Commercial Banks: A Comparative Study of Bank of Baroda and Axis Bank in
Bhubaneswar City’, Journal of Management Research and Analysis, Volume – 2, Issue – 3, pp.195-
203.

4|Page
 Dr. Rajeshwar Shettar (2014) through his research paper titled, ‘Deposit
Mobilisation and Socio-Economic Impact: A Case Study of Union Bank of India’,
attempted to evaluate the social and economic impact of mobilisation of deposits.
Mobilisation of deposits is an integral part of any banking institution. Deposit
mobilisation helps in uplifting the economic and social position of an economy.
The research was completely based on secondary data with information extracted
from the annual reports of Union Bank of India with regards to total deposits i n
the form of term deposits, current deposits and savings deposits. Simple statistical
measures, i.e. averages, indices, ratio analysis, etc. were utilised for the
classification and analysis of the data collected. The secondary data was collected
for over a period of 13 years, i.e. from 1999-2000 to 2011-2012. A significant
growth was observed throughout the study period in the mobilisation of all kinds
of deposits of Union Bank of India.

The statistics extracted from the annual reports of the bank reflected that
the bank was highly successful in mobilising funds for deployment. However, it
was found that the deposit mix of the bank was quite conventional in nature, as it
was only able to mobilise only three types of deposits, i.e. savings, current and
term deposits. The individual statistics of all three types of deposits indicated that
the bank was lagging in attracting savings and current deposits as the term
deposits showed an increasing trend over the other two. However, overall growth
in the number of deposits of the bank played a pivotal role in enhancing the social
and economic role of our nation. With reference to term deposit, the bank had
introduced a scheme under the name ‘555 days’. The constant and focused
strategies of the bank with regards to deposit mobilisation have resulted in an
excellent development of the bank in a very cost-effective way.

The study concluded that a higher growth rate of deposit mobilisation of

banks helps in achieving a higher level of market orientation of that bank. Larger
the size of the deposits, larger are the funds available for lending. The researcher
has suggested that banks should take initiatives in increasing awareness amongst
its customers as well as the general public about its products and other support

5|Page
services. Also, in order to maintain customer loyalty, the bank needs to offer
banking services in a flawless manner with lower costs. 2

2.2.3 FACTORS AFFECTING SATISFACTION OF DEPOSITORS

TOWARDS THE SERVICES OF PRIVATE SECTOR BANKS
S. M Akterujjaman, (2016) analysed the important factors that affected
the satisfaction levels of depositors with the services of private commercial banks
in Bangladesh. The research was carried out amongst a total of 120 depositories
who were selected through judgemental sampling from a total of 12 branches of
four private commercial banks, i.e. BRAC Bank Ltd, Prime Bank Ltd, Mercantile
Bank Ltd and National Bank Ltd from the city of Dhaka and Khulna in
Bangladesh. The major sources of secondary data included official records of the
banks published on their official websites, report documents, periodicals of
different domestic and international agencies, reports of the Ministry of Finance,
research articles, etc. Primary data was extracted through structured questionnaires
based on various banking parameters, which include, ease of opening bank
account, depositing money, encashment of general cheque, encashment of demand
draft, etc. The respondents were asked to rate these parameters based on Likert’s
five point scale. For the analysis of data, a number of quantitative techniques like
demographic analysis, descriptive analysis and empirical analysis were
undertaken. The same was carried out through percentage frequency, mean,
standard deviation and co-efficient of variation.

The overall findings of the study concluded that depositors of private sector
banks in Bangladesh were highly satisfied with most of the service related
parameters, which included the ease in the process of opening an account, in
transacting with these banks, encashment of general cheque, encashment of
demand draft, receiving cheque books on time when requested, in preparing
demand draft/pay order, etc, cheque collection facilities, etc. The research even
manifested some new dimensional knowledge for achieving the pre-determined

2
Dr. (Smt.) Rajeshwari Shettar (2014), ‘Deposit Mobilisation and Socio-Economic Impact: A Case
Study of Union Bank of India’, International Organisation of Scientific Research Journal of
Engineering (IOSRJEN), Volume – 4, Issue – 5, pp.21-26.

6|Page
targets of banks, enhancing the quality of overall services of banks and thereby,
increasing the satisfaction of depositors. 3

2.2.4 UNDERLYING DYNAMICS OF BANK DEPOSITS:

Harendra Behera, Dirghau Raut and Arti Sinha, (2019) expressed their
views on cyclical swings and secular changes affecting bank deposits by adopting
an empirical approach. Bank deposits constitute an important part of savings of
households, which on other hand are utilised by banks for financing. According to
the authors, the post-demonetisation period was characterised with slow growth in
bank deposits alongside a revival of credit demand. The reason for the same can be
equated to the substitution effect of small savings and mutual funds on bank
deposits in the post demonetisation period. This has led to an increase in the
concern related to widening gap between credit and deposit growth leading to a
structural liquidity gap in the banking system. The outstanding deposits of
scheduled commercial banks which stood at Rs. 1,25,726 billion as on 31 st March,
2019 accounted for 128.7 per cent of outstanding bank credit. This reflects the
tightening of financial conditions on account of low deposit growth. Structural
breaks in the y-o-y growth of aggregate deposits were examined using Bai-Perron
Test. A major structural break was witnessed in the month of October in 2009 in
terms of total deposits. The break in 2009 may be indicative of deceleration in
GDP growth.

In the recent times, an overwhelming growth in deposits is being witnessed,

past 2018 as against its slow-down since October 2009. Through the empirical
analysis, the author concluded that income is the most important influencing factor
affecting deposit behaviour both in the short and long run, followed by interest
rate which holds importance for mobilisation of deposits only at the margin.
Financial inclusion boosts mobilisation of deposits in the long-run which
recommends setting up of bank branches in the unbanked areas. Substitution
effects associated with SENSEX returns for deposit growth are limited to the short

3
Akterujjaman S.M., (2016), ‘Factors Affecting Depositor’s Satisfaction Toward the Services of
Private Commercial Banks in Bangladesh: A Study of Dhaka and Khulan City’, International Journal
of Information, Business and Management, Volume – 8, Number – 4.

7|Page
run which necessitates a cautious evaluation of regulatory reforms and tax
arbitrage in order to make both of them market oriented. In short run, as SENSEX
returns, small savings also substitute bank deposits but supplement deposits in the
long run, reflecting that limits on income tax exemption eventually evens out
substitution effects and equates income to the most important determinant of both
in the long run. Finally, it was inferred from the empirical findings that financial
inclusion and income were long-term structural drivers with SENSEX returns and
interest returns also have an impact on the growth of deposits in the short run. 4

2.2.5 PATTERN OF DEPOSIT MOBILISATION:

Selvarj N. and Balaji Kumar P. (2015) through their research paper titled
‘A Study on the Deposit Mobilisation Pattern of the Dindigul District Central Co -
operative Bank Limited (DDCC)’ undertook an evaluation of the trends and
growth of various categories of deposits collected by the DDCC Bank over a
period of 15 years ranging from 1995-96 to 2009-2010. According to the
researchers, the confidence of general public towards a bank is reflected in the
total quantum of deposits owned by it and its growth rate in deposit figures.
Increase in the area and scale of operations along with diversification of co -
operative banks has necessitated that co-operative banks mobilise huge funds in
the form of deposits. Deposits constitute the major source of resource for
mobilising funds for the sampled bank. The same deposits, on the other hand, are
utilised by bank to meet increased demand of various sections of the society,
which include agriculture weavers and weaker sections of the society. The study
was purely based on secondary data which was extracted from the annual reports
and other financial documents maintained by the bank. Through the findings, it
was concluded that the total deposits of the bank showed a consistent upsurge
throughout the study period with a growth rate of 7.184 percent wherein the
growth of the total current deposits was not quite significant as it highlighted a
negative growth rate of 0.322 percent over the study period. The researcher

4
Behera Harendra and Raut Dirghau and Sinha Arti (2019), ‘Bank Deposits: Underlying Dynamics’,
Department of Research and Policy Research & Department of Statistics and Information
Management, RBI Bulletin, May 2019.

8|Page
recommended a few suggestions for enhancing the mobilisation of deposits by the
Dindigul District Central Cooperative Bank Limited, which are as follows:
(a) As deposits, loans and advances offered by a bank are inter-related to each
other, banks should increase its number of branches so as to mobilise more
deposits. This is because, higher the deposits of a bank, higher would its
capability to lend and to earn more revenue.

(b) It was ascertained through the research study that the cost of saving
deposits is low. Thus, banks should create awareness about the importance
of banking amongst the public and should try to bring more and more
people under the banking fold through financial inclusion scheme
introduced by the Reserve Bank of India (RBI).

(c) With an increase in the number of branches of commercial banks,

district co-operative banks find it difficult to mobilise more deposits.
Thus, it was suggested that these co-operative banks should also
enhance their quality of services and render the same services as
provided by other commercial banks in order to attract more and more
customers and increase their revenue by collecting huge deposits. 5

2.2.6 INFLUENCING FACTORS BEHIND CHOICE OF BANK FOR

DEPOSITING MONEY:
Mustafizur Rahaman, Wohaid Murad and M. Asaduzzaman, (2015)
undertook a research study with an aim to determine the importance of various
influencing factors behind selection of a bank by customers of banks in Dhaka
City Corporation area of Bangladesh. The research was carried out from a three-
dimensional perspective, including bank executives, depositors and borrowers. A
sample of 58 respondents belonging to each group was selected for the study
comprising a total of 174 respondents. A separate set of questionnaire based on 32

5
Selvaraj N. and Balaji Kumar P. (2015), ‘A Study on Deposit Mobilisation Pattern of the Dindigul
District Central Cooperative Bank Limited’, Journal of Tourism and Hospitality, Vol 4, Issue 1,
ISSN: 2167-0269.

9|Page
parameters with regards to various influencing factors behind choice of a bank was
formulated for all three category of respondents. Factor analysis pertaining to
principle component analysis and an oblique rotation was resorted to for analysing
the data in order to determine the principle factors that were perceived important
from depositors, bank executives and borrowers point of view. On the basis of data
analysis, it was concluded that the most prominent influencing factors for choice
of bank included:
(a) From the Perception of Depositors:
 Factor 1: Diversified services and reputation – Out of its ten
variables, it was found that mobile banking services was the most
important variable while support to customers during emergencies
was the least important variable.
 Factor 2: Convenience and financial benefits – Out of its seven
variables, it was found that location of bank branch near to one’s
residence was the most important variable with parking facilities
being the least important one.
 Factor 3: Quality of Bank Management with Bank Services –
Out of its six variables, social constraints was found to be the most
important variable followed by special loans and deposit schemes
and quality of bank management in providing services.
 Factor 4: Promptness – It included four variables out of which
electronic fund transfer service was found to be the most important
variable fast processing of documentation as the least important one.
 Factor 5: Advertisement: It included advertisement of bank in
printing and electronic media.

(b) From the Perception of Borrowers:

 Factor 1: Promptness and Merchant Banking – Out of its three
variables, fast processing of documents was found to be the most
important variable with location of bank branch near to one’s
residence and merchant banking both showed same importance.
 Factor 2: Physical Facilities, Ownership and Mobile Banking -
Out of its seven variables, physical facilities available in a bank

10 | P a g e
 followed by promptness of cheque encashment were found to be the
most important with remittance facilities being the least important.
 Factor 3: Financial Benefits and Charges – Out of its five
variables, interest rate was found to be the most important variable
followed by loan negotiation.
 Factor 4: Customer Friendliness – It only included customer
counselling.
 Factor 5: Quality, Publicity and Convenience: Out of its four
variables, advertisement of bank in print and electronic media was
found to be the most important variable with ATM services being
the least important.

(c) From the Perception of Bank Executives:

 Factor 1: Reliability: – Out of its nine variables, quickness of cash
deposit was found to be the most important variable with merchant
banking being the least important variable.
 Factor 2: Physical Facilities and Cash Management Services –
Out of its two variables, physical facilities of a bank was found to
be the most important variable with cash management services
securing a second position.
 Factor 3: Financial Benefits – Out of its three variables, interest
rate was found to be the most important variable followed by lower
service charges and faster document processing.
 Factor 4: Online Banking – Out of its two variables, mobile
banking was rated to be very important variable with convenient
ATM service being the least important.

It was concluded that borrowers as well as depositors were influenced by

varied factors that affected the choice of bank with bank executives having limited
knowledge about the factors influencing the choice of bank by depositors but

11 | P a g e
possessed good knowledge about the factors influencing the choice of banks by
borrowers.6

2.2.7 FACTORS AFFECTING DEPOSIT MOBILISATION:

Helani Udara Gunasekara and Parasansha Kumari (2018) through
their research paper titled, ‘Factors Affecting Deposit Mobilisation in Sri Lanka’,
aimed at investigating the major influencing factors affecting mobilisation of
deposits from the customers’ point of view. According to the researchers, it is
important to assess the viewpoints or perception of customers towards deposit
mobilisation as it is the savings of these customers that constitute deposits for
banks which generate revenue. The study was carried on a sample of 120 deposit
account holders selected through convenient random sampling method from
Dutugemunu Street, Dehiwala, Ihala Biyanwila, Kadawatha, Mandawala and
Kirinadiwela areas of Sri Lanka in order to extract the perception of depositors
with regards to mobilisation of deposits. Primary data was obtained through
questionnaire method. Analysis of data was undertaken through univariate
analysis, bi-variate analysis and multivariate analysis. Further, chi-square test and
simple regression analysis was undertaken to test the hypotheses. The important
factors influencing deposit mobilisation from the customer’s point of view as
identified through the research study include savings interest rate, security, branch
expansion, bank image, awareness and quality of services provided by the bank.

It was revealed in the research study that deposit mobilisation is the key
focus of many banks. However, majority of the banks in Sri Lanka find it quite
challenging in obtaining adequate deposits as against the increasing need for loans.
The study even revealed that there are basically three types of deposits, namely,
savings, current and fixed time deposits which are sold commonly to the
customers by the local banks. With an increase in new and existing forms of
businesses in Sri Lanka, there has been an increase in the need for finances. The
banks are capitalising on this situation to earn profits by promoting these finances.
This had made mobilisation of deposits a critical factor behind the success for

6
Rahaman Mustafizur, Murad Wohaid and Asaduzzaman M. (2015), ‘Factors Affecting Customer
Choice of Commercial Banks in Bangladesh’, BUBT Journal, pp.155-176.

12 | P a g e
banks. The same has been justified with the increase in number of branches at a
fast pace, modernisation of service delivery and growing competition amongst
banks. Further, a significant and positive relationship was observed between
deposit mobilisation and deposit interest rate, expansion of bank branches, s ecurity
services and technology and awareness. Also a significant relationship was
observed between living area and the amount of deposits and various demographic
variables such as occupation, education level, gender and income. 7

2.2.8 IMPACT OF TARGET DEPOSIT MOBILISATION ON THE

BANKING INDUSTRY:
Mohammed Alhaji Audu, Alexander Solomon Oghoyone and Musa
Garba Gulani, (2015) attempted to assess the effects of target deposit
mobilisation on the overall banking industry in Nigeria by conducting a research
study on selected four banks, i.e. Access Bank Plc, First Bank of Nigeria Plc,
United Bank for Africa and Eco Bank. Against the backdrop of global financial
crisis and misconduct of a few banks in Nigeria, the Central Bank of Nigeria
introduced a new set of reforms for the banking industry as a whole in Nigeria.
Increasing competition in the ever dynamic environment had made the scramble
for depositors’ fund to become intense. In order to obtain more deposits from the
general people, a number of banks had adopted aggressive strategy for marketing
in the name of ‘target deposits’ for its marketers. This practice of ‘target deposits’
adopted by bank staff affected the bank and their marketers, i.e. their employees,
socially and financially. The study was basically undertaken with an objective to
study the implications of this practice of ‘target deposit’ on the total size of the
deposits, financial impact of the same on the employees and to determine the
unethical side of the practice.

According to the researchers, larger deposits from the public enabled banks
to increase their lending capacity which ultimately increased the bank’s earning
capacity in the form of interest income. Thus, due to inter-relation between
deposits, loans and interest income, banks compete with other deposit collecting

7
Gunasekara Helani Udara and Kumari Parasansha (2018) ‘Factors Affecting Deposit Mobilisation in
Sri Lanka’, International Review of Management and Marketing, Volume – 8, Issue – 5, pp.30–42.

13 | P a g e
institutes by offering appealing packages and attractive interest rates and
following the practice of ‘target deposits’ by compelling their bank staff to do
anything or everything to obtain deposits from public.

On a positive side, it was observed that during the study period i.e. from
2000 to 2010, the practice of ‘target deposits’ helped in increasing the volume
of deposits of the banks under consideration. The banks had tied monetary
rewards for their employees for achieving sales or target deposits. Banks even
based salaries of their employees in their potential to bring more and more
deposits. This reflected that financial incentive scheme is an indispensable tool
for enhancing the deposit mobilisation efforts of bank employees as well as
bank managers. However, in the long-term, the practice of ‘target deposits’ led
the banks to adopt various unethical practices like money laundering,
exceeding credit ceilings fixed by the Central Bank of Nigeria (CBN), round
tripping of funds, illegal sale of foreign exchange and wrong use of females in
convincing big businessmen to bank with them. 8

2.2.9 FINANCIAL INCLUSION – CHALLENGES:

According to a field research undertaken by a group of students from the
Indian Institute of Management (IIM), Bangalore under the guidance of former
members of Reserve Bank of India (RBI), financial inclusion has become quite a
challenging concept as a majority of people in rural and backward areas are still
excluded from the purview of financial inclusion. A number of vigorous initiatives
have been adopted by the Reserve Bank of India and the Government of India to
reach every corner of our country to secure participation of everyone under the
scheme of financial inclusion. Some of these initiatives include SHG bank linkage
program, electronic benefit transfer, simplifying KYC norms, use of business
correspondents (BCs), use of mobile technology, encouraging ‘no frill accounts’,
promoting financial literacy amongst the rural and uneducated masses, setting up

8
Audu Mohammed Alhaji, Oghoyone Alexander Solomon and Gulani Musa Garba (2015), ‘The
Impact of Target Deposit Mobilisation on the Banking Industry’, A Study of Selected Banks in
Maiduguri Metropolis’, IOSR Journal of Business and Management (IOSR – JBM), Volume – 17,
Issue – 5, Version – III.

14 | P a g e
of credit counselling centres, customer services centres, Aadhar scheme, etc.
However, the impact of these initiatives is not quite encouraging and thus, poses a
challenge to reassess and reframe these initiatives again. According to the
researchers, prevalence of a number of issues in our country has made the concept
of financial inclusion to remain as a mere dream with most of the people in our
country lacking adequate access to banking services. Also, the CRISIL Inclusix
Index 2009 and 2010 depicted a dismal situation of financial inclusion in India.

The researchers identified a few key issues related to financial inclusion

which need to be focused. Some of these issues include lack of innovation in
banking technology, lack of trust of business correspondents, inefficiency of
business correspondents, low penetration of financial services, lack of trust in
post-offices for bank related work, hesitation in using mobile phones for carrying
out banking transactions, etc. Lack of awareness amongst the rural people with
regards to the importance of having a bank account and usefulness of obtaining
loans or credit from formal sources as compared to informal sources and lack of
financial literacy are the major issues which have led to low penetration of
financial services in rural areas.

In conclusion, the researchers even recommended few solutions for

achieving sustainable inclusive growth through financial inclusion. The major
findings of discussions with bankers, bank customers, farmers, schools teachers,
business correspondent and SHG members during the field visit to Kunigal village
and Dodda Agrahara village in Tumkur district in Karnataka by the researchers
have been stated below:
(a) With business correspondents according importance to safety as the value
proposition of the bank, it was found that the people of these villages
considered storing their savings at home as it was much safer rather than
depositing them in a bank.

(b) In the villages having physical presence of banks, it was found that
people were highly satisfied with banks and had confidence in them.

15 | P a g e
 (c) People also indicated wariness, impatience and discomfort with the
processes of formal banks.

(d) It was also found that most of the people in the villages had obtained
much higher amount of loans from banks in comparison to their deposits
with the bank.9

2.2.10 MEASUREMENT OF FINANCIAL INCLUSION:

CRISIL (2013) assessed the degree of financial inclusion in our country by
considering non-monetary aggregates in the form of an index. For the calculation
of non-monetary aggregates, CRISIL Inclusix considered the number of
individuals having a reach to various financial services instead of considering the
loan amounts. CRISIL attempted to provide ground level information about the
performance of financial inclusion of our country in both rural and urban areas by
considering three most important parameters, i.e. branch penetration, deposit
penetration and credit penetration. Data on these parameters was updated annually
and based on the availability of the data; additional services like insurance and
micro-finance were taken into account. The major findings of the report have been
stated below:
(a) One in every two Indians owns a savings account. However, only one
Indian in every seven Indians has a reach to banking credit.

(b) CRISIL Inclusix is a unique index to measure the extent of financial

inclusion in India across its 666 districts. CRISIL Inclusix at an all India
level stood at a relatively low level of 40.1 for 2011 on a scale of 100. 10

2.2.11 FINANCIAL INCLUSION FOR INCLUSIVE GROWTH:

Radhika Dixit and Munmun Ghosh (2013) evaluated the need for
inclusive growth phenomenon and importance of financial inclusion in achieving
9
Singh Charan, Mittal Akanksha, Goenka Akshay, Goud Rahul, Ram Karthik, Vaibhav Rathi,
Chandrakar Ravi, Garg Ritesh and Kumar Ujjaval, (2014), “Financial inclusion in India – Select
Issues”, CCS Project, Indian Institute of Management (IIM), Bangalore, Working Paper No 474.
10
CRISIL (2013), ‘Inclusix Financial Inclusion Index’, June.

16 | P a g e
the same through their research paper titled, ‘Financial Inclusion for Inclusive
Growth of India – A Study of Indian States’. The prevalence of concept of
financial inclusion in India is much older than it being enacted as an objective by
the Reserve Bank of India and Government of India in achieving inclusive growth
of our country.

According to the researchers, the Indian economy is witnessed to be one of

the fastest growing economies of the world. However, its growth has been
characterised as being uneven with regards to absence of uniformity and discrete
with regards to distribution of its growth benefits to certain sectors of the
economy. This situation reflects the importance of inclusive growth through
achieving the need for resources and resource generation and mobilisation. Most
of the poor or low-income groups fall under the purview of financial exclusion as
most of them struggle due to lack of adequate financial sources to support them.
Presence of formal banking services, exploiting economies of scale and facilitating
a cautious use of targeted subsidies may go a long way in minimising the
imperfections prevalent in the market and distributing the benefits of financial
inclusion to poor which would ultimately lead in raising incomes. The study also
highlighted that presence of varied factors like unaffordability, lack of awareness,
high transaction costs, absence of adequate customised financial products and low
quality products hamper the access to financial products in our country.

The research study was completely based on secondary data with Indian
states being grouped into three clusters. Analysis of these clusters was based on
certain parameters that included unemployment rate, GDP per capita, literacy rate
and index of financial inclusion. The research concluded that there exists no
significant association between financial inclusion and the rate of unemployment
as states with the highest financial inclusion depicted high rate of unemployment.
Further, the researchers suggested that the objective of financial inclusion can be
achieved with joint efforts of sectoral regulators, governments, banks, civil
societies, non-Governmental organisations, etc. Also, those states in our country
that face the issue of financial exclusion should develop their own customised

17 | P a g e
solutions based on their own experience and features and those of its peers across
the country. 11

2.2.12 DEPOSIT MOBILISATION OF BANKS IN PRE AND POST

REFORM PERIOD:
S. Vadivelraja (2015) attempted to assess the growth pattern of the deposit
mobilisation of public and private sector banks in India during the pre-reform
period (1983-84 to 1997-98) and post-reform period (1998-99 to 2012-2013) by
undertaking a comparative study of selected banks with regards to number of total
branches, accounts and deposits. The period of study ranges from 1983–84 to
2012-2013. The public sector banks enjoyed a good position in the pre-reform
period, however, with the emergence of the strong private sector banks in the post-
reform period with increased number of offices, deposits and accounts posed a
stiff competition. The Reserve Bank of India (RBI) projected the growth of money
supply to be 17% at the end of the accounting year 2011 but it stood at 15.9%. T he
reason for the same can be cited as lower growth in aggregate deposits of
scheduled commercial banks. The data with regards to number of bank branches,
aggregate deposits and accounts was collected from secondary sources which
include official websites of sampled banks, various publications of Reserve Bank
of India and Indian Bankers Association, reports and journals. For the analysis of
data, statistical tools like standard deviation, average, trend analysis, compound ed
growth rate, co-efficient of correlation, multiple regression analysis, Arima model,
t – test, etc. were utilised. The major findings of the study are stated as follows:
(a) There existed a significant relationship between number of offices, number
of accounts and total deposits of scheduled commercial banks in the pre-
reform period at 1% level of significance.

(b) With regards to number of accounts and current deposits of scheduled

commercial banks, there existed a significant relationship between the two in
the pre-reform period with no significant relationship in the post-reform era.

11
Dixit, Radhika & Ghosh,, Munmun, (2013), ‘Financial Inclusion For Inclusive Growth of India – A
Study of Indian States’, International Journal of Business Management & Research (IJBMR), Vol 3,
pgs 147-156.

18 | P a g e
 (c) With regards to number of accounts and savings deposits of scheduled
commercial banks, no significant relationship was found between the two
in both pre-reform and post-reform period.

(d) With regards to number of offices and saving deposits of scheduled commercial
banks, a significant relationship was found between the two in the pre-reform
period with no significant relationship in the post-reform period.

(e) Post-reform period witnessed a growth in aggregate deposits of

commercial banks as compared to pre-reform period.12

2.2.13 MOBILISATION OF DEPOSITS IN WESTERN REGION OF

INDIA:
Thangam Alagarsamy and S. Ganapathy (2017) evaluated the growth
pattern and compounded annual growth rate in mobilisation of deposits of
scheduled commercial banks in the western region of India comprising of Goa,
Gujarat, Maharashtra, Daman and Diu and Dadra-Nagar Haveli over a period of 10
years ranging from 2005-06 to 2014-15. The study was completely based on
secondary data extracted from the official website of Reserve Bank of India. The
findings of the study with regards to growth pattern of mobilisation of deposits in
the above mentioned states are as follows:
(a) Goa: The number of current deposit accounts of the commercial banks in
the state of Goa gradually increased over the period of the study with a
growth rate of 31.41% and CAGR being 13%, while the growth in savings
deposits and term deposits depicted a decreased growth rate with CAGR of
savings deposits and term deposits being 16% and 14% respectively.
However, the growth rate of current deposits reflected negative figures in
four years with savings and term deposits reflecting no negative figures.

12
Vadivelraja, (2015), ‘Deposit Mobilisation by Banks in India during Pre and Post Reform Periods: A
Comparative study of Public and Private sector banks’, Research Thesis for Doctor of Philosophy in
Commerce, Madurai Kamraj University.

19 | P a g e
(b) Gujarat: The number of current accounts of the commercial banks in
the state of Gujarat fluctuated all over the study period depicting a
growth rate of 28.75% and CAGR being 19%, while the growth in
savings deposits and term deposits depicted increased and decreased
growth rate with CAGR of savings deposits and term deposits being
17% and 19% respectively. No negative figures were seen in the growth
rate of all three kinds of deposits all over the study period.

(c) Maharashtra: The number of current accounts of the commercial banks

in the state of Maharashtra fluctuated all over the study period depicting
a growth rate of 23.58% and CAGR being 15%, while the growth in
savings deposits and term deposits depicted a gradual decrease in the
growth rate with CAGR of savings deposits and term deposits being
16% and 19% respectively. Also two negative figures were observed
with regards to growth of current deposits.

(d) Dadra and Nagar Haveli: The number of current accounts of the
commercial banks in union territories of Dadra and Nagar Haveli
fluctuated all over the study period depicting a compound annual growth
rate being 10%, while the growth in savings deposits and term deposits
depicted a gradual decrease in the growth rate with CAGR of savings
deposits and term deposits being 25% and 26% respectively. Negative
figures with regards to current deposits were observed in three years. No
negative figures were observed with regards to savings deposits and
term deposits.

(e) Daman and Diu: The number of current deposits of the commercial
banks in the state of Daman and Diu fluctuated all over the study period
depicting a compound annual growth rate being 15%, while the growth
in savings deposits and term deposits depicted a gradual decrease in the
growth rate with CAGR of savings deposits and term deposits being

20 | P a g e
 15% and 19% respectively. A negative figure was observed with regards
to current deposit in 2011-12 with growth of savings deposit showing a
negative figure in 2006-07. Tern deposits did not reflect negative figure.

The study concluded that the state of Maharashtra, being the second most
populated state and third largest in term of area, the growth of term deposits of the
state was found to be highest as compared to other states. The union territories of
Dadra and Nagar Haveli mobilised highest savings deposits as compared to other
states and union territories.13

2.2.14 FINANCIAL INCLUSION IN INDIA:

M.P. Desai (2016) has critically analysed the efforts at various levels in
India in the direction of achieving the objective of financial inclusion. According
to the researcher, lack of adequate access to appropriate financial services is a
global problem. Financial access aids in boosting country’s financial development
and improving the conditions of the poor. From the time of its inception, the
Reserve Bank of India is constantly putting in efforts to achieve the said objective
through various measures and schemes.

The results of Census 2002 revealed that only 35.5% of rural households
and 49.5% of the urban sector households had access to banking facilities. Also,
the share of urban sector was found to be more than the total average of
availability of banking services. The objective of financial inclusion got a major
push with the introduction of the ‘Swabhibhan Campaign’ by the Reserve Bank of
India with an aim to cover 74000 villages. The Reserve Bank of India carried out
its objective to extend door to door banking facilities to all villages which are
financial excluded in a phased manner.
(a) In Phase I, 74414 villages which were unbanked were selected to pass them
the benefits of financial inclusion by allotting them to various banks

13
Alagarsamy Thangam and Ganapathy S. (2017), ‘Deposit Mobilisation of Commercial Banks: A
Study with Special Reference to Western Region in India’, International Journal of Advanced
Research in Management and Social Sciences, Volume – 6, Issue – 7.

21 | P a g e
 through SLBCs by opening 24393 bank branches, ATMs, 589 Business
Correspondents (BCs) and 2332 through other models.

(b) In Phase II, 490000 villages were identified with an aim to improve their
access to bank branches.

In conclusion, the researcher remarked that in spite of various efforts of

RBI, an estimated 40% of the population in our country is financially excluded.
However, with the joint efforts of RBI, political parties, Government and bank
management, it would be easier to bring everyone under the purview of financial
inclusion. For this, he highlighted the need to target the untapped potential of the
bottom of pyramid section of Indian economy. 14

2.2.15 STRATEGIES FOR MOBILISING DEPOSITS:

Adu-Gyamfi Antwi (2015) through his case-study approach, attempted to
identify various strategies and methods which would prove effective in
maximising the total amount of domestic deposits of the commercial banks in
Ghana in the light of high population in rural areas, prevalence of increased
informal sector employment and macro-economic instability. The commercial
banks in Ghana have a great control over the investment funds which accumulate
from the domestic deposits and constitute the major financial bodies for the
business corporations, small and medium enterprises and individual investors.
However, the total volume of domestic deposits collected by these banks is quite
meagre or below the level of sustainability for self-sufficiency.

Through the research study, the researcher aimed to have an in-depth study
of the various products and services offered by these banks and their capabilities
in obtaining deposits and also the major bottlenecks or challenges in mobilising
adequate deposits over a period of four years, i.e. from the year 2000 to 2004. The
analysis of the data revealed that the deposits of these banks showed a growth in
the amount of deposits over the study period but at a decreasing rate. The other

14
Desai M.P., (2016), ‘Present Scenario of Financial Inclusion in India’, Indian Journal of Research
(PARIPEX), Volume – 5, Issue – 3.

22 | P a g e
reasons as identified for the low deposit mobilisation include the location of these
banks in few selected cities only, unfavourable macro-economic conditions that
have resulted in negative real interest rate on deposits, excessive Government
interference, etc. Along with this, the banking products and services were designed
in a manner that only targeted a particular section of the society which mainly
included literate formal sector.

In conclusion, the researcher has made some suggestions for enhancing the
deposit mobilisation efforts of these banks. These recommendations are:
(a) As majority of the population in Ghana dwells in rural areas. Therefore,
banking services should be made more effective in these areas in order to
encourage saving habits in them. The same can be done by deploying a
bank correspondent in these areas to guide the people on simple book
keeping, maintaining and accessing accounts, etc.

(b) In order to build confidence in the depositors, the Central Bank should
focus on undertaking monetary policy regulations, whereas the
Government should focus on fiscal and infrastructural development as
excessive interference by Government results in number of losses of the
depositors in from of freezing of accounts and interest rate ceilings
which shake their confidence in saving with banks.

(c) Commercial banks should resort to aggressive advertising and

promotion of their products and services by educating people about it
through personally reaching towards their depositors by advertising in
shopping houses, super markets and other similar places. Even internet
banking and telephone banking should be promoted.

(d) The legal system should be strengthened by adopting best accounting

and auditing practices and other checks in order to facilitate smooth
interpretations of the law. Initiating regulations to educate and protect

23 | P a g e
 depositors would build a safe environment for depositors to increase
their savings.

(e) The process of opening a bank accounts and withdrawal process should
not be based on various terms and conditions as initial deposits and
minimum balance requirements squeeze out the available income of the
savers. 15

2.2.16 BANK SPECIFIC FACTORS AND DEPOSIT MOBILISATION

OF THE NIGERIAN BANKING SECTOR:
Bernard (2019) in his article attempted to study the interrelation between
macro-economic dynamics, bank specific factors and mobilisation of deposits of
the banking sector in Nigeria. The term macroeconomic dynamics comprises of
inflation rate, rate of lending, exchange rate, Government expenditure, rate of
unemployment and gross domestic product while factors specific to bank include
interest rate on deposits, network of bank branches, bank’s liquidity, etc. The
study was based solely on secondary data extracted from the Central Bank of
Nigeria (CBN) and National Bureau of Statistics (NBS) statistical bulletin
pertaining to the years from 1985 to 2018. In order to establish relationship
between the variables and to establish the like fit of the collected data, multiple
regression Ordinary Least Square (OLS) statistical tool was considered. For
achieving causal relationship between the variables, Granger Causality Test was
adopted.

The findings of the study revealed that there exists a negative relationship
between inflation rate and deposit mobilisation as inflation lowers the purchasing
power of money and thus reduces bank deposits; negative relationship was found
between lending rate and deposit mobilisation as reduction in interest rate charged
by banks on loans requires borrowers to open an account with the bank; negative
relationship between unemployment rate and deposit mobilisation as

15
Bright Adu-Gyamfi Antwi (2015), ‘Mobilising deposits; the role of Commercial Banks in
Ghana’, South American Journal of Management, Vol 1, Issue 2.

24 | P a g e
unemployment leaves nothing in hands of people to deposit or save and at last,
negative relationship was observed between bank’s liquidity and deposit
mobilisation as bank having a higher loan-to-deposit ratio discourages people to
invest in it. On the other hand, a positive relationship was observed between
exchange rate and deposit mobilisation as when the value of a country’s currency
depreciates, depositors withdraw their savings from such banks in exchange fo r
currencies with higher value or invest in any other form of investment rather than
bank deposit. A positive relationship was also observed between Government
expenditure and deposit mobilisation as a hike in wages and salaries introduced by
the Government leaves more disposable income and savings in the hands of the
public so they have more to deposit in banks. Deposit interest rate and deposit
mobilisation, too showed positive relationship as banks offering higher rate of
interest on deposit attract more depositors towards them. A positive relationship
exists between Gross domestic product and deposit mobilisation as during the
period of higher growth, producers earn more profits due to an increase in demand
for goods and services by the people. Thus, they have more surplus earnings to
save and deposit. Even number of bank branches and deposit mobilisation has
positive relationship as new branches attract more customers which help in
increasing the total volume of deposits. At last, it was deduced through various
tests that factors related to bank do not granger cause deposit mobilisation whereas
all the variables of macro-economic dynamics except lending rate granger cause
deposit mobilisation of the banking sector in Nigeria. 16

2.2.17 DEPOSIT TRENDS PRIVATE AND PUBLIC SECTOR BANKS

IN INDIA:
Dr. Chetana Soni and Dr. Pushpraj Kulkarni (2018) undertook a
comparative trend analysis of private and public sector banks in India over a
period of 10 years from the year 2007 to 2017. Based on the historical data of the
selected public sector and private sector banks, the researcher attempted to
ascertain the variations in trends of deposits over a period of time. The hypothesis

16
Bernard Azolibe Chukwuebuka (2019), ‘Macroeconomic Dynamics, Bank Specific Factors and
Deposit Mobilisation of the Nigerian Banking Sector’, Asian Journal of Economics, Business and
Accounting, Article No: AJEBA 50584, Volume – 12, Issue – 2, pp.1-16.

25 | P a g e
of the study was that there existed a significant difference in the pattern of deposit
of public and private sector banks. The sample of the study included a total of 16
banks with 8 banks each from public and private sector. For analysis of data,
statistical tools such as mean and standard deviation were considered.

With regards to average deposits, it was inferred that the deposits of the
public sector banks showed a rising trend over a period of ten years with a slight
fluctuation being recorded in the year 2015 which picked up again after 2015. The
overall pattern of deposits of the private sector banks, too, showed a rising trend
over the study period. However, on comparative basis, it was concluded that the
deposits of public sector were higher than the private sector banks in terms of
aggregate deposits. The average growth rate of the public sector banks over the
study period was 14%, whereas in case of private sector banks, the growth rate
was 19%. The co-efficient of correlation was found to be 0.95 and thus, it was
concluded that the co-efficient correlation was significant between the average
deposits of public sector and private sector banks. 17

2.2.18 SERVICE QUALITY OF BANKS TOWARDS DEPOSIT

SCHEMES:
V. Karthihai Selvi and J. Vimal Priyan (2017) evaluated the outlook of
customers towards the quality of services of the Canara Bank with regards to
various deposit schemes offered by the bank. It is only through the satisfaction of
the customers that lead to their retention. The study was carried out amongst 200
customers of the Canara Bank in Sivakasi area, selected through convenient
sampling method. The respondents were interviewed through structured interview
schedule. Secondary data pertaining to a period of six months i.e. from August
2014 to January 2015 was extracted from a number of sources including
newspapers, magazines, research articles, reports, journals, websites, etc. For
assessing the quality of services, attributes like assurance, convenience, nature of
personal interaction, access and competence were considered. For analysing the

17
Dr. Chetana Soni and Dr. Pushpraj Kulkarni (2018), ‘A Study of Deposit Trends in Select Public and
Private Sector Banks in India’, International Journal of Latest Engineering & Management Research
(IJLEMR), Volume – 3, Issue – 5, pp.62-68.

26 | P a g e
perceptions of the respondents towards the quality of services of the bank,
SERVQUAL Model was utilised. Further, to ascertain the reliability of the
selected parameters and coherence between them, Chronbach’s coefficient alpha
test was considered.

The results of the study indicated that marital status, age and income of the
respondents had a great influence on the determination of the preference of various
deposit schemes with attributes like occupation, sex and educational qualifications
having not much influence over the preference of deposit schemes. Overall, it was
concluded that the respondents held a positive response towards the service
attributes of the Canara Bank. 18

2.2.19 EFFECTS OF INFLATION ON DEPOSIT MOBILISATION:

Orok, Akaninyene and Okoi (2018) through their research paper titled,
‘Inflation and Deposit Mobilisation in Deposit Money Banks – The Nigerian
Perspective’, undertook a critical study to gauge the impact of inflation on deposit
mobilisation of banks. The study was completely based on the secondary data
extracted from the statistical bulletin of the Central Bank of Nigeria (CBN),
various research libraries in Nigeria, textbooks, journals and annual reports of the
sampled banks pertaining to the period 1994 to 2014. In order to establish the like
fit of the observed data and to ascertain the relationship between the variables,
multiple regression ordinary least square was utilised. The major findings of the
study are stated as follows:
(a) There existed a negative relationship between inflation and demand
deposits mobilised, whereas a positive relationship existed between money
supply and mobilisation of demand deposits.

(b) There existed a negative relationship between inflation and savings

deposits mobilised, whereas a positive relationship existed between
money supply and consumer prices on mobilisation of savings deposits.

18
Selvi V. Karthihai and Priyan J. Vimal (2017), ‘Perception of Customers Towards Service Quality of
Canara Bank Towards Deposits Schemes’, ICTACT Journal on Management Studies, Volume – 3,
Issue – 1, February.

27 | P a g e
 (c) There existed a negative relationship between inflation and consumer price
index on time deposits, whereas a positive relationship existed between
money supply and interest rate on mobilisation of time deposits.

(d) Interest rate creates a significant impact on saving deposits and time
deposits.19

19
Orok, Akaninyene and Okoi, (2018), ‘‘Inflation and Deposit Mobilisation in Deposit Money Banks –
The Nigerian Perspective’, International Journal of Public Administration and Management Research
(IJPAMR), Volume – 4, Issue – 4, pp.109-121.

28 | P a g e