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TWO DAY NATIONAL SEMINAR ON REORGANISATION OF PUBLIC SECTOR BANKS: A BOON OR A BANE “A catch 22 situation‖ 6th and 7th of January 2020
SEMINAR PROCEEDINGS
“PRAJNA”
Under the sponsorship of
Sree Sankara College Association as an Internal Quality Assurance Cell initiative
Organised by
The Post Graduate Department of Commerce, Sree Sankara College, Kalady-683574 In collaboration with
Mahatma Gandhi University, Kottayam Expert Partner : Syndicate Bank
PRAJNA A JOURNAL OF COMMERCE
Proceedings of the National Seminar on „Reorganisation of Public Sector Banks: A Boon or A Bane‟
Editors 1. Ms. Sharanya Prathapan Assistant Professor Department of Commerce Sree Sankara College, Kalady
2. Ms. Gopika .G Assistant Professor Department of Commerce Sree Sankara College, Kalady 3. Ms S. Gowri Antherjanam Assistant Professor Department of Commerce Sree Sankara College, Kalady
Copyright© 2019, Sree Sankara College, Kalady All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior written permission of this publisher. Printed from the camera ready papers provided by the Authors
Printed by SM PRESS, ALUVA ROAD, ANGAMALY, ERNAKULAM DIST., KERALA, PIN 683572
FOREWARD In modern age, banking play a very significant role in socio-economic development of a nation in the form of programmes aiming at poverty mitigation, infrastructural development, health care and protection, entrepreneurial development, educational promotion, employment generation and women empowerment. The banking industry in India is undergoing a transformation phase since liberalisation. The last two decades have been eventful for the banking industry as a whole. Banking sector has been experiencing changes from 1994 when six private banks were licensed to operate in India, who are the pioneers in the banking industry now. Further to that, the Narasimharao Committee has put forward several reforms, like lowering CRR and SLR, introduction of capital adequacy norms, deregulation of interest rates, speedy recovery of bad debts and the like. The finance minister of India, Ms Nirmala Sitharaman announced merger of ten public sector banks into four, thereby making India a USD 5 trillion economy. The reorganisation is expected to contribute much to the economy such as enhanced capacity to increase credit, banks with a strong national presence and international reach, reduction in lending cost, Next Generation technology for the banking sector, capacity to raise market resources and much more. The Postgraduate Department of Commerce hosts the Two Day National Seminar on ―Reorganisation of Public Sector Banks-“A Boon or a Bane” on 6th and 7th January 2020 to analyse the benefits and drawbacks of the new banking reform to the Indian economy and to provide a platform for these deliberations. This proceedings edition includes many of the seminar research papers submitted by the delegates from different institutions. We thank the seminar presenters and contributors for their insights and contributions
ABOUT THE ORGANISERS About the College Sree Sankara College (Aided), Kalady was founded in the year 1954 by Swami Agamananda, a social reformer and a foresighted scholar of Sri Ramakrishna Advaita Ashram. The institution was established with a view to perpetuating the memory and doctrines of the great saint and philosopher, Adi Sankaracharya and to nurture his birth place as a cultural citadel. The foundation stone was laid on 28 August, 1953 by His Highness The Maharaja of Travancore in the presence of The Maharaja of Cochin and several other distinguished personalities. The Sree Sankara College Association was formed in July 1954.
About the Department The Commerce department of Sree Sankara College, Kalady, was formally set up in 1954 under the affiliation of Kerala University, which was thereafter affiliated to Mahatma Gandhi University, Kottayam. This Department was one among the first commerce department in Ernakulam District. In its history spanning over six decades, it has redefined the commerce education in the state. It is one of the first colleges in Kerala where B.Com Degree course with Cost Accounting as an elective was offered. The Post Graduate course in the commerce department started functioning late 1960s. The research Centre of the department got its recognition in the year 1997. Eminent personalities in the field of Education, Commerce, Law, Economics etc were the resource persons for the department. Formerly the department had offered only B.Com Finance & Taxation and M.Com Finance. The annual intake was limited to approximately 80 students when the applications exceeded 300. The management and IQAC, on the basis of the feedback collected, introduced a new course B.Com Computer Application, which started functioning in the academic year 2014. At present the department has an annual intake of above 300 students. It is well equipped with potential faculties and other amenities. The Commerce department has a department library with approximately 500 books for in house reference for students. It has published about 700 dissertations till date. The department provides an opportunity to inculcate and nurture entrepreneurial traits in the students under the ED (Entrepreneurship Development) club.
Background of the Seminar The Finance Minister of India, Ms Nirmala Sitharaman announced merger of ten public sector banks into four, thereby making India a USD 5 trillion economy. The biggest overhaul in public sector banks has left India, with only 12 banks now instead of 18, before the decision. The reorganisation is expected to contribute much to the economy like, enhanced capacity to increase credit, strengthen national and international reach, reduction in lending cost, Next Generation technology for the banking sector, Capacity to raise market resources and so on. On the other hand, merger creates variety of problems which may cause great damage to the economy as a whole if not executed properly. Hence, the Two Day National Seminar on the Reorganisation of public sector banks, throws light on this situation which is to be debated as it is a catch 22 situation. This Seminar is ought to be beneficial to the Academicians, Industrialists, Research Scholars, and Students.
ORGANISING TEAM Sri K Anand, Managing Director, Sree Sankara College Association Prof. C P Jaisankar, chief Operating Officer, Adi Shankara Trust Dr. A Suresh, Principal, Sree Sankara College, Kalady Dr. Preethi Nair, IQAC, Sree Sankara College, Kalady Ms. Sharanya Prathapan , Head of the Department, Sree Sankara College, Kalady- Seminar Convenor Ms Gopika G., Assistant Professor, Sree Sankara College, Kalady- Seminar Coordinator Ms S Gowri Antherjenam, Assistant Professor, Sree Sankara College, Kalady- Seminar Joint Coordinator Ms Abhisha J, Assistant Professor, Sree Sankara College, Kalady Ms Smrithi Ashokan, Assistant Professor, Sree Sankara College, Kalady Mr Anoop V P, Assistant Professor, Sree Sankara College, Kalady Ms Manju C R, Assistant Professor, Sree Sankara College, Kalady Mr Sarath Chandran, Guest Faculty, Sree Sankara College, Kalady Ms Thulasi A R, Guest Faculty, Sree Sankara College, Kalady Mr Shineed K, Guest Faculty, Sree Sankara College, Kalady Ms. Shinitha, Guest Faculty, Sree Sankara College, Kalady Ms Silviya Thomas, Guest Faculty, Sree Sankara College, Kalady
ACKNOWLEDGEMENT We would like to express our heartfelt gratitude to the Management, Sree Sankara College Association for the approval of our proposal to the new initiative of IQAC and also for the conduct of the two day ―National Seminar on Reorganisation of Public Sector Banks: A Boon or a Bane‖. Sincere gratitude to Mahatma Gandhi University for collaborating with this event. Extremely thankful to The Syndicate Bank, Kerala Region to have provided us with the expert opinion and providing us with the best orators in the contemporary issue. We are expressing our gratitude to Dr. A Suresh, Principal, Sree Sankara College, Kalady for the encouragement and support extended for the smooth conduct of the seminar. We would also like to acknowledge our gratitude to the Chief Operations Officer, Prof. C P Jaisankar for the support and guidance extended towards the department. We thankfully appreciate the support and guidance extended by The IQAC Coordinator Dr. Preethi Nair in the conduct of the seminar. Special thanks to the faculty, administrative staff, and the students for the cooperation and help extended in organizing the seminar. We would also like to thank the Krishna Printers for taking up the responsibility of publishing the proceedings on behalf of the Post Graduate Department of Commerce. We take this opportunity to thank all the institutions, faculties, research scholars and students who have wholeheartedly participated in the seminar.
Ms Sharanya Prathapan Ms Gopika G Ms S Gowri Antherjanam
Thanks to the Resource Persons and Session Moderators Dr. Salim Gangadharan, (Chairman of South Indian Bank Ltd., Retd. Principal Chief General Manager, RBI Former Director of Central Bank of India and Syndicate Bank)
Mr.Sanjay A Manjerekar (Senior Vice President, All India Bank Officers Confederations, Working President, All India Nationalised Bank Officers Federations, General Secretary, Syndicate Bank Officers Association, AGM and Ex-Director, Syndicate Bank)
Dr. Sony Kuriakose (Assistant professor and research Guide, Postgraduate and Research Department of Commerce, Nirmala College, Muvattupuzha)
Dr. V K Vijayakumar (Well Known Economist, Chief Investment Strategist, Geojit Financial Services)
Dr. N Ajithkumar (Session Chair) (Former Principal and Research Guide, Cochin College, Cochin, Research Head and Visiting Faculty, Amrita University)
Mr. Dany, Manager, Syndicate Bank, Angamaly
Technical Sessions Session I
:
Public Sector Banks- Merger and its Consequences
Session II
:
Bank Consolidation in India: Issues and Challenges
Session III :
Paper Presentations
Session IV :
Banking Crisis: Message from the Market
Key Note Address Dr. Salim Gangadharan, Chairman of South Indian Bank Ltd., who was retired as the Principal Chief General Manager of RBI and also the former Director of Central Bank of India and Syndicate Bank.
Themes of the seminar Indian Banking Industry Outlook 2019-2020 Banking Sector Reforms Indian Banking Sector: Challenges and Opportunities Digital Banking: Pros and Cons Global Impact on Banking in India E-management in Banking Industry Innovations in Banking Products Human Resource Integration Customer Impact and Perception Crisis in Management and Governance in Banking Sector Latest trends in the banking sector
TABLE OF CONTENTS Foreward About the Organisers Organising Team Acknowledgement Resource Persons and Session Moderators Technical Sessions Seminar Themes Full Papers
Topics IMPENDING BANKING
TRENDS
SECTOR
AND WITH
Page No.
CHALLENGES SPECIAL
IN
INDIAN
REFERENCE
TO
DIGITISATION MERGERS AND ACQUISITIONS OF BANKS IN INDIA: EMERGING REGULATORY ISSUES IMPACT OF TECHNOLOGY ADOPTION IN PUBLIC SECTOR BANKS IN INDIA – AN ANALYSIS IS INSOLVENCY AND BANKRUPTCY CODE, 2016 (IBC) A PANACEA FOR SOLVING THE NPA CRISIS THE
ATTITUDE
OF
BANK
EMPLOYEES
TOWARDS
MERGER: A PRE AND POST MERGER ANALYSIS SERVICE QUALITY OF BANKING SERVICES OF STATE BANK
OF
INDIA:
AN
ENQUIRY
USING
SERVQUAL
APPROACH AMONG YOUTH CONSUMER ADOPTION TO FIN TECH INNOVATIONS: A SURVEY AMONG YOUTH WITH SPECIAL REFERENCE TO MOBILE BANKING APPS SERVICE QUALITY OF INSURANCE SERVICES OF LIFE INSURANCE CORPORATION OF INDIA: AN ENQUIRY USING
SERVQUAL APPROACH SERVICE QUALITY OF INSURANCE SERVICES OF ICICI PRUDENTIAL: AN ENQUIRY USING SERVQUAL APPROACH SERVICE QUALITY OF INSURANCE SERVICES OF HDFC LIFE:AN ENQUIRY USING SERVQUAL APPROACH SERVICE QUALITY OF HEALTH INSURANCE SERVICES: AN ENQUIRY USING SERVQUAL APPROACH SERVICE QUALITY OF BANKING SERVICES OF FEDERAL BANK: AN ENQUIRY AMONG YOUTH USING SERVQUAL APPROACH A STUDY ON THE ATTITUDE OF NON-MUTUAL FUND INVESTORS
ON
MUTUAL
FUND
SAHI
HAI
ADVERTISEMENTS RECENT TRENDS IN INDIAN BANKING SECTOR OPPORTUNITIES AND CHALLENGES OF INDIAN BANKING SECTOR INDIAN BANKING OPPORTUNITIES
SECTOR:
CHALLENGES
AND
A STUDY ON THE IMPACT OF AGRICULTURE INSURANCE ON RISK MANAGEMENT AMONG FOOD CROPS FARMERS IN KERALA A STUDY OF M-WALLET AWARENESS AND USAGE IN SOUTH KERALA RECENT TRENDS IN INDIAN BANKING
IMPENDING TRENDS AND CHALLENGES IN INDIAN BANKING SECTOR WITH SPECIAL REFERENCE TO DIGITISATION *Dr. MANJULA
R
IYER,
Associate
Professor,
School of
Contemporary
Knowledge
Systems,
Chinmaya Vishwavidyapeeth (Deemed-to-be-University) De-novo Veliyanad, Ernakulam – 682313 – Kerala, Mail id: [email protected], Ph: 9447026854 **MUTHULAKSHMI R, Assistant Professor, Department of Commerce [SF], Bharatamata College, Mail Id: [email protected], Ph: 9746280640
ABSTRACT Today, digital technologies are evolving at an unprecedented rate all across the globe. India, too is witnessing radical growth in Information and Communication Technology at a very rapid pace. As a result, Indian Banking sector is undergoing huge transformation to offer better and enhanced services to its customers. Constant modernization in ICT in the banking sector has made Virtual Banking a reality in India. Establishment of Innovation Labs is facilitating the banks to explore several avenues in the banking arena like Biometrics, Artificial Intelligence [AI], Robotics, Data Analytics etc. Digital wallets have already paved the way for cashless transactions. This research paper undertakes the study of “Current Trends and Challenges in Indian Banking Sector with Special Reference to Digitisation” in order to make the entire banking experience consumer centric. The objective of this paper is to present the innovative bank products and services which are required in the present technological environment. The paper will focus on the adoption and perceived usefulness of customers on Digital banking i.e Internet banking (IB) and cell phone banking (CB) in India, and the data for this study is both primary and secondary data ;primary data is collected through a survey conducted on 250 respondents across Ernakulam district. The result confirms that adoption of IB and CB is on the rise though there is a need for security concerns as customers consider it viable. The paper also explains the challenges posed by ICT innovation in Banking Sector and also suggests the alternatives to overcome the challenges through secondary data. The paper concludes with the note that the banks require innovative financial products and structures to respond to customer requirements and banks need to leverage technology to gain competitive advantage upholding security concerns minimising risk and fraud to the greater extend leading to a new business model by building management and customer services by the banking sector. Keywords: ICT, Innovation, Biometrics, Artificial Intelligence, Technology
I. INTRODUCTION The banking system in India is significantly different from other Asian nations because of the country‘s unique geographic, social, cultural and economic characteristics and population. There are high levels of illiteracy among a large percentage of its population but, at the same time, the country has a large reservoir of managerial and technologically advanced talents. 70% of the population resides in semi-urban and rural centres and the
country‘s economic policy framework combines socialistic and capitalistic features with a heavy bias towards public sector investment. Mobile technologies of recent years have gained momentum and are impacting the working of every process including financial services. Financial service providers including banks are turning their necks toward the wave of these technologies. In the essence it has been made mandatory by situations and conditions in the market that they should be adopted to meet customer demands. Internet technology has brought information revolution in the modern society and is rightly being regarded as the third wave of revolution after Agriculture and industrial revolutions. This technology has enabled the blurring of boundaries and time hurdles to make the globe a village. Since financial service industry is part of the affected, Jahangir, (2008) opined that it (Information technology) has an enormous effect in developing the banking services. In India, electronic banking is becoming highly attractive to customers and banking community as well (Mahamood 2009).
The process started in the early 1980s, when Reserve Bank of India (RBI) set up two committees in quick succession to accelerate the pace of automation of operations in the banking sector (Khan et.al., 2009). A high level committee was formed under the chairmanship of Dr.C Rangarajan, then Governor of RBI, to draw up a phased plan for computerization and mechanization in the banking industry over a five-year time frame of 1985-1989. The focus by this time was on customer service and two models of branch automation were developed and implemented. Having gained experience in the earlier mode of computerization, the second Rangarajan committee constituted in 1988 drew up a detailed perspective plan for computerization of banks and for extension of automation to other areas such as funds transfers, ATMs, Internet banking etc. To cap the legal challenges posed by the new developments in technology, the Government of India enacted IT Act, 2000, with
effect from October 17th, 2000. The Act provides legal recognition of e-transactions and other means of e- commerce. Also, RBI set up a working group on internet banking to examine different aspects of internet banking which include technology and security issues, legal issues and regulatory and supervisory issues. Khan, et.al. (2009) argues that Internet banking in India is at a nascent stage and where online financial providers are few. But still the number of companies specializing in developing Internet banking software, security and website designing and maintenance are becoming many. On the context of mobile banking in India, financial institution are finding it easy to provide banking services to a huge mass due to large number of Mobile phone subscribers with day in day out trend upward. It means that, Banks or institution providing multi-channel banking services Information and Communications Technology or ICT is the infrastructure and components that enable modern computing. It refers to the convergence of audio-visual and telephone networks with computer networks. ICT facilitates interaction of people and organizations in digital world. ICT innovation in Indian banking sector has laid strong foundation of modern banking services. There has been a paradigm shift in the offerings made to the consumers. The expectations of tech savvy customers have increased manifold in last few years. Net Banking, digital wallets, mobile banking apps is the way of life of such customers who move around without any hard cash in their pockets. The survey of literature shows that many researches have contributed sufficiently in throwing the light on this concept on internet and mobile banking. For example, Nath, 2001 examined banker‘s views on the need of IB, its effect on consumer-bank relationship and customers‘ experiences in internet banking. The study, confirmed that by then, most banks were not offering full-fledged Internet banking. However, many of them had plans to offer internet banking services. Further, the study asserted that IB enhance customer service, increase customer base and impose cross selling opportunities. Soroor (2005) assessed the security of e-banking in Iran with much focus on internet and mobile banking. He presented an overview and evaluation of techniques that are used in Iran. had plans to offer internet banking services. Further, the study asserted that IB enhance customer service, increase customer base and impose cross selling opportunities. Soroor (2005) assessed the security of e-banking in Iran with much focus on internet and mobile banking. He presented an overview and evaluation of techniques that are used in Iran. The result found that the best
practice in Iran with proper balance between security and cost is the use of other hardware tokens, such as a digipass, that generate response to unpredictable challenges of the bank and that are able to calculate tokens such as a smart card that is already used in other related applications as in, foe example, an electronic purse. Zheng and Zhong (2005) examined the trend in the internet revolutions that have set the Chinese banking sector in motion and the Factors which have influenced the adoption of IB in china. It was revealed that internet availability, awareness, attitude towards change, computer and internet access, cost, trust in ones bank, security concerns, ease of use and convenience were the major factors affecting the adoption. An exploration done by Singhal and Padhmabhan (2008), revealed that utility request, security, utility transaction, ticket booking and funds transfer were major factors contributing to internet banking adoption. Tat, et.al (2008) examined predictors of intention among users of internet banking to continue using IB services. It was revealed that trust was the strongest predictor followed by compatibility and ease of use. Mirza,et.al.,(2009) revealed a significant difference between demographic and attitude of users and non-user groups. The majority of customers were very comfortable and willing to use IB services. Security concerns, lack of technological knowledge and awareness stood out as being obstacles to the adoption of Internet Banking. Yuttapong et.al (2009) investigated the factors impacting the adoption of internet banking and found that complexity had a negative relationship with intention to adopt the internet banking in Thailand. Further, it was indicated that compatibility had a high positive relationship with intention to adopt IB. Khan et.al (2009) evaluated the service quality of Internet banking in India from customer‘s perspective and found that customers are satisfied with quality of service on four dimension viz. reliability, accessibility, privacy/ security, responsiveness and fulfillment but least satisfied with the user-friendliness dimension III. OBJECTIVES 1) To study the impending and upcoming technology in Indian Banking Sector 2) To examine the usage of banking services through Digital banking 3) To study the challenges posed by ICT innovation in Banking Sector 4) To suggest alternatives to overcome the challenges. IV. SCOPE The study covers the technological progresses and developments in Indian banking sector only.
V Research Methods & Design The study is Analytical in nature based on primary data and descriptive in nature and based on secondary data. The Secondary data are collected from various reports, journals, news articles, various bank portals, RBI portal and internet sources. The universe of the study comprised customers of all commercial banks in India, in some selected major cities. It was necessary that the approached respondents should be ebanking savvy. This was done by a pilot study with the help of a Google form confirming the respondent and asking if he/she has adopted mobile or internet banking technology. The respondents who do not use these services were excluded from the sample. The research instrument was mailed to identified respondents‘ addresses, others were personally distributed using Whatsapp platform. E-mail attachment through internet was used to send the questionnaires to known customers. Out of the total 400 questionnaires send to respondents 250 usable responses were received. According to central tendency theorem the usable sample received was adequate and Important statistical tools like Chi- square, Crosstabulation and other appropriate tools were applied with the help of SPSS statistical software Version 23.0. VI Empirical findings Adoption of cell phone banking The trend on adoption of cell phone for communication is upwards in the recent years in every Conner of the globe. This has prompted to the discovery of banking through the mobile phone or providing other financial services.Out of the respondents surveyed, 92 percent had adopted cell phone banking in India and 8 percent reported that they have not adopted. Out of those who adopted, 80 percent were young aged 20 to 35 years, 14 percent were 35 to 50 years, and 6 percent were less than 20 years of age. There were no respondents in the age category of 50 years and above. This reveals that majority of customers adopting new age banking services are young. Adoption of Cyber Banking Internet Banking is also another e-banking channel through which banking services are provided to customers. The findings indicate that, 67.2 percent of the total sample adopted
Internet Banking and 36.8 did not adopt. Figure 2 shows that out those who adopted, 67 percent were young aged 20 to 35 years, 20 percent were middle aged 35-50 years and old people aged 50 years and above were represented by 2%. Further, it was revealed that young people at the age of less than 20 years had adopted Internet banking (11%). This revealed that internet banking is more adopted than Cell phone banking which means that there in a need for banks to partner with mobile phone and Internet services providers to tab the unbanked India since mobile penetration has reached them. Banking through cyber in India Cyber banking has gained popularity in the modern banking arena not only in India but elsewhere in the world. IB can be used in many ways as a channel through which banking services will be provided. Using nine common services offered through internet banking, it was enquired from customers the most used services. The various services were listed as variables and the result is presented on table 1. The list of variables which represents the Cyber banking services include, know products of banks (KNWPD), check balance (CKBAL), electronic funds transfers (EFTs), check statement (CKSTM), purchase products (PCHPDS), order cheque books (ODCHBK), stop payment (STPMTS) , change password or pin (CHGPSWD) and after sale service (AFTSLS) i.e. e-mail enquiries.
Table 1 indicates that 58.4% of the respondents reported to use cyber banking to know various products offered by banks. This indicated that, many banks mostly used or needed to use their websites to advertise their products because this is an important source of product information to customers. Checking account balance (56%) was another service which seemed to be used by many customers checking bank statement (46.8%) and after sale service (46.0%) were favored also which shows that customers have started
embracing internet banking though the percentage is less as compared to other services like ATM and cards banking. This might be due to the low internet penetration in India and improper infrastructural facilities in many urban and rural India. Stop payment and order cheque book were favored by 16.8% and 16.0%. This shows that majority of Indian customers do not use this service, may be they can be availed somewhere else or they no longer need internet banking to get this services. Perceived usefulness of digital banking Financial products through cell phones have proved to be useful to both customers and providers in recent times. Customers find it easy, convenient, and efficient to transact conventional banking services which are non-monetary in nature such as balance enquiry, transfer of funds, change password etc through a mobile phone. Also, in some parts of the world like Philippines, South Africa and Kenya, transactional services are offered through cell phones. The research proposed to enquire customer opinion regarding the emergence of cell phone banking. The result is presented in Table 3 on the basis of bank wise and age-wise. The strong feeling were indicated by strongly agree and the weakest feeling was indicated by strongly disagree. Table 3 indicates that, 45.2% agreed and 40.8% strongly agreed that SMS banking is useful. In the similar case, 9.2% were neutral to this fact whereas 4.0% disagreed and 0.8% strongly disagreed on this fact. This shows that the majority, (more than 85%) either agreed or strongly agreed on this fact. This shows how Indian customers are in favor and will support the introduction of SMS banking in banks. If we look at the Bank type classification perspective, respondents from Private Banks (PBs) supported the fact by more 95% respondents who either agreed or strongly agreed that SMS banking is useful. Also, 44.1% of Public sector (PSBs) strongly agreed while 37.5% agreed on the same fact. In the case of Multinational Banks (MNBs) respondents, 50% agreed and 33.3% strongly agreed that SMS banking is useful. This shows that in the overall case, all Indian respondents favored the emergence of digital financial service through mobile phones.
From age dimension, it is indicated that, all categories of age except customers aged above 50 years, i.e. less than 20 years, 20 to 35 years and 36 to 50 years of age, supported Cell phone banking by indicating that the channel is useful to them. It was indicated by more than 80% of respondents who either agreed or strongly agreed on the fact about usefulness of mobile phone banking. The old age category (above 50 years) shows that 60% either agreed or strongly agreed whereas 40% either disagreed or strongly disagreed which clearly indicates that young respondents had a positive feeling than old respondents. However, since more than half of them support SMS banking, the negative feelings represented by 40% can not affect the positive felling of 60%.
H1= Age does not associate with opinion regarding the usefulness of Cell phone banking
H2= Bank classification is associated with the opinion regarding the usefulness of Cell phone banking
The Chi-square result (Table 4) revealed that Bank type had no association with the perception towards the usefulness of Cell phone banking in India and age had an association with perception regarding the usefulness of cell phone banking. The prompt the rejection of hypotheses
VII Challenges – 7.1Automation and AI may lead to unemployment:- AI and automation are the major breakthroughs of today‘s innovation era. Although the benefits are promising, technology revolution poses a great threat to many of the jobs which will be completely automated and opportunities for job seekers will shrink. Banking is no exception to this fact.
7.2Voice Revolution will take over online banking:- As voice recognition and voice authentication mature, web traffic to banking sites and mobile applications may drop by 50% in next few years. Customers will simply TALK to an internet connected device and perform most common banking tasks within few seconds. Drop in web traffic due to voice recognition systems could pose a serious threat to banking industry. The customers who currently visit the websites for banking tasks, also go through the marketing promotions on the site. The banks may lose the opportunity to cross sell current customers with drop in web traffic. 7.3 Issues related to Biometrics Operational issues – A minor could change the voice quality and may pose problems in speech authentication. People who work in labour intensive jobs may have damaged fingerprints. Even the senior citizens may have problem in fingerprint authentication. 7.4 Security issues in its note on 'Digital Payments - Analysing the cyber landscape', KPMG mentioned, cyber security is one of the most critical challenges faced by stakeholders of the digital payment ecosystem. With more and more users preferring digital payments, the chances of getting exposed to cyber security risks like online fraud, information theft, and malware or virus attacks are also increasing. Lack of awareness and poor digital payment ecosystem are some of the primary reasons that have led to increase in these attacks. 7.5 Digital literacy in rural areas: - There has been considerable growth in the users of smartphone in rural India in last few years. But not many are aware and confident about online banking through smartphones. The primary usage of smartphone is restricted to entertainment and communication only. As the urban tech savvy customers adopt the changing landscape of ICT innovation in banking, Indian rural population yet needs to be educated about the concepts of AI, Biometrics, Block chain, Big Data etc. 5.3 Alterations to overcome the challenges: Following steps can be adopted by the banks to overcome the challenges 5.3.1. Transition to AI Top management and Leadership of the banks should play a significant role. Effective communication regarding the need and implementation of AI in the organization to all the employees may help achieve smooth transition. All employees irrespective of their age will have to equip themselves with latest technology innovation in the industry and upgrade their skills.
5.3.2. Voice Revolution As voice revolution takes over; traditional online banking traffic is bound to get displaced. Banking industry should evolve its web presence by offering higher end products such as loans, mortgages and financial planning tools. Websites should soon evolve to focus on superior experiences for financial education, planning and simplifying complex financial decisions. 5.3.3. Biometrics Multifactor authentication with biometrics being prominently used could help minimize frauds. Behavioral biometrics could provide additional protection to enhance banking security in the future. 5.3.4. Security As mentioned rightly in KPMG report, Cyber Security should be shared responsibility of government, organizations as well as the end users. Users should be aware of the basic security features. Organizations should regularly update their software and fraud detection systems. The government should focus more on educating the customers and should enforce basic security standards for organizations. All the breaches should be mandatorily reported. 5.3.5. Digital Literacy The government of India has launched National Digital Literacy Mission with the vision to empower at least one person per household with crucial digital literacy skills by 2020. It targets to train 60 million rural Indians. This mission will help in educating the rural population to understand the importance, ease and benefits of digital transactions. This will boost competitiveness of Indian banking sector in years to come. CONCLUSION The Banking sector is now observing a new wave of evolution with innovations in the space, especially with the production of prepaid wallets. Indian Banking Industry has displayed significant resilience during the return period. The second-generation returns will play a vital role in further establishment of the system. Indian banking system will further develop in size and complexity while playing as a significant role as agent of economic growth and intermingling different sections of the financial sector. It is sure that the future of banking will offer more cultured services to the customers with the continuous product and process modernizations. Adoption of rigorous prudential norms and higher capital standards, better risk management systems, adoption of universally accepted accounting practices and increased disclosures and transparency will safeguard the Indian Banking industry saves pace with other advanced banking systems. Finally, the banking sector will need to lead a new
business model by building management and customer services. Banks should contribute concentrated efforts to render better services to their customer. Nationalized and commercial banks should monitor the Recent trends and to get advantage of openings in changing banking scenario. REFERENCES 1. M. Bhuvana, P. G. Thirumagal and S .Vasantha, Big Data Analytics - A Leveraging Technology for Indian Commercial Banks, Indian Journal of Science and Technology, Vol 9 (32), August 2016 2. Saranya. J1, Anitha. K 2, Dr. S.Vasantha, An Empirical Study on Role of ICT in Banking Sector,IJMCR, Vol 2 Apr 2014 3. KPMG Report, Interdependence of Emerging Technology on next-generation banking, January 2017 4. https://fintechweekly.com/fintech-definition 5. http://searchcio.techtarget.com/definition/ICT-information-and-communications-technologyor-technologies 6. https://www.npci.org.in/ 7. http://perspectives.icicibank.com/bank-on-your-wrist 8. https://analyticsindiamag.com/conversational-ai-huge-indian-banking-sector-getting-bigger/ 9. https://www.enterpriseinnovation.net/article/ai-powered-robots-transform-banking-india500643590 10. http://www.businesstoday.in/sectors/banks/what-is-blockchain-technology-let-us-explainbitcoin-banks/story/238438.html 11. https://www.forbes.com/sites/suparnadutt/2017/09/01/blockchain-is-slowly-changing-digitalbanking-in-india-thanks-to-these-startups/#5489c2374a17 12. https://www.vccircle.com/what-blockchain-and-why-icici-bank-s-use-it-big-deal/ 13. http://www.computerweekly.com/opinion/Privacy-concerns-in-the-digital-world 14. http://www.moneylife.in/article/ransomware-digital-india-and-the-growing-cyberthreats/50521.html 15. http://onlinesellingindia.com/upi-apps-digital-wallets-in-india/ 16. https://rbi.org.in/scripts/AnnualReportPublications.aspx?Id=1209
MERGERS AND ACQUISITIONS OF BANKS IN INDIA: EMERGING REGULATORY ISSUES Dr. Binu Mole K, 1 Assistant professor, School of Legal Studies, CUSAT.
Abstract: Mergers and acquisitions of financial institutions are occurring at a rapid pace in emerging economies of the world and the scenario in India is not alien to the trend. Many reasons are adduced for increasing mergers and acquisitions of financial institutions like banks happening around the globe. Mergers and acquisitions of financial institutions usually lead to reduction of cost duplications and hence are viewed as a welcome measure.1 They provide opportunities for enhancement of revenue due to efficiency gains and also from increased market power. Over the past years, governments around the world and also in India have removed important regulatory barriers to development of financial industry. The lifting of these barriers has opened the way for increased mergers and acquisitions of financial institutions in India. This paper shall focus entirely on specific regulatory developments associated with the mergers and acquisitions in banking sector in India and analyse them against its commercial background. Specific issues that gains attention in this paper are the Policies of RBI, its role as the regulator of the finance sector. Going through the insight merger and acquisition process between two banks, this paper shall throw light upon implications of such schemes in banks in India. RBI is constantly updating regulatory norms relating to bank mergers and acquisitions. This calls for an in-depth
examination of the
regulatory framework and examine the challenges posed in achieving the objective of economies of scale. Introduction In the beginning of twentieth century, the banking sector both domestic and international has been undergoing a lot of changes in terms of impact created by globalization. These changes have in fact, affected the banking sector both structurally and strategically. Different strategies have been tailored in to banking regulations to make the sector remain efficient and 1
Ravisha N. S., Dr. M.G. Krishnamurthy, M&A in Indian Banking Sector, Contemporary Research In India (ISSN:2231-2137)SpecialIssue:Feb.,2012;availableat http://www.contemporaryresearchindia.com/Pdf/CRI/Feburary2012/24%20ravisha,%20drishnam urthy%20and%20srikanth.pdf (Last accessed Nov. 23, 2019)
surge ahead keeping pace with the global trends. One among them is through the process of consolidation of banks2. There are several ways to consolidate the banking industry. Mergers and Acquisitions is one of the widely used strategies by the banks to strengthen and maintain their position in the market3. Companies are confronted with the fact that the only big players can survive as there is a cut throat competition in the market and the success of the merger depends on how well the two companies integrate themselves in carrying out day to day operations. Banks will get the benefits of economies of scale through mergers and acquisition. For expanding the operations and cutting costs, Business Entrepreneur and Banking Sector is using mergers and acquisitions worldwide as a strategy for achieving larger size, increased market share, faster growth, and synergy for becoming more competitive through economies of scale. A Merger is a combination of two or more companies into one company or it may be in the form of one or more companies being merged into the existing companies. On the other hand, when one company takes over another company and clearly well-known itself as the new owner, this is called as Acquisition. The banks must follow the legal procedure of mergers and acquisitions which is given by the Reserve Bank of India, SEBI, Indian Companies Act and Banking Regulation Act 1949. Mergers and acquisitions are not a short term processes, it takes time to take decisions after examining all the aspects. Indian Corporate Sector had stringent control before liberalization but, the Government has initiated the Reform after 1991 which resulted in the adaptation of the banking sector. Mergers and Acquisitions of Banks: Indian Scenario The Banking system of India was triggered in 1770 with the formation of First Bank, viz., the Indian Bank also known as the Bank of Hindustan. Later on in the second half of nineteenth Century banks like the Bank of Bombay, the Bank of Madras and the Bank of Calcutta were established during the British period. These Banks were later merged in 1921 to form the Imperial Bank of India. In order to develop banking facilities in the rural areas the Imperial Bank of India was partially nationalized in 1955, and named as the State Bank of India along with its 8 associate banks. Later on, the State Bank of Bikaner and the State Bank of Jaipur merged and formed the State Bank of Bikaner and Jaipur. Approaching the development of Indian Banking system, the wave of growth through mergers and acquisitions was one peculiar to the post liberalization Era. In the Pre – Liberalization period, trend of growth was 2
Devarrajappa S., Mergers in Indian Banks: A Study on Mergers of Hdfc Bank Ltd and Centurion Bank of Punjab Ltd, International Journal of Marketing, Financial Services & Management Research Vol.1 Issue 9, September 2012, P.33 3 Shail Shakya, Mergers & Acquisitions in Indian Banking Sector Regulatory Issues and Challenges (2014)
centered on nationalization policies adopted by the governments. The Government of India had nationalized 14 Banks as on 19 July 1969 and 6 more commercial Banks were nationalized on 15 April 1980. In 1993, government merged The New Bank of India and The Punjab National Bank and this was the only merger between nationalized Banks, after that the numbers of nationalized Banks reduced from 20 to 19. In the post globalization era, the Government initiated several measures to boost performance and efficiency of our banks and financial sector by issuing licenses to private banks. After the Global crisis in 2008-09 also measures were taken to strengthen the banking sector in India. A multitude of monetary measures were also made by the Reserve Bank of India. In 2010 merger of the ICICI Bank and the Bank of Rajasthan was made. In 2014 Kotak Mahindra Bank merged with ING Vyshya Bank. Again the year 2017 also witnessed the merging of state banks of Travancore, Bikaner & Jaipur, Patiala, Punjab, Mysore, Hyderabad, and Bharathiya Mahila Bank with State Bank of India4. The Regulatory Framework for Bank Mergers in India The commercial banks form the significant part of the organized banking system and fall into four classes based on their method of establishment and pattern of ownership. These are private banks, banks in the public sector, foreign banks and regional rural banks. The mergers and acquisitions regulations in the Indian Banking sector can be broadly placed as per the nature of the entities involved and of the mergers, into several categories. The regulatory framework for M&As in the banking sector is laid down in the Banking Regulation (BR) Act, 1949. Originally, the Banking Regulation Act, 1949 did not contain any provisions for mergers and acquisition of banking companies. Amalgamation and Acquisition of Private Banks a) Voluntary Mergers The Banking laws (Amendment) Act, 1950 for the first time recognized the right to voluntary amalgamation of banking companies. It conferred power to the Reserve Bank of India to sanction the scheme of amalgamation between banking companies. In voluntary amalgamation, Section 44A of the Banking Regulation Act, 1949 provides that the scheme of amalgamation of a banking company with another banking company is required to be
4
For latest list of banks so far merged see https://affairscloud.com/list-mergers-acquisitions-bank-india (Site visited on Dec 22, 2019)
approved individually by the board of directors of both the banking companies and subsequently by the two-thirds shareholders (in value) of both the banking companies. After the scheme of amalgamation is approved by the requisite majority in number representing two-third in value of shareholders of each banking company, the case need to be sanctioned by the Reserve Bank. However, the Reserve Bank has the discretionary powers to approve the voluntary amalgamation of two banking companies under section 44A of the BR Act. The experience of the Reserve Bank has been, by and large, satisfactory in approving the schemes of amalgamation of private sector banks till the recent past. Most of these voluntary mergers were between healthy banks, somewhat on the lines suggested by the first Narasimham Committee5. The Committee was of the view that the move towards the restructured organisation of the banking system should be market-driven and based on profitability considerations and brought about through a process established under for the same6. b) Compulsory mergers They are induced or forced by the Reserve Bank under Section 45 of the BR Act, in public interest, or in the interest of the depositors of a distressed bank, or to secure proper management of a banking company, or in the interest of the banking system. In the case of a banking company in financial distress, the Reserve Bank may apply to the Central Government for an order of moratorium in respect of a banking company and prepare a scheme of amalgamation of the banking company with any other banking institution. Thereafter, the scheme is required to be sent to the banking companies concerned for their suggestions or objections, including those from the depositors, shareholders and others. After approval, the final scheme of amalgamation is send to the Central Government for sanction and notification in the official gazette and is placed before the two Houses of Parliament. The amalgamation comes in to effect on the date indicated in the notification issued by the government in this regard. There can also be voluntary merger or acquisition of any financial business by any banking institution, Subject to the approval of the RBI under the Banking Regulation Act, 1949. Amalgamation and Acquisition of Public Sector Banks
5
Committee on Banking Sector Reforms (Narasimham Committee II) - Action taken on the recommendations available at https://rbidocs.rbi.org.in/rdocs/PublicationReport/Pdfs/24157.pdf 6 Leeladhar V, 2008. "Contemporary International and Domestic Banking Developments and the Emerging Challenges," Working Papers id:1773, eSocialSciences.
The statutory framework for the amalgamation of public sector banks, viz., nationalised banks, State Bank of India and its subsidiaries is, different as the provisions of the BR Act do not apply to them. The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and 1980, or the Bank Nationalisation Acts authorise the Central Government under Section 9(1)(c) to prepare or make, after consultation with the Reserve Bank, a schemes for the transfer of undertaking of a ‗corresponding new bank‘ (i.e., a nationalised bank) to another ‗corresponding new bank‘ or for the transfer of whole or part of any banking institution to a corresponding new bank. The scheme framed by the Central Government is required, under Section 9(6) of the Bank Nationalisation Acts, to be placed before the both Houses of Parliament. As regards the State Bank of India (SBI), the SBI Act, 1955, empowers the State Bank to acquire, with the consent of the management of any banking institution (which would also include a banking company), the business, including the assets and liabilities of any bank. Under this provision, the consent of the bank sought to be acquired, the approval of the Reserve Bank, and the sanction of such acquisition by the Central Government are required. Several private sector banks were acquired by State Bank of India following this route. However, so far, no acquisition of a public sector bank has taken place under this procedure. Similar provisions also exist in respect of the subsidiary banks of the SBI. Thus, there are sufficient enabling statutory provisions in the extant statutes governing the public sector banks to encourage and promote consolidation even among public sector banks through the merger and amalgamation route, and the procedure to be followed for the purpose has also been statutorily prescribed. Reserve Bank of India : 2005 Guidelines on Bank Merger and Amalgamation The guidelines on merger and amalgamation of banks announced by the Reserve Bank in May 2005, also stipulates following in regard to merger and amalgamation of banking companies7. The guidelines lay down the process for the merger proposal, the determination of the swap ratios, disclosures, the stages at which Boards must get involved in the merger process and the norms of buying or selling of shares by the promoters before and during the process of merger. Boards of banks have been given a key role in the merger process. The decision of merger has to be approved by a two third majority of the total Board members
7
See also Patwari, Indrani, Bank Mergers and Acquisitions: A Comparative Analysis of the Banking Regulation Act, 1949 with the Companies Act, 2013 (July 6, 2017). Available at SSRN: https://ssrn.com/abstract=2998223 or http://dx.doi.org/10.2139/ssrn.2998223
and not just two thirds of those present. Further, the directors who participate in these meetings must be signatories to the Deeds of Covenants. The guidelines also provide that the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 would also have to be followed by the concerned entities. This would apply even if any/both of the entities were unlisted. With regard to merger of Two banks the guidelines provide for the approval of the directors of both banks prior to the convening of shareholder‘ s meeting for approval of the scheme of amalgamation. The issues that the Boards would need to consider in this regard are the valuation of the assets, liabilities and reserves of the bank to be amalgamated; the nature of consideration to be paid to the shareholders of the bank to be amalgamated; the swap ratio; the shareholding patterns of both the banks and the amalgamating bank; and the impact on the amalgamating bank‘ s profitability and capital adequacy ratio. The guidelines also provide for certain information to be submitted to RBI to facilitate its consideration of the amalgamating bank‘s application for its sanction. Similarly, certain information will also have to be submitted towards for determination of the value of the shares of the amalgamated bank, which shall have to be paid to dissenting shareholders. Finally, Where a non-banking financial company is proposed to be merged with a bank (or vice versa), the guidelines provide that the bank has to obtain RBI approval after receipt of its Board approval but prior to submission of the scheme of amalgamation to the concerned High Court. In addition to these issues the Board of the bank also has to consider violation of any RBI / SEBI norms by the NBFC, compliance by the NBFC of the ― know your customer‖ norms for all accounts; and NBFC‘ s taking of credit facilities from banks or financial institutions and terms thereof, if any. The bank, in this case too, will have to submit certain information for and in relation to RBI sanction and the valuation of shares. Mergers and Acquisitions: Restricted Scope for Judicial Review a Serious Concern With regard to merger and amalgamation of Banking Companies, section 44 A of the Banking Regulation Act, 1949 shows that it departs from the provisions of the Companies Act, 1956 in primarily two aspects, namely the High court is not granted the power to grant approval to the scheme for merger of banking companies. The Reserve Bank of India is also empowered to determine the market value of shares of the shareholders who has voted
against the scheme of amalgamation8. The banking Regulation Act enables the dissenting shareholder to obtain from the banking company concerned the market value of his shares as determined by the Reserve Bank of India under S. 44A (3). In Bank of Madura Shareholders Welfare Association v. Governor, Reserve Bank of India9, it was held that if the shareholders were aggrieved that the market value of shares of both the companies had not been determined properly, it was always open to it to get the market value evaluated by the Reserve Bank of India and that the court would not go into the question whether the share exchange ratio adopted in the scheme was fair or not. The difficulty in arriving at share valuation was discussed in detail in In Re: ICICI Ltd10 where a scheme was prepared for the amalgamation between ICICI Capital Services Ltd. and ICICI Personal Financial Services Ltd. with ICICI Bank Ltd. The petitioner and two other companies are the transferor companies and they are to be amalgamated with the ICICI Bank Ltd., the transferee company. Petitioners two main objection were. 1) The approval of the RBI was not sought for a scheme of amalgamation as the transferee was a banking company 2) Valuation of shares was not arrived at properly. To the first question court held that the objection has no substance, in as much as, the provisions of section 44A come into play only in case the transferee and transferor, both the companies are Banking Companies. In the said case, though the transferee company is a banking company, none of the transferor companies are banking companies. The objection did not sustain. While deciding that case, the court referred Piramal Spg & Wvg. Mills Ltd11, and cited what was there as that the valuation of shares is a technical matter which requires considerable skill and expertise. There are bound to be differences of opinion as to what the correct value of the shares of any given company is, simply because it is possible to value the shares in a manner different from the one which has been adopted in a given case, it cannot be said that the valuation which has been agreed upon is unfair. Court thus held that what is important is that all shareholders of both companies have unanimously accepted the valuation which has been arrived at by the auditors of the transferor and transferee companies, under these circumstances, the application cannot be rejected on the ground that the valuation of shares is unfair to the shareholders of the transferor-company. Bank Mergers Policy versus Competition Policy 8
The Banking Regulation Act, 1949, sec 44A(3) (2001)105ComCas.663 (Mad) 10 2002(4)Bom CR450 11 [1980] 50 Comp Cas.514 9
Reserve Bank of India sought an exemption from CCI scrutiny of bank mergers through the Banking Laws (Amendment) Act, 2012. The Act provided that ―Notwithstanding anything contrary contained in Section 2 of the Banking Regulation Act, 1949, nothing contained in Competition Act, 2002, shall apply to any banking company, the State Bank of India, any subsidiary bank, any corresponding new bank or any regional rural bank or cooperative bank or multi-state cooperative bank in respect of the matters relating to amalgamation, merger, reconstruction, transfer, reconstitution or acquisition under respective Acts. Through this amendment, though the Reserve Bank of India (RBI) tried to remove the scrutiny of competition commission of India over bank mergers it could not succeed. Ministry of corporate affairs issued a notification on 8th January 2013, by which Central Government exempted mergers under section 45(forced mergers) of the Banking regulation Act, 1949 from the applicability of section 5 and 6 of the Competition Act, 2002 in public interest for a period of five years, but the voluntary mergers among the banking sector requires the prior approval of CCI. CONCLUSION Merger and Acquisition is the useful tool for growth and expansion in the Indian banking sector. It is helpful for survival of weak banks by merging into larger bank. In this scenario, Mergers and Acquisitions have become one of the widely used strategies by the banks to strengthen and maintain their position in the market today. The basic reason for the regulation of banking company is that it is an institution wielding enormous responsibilities to the depositor ‗s money and to mitigate the risk of failure of a banking institution is the responsibility of the regulators. Bank mergers are no exception to it. It is inevitable to have a relook at the expanding the scope of judicial review of bank mergers and acquisitions particularly when issues like valuation of shares stand to affect shareholders. Competition commission is responsible for preventing abuse of dominance position of any company or enterprise in the market so as to avoid the practices having adverse effect on the competition. Competition commission ‗s role is not confined to any specific sector of business or service in India, but it is the regulator of all kinds of services and business where it is likely to have an effect on free competition in the market. Thus, it is appropriate to confer power to the CCI to regulate the bank mergers.
IMPACT OF TECHNOLOGY ADOPTION IN PUBLIC SECTOR BANKS IN INDIA – AN ANALYSIS *Dr. S. Ganapathy, Professor, Department of Commerce, Alagappa University, Karaikudi, Tamilnadu. **Mr. S. Rajamohan, Part time Doctoral Research Scholar, Department of Commerce, Alagappa University, Karaikudi, Tamilnadu and Asst. Professor, Department of Management, Bharata Mata College of Commerce and Arts, Choondy, Aluva.
Abstract Resulting the developments in the information technology, the banking industry has undergone a massive change. Technology adoption has given new dimensions to the banking industry. It has allowed banks to offer much more to the customers, like facilities of card and telephone access, anytime and anywhere banking through 24 hours of ATMs, credit cards, debit cards, POS (Point of Sale) access. In fact, the technology has given the customers to have fingertips access to their accounts worldwide. The digitalization of information has facilitated the banking transactions very easy and convenient both to the bank and customer. Information technology can be used to develop products, services and other capabilities that will enable a bank to pull off strategic advantages. This research is aims to study the impact of technology adoption in public sector banks in India. Secondary data have been collected from various sources like articles and websites by the researcher for the study. The study reveals that adopting technology in public sector banks comes up with both benefits and challenges. Cost effective, non-stop banking, new products and services, data warehousing, a sustainable banking are some of the benefits experienced by Public sector banks from the adoption of technology. Cybercrimes, customer response, choice of technology, data integration, shifting to alternatives and fraud are some of the challenges in adopting the technology by Public Sector banks. Key words: Public Sector Banks, Information Technology, Internet banking, Benefits, Challenges
Introduction Banking environment has become highly competitive today. Information technology refers to the acquisition, processing, storage and dissemination of all types of information using computer technology and telecommunication systems. Information technology architecture is an integrated framework for acquiring and evolving IT to achieve strategic goals. These technologies are used for the input, storage, processing and communication of information. Information technology includes ancillary equipment, software, firmware and similar procedures, services etc. Modern high throughput technologies are providing vast amounts of the sequences, expression and functional data for genes and protein.
Recent developments of banking sector in India are Internet, Society for worldwide interbank financial telecommunications (SWIFT), Automated Teller Machine (ATM), Cash dispensers, Electronic clearing service, Bank Net, Chip card, Phone banking, Tele-banking, Internet banking, Mobile banking, Anywhere banking, Voice mail, E-banking Etc., The basic need of Information Technology (IT) in Banking Sector are Meeting Internal Requirements, Effective in Data Handling, Extending Customer Services, Creative Support for New Product Development, End-user Development of the Non-technical Staff. Emerging trends of information technology in banking sector are Outsourcing, Integration, Distinctive Edge, IT as Profit Centre, Prospering in Down Market. Public sector banks are those banks where majority of stake (more than 50%) is held by a government. India at present 12 public sector banks after merger , including the merger and 1 payment bank, India Post Payment Bank.
Review of Literature Many researchers have worked efficiently on role of information technology in financial institutions. Ahmadirezaei (2011) concluded that investment in technology results in better facilitation of the customer and time saving of both customer as well as employees. Khajeh [2011) explained that banking industry influenced by technology in three different ways which are level of competition, economy of scale and creation of different delivery channels. Technologies can only lead to increased productivity or improve performance when combined with other resources effectively by human resources or when done effectively, and use technology productively and ethically (Dauda&Akingbade, 2011) advancement makes employees more effective and efficient (Lawless and Anderson, 1996). Technological advancement can improve firm performance as well (Li and Deng, 1999). The majority of the banks in Zimbabwe have adopted internet banking, usage levels have remained relatively low, as not many customers are using this innovation in Zimbabwe. Regarding the challenges faced by banks in the adoption of IB, compatibility with existing legacy systems, cost of implementation and security concerns ranked high (Thulani, D., Tofara, C et al., 1970). The role of information systems and infrastructural new trends in banking sector was studied. The committee stressed the issue of development in banking infra services which helps to mobilize the services and resources through various ways (Rangarajan, 1991). As the Indian banks position themselves as financial service providers,
banking business is getting redefined. Technology is unsettling the earlier business processes and customer behaviour is undergoing change. These have enhanced the forces of competition. Four trends are fundamentally altering the banking industry: consolidation, globalization of operations, development of new technologies, and universalization of banking (K.V.Kamath, S.S.Kohli, et.al., 2003). The relationship between technology and banking is found challenges ahead of the banking industry. All are using ATM‟s and electronic mode to do banking transactions. So now a day it is very essential for the banks to adopt the new factors and use those to achieve their objective (S.B.Verma , 2007). The essentials of the banking and technology and how new trends are performing a major role to the growth of banks. Provide the new services and launching new banking products in the market is a major element in information technology now a days. All efforts would take for better utilisation and trustworthiness of the stakeholders of banks (R.K.Mittal, 2008). The customers are satisfied with the quality of e-banking services. But they face technical as well as administrative and procedural problems. Further to promote e-banking services, it is of importance that the banks must ensure quality in customer service. ‗Quality in work‘ and ‗satisfaction of the customers‘ is the two key words, which must be given sternest attention to promote a product (P.A.Devi,,& V.Malarvizhi, 2010). The penetration of information technology in rural areas and outsourcing of information technology are major concerns of information technology in banking operations. Further, there is motivation to customers for increased use of information technology while transacting with banks. There is more need for strategic thinking by smaller banks while investing in information technology (Chitra 2010). The information technology promises to change the pace of banking in the next few years. Mobile banking and internet banking are going to be indoor in the banking sector in future. Even though IT systems are complex and sophisticated but they are energy guzzlers (Sreelatha. T, CH.ChandraShekar 2012). E Banking is likely to bring a host opportunity as well as unprecedented risks to the fundamental nature of Banking in India. The concept of Scope of E Banking is still evolving several initiatives taken by Government of India as well as Country‘s Central Bank, the Reserve Bank of India have facilitated the development of EBanking in India (N. Jamaluddin, 2013). Banks and Money related Foundations remain the unabated focuses of digital culprits in the most recent decade. Prominently monetary profit is as yet the real inspiration driving most cybercriminal exercises and there is minimal shot of this changing soon. This paper centers around the specialized parts of different kinds of cybercrimes concerning the saving money units and their related effects (Harshita Singh Rao2019). The values of quarter smart advances of SBI range drastically from every enhance
and there may be a growing trend except 2011-12 in the Total Advances of SBI. There is a fluctuating trend of Growth Rate in each total advance as an entire as well as in each area. Advances (A.Thangam, S.Ganapathy, et.al., 2019).
Objectives of the study 1. To study the Technological developments in public sector banks. 2. To evaluate the benefits achieved by public sector banks for adoption of technology in India. 3. To analyse the problems faced by public sector banks for adoption of technology in India. 4. To offer suggestions to improve banking while adopting technology.
Methodology The research is purely based on secondary data. For this study the data has been collected from the Reserve Bank of India circulars and bulletin, business dailies such as The Economic Times, Financial Express, Business Standard and various other journals, magazines and websites which constitute the secondary sources of data.
Technological Development in Banking Sector Dr. Rengarajan committee was entrusted to study the possibilities and stages involved in computerization of banks and to prepare guidelines for the same in the year 1983. The report submitted by the committee in the year 1984 was known as the First Rangarajan committee Report. The objectives of the computerization of banks are to improve customer service, decision making on productivity and profitability. The various stages of computerization were Stand-alone computer system, Multi user computer networking, Branch –level computerization and total branch automation. Next stage of computerization at Regional/ Circle / Zonal office acts in between branches and head office . The computerization at head office level activities is divided into different functional area like operations, planning, human resource development, international business and services etc. Introduction of Local Area Network (LAN) and Wide Area Network ( WAN) changed the banking environment tremendously . The concept of LAN is very important for branch
computerization whereas WAN generally used to interconnect branches with regional offices, and regional office to head office. Another development in banking was introduction of core banking system, has a centralised branch computerization model where branches are connected to central host. It incorporates branch automation modules and online multiple delivery channels like ATM, ABB, Debit Card, Tele- banking, mobile banking, internet banking etc. Online Banking: Online banking means managing banking activities using either financial institution‘s internet banking website or their mobile banking app for smart phones. With online banking the customer can view their account balances, make payments, transfer money, and update your personal details with your financial institution. Electronic Banking: Electronic banking, also known as electronic fund transfer (EFT), uses computer and electronic technology in place of checks and other paper transactions. EFTs is initiated through devices like cards or codes that let you, or those you authorize, access your account. Many financial institutions use ATM or debit cards and Personal Identification Numbers (PINs) for this purpose. ATM : ATMs are electronic terminals that let you bank almost virtually any time. To withdraw cash, make deposits, or transfer funds between accounts, you generally insert an ATM card and enter your PIN. Some financial institutions and ATM owners charge a fee, particularly if you don't have accounts with them or if your transactions exceed the prescribed limit set by the banks. Mobile Banking: Mobile phone can assist the common man to conduct banking transactions any time and from anywhere. Use of mobile phone handsets as a payment device is well developed in India. Technology used for mobile banking must be secure and should ensure confidentiality, integrity and authenticity. Internet Banking: Banks are using electronic and telecommunication networks for delivering a wide range of value-added products and services to their customers. The delivery channels include dial-up connections, private networks, public networks etc., and the devices include telephone, personal computers etc. The following table shows transformation from traditional banking to modern banking:
Table – I S.No
Traditional
Alternatives
Medium
Services Available
Service Instant deposit and withdraw money, getting statement PC and LAN ,DD, calculation of Interest etc., Instant deposit and withdraw PC and money, getting statement, DD, cheque clearance and Internet depositing, stop payment etc.,
1.
Brick-Mortar services
Automated Branches
2.
Branch Banking
Core Banking
3.
Manual Note Counting
Note Counting Electronic Machine device
4.
Formal Cheque
MICR Cheque
5.
DD/MT/TT
EFT
6.
On counter Cash withdraw
MICR technology Internet core solution (CBS)
Instant note and bundle of notes counting
Instant cheque clearance
Instant fund transfer Withdraw money, balance enquiry, account statement, mobile recharge, make donation, card to card transfer, and utility bill payments.
Debit card
ATM
7.
On counter Cash withdraw
Debit card
Point of Sale(POS)
Mobile recharge, make donation, card to card transfer, utility bill payments.
8.
Letter Credit
E-Money
Credit Card
Purchasing and payment of utility bill payments
PC and Internet
Balance enquiry account statements, stop payment order, EFT, RTGS, purchasing and payment of utility bill payments
9.
Branch Banking
of
Internet Banking
10.
Branch Banking
Mobile banking
Mobile phone, SMS, 3G,4G
Balance enquiry account statements, stop payment order, EFT, RTGS, purchasing and payment of utility bill payments
Source: T.R.Srilatha and A. Sudhakar (2018). Benefits of Technology Adoption in Public Sector Banks Nowadays banks are facing the challenges of tightening budgets and continuous demands to reduce costs while handling the standard flow of new regulations. They are also under heavy pressure to meet the increasingly complex demands of the real-time, digital customer technology is inevitably playing a core role in helping them address these issues. Public Sector Banks uses various technologies for providing good and satisfactory services to customers. The following are the advantages of adopting technology in banks.
Technology services in Public Sector Banks will minimize the cost of handling, so cost reduction is the main benefit from adopting technology to banks.
Technology enabled the banks to move from a concept of Branch Customer to Bank Customer. Free flow banking from anywhere and at any time banking provide added comfort and convenience to the present-day tech-savvy customers.
New products and services other than banking launched with the help of technology. Presently data warehousing becomes a very useful tool in the hands of management for decision making. Data warehousing enables the banks to pool enormous amount of data at one place and slice and dice the data for the purpose of analysis. This enables to know the demographic profile of customers, potential customers and the most profitable business lines are all identified and appropriate direction to the business strategies decided.
With the help of technology banking industry is able to provide banking services in unbanked areas. Technology plays a major role in financial inclusion, a sustainable banking theme very relevant to a country like India that has a large unbanked population.
cost effective
A Sustainabl e banking
Nonstop banking Technology benefits
Data Warehous ing
New products and services
Benefits of technology
Challenges faced by Public Sector banks in Technology Adoption. Public Sector Banks are facing many challenges with the advent of adopting new technologies. The following are the major challenges faced by the Public Sector bank in adopting the technology. Data Integration In India largest portion of population is connected with the banking sector. Data of clients are scattered, therefore collection of this data in a systematic manner is very indispensable. New Technologies should help Public sector banks for deliver strong and reliable services to their customers at lower cost. Besides this technology should also to generate and manage information successfully. Information contains data collected based on principles of integrity, reliability and accuracy. Public Sector Banks are collecting enormous quantities and warehousing volumes of data relating to customers and transaction. The information is subjected to meaningful analysis, usage and creation of a data base with an objective to the diversified internal and external management information system requirements.
The problem of Fraud The issue related to the security has become one of the major concerns for Public Sector Bank. Because of increasing users and new services in banking – productivity, efficiency and quality are essential to survive in this competition. A large group of customers refuse to choose e-banking facilities because of fear of fraud, uncertainty and security concerns. Creating and maintaining trust is the major hurdle to online banking for most of the customers. They have a perception that online or internet banking is risky due to which frauds and misbehaves can take place. So, it is a big challenge for bankers to make clients satisfied regarding their security issues. According to RBI report, fraud cases in Public sector bank were total of 3766 which is the highest among other sectors of bank. As per the report the number of fraud cases was increased by 15 percent on year on year basis. The following is the statement showing number and amount of fraud cases in Public Sector Banks for the past 10 years Table II Number and amount of fraud cases in Public Sector Banks for the past 10 years No. of Cases of Year
fraud
Amount in ₹ crores
2009-10
4003
13672.46
2010-11
3530
14748.5
2011-12
3910
20210.86
2012-13
4504
24819.4
2013-14
4359
21542.03
2014-15
4269
23694.65
2015-16
4207
16779.42
2016-17
3927
25883.98
2017-18
4228
9866.23
2018-19
2836
6734.65
Data belongs to the period from 31stMarch2010 to 31st March2019.
Source: https://factly.in/ Graphical presentation of Fraud cases in Public Sector Banks for the past 10 years from 2009-10 to 2018-19 (Amount in Crores) 25884.0
24819.4
23694.7 21542.0
20210.9
16779.4 13672.5
14748.5 9866.2 6734.7
1
2
3
4
5
6
7
8
9
10
Choice of Technology Without any doubt, advent of technology in banking sector saves a lot of time. Every bank in India, especially public sector banks is updating themselves by adopting various technologies. But problem arises when adopts the wrong choice of technology due to insufficient control processes and inappropriate system design. This wrong selection of technology may lead to a loss in terms of financial losses well as loss of brand image as well as goodwill (Laroiya, R. 2002). Due to this reason, many banks rely on third party service provider for banking technology, which may incur high costs. Cyber Crime Cybercrime is a major challenge for banks which adopts technologies. Nowadays various incidents pertaining to theft of personal information and abuse of ATM‘s is happening everywhere. The following are various kinds of cybercrime. Hacking Hacking is a system to increase unlawful and unauthorised access to a PC or system so as to take, degenerate, or erroneously see information. Phishing
Phishing is a procedure to obtain private data like usernames, passwords, and charge/Master card subtleties, by imitating as a reliable material in an electronic correspondence and replay similar subtleties for harmful reasons. Vishing Vishing is the criminal routine with regards to utilizing social designing through phone framework to access private individual and budgetary data from the general population with the end goal of monetary reward. E-mail Satirizing E-mail Satirizing is a procedure of concealing an email's real starting point by shaped the email header to seem to begin from one real source rather than the real beginning source. Spamming In Spamming, undesirable and spontaneous messages typically sent in group, trying to constrain the message on individuals who might not generally get it are alluded to as Spam Messages. Denial of Administration This attack is described by an express attempt by aggressors to anticipate real clients of an administration from utilizing that benefit by "flooding" a system to prohibit real system traffic, upset associations between two machines to deny access to an administration or keep a specific individual from getting to an administration. Advanced Constant Danger (ACD) ACD is portrayed as a lot of intricate, covered up and progressing PC hacking forms, frequently focusing on an explicit element to break into a system by keeping away from location together delicate data over a critical timeframe. The assailant generally utilizes some kind of social designing, to access the focused-on system through authentic methods. ATM Skimming ATM Skimming is a means of trading off the ATM machine or POS frameworks by introducing a skimming gadget on the machine keypad to show up as an actual keypad or a gadget made to be fastened to the card pursuer to be similar to a piece of the machine. In
addition to that, malware that takes Visa information specifically can likewise be introduced on these gadgets. Effective execution of skimmers causes in ATM machine to gather card numbers and individual unique proof number (Stick) codes that are later repeated to complete fake exchanges. To avoid these cybercrimes, several security measures to be adopted for their documents
such
as,
facts
machine
and
customer
deliverable
instruments.
It
is also mandatory that consumer personal records and different information accessible with banks is secured adequately to ensure that fraudsters do no longer get admission to it. All safety measures must be beneath continuous review for in addition strengthening. There is
a
need for comprehensive Information
System
Security policy has
to
be
put
in vicinity via the bank for safeguarding the sensitive information of customers. Customer‟s response Consumer response on adopting technology by public sector bank is another question mark as majority of Indian population deals with Public Sector Bank. Any change in the regular practise in banking operations might affect the stakeholders. So, customers‘ responses to the adoption of technology are a major challenge. Bank customers should understand the merits and demerits of various products. Banks must educate the consumers regarding the use of technological products, which in turn will be a positive impact on bank performance. The entire institution of banking is built on consumer trust. It helps not only in retaining the existing customers but also attracts new customers. This activity will automatically improve the quality in banking services and development of banks. Shifting to Alternatives Due to the advent of Prime minister‘s Digital India, Cash less economy and so on, every bank started to adopt new technologies. But the problem arises when the clients are feeling hard adopt the new technologies, as the procedures were cumbersome. The bankers should frame the procedures in such a way that is user friendly to the clients. The customers get to know the pros and cons of alternative devices in banking services. The following are some of the alternative services in banks.
Cyber crime Customer response
Fraud Technology challenges Shifting to Alternatives
Choice of Technology Data Integration
Suggestions This period is digital era, where everything is digitalised. Banks need to be updated with technologies in order to survive in this competitive world. Some of the suggestions are The public sector banks should focus on the choice of technology. The technology adopted by the banks should be user friendly. The customers should be educated on the application, pros and cons of technology. Banks should ensure security in its operations.
Conclusion Information technology is a means for increasing productivity and efficiency in operational levels. Banking, which is primarily a service industry becoming more and more technology dependent. The most visible impact of technology is reflected in the way the banks respond
strategically for making its effective use for service delivery. With
the introduction of technologies, the
transactions
of
banking
and delivery of
banking merchandise will grow to be an extra customer friendly. To cope up with the fast modifications in
the
technology, legislation and
market
to constantly innovate and try to remain beforehand of the curve.
space,
banks
have
The study reveals that
adopting technology in public sector banks comes up with both benefits and challenges. Cost effective, nonstop banking, new products and services, data warehousing, a sustainable
banking are some of the benefits experienced by Public sector banks from the adoption of technology. Cyber-crime, customer response, choice of technology, data integration, shifting to alternatives and fraud are some of the challenges in adopting the technology by Public Sector banks. As today‘s world is digitalized, strength of protection is of very great importance. References 1. A.Thangam, S.Ganapathy and S.Nachammai (2019). Sector wise advances of State Bank of India. International Journal of Scientific and Technological Research. 8 (12), 1326- 1332. 2. Arundhati Bhattacharya (2015). New Paradigm in Business Strategies of Bank. The Journal of Indian Institute of Banking and finance. 3. Ashish K.Sartape (2016).
Information Technology and Banks: Trends, Issues and
Challenges. IRJMS 2(12), ISSN (online): 2454-8499.
4. Ahmadirezaei, H., 2011. The Effect of Information Technology in Saderat Banking System. Procedia Social and Behavioural Sciences.) 5. Chitra (2010) IT Emergence: Recent Trends in Banking Industry of India http// www.article base. Com/ information-technology- in- banking- industry- of- India- 1981838.html.
6. Dauda, D. Y., &Akingbade, W. A. (2011). Technological change and employee performance in selected manufacturing industry in Lagos state of Nigeria. Australian Journal of Business and Management Research, 12. 7. Devi, P. A., & Malarvizhi, V. (2010). Customers' Perception of E-banking: Factor Analysis. IUP Journal of Management Research, 9(6). 8. Harshita Singh Rao. (2019). Cybercrime in banking sector. International Journal of Research Granthaalayah, 7(1), 148-161. 9. Kamath, K. V., Kohli, S. S., Shenoy, P. S., Kumar, R., Nayak, R. M., Kuppuswamy, P. T., & Ravichandran,
N.
(2003).
Indian
banking
sector:
Challenges
and
opportunities. Vikalpa, 28(3), 83-100.
10. Khajeh, S., 2011. The Impact of Information Technology in Banking System (A Case Study in Bank Keshavarzi IRAN). Social and Behavioural Science.) 11. Laroiya, R. (2002), "Client Drain from Public Sector Banks: Causes and Strategies", Biz Craft, Edition 2 (April to October, 2002), Journal of Management Science, Bareilly, pp. 2935.
12. Li, Y. and Deng, S.L. (1999), ―A methodology for competitive advantage analysis and strategy formulation: an example in a transitional economy‖, European Journal of Operational Research, Vol. 118, pp. 259-70.
13. P.A.Kalyanasunda (2014) ―Role of Technology in Modern Banking‖ The Journal of Indian Institute of Banking and finance July-Sep 2014. 14. R.K.Mittal et al (2008) Emerging Trends in the Banking Sector Macmillan India Ltd. Vol.1. 15. S.B.Verma et al (2007) E-Banking and Development of Banks, Deep and Deep Publications Pvt Ltd. 16. T.R.Srilatha and A. Sudhakar (2018). Adoption of technology in banks – issues and challenges. Journal of Emerging Technologies and Innovative Research, 5(2), 443-449 17. T.Sreelatha , CH.ChandraShekar (2012) Role of Technology in Indian Banking Sector IJMBS. 2(4), ISSN No: 2231-2463,36-40. 18. Thulani, D., Tofara, C., & Langton, R. (1970). Adoption and use of internet banking in Zimbabwe: An exploratory study. The Journal of Internet Banking and Commerce, 14(1), 113. 19. Yiu, C. S., Grant, K., & Edgar, D. (2007). Factors affecting the adoption of Internet Banking in Hong Kong—implications for the banking sector. International journal of information management, 27(5), 336-351. 20. https://financialservices.gov.in/banking-divisions/public-sector-banks
IS INSOLVENCY AND BANKRUPTCY CODE, 2016 (IBC) A PANACEA FOR SOLVING THE NPA CRISIS? Shruthi Manohar, Research Scholar, School of Legal Studies, CUSAT. Abstract Non-performing assets (NPAs) has always been a major challenge for banks in India. Though several initiatives were taken on legal, financial and policy level, most of them showed only moderate to low success. Insolvency and Bankruptcy Code, 2016 acts as a game changer in India. There are reports saying that the inception of the Insolvency and Bankruptcy Code, 2016 has been an instrumental change in curbing the menace of NPAs in the Indian economy. An attempt is made in this paper to analyse how far this statement is true. The paper seeks to provide an overview of the key issues in this area. The paper also throws light on the initiatives of RBI to sort out problems of NPA. The objective of this paper is to contribute to the understanding, to analyse and critically examine the present position of law. Keywords: Insolvency and Bankruptcy Code, IBC, Non-Performing Assets, NPAs.
Introduction Non-performing assets (NPAs) has always been a major challenge for banks in India. Though several initiatives were taken on legal, financial and policy level, most of them showed only moderate to low success. Insolvency and Bankruptcy Code, 2016 acts as a game changer in India. Prior to the enactment of IBC, there existed many laws dealing specifically with the recovery of loans but miserably failed to recover the debts in a time bound manner. The inefficiency of the then existed mechanisms proved to be a crucial factor in recovery. It is at this point of time that Insolvency and Bankruptcy Code was enacted with sweeping changes within the credit availability and delivery system in India with the objective of making India a favorable place for investment and business development. Research Questions 1) Whether the introduction of IBC has made any difference on the resolution of NPAs? 2) Whether IBC can be considered as a strategy for resolving the NPAs? Objectives The objective of this paper is to provide a brief overview of the legal framework governing NPAs, to analyse various laws and mechanisms dealing with NPAs and examine how far it
has achieved the objectives, to analyse how far IBC has addressed these issues and examine the difference IBC has brought on NPAs. Methodology Doctrinal method of study is followed. Non-Performing Assets (NPAs) A major issue in the financial arena of the Indian economy is the accumulation of nonperforming assets (NPAs) on the balance sheets of banks‘12. Non-performing assets are those assets of the bank which has ceased to generate income for the bank 13. It is a loan or advance for which the principal or interest payment remained overdue for a period of 90 days14. NPAs are one of the major problems that the banks are facing. While outlining the basic problem of Non-Performing Assets, the Banking Law Reforms Committee15 recommended the Insolvency and Bankruptcy Code. Whether the introduction of IBC has made any difference on this is a question to be addressed. Legal Mechanisms for Recovery of NPAs The debt /credit market constitute the driving force in the economy of a country. This brings out the relevance of debt recovery laws. The banks resort to different mechanisms for the recovery of their bad loans. The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDDBFI Act,1993) and The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act, 2002), are the major laws dealing with the recovery aspect of the banks. Even before the enactment of these laws, there existed The Sick Industrial Companies Act, 198516 which was enacted on the recommendations of Tiwari Committee.
12
Neeraj Tiwari, ―The Role of Assets Reconstruction Companies,‖ Pratt's Journal of Bankruptcy Law 7, no.6 (September 2011). 13 Sumant Batra, Corporate Insolvency: Law and Practice, (Eastern Book Company, 2017). 14 Definition of ‗Non Performing Assets‘, December 21, 2019, https://economictimes.indiatimes.com/definition/non-performing-assets 15 Banking Law Reforms Committee Report, 2015, December 20, 2019, https://ibbi.gov.in/BLRCReportVol1_04112015.pdf. 16 Repealed by the Introduction of Insolvency and Bankruptcy Code, 2016.
SICA17 was meant for sick industrial companies. The Board of Industrial and Financial Reconstruction (BIFR) and Appellate Authority for Industrial and Financial Reconstruction (AAIFR) were constituted under this Act. Bank as a creditor can also initiate actions under the provisions of this Act. However, the scope of this Act was only limited to the industrial companies which were deemed sick. The Act had few drawbacks. In situations wherein BIFR recommended for winding up of an industry, the High Court having jurisdiction would reopen the case and later decide whether to wound up or not18. This Act was largely misused by the debtors, especially the moratorium provisions under the Act. Thus this Act proved to be ineffective. The pre liberalization period faced the issues of deterioration in the asset quality and increase of NPAs in the Banking Industry. This led to the enactment of the Recovery of Debt due to Banks and Financial Institutions Act of 1993, which was on the recommendations of the Narasimham Committee. RDDBFI Act,1993, deals with the recovery aspects of the financial institutions, wherein quasi-judicial body Debt Recovery Tribunals (DRTs) with an appellate tribunal, Debt Recovery Appellate Tribunal (DRAT) established under this Act. The objective of this particular Act is to provide quick and immediate assistance to banks and other financial institutions, thereby ensuring speedy recovery of bank dues. These tribunals which have the powers of the civil courts proved to be good initially in addressing the issues but later on proved to be burdened with back logs. Thus it came to be less effective. Narasimham Committee II, which was set up with the objective of reviewing the implementation of the reforms as suggested under the Narasimham Committee Report I, recommended for the creation of Asset Reconstruction Funds/Asset Reconstruction Companies to take over the bad debts of banks, allowing them to start on a clean-slate19. The report of the Andhyarujina Committee, established to implement the recommendations of Narasimham Committee II, submitted in May, 2000, led to the enactment of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 (SARFAESI Act). The Act provides for the enforcement of security interest by the banks without the intervention of court but with the assistance. The Act provided measures for the securitisation of financial assets. Asset Reconstruction Companies (ARCs) constituted 17
The Sick Industrial Companies (Special Provisions) Act, 1985. Rajeswari Sengupta, Anjali Sharma, Susan Thomas, ―Evolution of the Insolvency Framework for NonFinancial Firms in India‖, Indira Gandhi Institute of Development Research (IGIDR), December 21, 2019, http://www.igidr.ac.in/pdf/publication/WP-2016-018.pdf 19 Narasimham Committee on Banking Sector Reforms, 1998, December 27, 2019 http://www.enablersindia.com/banker/ibfsa10.pdf. 18
under the Act started to take the secured interests of the banks through the securitisation process. These provisions under the SARFAESI Act enabled the banks to recover its debts. The main attraction of this Act was that it did promote the recovery without the intervention of the court, thus reducing the time delays, which it faces when taking the normal court proceedings. It is to be noted that the debt owed backed by a security interest, can be enforced under the SARFAESI Act as well as RDDBFI Act, but for the debt owed for which there is no security interest, it can be enforced only under the RDDBFI Act.20 Despite these enactments, the NPAs went on at an increasing rate. Thus this also did not provide an effective remedy in reducing the NPAs in the long run. The Companies Act also provided provisions for dealing with the insolvency situations of the companies, which ultimately leads to the winding up and liquidations procedures, which has now replaced by the Insolvency and Bankruptcy Code, 2016. Civil remedies under the Civil Procedure Code, 1908 (CPC), Criminal remedy under Section 138 of Negotiable Instruments Act, 1881, remedies under Arbitration and Conciliation Act, 1996, Lok Adalats - Legal Services Authorities Act are also available. RBI Recognized Mechanisms Apart from the above mentioned legislations, RBI guidelines have also got its role. Different debt restructuring mechanisms like CDR, SDR, S4A, etc., were opted, which remained popular for being mechanism implemented without the intervention of the overburdened courts. Corporate Debt Restructuring (CDR) :
CDR guidelines formulated in 2001, a voluntary
framework primarily meant for bankers, enabled the creditors to get into contracts (based on their Debtor-Creditor Agreement and Inter-Creditor Agreement). The objective of CDR was to ensure a timely and transparent mechanism for the restructuring of the corporate debts for the benefit of all concerned21. It provided limited flexibility in terms of outcome22. So far as the banks are concerned, it provided great incentive to rely on the CDR mechanisms, since it
20
Vinod Kothari, Securitisation Asset Reconstruction and Enforcement of Security Interest, 2nd ed. (Wadhwa and Company Nagpur, 2007). 21 Corporate Debt Restructuring, RBI Notification dated 23-08-2001, https://rbidocs.rbi.org.in/rdocs/notification/PDFs/22752.pdf 22 Id.
allowed obtaining regulatory forbearance in the treatment of NPAs on their balance sheet 23. Large banks were resorting to CDR mechanisms to restructure their loans. Joint lenders forum (JLF) : JLF24 guidelines formulated in 2014, constituted a compulsory framework for banks and financial institutions. This was primarily meant for banks and NBFCs. The foreign creditors/trade creditors were outside the purview of JLF. It provided limited flexibility in terms of outcome. Strategic debt Restructuring (SDR): SDR25 provided rights to lenders to acquire/divest a majority stake in borrower companies. Scheme for Sustainable Structuring of Stressed Assets (S4A) : (S4A) was introduced to strengthen the lenders' ability to deal with stressed assets which are large commercial operating accounts, wherein the sustainable debt should not be less than 50 per cent of current funded liabilities26. Yet another notification came during the period included the Flexible Structuring of Existing Long Term Project Loans, which will make that loan out of the name of NPAs27. However, all these mechanisms were withdrawn by RBI. RBI and NPAs The RBI was bestowed with the power to direct the banks to file an insolvency procedure against any borrower who defaulted in his payment under Section 35AA28 and Section
23
Reserve Bank of India, Report of the Working Group to Review the Existing Prudential Guidelines on Restructuring of Advances by Banks/Financial Institutions, December 24, 2019, https://rbidocs.rbi.org.in/rdocs//PublicationReport/Pdfs/WRPN180712FL.pdf 24 Framework for Revitalising Distressed Assets in the Economy – Guidelines on Joint Lenders‘ Forum and Corrective Action Plan, RBI Notification dated 26-02-2014, December 24, 2019, https://rbidocs.rbi.org.in/rdocs/notification/PDFs/503ACF260214F.pdf. 25 Strategic Debt Restructuring Scheme, RBI Notification dated 08-06-2015, December 24, 2019, https://rbidocs.rbi.org.in/rdocs/notification/PDFs/SDRS62783F81DA523634E0D8AF43D088360A754.PDF 26 Scheme for Sustainable Structuring of Stressed Assets, RBI Notification dated 13-06-2016, December 24, 2019, https://rbidocs.rbi.org.in/rdocs/notification/PDFs/NT422B1EE9DF2D4B5484487065B8FB94B5EC9.PDF. 27 Flexible Structuring of Long Term Project Loans to Infrastructure and Core Industries, RBI Notification dated 15-07-2014, December 24, 2019, https://rbidocs.rbi.org.in/rdocs/notification/PDFs/CDB150714FP.pdf. 28 Section 35AA ―The Central Government may, by order, authorise the Reserve Bank to issue directions to any banking company or banking companies to initiate insolvency resolution process in respect of a default, under the provisions of the Insolvency and Bankruptcy Code, 2016‖
35AB29 of the Banking Regulation Act, 1949, which was introduced by the Banking Regulation (Amendment) Act, 2017. These provisions permit RBI to direct banks to initiate proceedings for recovery of NPAs and deal with their stressed asset. Thus the amendment enabled RBI to take a targeted approach and deal with NPAs quickly. Sashakt - the resolution scheme to resolve the problem of NPAs through a market-led approach, was introduced in July 2018. Sashakt entails participating banks to work together under an Inter-Creditor Agreement (ICA). As on March 31, 2019, 35 banks had signed the ICA30. Further, the Reserve Bank introduced a prudential framework for the resolution of stressed assets. This aimed at protecting the banking sector from a build-up of nonperforming assets (NPAs) stress was revised on June 7, 2019 which was in fact with a view to providing a pre-IBC window for banks to resolve stressed accounts31. The modified framework aims at providing early recognition, reporting and time bound resolution of stressed assets, at the same time providing strong disincentives in the form of additional provisioning for delays in initiation of resolution or insolvency proceedings. Insolvency and Bankruptcy code All the before mentioned mechanisms provided scattered remedies. Issues of multiple foras and fragmented legislations by itself posed difficulties. It was during this period that IBC was rolled out. IBC brought in the fragmented legislations into one single umbrella legislation. The banks as a financial creditor can invoke the provisions under IBC. The Insolvency and Bankruptcy Code was implemented in 2016 to facilitate timely resolution of insolvency and bankruptcy cases, provide maximization of value of assets of debtors, reorganization of business of corporate debtors, facilitate credit market, encourage entrepreneurship in India and to balance the interest of all stakeholders32. The Code provides
29
Section 35AB ―(1) Without prejudice to the provisions of section 35A, the Reserve Bank may, from time to time, issue directions to any banking company or banking companies for resolution of stressed assets. (2) The Reserve Bank may specify one or more authorities or committees with such members as the Reserve Bank may appoint or approve for appointment to advise any banking company or banking companies on resolution of stressed assets‖. 30 Monetary Management and Financial Intermediation, December 25, 2019, https://iica.nic.in/images/echap03_vol2.pdf. 31 Prudential Framework for Resolution of Stressed Assests, RBI notification dated 07-06-2019, December 24, 2019,https://rbidocs.rbi.org.in/rdocs/notification/PDFs/PRUDENTIALB20DA810F3E148B099C113C2457FBF 8C.PDF 32 http://www.mca.gov.in/Ministry/pdf/TheInsolvencyandBankruptcyofIndia.pdf
two stages for effective debt recovery. The first stage involves insolvency resolution negotiation; whereby the viability of running the enterprise and protecting the rights of creditors is assessed and in the second stage when negotiation to run the entity fails, liquidation of the corporate entity is proposed. The code provides to conclude both the processes in a time bound manner33. There are several concerns which has spring up. Lack of proper resolution plans, low resolution value34, low liquidation value, difficulties in adhering to the time lines prescribed under the law because of the procedural delays in the tribunals etc 35. Although the time limit for resolution under IBC has been recently extended to 330 days, there are instances of some cases delayed beyond the time limit. The shift of power in favour of creditors in the IBC framework has facilitated speedier and impartial resolution process. However, the resolution process is being delayed owing to limited infrastructure in NCLT and rising cases of frivolous appeals. Recovery of NPAs under IBC For addressing the issues of NPAs various measures were taken up by the parliament in the form of legislations. Can IBC be considered as a strategy for resolving the NPA problem? The legal strategies like SICA, RDDBFI, SARFAESI proved to be not that effective for various reasons like capacity issues, incentive structures, outcome biases etc. One of the objectives of the Insolvency and Bankruptcy Code was resolution in a time bound manner. The speedy recovery of NPAs is sine qua non for a healthy economy. While examining various reports, it could be understood that, excluding the exemplary cases like the acquisition of Bhushan Steel by Tata Steel, Electro Steel by Vedanta, or Binani Cement by Ultratech Cement, the IBC route is not necessarily giving any stimulus to overcome the NPA crisis36. Scope of fetching decent returns for banks from the Companies with weak financials doing business in other sectors was low. The majority of the companies referred to under IBC by RBI belonged to some key sectors like steel, power, infrastructure, etc 37. These companies 33
Id In Kamini Steel & Power India Pvt. Ltd v. Indian Overseas Bank & ors. (Comp Appeal (AT) No. 335 of 2017), the resolution value proposed was lower than the liquidation value. 35 Quinn Logistics India Pvt. Ltd v. Mack Soft Tech Pvt. Ltd& Ors. 208 Comp Cases 0432(2018) 144 CLA 0484, Mobilox Innovations Private Limited v. Kirusa Software Private Limited (Civil Appeal No. 9405 of 2017) 36 Nishank, ―Insolvency and Insolvency and Bankruptcy Code: Whose Loss whose Gain? A Critical Analysis of Performance of Two Years of IBC, December 26, 2019, https://www.cenfa.org/wpcontent/uploads/2019/07/IBC-Report-Final.pdf. 37 Id 34
went into default not just because of the mismanagement by the promoters, but also of excessive lending in some specific sectors, which added strain on these companies under changing external economic conditions38. The amount of recovery of companies which came under IBC to an extent depended on the sectorial background of these companies ie, in which category these companies belong. It is a fact to be mentioned that the Insolvency and Bankruptcy (IBC) process has helped to bring a number of non-performing assets into the IBC process. The fear of losing control under IBC is helping change the credit culture in the country39. However, notwithstanding the resolutions through the Insolvency and Bankruptcy Code, the overhang of NPAs remains. 40 Reserve Bank of India (RBI) report on trends and progress of banking in India While examining the Reserve Bank of India (RBI) report on trends and progress of banking in India, it can be understood that, the total Non Performing Assets (NPAs) have seen a decline for the first time in seven years41. As per the report this has been aided by the Insolvency and Bankruptcy Code (IBC) and a conducive policy environment. According to the data, the total NPAs declined from 11.2 per cent in March 2018 to 9.1 in March 201942. The report further states that a decline in the slippage ratio along with a reduction in outstanding GNPAs helped in improving the GNPA ratio43. While a section of the write-offs was achieved due to ageing of loans, recovery efforts received a boost from the IBC 44.The report also mentioned that the Cases referred for recovery under various mechanisms grew over 27 per cent in volume, and it got tripled in value during the year. This ultimately leads to a pile-up of bankruptcy proceedings, which in turn highlights the need to strengthen and expand the supportive infrastructure under this45.
38
Id Economic Survey 2018-19, Government of India Ministry of Finance, Department of Economic Affairs, Volume 1, December 26, 2019, https://www.indiabudget.gov.in/economicsurvey/doc/echapter.pdf 40 Report on Trend and Progress of Banking in India 2018-19, RBI, December 27, 2019, https://rbidocs.rbi.org.in/rdocs/Publications/PDFs/0RTP241219FL760D9F69321B47988DE44D68D9217A7E.P DF. 41 Id 42 Id 43 Id 44 IBC, Conductive Policy Environment Result in Bank NPAs Declining for First Time in Seven Years: RBI Report, December 27, 2019, https://swarajyamag.com/insta/ibc-conducive-policy-environment-result-in-banknpas-declining-for-first-time-in-seven-years-rbi-report. 45 Report on Trend and Progress of Banking in India 2018-19, RBI, December 27, 2019, https://rbidocs.rbi.org.in/rdocs/Publications/PDFs/0RTP241219FL760D9F69321B47988DE44D68D9217A7E.P DF, Banks' Asset Quality Improves as NPAs Remain Stable, December 27,2019, https://www.ndtv.com/business/gross-npa-ratio-improves-to-9-1-as-of-september-rbi-2153811. 39
Conclusion The IBC has definitely instilled fear in the minds of errant promoters that in case they default, the control of their companies can be taken away. It also instils a fear in the mind of the debtors to make the repayment promptly. The confidence it lays on for the creditors also comes as an inspiration to stand in the credit market or dispense the loans. The quick and prompt action in the early stages of debt due would ultimately result in decreasing the number of leading the debts into NPAs/ bad loans. Thus lowers the banks to go for recovery actions. The Insolvency and Bankruptcy Code can be considered as the right choice for resolving stressed assets on account of genuine business failures, especially in case of large NPAs of big companies. However, the situation is different in the case of wilful defaults or corporate malfeasance46. Due diligence has also to be exercised by the lenders while dispensing loans. IBC has increased the pressure on creditors to settle, even in cases they were not fully satisfied with the offer47, where in most of the cases the hair cuts were high but had to accept in order to resolve the NPAs. IBC may not be always the answer for addressing the NPA crisis at all situations and certainly not a panacea for Indian banking industries NPA‘s. ****
46
Nishank, ―Insolvency and Insolvency and Bankruptcy Code: Whose Loss whose Gain? A Critical Analysis of Performance of Two Years of IBC, December 26, 2019, https://www.cenfa.org/wpcontent/uploads/2019/07/IBC-Report-Final.pdf. 47 Id
THE ATTITUDE OF BANK EMPLOYEES TOWARDS MERGER: A PRE AND POST MERGER ANALYSIS *Dr. Renu Susan Samuel, Assistant Professor, Dept. of Economics, St.Peter‘s College, Kolenchery, e-mail: [email protected] Abstract With the increasing competition in the globalised economy, mergers are expected to occur at a much larger scale than any time in the past and have played a major role in achieving the competitive edge in the dynamic market environment. Mergers can prove to be a huge risk to the human resources of both companies. If not done with care, a proper understanding of each other by either the entities or the lack of willingness among anyone to co-operate, the whole effort may go waste and the whole result will be disastrous. This situation mostly occurs when most mergers fail to consider or address the concern of the employees within the firm, especially of the firm which is being acquired.
Mergers and acquisitions is nothing new in India, as can be witnessed through the merging of the three Presidency banks of India - the Bank of Bengal, the Bank of Bombay and the Bank of Madras in 1921, to form the Imperial Bank of India and later, after Independence, came to be renamed as the State Bank of India. Later, we could see the only merger between nationalised banks, when the New Bank of India was merged by the Government with Punjab National Bank, in 1993. More initiatives were seen in this regard in the private sector. But, it was the largest merger by HDFC in 2008 (with the Centurion Bank of Punjab) that triggered off some studies in this area. This study deals with the attitude of employees in HDFC Bank during the pre-merger and post-merger period.
Key Words: Bank, Merger, Employees, HDFC Bank, Pre-merger, Post-merger.
INTRODUCTION The Indian banking industry has a long history to narrate. Beginning from the Presidency Banks of the 1800s, the banking industry has witnessed comprehensive changes. Among those, mergers and acquisitions are very important, especially in the current scenario, where the Government of India is keen on bringing about a mega banking realignment whereby the total number of public sector banks will come down to 12. The main objective is to make them "global-sized banks". A merger should be among equals. Synergies, expansion of scale, economies of scale, operational efficiencies, diversification, market expansion, are a few benefits to mention, that accrue from merger. Merger is much sought after in today's world as a better means of
growth. While concentrating on improving profit and synergies that may arise out of the merger, management should not forget that their employees are an integral part of their organisation. STATEMENT OF THE PROBLEM With the increasing competition in the globalised economy, mergers are expected to occur at a much larger scale than any time in the past and have played a major role in achieving the competitive edge in the dynamic market environment. Mergers can prove to be a huge risk to the human resources of both companies. Employees of the merging or acquiring company, however, have an edge over those working for the acquired company as they may be rewarded with an increase in remuneration and better job position. It gives them a sense of having an upper-hand, yet, the fears of mergers cannot be neglected. Mergers can be especially challenging to employees, ultimately impacting their performance. Literature proves that deep studies have not been carried out in the Indian scenario and that too with the little or negligible focus on the human factor. Hence, the study has been made on the topic. METHODOLOGY The study deals with the attitude of employees in HDFC Bank during the pre-merger and post-merger period. The study is purely based on both the primary data and secondary data. Descriptive statistics and Independent t-test are used to analyse the attitude of employees in the HDFC Bank during the pre-merger and post-merger period. The merger of Centurion Bank of Punjab with the HDFC Bank was considered and the employees of erstwhile Centurion Bank of Punjab (now with the HDFC Bank) were selected for the purpose of the study. A structured questionnaire was circulated to 196 employees of Centurion Bank of Punjab which is merged with HDFC Bank for the purpose of data collection. Out of 196 questionnaires, 162 questionnaires were completed and the same was considered for the analysis of data. The secondary sources of data obtained from annual audit report of the HDFC Bank, websites, journals, newspapers, articles are used for the theoretical development.
REVIEW OF LITERATURE It has been stated that there had been more than 1500 mergers in the US during a three year period of 1993-1996. The literature reviewed by Pilloff suggested that the value gains claimed post-merger had not been confirmed. He intended to address alternative explanations and reconcile the data with continued merger activity. His study found that there was no significant gain in value or improvement in performance that resulted from the merger activity. The acquired firm shareholders gained at the expense of the acquiring firm. Another disturbing finding was that the market was unable to forecast accurately the definitive success of individual mergers. But in spite of these uncertainties and negative outcomes, mergers in the US continued (Steven J, 1996)48. A case study of banking employees of Pakistan revealed that those employees who had worked in both pre and post-merger environment strongly felt that their motivation level was unsatisfactory. They also felt that there was a strong threat to their job security. However, in case of employees who had only post M&A experience, the results were better. They had a positive opinion with regard to job motivation and job security. Information was gathered using questionnaires with a 5 point scale under two dimensions (Muhammad Naveed, 2011)49. Mergers promoted synergies. A study based on 45 banks, consisting of public-sector banks, private sector banks and foreign banks operating in India observed that the share of the top 5 players had eroded and had been consumed by the next 15 players. As the base of total deposits had been rising, the value in deposits in the next 15 banks had been remarkable. While fragmented Indian banking structure may be beneficial to the customers, it also created the problem of no player having the critical mass to play the game at the global banking industry level. In the quest for the other benefits of mergers, it has been found that access to new markets is another reason, as was evident from the mergers between Centurion Bank and New Bank of Punjab. The other main benefits as pointed out by most of the banks were reduction in cost of funds, diversification of loan portfolio and expansion of range services available to the public. Lowest priority was given to benefits such as improvement in 48
Steven J, P. &. (1996). The Valu Effects of Bank Mergers and Acquisitions. The University of Pennsylvania. Pennsylvania: The Wharton School. 49 Muhammad Naveed, M. N. (2011). Impact of Mergers & Acquisitions on Job Security and Motivation (A Case Study of Banking Employees of Pakistan). 3rd International Conference on Information and Financial Engineering. 12, pp. 353-357. IACSIT Press.
employee incentives, and extension of career opportunities, hence emphasising the importance on the need to study the human resources management during mergers (Prajapati, 2010)50. A case study on the ICICI Bank Ltd. has examined its growth through mergers, acquisitions and amalgamation. The study discussed on the amalgamation of ICICI bank with SCICI in 1996, which resulted in a negative goodwill. The amalgamation with ITC Classic Finance Ltd., the beleaguered non-banking financial arm of ITC Ltd., was one of the first-ofits-kind mergers in India‘s financial sector. The merger gave ICICI the biggest benefit of a fantastic retail base. As the reason for its amalgamation with Anagram Finance, ICICI state that it had over the years consolidated its premier position as a wholesale provider of finance. The amalgamation with the Bank of Madura was in response to its quest for merger with private banks. Another reason was that its technological upgradation was crawling at a pathetic pace. On the other hand, BoM had an attractive business per employee figure of Rs. 202 lakh, a better technological edge, and a vast base in southern India. Next, there was merger of ICICI, ICICI Personal Financial Services and ICICI Capital Services with and into ICICI Bank in 2002. As a step towards expanding the bank network countrywide the ICICI Bank acquired Shimla and Darjeeling Branches from Standard Chartered Grindlays Bank Ltd. The amalgamation with Sangli Bank was expected to benefit the shareholders of both the entities and to supplement the urban distribution network of ICICI. It also provided new opportunities to the Sangli Bank employees and gave its customers access to the multichannel network and wide range of products and services of ICICI Bank. The final amalgamation discussed is that with the Bank of Rajasthan, whose intention was banking business as set out in its Memorandum of Association. While for ICICI Bank, the merger was a customer-centric strategy that placed branches as the focal point of relationship management, sales and service in geographical micro markets. The news of merger was not however, welcomed by the employees of BoR, who called for a strike demanding the termination of the ICICI-BoR merger proposal. Hence, it is to be noted that issues of employees‘ perception towards mergers needs special attention if mergers are to develop
50
Prajapati, M. S. (2010, August). Mergers and Acquisitions in the Indian Banking System- An Overview. II (19) .
synergies. The study concludes on the note that a firm must work out a strategy in three phases- Pre-merger phase, Acquisition phase and Post-merger phase (Dr.K.A.Goyal, 2012)51. RESULTS AND DISCUSSION Socio-demographic Profile of the Respondents The socio-demographic profile of the respondents brings out the details of the respondents in terms of variables such as their age, gender, educational level, designation in the bank, and the number of years of experience in the present bank. Table 1: Profile of the respondents Source: Survey Data
Profile of the Employees
Number
Percentage
30-40 40-50 50-60 years
57 65 40
35.2 40.1 24.7
Male Female
151 11
93.2 6.8
Qualification
Graduate Post Graduate Professional Degrees
63 63 36
38.9 38.9 33.3
Designation
Middle Level Top Level
81 81
50 50
Experience
0-10 10-20 20-30 Above 30 years
36 91 31 4
22.2 56.2 19.1 2.5
Age
Gender
Total
162
The table above depicts the profile of the respondents comprising of their age, gender, qualification, designation and experience. A majority of 40.1 per cent of the employees 51
Dr.K.A.Goyal, V. J. (2012). Merger and Acquisition in Banking Industry: A Case Study of ICICI Bank Ltd. International Journal of Research in Management, 2 (2), 30-39.
belong to the age category of 40-50 years. 93.2% of them are males. Considering the educational qualification, 38.9% each are both Graduates and Post Graduates while 22.2% have Professional Degrees. 50% each belong to the Top and Middle level management. With regard to the years of experience in the merged bank, 56.2% have 10-20 years of experience, 22.2% have upto 10 years of experience, 19.1% have 20-30 years and 2.5% have above 30 years of experience. Attitude of employees in the HDFC Bank during the pre-merger and post-merger period Table 2: Attitude of employees in HDFC bank during the pre-merger period Pre-merger attitude
Mean Score
I was nervous about my future when I heard about the merger
3.49
The communication from top management about the merger
2.89
plans was assuring I feel sufficiently informed about the process of the merger
2.65
I understand the objectives behind the merger
3.01
I believe that the merger is the right way for the bank to become
3.22
a market leader in India Source: Computed from primary data The above table deals with the attitude of employees in the HDFC Bank during the pre-merger period. The mean score for ‗I was nervous about my future when I heard about the merger‘ is 3.49 and it indicates that the employees are highly nervous about the merger process. The mean score for ‗The communication from top management about the merger plans was assuring‘ is 2.89 and it indicates that there was a problem of poor communication regarding the merger process. The mean score for ‗I feel sufficiently informed about the process of the merger‘ is 2.65 and it indicates that the employees have no clear information regarding the process of merger. The mean score for ‗I understand the objectives behind the merger‘ is 3.01 and it indicates that the employees somewhat know the motive behind the merger but it was not clearly defined. The mean score for ‗I believe that the merger is the right way for the bank to become a market leader in India‘ is 3.22 and it indicates that the merger is the right way for the bank to become a market leader in India.
Hence, it is concluded that the employees are highly nervous about the merger process and they felt that there is no proper communication regarding the merger in the bank. Table 3: Attitude of employees in the HDFC Bank during the post-merger period Post-merger attitude
Mean Score
I feel adequately involved in changes to my work environment
3.46
My supervisor provide me with the necessary orientation concerning the
3.02
merging process I miss my colleagues from the previous bank
3.67
I feel out of place in the new bank
3.58
I experience frustration and stress from my attempts to adapt to the culture
3.89
in the merged bank There are things in my new network environment that I find surprising
3.22
I feel nervous and uncomfortable when meeting individuals from the
3.14
merged bank I have a clear understanding of my role within the new bank
2.33
I feel welcome and respected by new colleagues
2.96
My suggestions are always received by my supervisors
2.77
I look towards my professional future at the bank in a positive way
3.63
I am happy and satisfied at my new work place
3.17
Source: Computed from primary data The table above deals with the employees‘ attitude towards the HDFC Bank during the post-merger period. The mean score for ‗I feel adequately involved in changes to my work environment‘ is 3.46 and it indicates that the employees are experiencing change in the work environment. The mean score for ‗My supervisor provide me with the necessary orientation concerning the merging process‘ is 3.02 and it indicates that the supervisor gives only a few information regarding the merging process. The mean score for ‗I miss my colleagues from the previous bank‘ is 3.67 and mean score for ‗I feel out of place in the new bank‘ is 3.58 and these indicate that the employees miss their old working environment and their co-workers. The mean score for ‗I experience frustration and stress from my attempts to adapt to the culture in the merged bank‘ is 3.89 and mean score for ‗There are things in my new network environment that I find surprising‘ is 3.22 and this indicates that due to merger,
employees feel stress and tension in the new working environment so as to adapt to the new culture in the newly merged bank. The mean score for ‗I feel nervous and uncomfortable when meeting individuals from the merged bank‘ is 3.14, the mean score for ‗I have a clear understanding of my role within the new bank‘ is 2.33, the mean score for ‗I feel welcome and respected by new colleagues‘ is 2.96 and the mean score for ‗My suggestions are always received by my supervisors‘ is 2.77. All these indicate that the employees are not comfortable in the merged bank as they have an issue with role clarity, role ambiguity, and role conflict. The mean score for ‗I look towards my professional future at the bank in a positive way‘ is 3.63 and the mean score for ‗I am happy and satisfied at my new workplace‘ is 3.17 and these indicate that even though the employees are not fully satisfied with the merger process, they feel that this merger will help them to gain a professional future in the coming days. Table 4: Difference in the level of attitude of the HDFC Bank employees during the Premerger and Post-merger period Variable Level of attitude of the HDFC Bank employees during the pre-merger and post-merger period Source: Computed from Primary Data;
t
Sig.
4.284
.000*
*5% level of significance
The above Table reveals the result of the t-test applied to test the significant difference in the level of the attitude of the HDFC Bank employees during the pre-merger and Post-merger period. The calculated P value for the attitude of employees (t value = 4.284) shows that there is a significant difference in the level of the attitude of the HDFC Bank employees during the pre-merger and post-merger period since its P value (.000) is less than 0.05. CONCLUSION In the merger of two entities of this size, cultural integration issues are bound to happen. If the bank expect the employees to continue, they need to take extra care to carry along the newly added employees and also take effort, if needed, to help them integrate with the existing team. If the bank management ignore the concerns of their employees, then
ultimately their attitude towards the management will also turn bitter and this negativity will reflect on their interpersonal relationships and as well in their behaviour to the customers. In the long run, this will affect the very existence of the organisation. BIBLIOGRAPHY
1. Dr.K.A.Goyal, V. J. (2012). Merger and Acquisition in Banking Industry: A Case Study of ICICI Bank Ltd. International Journal of Research in Management, 2 (2), 30-39. 2. Donald S.Siegel, K. L. (2008). Evaluating the Effects of Mergers and Acquisitions on Employees: Evidence from Matched Employer-Employee Data. 3. Gian Kaur, P. K. (2010). Bank Mergers Cost Effiency Gains among Commercial Banks in India. Indian Journal of Economics and Business, 9 (1). 4. K.Ravichandran, D. A.-N.-S. Performance of Market Based Mergers in Indian Banking Institutions. 5. Muhammad Naveed, M. N. (2011). Impact of Mergers & Acquisitions on Job Security and Motivation (A Case Study of Banking Employees of Pakistan). 3rd International Conference on Information and Financial Engineering. 12, pp. 353-357. IACSIT Press. 6. Nayak, D. M. (2007). Mergers and Acquisitions in Indian Banking Sector and their Impact on the Stakeholders. In B. D. Pramanik, Merger and Acquisition: Indian Scenario (pp. 125-135). Kanishka Publications. 7. Pardeep KAUR, G. K. (2010). Impact of Mergers on the Cost Efficiency of Indian Commercial Banks. Eurasian Journal of Business and Economics, 3 (5), 27-48. 8. P.Srilatha, G. &. (2013). Mergers and Acquisitions: A Study of Financial Performance of select Private Sector Banks. Southern Economist, 51 (20), 29-34. 9. R.Raiyani, J. (2010). Effect of mergers on efficiency and productivity of Indian banks: A CAMELS analysis. Asian Journal of Management Research, 772-793. 10. Steven J, P. &. (1996). The Value Effects of Bank Mergers and Acquisitions. University of Pennsylvania. Pennsylvania: The Wharton School.
SERVICE QUALITY OF BANKING SERVICES OF STATE BANK OF INDIA: AN ENQUIRY USING SERVQUAL APPROACH AMONG YOUTH *Aarya S, 4th Semester M. Com Student, Government College, Tripunithura, Ernakulam, Kerala **Dr.Vineeth. K. M.,Assistant Professor of Commerce, Government College, Tripunithura, Ernakulam, Kerala
ABSTRACT The customers of the banks are from all walks of life from uneducated peasants, company employees to global companies conducting the commercial activities all over the world. The banks should please all these types of customers who are from various social groups. Being a service provider, the roles of these banks are very crucial in creating a good perception in the customer„s minds about the banks. Since the services provided by the banks could bring or estrange a customer, much stress is put on the service delivery by many of the banks. The relation between the customer satisfaction and service quality has undergone an intense examination by a few service quality investigators (Bolton & Drew, 1994; Bitner & Hubbert, 1994). Parasuraman et al. (1985) recommended the SERVQUAL framework to evaluate the level of customer satisfaction. Parasuraman et al. (1988) proposed a SERVQUAL model that is based on five dimensional constructs of perceived service quality called as tangibles, reliability, responsiveness, assurance and empathywith item reflecting both expectation and perceived performance. Parasuraman (2000) voiced that excellent customer service and excellent marketing are the two sides of the same coin. This paper aims to the study the service quality and customer satisfaction of State Bank of India, being the largest public sector bank. The proposed study is empirical in nature. Suitable descriptive and inferential statistics shall be used to draw inferences. Key Words: Banking Service, Customer Satisfaction, Service Quality, SERVQUAL
Introduction Today we live in an era where we can‘t find an individual without bank account. Almost every transaction is carried out through bank account. Subsidies, scholarships etc... that we receive from government are all credited to our bank account. So this compels individuals to start a bank account. Customers are free to choose their banker. So in which bank they should take account is fully vested with them. Therefore a bank has to provide good quality services to its customers. To retain the customers‘ banks should satisfy them. The State Bank of India is a public sector bank headquartered in Mumbai, Maharashtra. Earlier it was known as Imperial Bank of India. In 1955 Government of India took control over the bank, with RBI taking 60 percent of stake and renamed it as State Bank of India. In this study service quality of banking services of State Bank of India is enquired among youth using SERVQUAL approach.
Review of literature Amiri Aghdaie S.F., Faghani F (2012) studied ―Mobile banking service quality and customer satisfaction-application of SERVQUAL model‖. This article is a study to determine the relationship between mobile banking service and customer satisfaction. In this customer satisfaction as the dependent variable and five concepts of service quality as independent variable. The study concludes that there was significant correlation. Mukesh kumar, Fong Tat Kee, amat Taap Manshor (2009) studied ―Determining the relative importance of critical factors in delivering service quality of banks: an application of dominance analysis in SERVQUAL model‖. The sample for the study is collected from 308 bank customers in Malaysia. The study concluded that the tangibility has the smallest gap whereas convenience has the largest gap. It states that the banking sector needs to become more competent by being responsive. Statement of problem With the increase in banks in different sectors like public, private sector competition is also increasing in the field of banking sector. So in order to withstand the competition, the banks has to provide adequate services to its customers. Customers prefer those banks that provide transparency and safety because customers are entrusting their money with the bank. Customers also seek personal attention from the bank. So it is essential to know the quality of service provided by the bank. This paper attempts to study the service quality of banks using SERVQUAL approach. Objectives of the Study The present study aims to assess the service quality of SBI using the SERVQUAL approach from the customers‘ view point belonging to the youth category.
Methodology The present study is empirical in nature assessing the service quality dimensions primary data has been collected using google forms from customers of SBI using the SERVQUAL (Parasuraman, Zeithaml, and Berry 1986, 1988)
The constructs of Tangibility (4 items), Reliability (5 items), Responsiveness (4 items), Assurance (4 items) and Empathy (5 items) showed reliability as the Cronbach‘s Alpha for each were above 0.7 (Nunally, 1978) The data collected were not found to be normally distributed as the KS test produced a p value less than 0.05 Nonparametric procedure of Wilcoxon‘s Signed Rank Test is applied to draw the inferences along with mean scores and percentages.
Results Table 1 Profile of the Sample Variable / Category
Gender
Education
Region of Residence
Frequency
%
Female
26
57.8
Male
19
42.2
Total
45
100.0
+2
4
8.9
Graduation
30
66.7
MPhil/PhD/Others
1
2.2
Post-Graduation
9
20.0
Upto SSLC
1
2.2
Total
45
100.0
Rural
16
35.6
Urban
29
64.4
Total
45
100.0
Source: Computed from Survey Data
The sample covers the basic demographics of gender, region and education. Table 2 Experience of Using SBI account Experience
Frequency
%
5 to 10 years
11
24.4
Less than 5 years
29
64.4
More than 10 years
5
11.1
Total
45
100.0
Source: Computed from Survey Data
Most the customers, being youth have an experience of using SBI for a period of less than 5 years. Table 3 Service Quality of SBI Expected Expected Tangibility Expected Reliability Expected Responsiveness Expected Assurance Expected Empathy
Mean
SD
Perceived
3.8944
0.58506
3.9467
0.82616
2.8500
0.75076
4.0111
0.79764
2.6844
0.73173
Perceived Tangibility Perceived Reliability Perceived Responsiveness Perceived Assurance Perceived Empathy
Mean
SD
Z
3.7222
0.65545
-2.308
0.021*
3.4267
0.70143
-3.986
< 0.001**
2.8778
0.73396
-0.292
0.770
3.5389
0.59581
-3.757
< 0.001**
2.6622
0.78488
-0.038
0.970
Source: Computed from Survey Data #Wilcoxon‘s Signed Rank Test **Highly Significant *Significant
P Value
The short fall in perceived service quality is visible in all the dimensions. It is found statistically significant regarding tangibility, reliability and assurance. The shortfall in responsiveness and empathy is not found to be statistically significant.
Discussion Youth form the new business for all trades. Banking is not an exception. But the present trends prove that there is a shortfall in the service quality dimensions from the expectations of youth. Serious efforts shall be made to improve the perceived service quality. Reference 1. Amiri Aghdaie S.F., Faghani F (2012), Mobile banking service quality and customer satisfaction-application of SERVQUAL model, International Journal of Management and Business Research, vol 2 2. Bruner II, G. (2017). Marketing Scales Handbook. Ft. Worth, TX: GCBII Productions, LLC. 3. Mukesh kumar, Fong Tat Kee, amat Taap Manshor (2009), determining the relative importance of critical factors in delivering service quality of banks: an application of dominance analysis in SERVQUAL model, Managing Service Quality: An International Journal, vol 19(2)
CONSUMER ADOPTION TO FIN TECH INNOVATIONS: A SURVEY AMONG YOUTH WITH SPECIAL REFERENCE TO MOBILE BANKING APPS *Ms. Ashme Andrews4th Semester M. Com Student, Government College, Tripunithura, Ernakulam, Kerala **Dr.Vineeth. K. M.,Assistant Professor of Commerce, Government College, Tripunithura, Ernakulam, Kerala
ABSTRACT “Fintech is the term used to refer to innovations in the financial and technology crossover space, and typically refers to companies or services that use technology to provide financial services to businesses or consumers. Fintech is a term used to describe financial technology, an industry encompassing any kind of technology in financial services - from businesses to consumers. Fintech describes any company that provides financial services through software or other technology, and includes anything from mobile payment apps to cryptocurrency.”(Anne Sraders, 2019) Using increasingly sophisticated technology, services have emerged that allow consumers to exchange money and payments online or on mobile devices. This paper aims to assess the consumer‟s technology adoption of Mobile Banking Apps. The proposed study is empirical in nature using both primary and secondary data. Primary data shall be collected using structured questionnaires adapting few statements from the Technology Acceptance ModelTAM(Davis,1989) as modified by Jayendra Sinha and Jiyeon Kim (2012).Suitable descriptive and inferential statistical tools will be used for analysis. Key Words: Consumer Behaviour, FinTech Innovation, Mobile Banking, Technology Adoption
Introduction Mobile Banking Apps are gaining greater importance now-a-days. Mobile Banking Apps are applications offered by banks which can be easily installed by customers in their smartphones and thereby can avail most of the services offered by a bank without stepping out. Now a days mobile phones are not only a medium for communication but also widely used for mobile services or M-services. M-services are services offered to customers via mobile technologies. A banking customer can use mobile banking apps for checking account balance, Update and view passbook details, payment of various bills online, take loans and even encash cheque by taking picture with their phone. Banks charge a fixed amount from the customer for all these services rendered. A few years back a customers was required to travel to their banks for banking services. Crowd and ques made things more complicated. As first step of convenience banks introduced ATM machines and later CDMs. As a part of technological advancement banks introduced mobile banking apps. These apps offers security, faster transactions to customers
which helps to retain existing customers and attract new customers. i mobile application of ICICI, Fed book of Federal bank, Axis mobile application of Axis bank, yono of SBI, U mobile of Union bank are some M-banking apps in India. ICICI Banks occupies the highest position among them which aims to improve the number and quality of transactions each year. (Deva Devan, 2013) The m-banking services are rapidly growing with its distinct features and level of security assured. Customers feel safe with their confidential data as the transactions are directly controlled by the bank itself. The major reason behind the increased usage of mobile banking apps is that services can be availed by a customer anytime and anywhere. It provides services even when the bank is not working i.e, 24×7. Mobile banking applications has a positive impact in Indian financial sector. (Sharma and Kaur, 2016) Statement of the Problem Mobile Banking Apps are the new virtual banks. Research questions arise as to the factors influencing the consumer adoption of mobile banking apps. This aims to understand the major factors influencing the consumer adoption in this pattern. Objectives The present study aims to evaluate the major factors influencing the consumer adoption of mobile banking apps along with its association with selected demographic variables.
Methodology The present paper is empirical in nature using dominantly primary data collected from users of mobile banking apps. Primary data has been collected using structured questionnaires adapting few statements from the Technology Acceptance Model-TAM(Davis,1989) as modified by Jayendra Sinha and Jiyeon Kim (2012). The data being not normally distributed, nonparametric procedures are used for drawing inferences along with mean scores and percentages.
Results Table 1 Profile of the Sample Variable / Category
Frequency
%
Female
17
42.5
Male
23
57.5
Total
40
100.0
+2
11
27.5
Graduation
19
47.5
Post-Graduation
9
22.5
Upto SSLC
1
2.5
Total
40
100.0
Rural
16
40.0
Urban
24
60.0
Total
40
100.0
Gender
Education
Region
Source: Computed from Survey Data
Table 2 Most used Mobile Banking App Bank/App
Frequency
%
Canara Bank
4
10.0
Federal Bank
15
37.5
SBI YONO
8
20.0
ICICI Bank
7
17.5
South Indian Bank
3
7.5
Union Bank of India
3
7.5
40
100.0
Total
Source: Computed from Survey Data
Federal Bank and SBI YONO along with ICICI are found to be mostly used by the respondents.
Table 3 Experience of using Mobile Banking App Experience
Frequency
%
1 to 3 Years
17
42.5
Less than 1 Year
22
55.0
1
2.5
40
100.0
More than 3 Years Total
Source: Computed from Survey Data Most of the respondents have an experience of using mobile banking apps for a period less than 3 years. Table 4 Usage Pattern of Mobile Banking App Usage
Frequency
%
Rarely 4 10.0 Regularly 16 40.0 Sometimes 20 50.0 Total 40 100.0 Source: Computed from Survey Data 40% of the respondents regularly use the mobile banking apps whereas 50% uses it sometimes on a need basis. Table 5 Purpose(s) of using Mobile Banking App Usage
Frequency
%
Account Balance or Statement
1
2.5
Account Balance or Statement, Fund Transfer
3
7.5
Account Balance or Statement, Fund Transfer, Payments of Bills
8
20.0
Account Balance or Statement, Fund Transfer, Payments of Bills, Others
2
5.0
15
37.5
Fund Transfer, Others
1
2.5
Fund Transfer, Payments of Bills
6
15.0
Others
1
2.5
Payments of Bills
3
7.5
40
100.0
Fund Transfer
Total Source: Computed from Survey Data
Exhibit 1 Purpose(s) of using Mobile Banking Apps
Fund Transfer appears to be the most important purpose of using the mobile banking app at convenience followed by payment of bills and balance enquiry. Table 6 Factors Influencing Consumer Adoption of Mobile Banking Apps Std.
Mean
Deviation
Rank
5
0.768
4.53
4.25
2
0.707
5.45
It has a good selection and visible menu
4.32
1
0.829
5.79
I get what I intent from this
4.17
4
0.813
5.44
The service is delivered by the time promised
4.20
3
0.939
5.65
They have competitive prices/charges
3.63
9
1.055
3.93
This has adequate security features
3.75
8
1.193
4.43
I feel that my privacy is protected
3.98
5
1.097
4.98
I feel safe in my transactions with this
3.90
7
1.194
4.83
Factor
Mean
Rank
It provides in-depth information
3.98
I feel comfortable in surfing it
Chi Square
28.713
Df
8
P Value
< 0.001**
Source: Computed from Survey Data #Friedman‘s Test **Highly Significant
The visible selection menu, comfort in surfing and service delivery as promised as well as intented are the major factors influencing the consumer adoption and these are found to be statistically significant. Table 7 Association between Experience of Usage and the Factors influencing Consumer Adoption Factor
Experience of using Mobile App
N
Mean
Kruskal
Rank
Wallis H
1 to 3 Years
17
23.94
It provides in-depth
Less than 1 Year
22
17.86
information
More than 3 Years
1
20.00
Total
40
1 to 3 Years
17
19.94
I feel comfortable in
Less than 1 Year
22
21.18
surfing it
More than 3 Years
1
15.00
Total
40
1 to 3 Years
17
20.29
22
20.18
1
31.00
It has a good selection and Less than 1 Year visible menu
More than 3 Years Total
40
1 to 3 Years
17
22.24
I get what I intent from
Less than 1 Year
22
19.39
this
More than 3 Years
1
15.50
Total
40
1 to 3 Years
17
20.74
The service is delivered
Less than 1 Year
22
19.82
by the time promised
More than 3 Years
1
31.50
Total
40
1 to 3 Years
17
20.94
They have competitive
Less than 1 Year
22
20.02
prices/charges
More than 3 Years
1
23.50
Total
40
Df
P Value#
3.260
2
0.196
0.417
2
0.812
1.015
2
0.602
0.957
2
0.620
1.145
2
0.564
0.143
2
0.931
1 to 3 Years This has adequate security Less than 1 Year features
More than 3 Years
17
21.56
22
19.68
1
20.50
Total
40
1 to 3 Years
17
21.18
I feel that my privacy is
Less than 1 Year
22
20.11
protected
More than 3 Years
1
17.50
Total
40
1 to 3 Years
17
21.59
I feel safe in my
Less than 1 Year
22
19.77
transactions with this
More than 3 Years
1
18.00
Total
0.270
2
0.874
0.167
2
0.920
0.312
2
0.856
40
Source: Computed from Survey Data #Kruskal Wallis H Test Experience of using the apps is not found to be associated with the factors influencing consumer adoption. Table 8 Association between Gender and Factors Influencing Consumer Adoption Factor
It provides in-depth information
I feel comfortable in surfing it
It has a good selection and visible menu
I get what I intent from this
Mean
Mann
Rank
Whitney U
Gender
N
Female
17
17.38
Male
23
22.80
Total
40
Female
17
22.06
Male
23
19.35
Total
40
Female
17
19.24
Male
23
21.43
Total
40
Female
17
19.32
Male
23
21.37
Total
40
P Value#
142.500
0.104
169.000
0.418
174.000
0.515
175.50
0.538
The service is delivered by the time promised
They have competitive prices/charges
This has adequate security features
I feel that my privacy is protected
I feel safe in my transactions with this
Female
17
20.26
Male
23
20.67
Total
40
Female
17
20.41
Male
23
20.57
Total
40
Female
17
20.76
Male
23
20.30
Total
40
Female
17
20.38
Male
23
20.59
Total
40
Female
17
19.82
Male
23
21.00
Total
40
191.50
0.905
194.000
0.965
191.000
0.898
193.50
0.954
184.000
0.739
Source: Computed from Survey Data #Mann Whitney U Test Gender is not found to be associated with the factors influencing consumer adoption.
Discussion Mobile banking has revolutionalised fund transfers and transactions. Youth being the drivers of growth have been the frequent users too. The convenience and service delivery as promised will drive the business far more with due concern for security and privacy.
References 1. Bruner II, G. (2017). Marketing Scales Handbook. Ft. Worth, TX: GCBII Productions, LLC. 2. Deva Devan (2013) ―Mobile banking in India issues and challenges‖, International journal of Emerging Technology and Advanced Engineering Volume 5 ISSN 516-520 3. Jayendra Sinha and Jiyeon Kim (2012). Factors affecting Indian consumers‘ online buying behavior. Innovative Marketing , 8(2) 4. Nisha Sharma and Rupinderdeep Kaur (2016) ―M-services in India: A study on Mobile Banking Applications‖ GIAN JYOTI E-journal, volume 6, issue2 ( April-June 2016) ISSN 2250-348X
SERVICE
QUALITY
OF
INSURANCE
SERVICES
OF
LIFE
INSURANCE CORPORATION OF INDIA: AN ENQUIRY USING SERVQUAL APPROACH *Ms. Devi .V, 4th Semester M. Com Student, Government College, Tripunithura, Ernakulam, Kerala **Dr.Vineeth. K. M.,Assistant Professor of Commerce, Government College, Tripunithura, Ernakulam, Kerala
ABSTRACT The customers of the insurance companies are from all walks of life from uneducated peasants, company employees to global companies conducting the commercial activities all over the world. The insurers should please all these types of customers who are from various social groups. Being a service provider, the roles of these insurers are very crucial in creating a good perception in the customer„s minds. Since the services provided by the insurance companies could bring or estrange a customer, much stress is put on the service delivery by many of the insurers. The relation between the customer satisfaction and service quality has undergone an intense examination by a few service quality investigators (Bolton & Drew, 1994; Bitner & Hubbert, 1994). Parasuraman et al. (1985) recommended the SERVQUAL framework to evaluate the level of customer satisfaction. Parasuraman et al. (1988) proposed a SERVQUAL model that is based on five dimensional constructs of perceived service quality called as tangibles, reliability, responsiveness, assurance and empathywith item reflecting both expectation and perceived performance. Parasuraman (2000) voiced that excellent customer service and excellent marketing are the two sides of the same coin. This paper aims to the study the service quality and customer satisfaction of LIC. The proposed study is empirical in nature. Suitable descriptive and inferential statistics shall be used to draw inferences. Key Words: Insurance Service, Customer Satisfaction, Service Quality, SERVQUAL
Introduction Service can be considered as an intangible product. The American Marketing Association defines services as ―activities, benefits and satisfactions which are offered for sale or are provided in connection with the sale of goods‖. As services lacks tangibility and ownership service quality matters. Every sphere of human life faces challenges and risk even though its degree varies from person to person. People have an inherent nature to reduce risk by forecasting future, this nature of human being lead to the growth of insurance business. In a country like India where there are more than 133 crores of people living insurance companies have a lot of growth prospects. Insurance company is an institution which provides protection to people from different types of risks. It is a contract between insured and insurer to where insurer covers risk of insured in return of premium. Life Insurance not only covers risk but
also it provides a good investment option. Unit linked policies and life insurance policies also provide different types of tax benefits to the customers. In India R.N Malhotra committee (1993) paved way for the growth of insurance sector. Life Insurance Corporation of India (LIC) is a pioneer institution in India in insurance sector. It was established in the year 1956 by an act of parliament with an objective of mobilising funds from the people in the form of insurance premium and using it for the benefit of society as a whole. LIC offers different types of life insurance policies which suits the needs of each and every individual like jeevan umang, jeevan anand, jeevan shanti, jeevan shiromani etc. The gross investment made by LIC in the period 2012-2017 is 1423055 crores. LIC is present in more than 14 countries in the world and it has a large customer base too as the customers of LIC includes people from all sectors. In this competitive world service quality and customer satisfaction are two major factors that determine success of a business. Service quality and customer satisfaction has a direct linear relationship i.e. if service quality of a concern is high then the customer satisfaction will be also high. SERVQUAL is a model used to measure service quality. It was developed by A.Parasuraman, Valarie Zeithaml and Leonard L berry in the year 1985. This study uses SERVQUAL model to measure service quality of LIC. This model compares consumer expectations about the service and what they actually received. Statement of Problem LIC is a leading institution among insurance service providers and also among the people of India. The importance of LIC increases as it is a state owned institution. Customers demand service quality from service providers if the company doesn‘t meet their expectations they switch to alternative company which will seriously affects the profitability and life of the business. Service quality determines success of any service providing institution. So it is important to measure the service quality. The aim of this study is to measure service quality of LIC using SERVQUAL model. Review of literature 1. Shubhada kulkarni in her paper titled ‗Service Quality and Customer Satisfaction: an empirical study of LIC‘s policy holders in Jalgaon district‘ (2013) found out that the policy holders of LIC in Jalgaon district are quite satisfied with the services rendered by LIC. But policy holders show dissatisfaction in some areas like creating access to
information by using call centres, providing
information about their services
provided. 2. M. Nazir Zamir Qureshi and Javaid Ahmad Bhat in their paper titled an assessment of service quality, customer satisfaction and customer loyalty in Life Insurance Corporation of India with special reference to Srinagar district (2015) concluded that customer satisfaction differs with education and income levels. High competition in insurance sector necessitates LIC to deliver quality services. LIC should concentrate more on delivery of personalised services to the customers .they should not merely stick on to the existing services but also they should work towards achieving standards set by the customers. 3. A study on service quality in insurance industry with special reference to life insurance corporation of India in Madurai district by I.Irulappan, P.M Rosline Bincy (2014) found that liberalisation and privatisation process which was started in 1991 brought great changes in the economy and it acted as a catalyst for the growth of life insurance sector and also it necessitated LIC to perform well. Objectives The present study aims to assess the service quality of LIC using the SERVQUAL approach from the customers‘ view point.
Methodology The present study is empirical in nature assessing the service quality dimensions primary data has been collected using google forms from customers of LIC using the SERVQUAL (Parasuraman, Zeithaml, and Berry 1986, 1988) The constructs of Tangibility (4 items), Reliability (5 items), Responsiveness (4 items), Assurance (4 items) and Empathy (5 items) showed reliability as the Cronbach‘s Alpha for each were above 0.7 (Nunally, 1978) The data collected were not found to be normally distributed as the KS test produced a p value less than 0.05 Nonparametric procedure of Wilcoxon‘s Signed Rank Test is applied to draw the inferences along with mean scores and percentages.
Results Table 1 Profile of the Sample Variable / Category
Gender
Age
Frequency
Female
19
61.3
Male
12
38.7
Total
31
100.0
31 to 50
14
45.2
Above 50
4
12.9
Below 30
13
41.9
Total
31
100.0
5
16.1
Salaried - Private Sector
12
38.7
Student
11
35.5
3
9.7
31
100.0
+2
7
22.6
Diploma
3
9.7
10
32.3
MPhil/PhD/Others
3
9.7
Post-Graduation
8
25.7
Total
31
100.0
Rural
16
51.6
Urban
15
48.4
Total
31
100.0
Salaried - Govt/Public Sector
Occupation
Unemployed Total
Education
Region of Residence
%
Graduation
Source: Computed from Survey Data The sample covers the basic demographics of gender, region and education.
Table 2 Experience of Using LIC Experience
Frequency
5 to 10 years
%
11
35.5
9
29.0
More than 10 years
11
35.5
Total
31
100.0
Less than 5 years
Source: Computed from Survey Data Most the customers have an experience of using LIC policies for a period of less than 5 years. Table 3 Type of Insurance Policy Subscribed Policy
Frequency
Retirement/Pension Plans
%
4
12.9
18
58.1
Term Assurance Plans, Retirement/Pension Plans
1
3.2
Term Assurance Plans, Traditional Insurance
2
6.5
6
19.4
31
100.0
Term Assurance Plans
Plans, Retirement/Pension Plans Traditional Insurance Plans Total Source: Computed from Survey Data Term Assurance plan is the most common insurance policy followed by retirement plans. Table 4 Service Quality of LIC Construct Tangibility
Reliability
Responsiveness Assurance
E/P
Mean
Std. Deviation
E
3.9435
0.94805
P
3.7984
0.92290
E
3.7226
0.96880
P
4.0516
0.98614
E
3.1613
1.28217
P
3.0161
1.15819
E
3.8952
1.09692
Z
P Value
-1.551
0.121
-2.567
0.010*
-0.778
0.436
-1.730
0.084
Empathy
P
3.5161
1.14006
E
2.8774
1.05663
P
3.0000
1.20775
-0.482
0.630
Source: Computed from Survey Data #Wilcoxon‘s Signed Rank Test *Significant The consumer delight in perceived service quality is visible in reliability dimension. It is found not statistically significant regarding all other dimensions.
Discussion Service quality is more important than reaping mere business. Insurance, not an exception. But the present trends prove that there is a perceived delight in the service quality dimensions from the expectations. Serious efforts shall be made to sustain and also improve the perceived service quality. References 1.
https://w.w.w.licindia.in
2. Bruner II, G. (2017). Marketing Scales Handbook. Ft. Worth, TX: GCBII Productions, LLC. 3. Irulappan, I., & Bincy, P. R. (2014). A study on service quality in insurance industry with special reference to LIife Insurance Corporation of India in Madurai District. Indian Journal of Research , III (4). 4. Kulkarni, S. M. (2013). Service quality and customer satisfaction:An empirical study of LIC's policyholders in Jalgaon district. vision research journal , III (I). 5. Qureshi, M. Z., & Bhat, J. A. (2015). An assessment of service quality, customer satisfaction and customer loyalty in Life Insurance Corporation of India with special reference to Srinagar district. Pacific Business Review International .
SERVICE
QUALITY
OF
INSURANCE
SERVICES
OF
ICICI
PRUDENTIAL: AN ENQUIRY USING SERVQUAL APPROACH *Ms. Divya Mol, 4th Semester M. Com Student, Government College, Tripunithura, Ernakulam, Kerala **Dr.Vineeth. K. M.,Assistant Professor of Commerce, Government College, Tripunithura, Ernakulam, Kerala
ABSTRACT The customers of the insurance companies are from all walks of life from uneducated peasants, company employees to global companies conducting the commercial activities all over the world. The insurers should please all these types of customers who are from various social groups. Being a service provider, the roles of these insurers are very crucial in creating a good perception in the customer„s minds. Since the services provided by the insurance companies could bring or estrange a customer, much stress is put on the service delivery by many of the insurers. The relation between the customer satisfaction and service quality has undergone an intense examination by a few service quality investigators (Bolton & Drew, 1994; Bitner & Hubbert, 1994). Parasuraman et al. (1985) recommended the SERVQUAL framework to evaluate the level of customer satisfaction. Parasuraman et al. (1988) proposed a SERVQUAL model that is based on five dimensional constructs of perceived service quality called as tangibles, reliability, responsiveness, assurance and empathywith item reflecting both expectation and perceived performance. Parasuraman (2000) voiced that excellent customer service and excellent marketing are the two sides of the same coin. This paper aims to the study the service quality and customer satisfaction of ICICI Prudential. The proposed study is empirical in nature. Suitable descriptive and inferential statistics shall be used to draw inferences.
Key Words: Insurance Service, Customer Satisfaction, Service Quality, SERVQUAL
Introduction Like any other service industry, life insurance industry in India is a fast growing sector and is facing cut throat competition which resulted in offering quality services to the customers. Life insurance provide not only financial safety and protection encourage
to individuals but also
savings among customers. Customer satisfaction determines the success of
business and it is the back bone of any insurance company. A customer can be satisfied only through high quality and unique products and services. The insurer should provide different varieties of services from time to time to the customers. For surviving in today‘s competitive market the companies needs to differentiate themselves from the competitors. To measure the service quality, Parasuraman, Zeithaml and Berry (1985) introduced a multi dimensional research instrument called SERVQUAL. It helps to determine the gap between the customer‘s expectation regarding service quality from the insurance company and the
customers perception towards service quality provided by the insurance company using 22 items on five dimensions of service quality. Statement of the problem The study attempts to understand the service quality provided by the ICICI Prudential life insurance company. ICICI prudential life insurance company is the first private sector company which provide insurance services in India which is a joint venture between ICICI bank and prudential plc. In the past few years there has been an increase in the number of new private insurance companies which has led to immense competition .Thus it is important for a company to satisfy their customer‘s needs according to their expectation. Review of literature Dr.A Lenin Jothi (2016) carried out
a study entitled ―service quality and customer
satisfaction in life insurance business‖ with a view to study the impact of service quality on customer satisfaction in life insurance industry in India from a sample of 500 life insurance customers from public sector and 500 from private sector. It also aimed to compare the level of customer satisfaction in public and private life insurance companies. The study reveals that SERVQUAL dimensions such as tangability,reliability , responsiveness, assurance and empathy have more impact on customer satisfaction in private sector than public sector . Dr. Shamsher Singh, Dr.Naveen J Sirohi and Ms.Kumkum Chaudhary (2014) in their article named ―A study of customer perception towards service quality of life insurance companies in Delhi NCR region‖ focused on
understanding
perception of customers
towards service quality provided by the life insurance companies . The study found that customer perception
towards service quality is influenced by four factors ,namely
responsiveness,assurance,tangible and empathy. The test of correlation found that the age of respondents significantly determine the customer perception in service quality of life insurance companies. Mr. Manish Madan and Ms. Shweta Pathak (2012) conducted a study entitled, ―service quality perceptions of customers about insurance companies: An empirical study on Delhi region ―with a view to find customer‘s perception towards the insurance companies regarding the service quality and to compare the customer‘s perception with regard to service quality in public and private insurance companies . The data were collected through a SERVQUAL model questionnaire from a sample of 100 respondents in the Delhi region. The study found
that in order to strength the level of the service quality LIC should focus on assurance and tangibility and LIC should concentrate more on retaining a customer rather than finding a new customer. In case of the private life insurance companies ,they need to focus on the reliability part and the same time they are good at tangibles. Objectives The present study aims to assess the service quality of ICICI Prudential Life Insurance using the SERVQUAL approach from the customers‘ view point.
Methodology The present study is empirical in nature assessing the service quality dimensions primary data has been collected using google forms from customers of ICICI Prudential Life Insurance using the SERVQUAL (Parasuraman, Zeithaml, and Berry 1986, 1988) The constructs of Tangibility (4 items), Reliability (5 items), Responsiveness (4 items), Assurance (4 items) and Empathy (5 items) showed reliability as the Cronbach‘s Alpha for each were above 0.7 (Nunally, 1978) The data collected were not found to be normally distributed as the KS test produced a p value less than 0.05 Nonparametric procedure of Wilcoxon‘s Signed Rank Test is applied to draw the inferences along with mean scores and percentages.
Results Table 1 Profile of the Sample Variable / Category
Gender
Age
Frequency
%
Female
18
60.0
Male
12
40.0
Total
30
100.0
31 to 50
11
36.7
Above 50
9
30.0
Below 30
10
33.3
Total
30
100.0
Occupation
Salaried - Private Sector
10
33.3
Self Employed
11
36.7
Student
9
30.0
Total
30
100.0
+2
7
23.3
Diploma
6
20.0
Graduation
11
36.7
Post-Graduation
6
20.0
Total
30
100.0
Rural
14
46.7
Urban
16
53.3
Total
30
100.0
Below Rs 2 Lakhs
18
60.0
Rs 2 lakhs to Rs 5 lakhs
9
30.0
Rs 5 lakhs to Rs 10 lakhs
3
10.0
Total
30
100.0
Education
Region of Residence
Annual Income
Source: Computed from Survey Data The sample covers the basic demographics of gender, region and education.
Table 2 Experience of Using ICICI Policies Experience
Frequency
%
5 to 10 years
7
23.3
Less than 5 years
20
66.7
More than 10 years
3
10.0
Total
30
100.0
Source: Computed from Survey Data Most the customers have an experience of using ICICI policies for a period of less than 5 years.
Table 3 Type of Insurance Policy Policy
Frequency
Retirement/Pension Plans
1
3.3
19
63.3
Traditional Insurance Plans
7
23.3
ULIP
3
10.0
Total
30
100.0
Term Assurance Plans
%
Source: Computed from Survey Data Term Assurance plan is the most common insurance policy. Table 4 Service Quality of ICICI Prudential Life Insurance Construct Tangibility
Reliability
Responsiveness
Assurance
Empathy
E/P
Mean
Std. Deviation
E
4.4167
0.63086
P
4.0750
0.78551
E
4.6533
0.55816
P
4.0933
0.62749
E
3.6000
1.28754
P
3.2250
0.99427
E
4.3583
0.68129
P
4.1417
0.68444
E
3.4400
1.17138
P
2.7867
1.12026
Z
P Value
-3.917
< 0.001**
-3.670
< 0.001**
-1.863
0.062
-1.489
0.137
-3.194
< 0.001**
Source: Computed from Survey Data #Wilcoxon‘s Signed Rank Test **Highly Significant *Significant The short fall in perceived service quality is visible in visible in all the dimensions. It is found statistically significant regarding tangibility, reliability and empathy. The shortfall in responsiveness and assurance is not found to be statistically significant.
Discussion Service quality is more important than reaping mere business. Insurance, not an exception. But the present trends prove that there is a shortfall in the service quality dimensions from the expectations. Serious efforts shall be made to improve the perceived service quality.
Reference Bruner II, G. (2017). Marketing Scales Handbook. Ft. Worth, TX: GCBII Productions, LLC. Jothi, A. L. (2016). Service Quality and Customer Satisfaction in Life Insurance Business. Australian Journal of Basic and Applied Sciences, 10(1), 636-641. Madan, M. M., & Pathak, M. S. (2012). Service Quality Perceptions Of Customers About Insurance Companies: An Empirical Study on Delhi Region. Singh, S., & Chaudhary, N. J. S. M. K. (2014). A study of customer perception towards service quality of life insurance companies in Delhi NCR Region. Global Journal of Management And Business Research.
SERVICE QUALITY OF INSURANCE SERVICES OF HDFC LIFE: AN ENQUIRY USING SERVQUAL APPROACH *Ms. M. Lakshmi, 2nd Semester M. Com Student, Government College, Tripunithura, Ernakulam, Kerala **Dr.Vineeth. K. M.,Assistant Professor of Commerce, Government College, Tripunithura, Ernakulam, Kerala
ABSTRACT The customers of the insurance companies are from all walks of life from uneducated peasants, company employees to global companies conducting the commercial activities all over the world. The insurers should please all these types of customers who are from various social groups. Being a service provider, the roles of these insurers are very crucial in creating a good perception in the customer„s minds. Since the services provided by the insurance companies could bring or estrange a customer, much stress is put on the service delivery by many of the insurers. The relation between the customer satisfaction and service quality has undergone an intense examination by a few service quality investigators (Bolton & Drew, 1994; Bitner & Hubbert, 1994). Parasuraman et al. (1985) recommended the SERVQUAL framework to evaluate the level of customer satisfaction. Parasuraman et al. (1988) proposed a SERVQUAL model that is based on five dimensional constructs of perceived service quality called as tangibles, reliability, responsiveness, assurance and empathy- with item reflecting both expectation and perceived performance. Parasuraman (2000) voiced that excellent customer service and excellent marketing are the two sides of the same coin. This paper aims to the study the service quality and customer satisfaction of HDFC Life. The proposed study is empirical in nature. Suitable descriptive and inferential statistics shall be used to draw inferences. Key Words: Insurance Service, Customer Satisfaction, Service Quality, SERVQUAL
Introduction Quality of service is a measure of the extent to which the customer is satisfied by the service delivered and it is determined by the customer's perception and not by the perception of the service provider. In today's competitive world, customers are not willing to settle for nothing less. They find themselves as the king and do not want to compromise on the quality of service. Their choice of a particular company is determined by considering the quality of services offered by that company. Superior services enable to differentiate a company from its competitors and help to attract loyal customers. Once the customer is satisfied with the services they are likely to repeat their transactions with the same company rather than being attracted by other competitors. Thus, customer satisfaction is the key element that enables the growth of a company.
With the huge population base and fast-changing environment, Life insurance companies were able to attract massive customers. This change has enabled insurance companies to provide superior quality services to their customers. Service quality is considered to be one of the vital measures to increase customer satisfaction and various methods are used to understand the actual level of satisfaction of customers derived from the services offered. Knowing the customer satisfaction level helps the company to improve its service quality so that the unsatisfied needs can be fulfilled. Once a satisfied customer trust the company and is assured that the company will continue to provide quality services, the customers will continue to do repeated transactions. Delivery of high-quality services will result in improved customer satisfaction, customer retention, cost-saving, improved financial performance and positive word of mouth. Therefore, for every company, it is very much essential to know the customers expectation and provide services accordingly so that maximum satisfaction can be achieved. HDFC Life Insurance Company is a joint venture between HDFC Limited (Housing Development Financial Corporation Limited) and Standard Life Plus founded in 2000 and since then it has grown into one of the biggest long term insurance companies in India. It provides a wide variety of products and services for both individual as well as group entities and was able to establish itself as unique by providing customization in their plans by adding other optional benefits at reasonable prices. HDFC Life has developed a strong reputation for its services and thereby, they need to maintain that level of customer expectation. Hence, like any other company, HDFC Life also has to regularly put an effort to know what the customer expects from the company.
Statement of problem In these days, there is intense competition between various insurance companies. So it is essential to understand the needs of the customers and find ways to meet those needs. Almost all the insurance companies offer similar products at similar prices and the quality of the service is the only means to differentiate these companies. Superior services offered will enable the company to enjoy a competitive advantage and also to have a distinctive image in the eyes of the customers. Thus, it is essential to understand what the customer expects from a service and their perception after the completion of the service. The study would enable to know the customer expectations of a service and how far the company was able to meet their expectation. Also, the relevant areas for improvements can be identified.
Review of literature Marla Royne Stafford, Thomas F. Stafford, Brenda P. Wells (1998). The study examines the most important service quality dimensions and customer satisfaction of four insurance companies. The effect of service quality dimensions on quality perception and customer satisfaction is considered to be the dependent variables. The results show that reliability is the most critical parameter of both the variables, assurance as significant for both variables while empathy is important only for customer satisfaction. The results also establish a negative relationship between tangibles and the variables. Also they suggest that significance of reliability is likely to strengthen the relationship between service quality and customer satisfaction. Usha Lenka, Damodar Suar and Pratap K.J. Mohapatra (2009). Their study examines whether customer satisfaction is increased with the service quality of Indian commercial banks. It was stated that it is economic to spend on retaining the existing customers as the cost of finding new customers is much higher than the cost of retaining customers. The study revealed that improving human, technical and tangible aspects of service quality of the bank will increase customer satisfaction. However, human aspects of service quality were found to be more influencing customer satisfaction than the technical and tangible aspects so as to retain the customers and promote customer loyalty. Rajat Gera (2011). The study aimed to identify the key conceptual and empirical interrelationships between service encountered variables of perceived agent service quality, customer satisfaction and perceived value and their relationships with the behavioural outcome on recommending. The study concluded that product knowledge, empathy, reliability and trust are the important key agent service quality attributes that cause favourable behavioural outcomes. Also agent service quality, satisfaction and value perceptions have a major contribution on recommendation intensions. Sunayna Khurana (2013). The study was aimed to understand the customers‘ expectations and perceptions of services provided by various insurance companies and to identify any gap between customer expectation and customer perception in the Life
insurance industry. The results of the study revealed that the difference in expectation and perception is highest in the case of competency and lowest in case of reliability. It was also mentioned that improved service quality should be adopted so that maximum customer satisfaction can be provided to the customer and also advised to regularly conduct a reassessment of service quality to improve its services. Objectives The present study aims to assess the service quality of HDFC Life Insurance using the SERVQUAL approach from the customers‘ view point.
Methodology The present study is empirical in nature assessing the service quality dimensions primary data has been collected using google forms from customers of HDFC Life using the SERVQUAL (Parasuraman, Zeithaml, and Berry 1986, 1988) The constructs of Tangibility (4 items), Reliability (5 items), Responsiveness (4 items), Assurance (4 items) and Empathy (5 items) showed reliability as the Cronbach‘s Alpha for each were above 0.7 (Nunally, 1978) The data collected were not found to be normally distributed as the KS test produced a p value less than 0.05 Nonparametric procedure of Wilcoxon‘s Signed Rank Test is applied to draw the inferences along with mean scores and percentages.
Results Table 1 Profile of the Sample Variable / Category
Gender
Age
Frequency
Female
21
58.3
Male
15
41.7
Total
36
100.0
31 to 50
18
50.0
Above 50
6
16.7
Below 30
12
33.3
Total
36
100.0
9
25.0
18
50.0
Self Employed
3
8.3
Student
6
16.7
36
100.0
3
8.3
12
33.3
3
8.3
Post-Graduation
18
50.0
Total
36
100.0
Rural
15
41.7
Urban
21
58.3
Total
36
100.0
Above Rs 10 lakhs
3
8.3
Below Rs 2 Lakhs
6
16.7
Rs 2 lakhs to Rs 5 lakhs
15
41.7
Rs 5 lakhs to Rs 10 lakhs
12
33.3
Total
36
100.0
Salaried - Govt/Public Sector Salaried - Private Sector Occupation
Total Diploma Graduation Education
Region of Residence
Annual Income
%
MPhil/PhD/Others
Source: Computed from Survey Data The sample covers the basic demographics of gender, region and education.
Table 2 Experience of Using HDFC Life Experience
Frequency
%
5 to 10 years
6
16.7
Less than 5 years
24
66.7
More than 10 years
6
16.7
Total
36
100.0
Source: Computed from Survey Data Most the customers have an experience of using HDFC Life policies for a period of less than 5 years. Table 3 Type of Insurance Policy Policy
Frequency
Term Assurance Plans
%
27
75.0
Term Assurance Plans, Retirement/Pension Plans
3
8.3
ULIP
6
16.7
Total
36
100.0
Source: Computed from Survey Data Term Assurance plan is the most common insurance policy.
Table 4 Service Quality of HDFC Life Construct
E/P
Mean
Std. Deviation
P
4.4375
0.45267
Tangibility E
4.1250
0.51235
P
4.6500
0.39821
Reliability E
3.9667
0.69200
P
3.3125
1.41973
Responsiveness E
2.9583
1.14252
P
4.6250
0.33541
Assurance E
3.9583
0.67744
P
3.1333
1.44222
Empathy E
3.1167
Z
P Value
-3.306
0.001**
-4.569
< 0.001**
- 2.680
0.007**
-4.560
< 0.001**
-0.093
0.926
1.04239
Source: Computed from Survey Data #Wilcoxon‘s Signed Rank Test **Highly Significant *Significant The consumer delight in perceived service quality is visible in in all the dimensions. It is found statistically significant regarding all dimensions except empathy.
Discussion Service quality is more important than reaping mere business. Insurance, not an exception. But the present trends prove that there is a perceived delight in the service quality dimensions from the expectations. Serious efforts shall be made to sustain the perceived service quality.
References 1. Bruner II, G. (2017). Marketing Scales Handbook. Ft. Worth, TX: GCBII Productions, LLC. 2. Gera, R. (2011), ―Modelling the service antecedents of favourable and unfavourable behaviour intentions in life insurance services in India: An SEM study‖, International Journal of Quality and Service Sciences, Vol. 3 No. 2, pp. 225-242. 3. Khurana, S. (2013). ―Analysis of Service Quality Gap in Indian Life Insurance Industry‖, European Journal of Commerce and Management Research, Vol.2. 4. Lenka, U., Suar, D., & Mohapatra, P. K. J. (2009). ―Service Quality, Customer Satisfaction, and Customer Loyalty in Indian Commercial Banks‖, The Journal of Entrepreneurship, 18(1), 47–64. 5. Royne Stafford, M., Stafford, T. and Wells, B. (1998), "Determinants of service quality and satisfaction in the auto casualty claims process", Journal of Services Marketing, Vol. 12 No. 6, pp. 426-440
SERVICE QUALITY OF HEALTH INSURANCE SERVICES: AN ENQUIRY USING SERVQUAL APPROACH *Ms. Parvathy Jayakumar,4th Semester M. Com Student, Government College, Tripunithura, Ernakulam, Kerala **Dr.Vineeth. K. M., Assistant Professor Of Commerce, Government College, Tripunithura, Ernakulam, Kerala
ABSTRACT The customers of the insurance companies are from all walks of life from uneducated peasants, company employees to global companies conducting the commercial activities all over the world. The insurers should please all these types of customers who are from various social groups. Being a service provider, the roles of these insurers are very crucial in creating a good perception in the customer„s minds. Since the services provided by the insurance companies could bring or estrange a customer, much stress is put on the service delivery by many of the insurers. The relation between the customer satisfaction and service quality has undergone an intense examination by a few service quality investigators (Bolton & Drew, 1994; Bitner & Hubbert, 1994). Parasuraman et al. (1985) recommended the SERVQUAL framework to evaluate the level of customer satisfaction. Parasuraman et al. (1988) proposed a SERVQUAL model that is based on five dimensional constructs of perceived service quality called as tangibles, reliability, responsiveness, assurance and empathywith item reflecting both expectation and perceived performance. Parasuraman (2000) voiced that excellent customer service and excellent marketing are the two sides of the same coin. This paper aims to the study the service quality and customer satisfaction of Health Insurance Service Providers. The proposed study is empirical in nature. Suitable descriptive and inferential statistics shall be used to draw inferences. Key Words: Insurance Service, Customer Satisfaction, Service Quality, SERVQUAL
Introduction Man is always exposed to risks. Insurance is said to be a protection from the financial loss. As it is the time where the number of diseases are inflating and people are unable to meetup these expenses, there come the importance of the health insurance. Health insurance covers whole or a part of the medical expenses incurred that is been spread over many people. Health insurance is a service sector which help the people to get the protection from the risks they were exposed to. Health insurance not only covers the hospitalization expenses but also pre and post hospitalization expenses. Health insurance covers medical, surgical sometimes dental expenses. It helps the insured to reimburse the expenses incurred him in the treatment.
Health Insurance industry is said to be an important industry because it contributes to the country in terms of the income and also in terms of job creation. To withstand in this competitive environment the health insurance companies must be able to satisfy their customers, this can be achieved though providing better quality services to the customers. Service quality is the difference between what the customer expects and what the customer percieve. SERVQUAL is a instrument developed by A.Parasuraman, Valarie zeithamal and Leonard L.Berry. SERVQUAL is designed to know the expectation and perception of customers using the five dimensions. Statement of the problem Insurance industries are leading service sector in the economy. There is a high rise in the number of insurance companies and also the diseases, thus there arise the need for conducting a study. As there are many insurance companies there exist high level of competition, so the companies must be able provide better services to the customers to withstand in the industry. Research interest arises to verify the service quality of health insurance providers. Review of Literature Syed Zafar Abbas Naqvi (2014). ―A Study of Customer Satisfaction in Health Insurance Companies in India (with special reference to eastern UP)‖. This study was conducted with the objective to study the customer satisfaction towards health insurance services provided by selected sample companies and also to suggest some measures through which satisfaction level can be enhanced. The study concluded that in the area of disclosure the private companies should be more transparent while the public companies should come up with speedy claim settlement procedure. Shafiu Mohammed, Mohammad N Sambo, Hengjin Dong (2011). “Understanding Client Satisfaction with a Health Insurance Scheme in Nigeria: Factors and Enrollees Experiences‖. The main objective of this study was to determine the satisfaction level of the enrollees and also to find out the factors influenced their satisfaction level. This study thus helped to alter the medium strategic plan of the scheme. Vikash (2011). ―Service Quality Perception of Customers about Insurance Companies‖. In this study the researcher used SERVQUAL/SERVPERF model. The main objective is to determine the perception of the customers regarding the quality of the service in insurance
companies, to determine the relevant dimensions of the service quality. Here the author made a comparative study about the public insurance companies and private insurance companies and found that the private sector companies could provide more competitive services than a public company. Durgesh Agnihot,Pallavi Chaturvedi(2017):"Study on consumer buying behavior towards health Insurance in Kanpur".In this study the researcher study the awareness and purchasing behavior of the people. This study also tries to draw out which type of health insurance has most preference. This study had able to find out that most of the health services are expensive and could not be affordable by ordinary people. Objectives The present study aims to assess the service quality of Health Insurance Service Providers using the SERVQUAL approach from the customers‘ view point.
Methodology The present study is empirical in nature assessing the service quality dimensions primary data has been collected using google forms from customers of Health Insurance Service Providers using the SERVQUAL (Parasuraman, Zeithaml, and Berry 1986, 1988) The constructs of Tangibility (4 items), Reliability (5 items), Responsiveness (4 items), Assurance (4 items) and Empathy (5 items) showed reliability as the Cronbach‘s Alpha for each were above 0.7 (Nunally, 1978) The data collected were not found to be normally distributed as the KS test produced a p value less than 0.05 Nonparametric procedure of Wilcoxon‘s Signed Rank Test is applied to draw the inferences along with mean scores and percentages.
Results Table 1 Profile of the Sample Variable / Category
Gender
Frequency
Female
20
66.7
Male
10
33.3
Total
30
100.0
2
6.7
16
53.3
2
6.7
Post-Graduation
10
33.3
Total
30
100.0
Rural
4
13.3
Urban
26
86.7
Total
30
100.0
Above Rs 10 lakhs
6
20.0
Below Rs 2 Lakhs
14
46.7
Rs 2 lakhs to Rs 5 lakhs
6
20.0
Rs 5 lakhs to Rs 10 lakhs
4
13.3
30
100.0
+2 Graduation Education
MPhil/PhD/Others
Region of Residence
Annual Income
%
Total Source: Computed from Survey Data
The sample covers the basic demographics of gender, region and education.
Table 2 Experience of Using Health Insurance Experience 5 to 10 years Less than 5 years More than 10 years Total
Frequency
%
3
10.0
23
76.7
4
13.3
30
100.0
Source: Computed from Survey Data Most the customers have an experience of using LIC policies for a period of less than 5 years.
Table 3 Type of Insurance Policy Subscribed Policy
Frequency
Family Health Insurance Plan
%
10
33.3
Family Health Insurance Plan, Group Insurance Plan [by employer]
1
3.3
Group Insurance Plan [by employer]
6
20.0
Individual Health Insurance Plan
9
30.0
Individual Health Insurance Plan, Family Health Insurance Plan
2
6.7
Individual Health Insurance Plan, Family Health Insurance Plan,
2
6.7
30
100.0
Group Insurance Plan [by employer] Total Source: Computed from Survey Data Family Health Plan is the most common insurance policy followed by individual plans. Table 4 Present Health Insurer Company
Frequency
%
IA Insurance
1
3.3
ICICI
2
6.7
14
46.7
Max life insurance
1
3.3
Metlife
3
10.0
New India insurance
1
3.3
Reliance
1
3.3
SBI
2
6.7
Star Health Insurance
3
10.0
United India insurance
1
3.3
Vipul MedCorp
1
3.3
LIC
Total
30 100.0 Source: Computed from Survey Data
LIC appears to be the most prominent service provider.
Table 5 Service Quality of Health Insurance Construct Tangibility
Reliability
Responsiveness
Assurance
Empathy
E/P
Mean
Std. Deviation
E
4.0500
0.67403
P
3.9500
0.82890
E
4.1800
0.72464
P
4.1667
0.69497
E
2.9083
0.85723
P
2.8417
0.84711
E
4.1250
0.85286
P
4.0750
0.60937
E
2.8667
0.98308
P
2.7867
0.89123
Z
P Value
-1.125
0.261
-0.070
0.944
-0.193
0.847
-0.373
0.706
-0.172
0.863
Source: Computed from Survey Data #Wilcoxon‘s Signed Rank Test *Significant Neither delight nor distress in perceived service quality is visible in different dimensions. The slight difference in absolute values is found to be not statistically significant regarding all dimensions. Kruskal Wallis H Test across the different service providers didn‘t produce any significant difference in perceived service quality.
Discussion Service quality is more important than reaping mere business. Health Insurance, not an exception. But the present trends prove that there is neither separate delight nor distress in the service quality dimensions from the expectations. Serious efforts shall be made to sustain and also improve the perceived service quality.
References 1. Agnihotri, Durgesh, and Pallavi Chaturvedi.(2017) "A study on consumer buying behavior towards health Insurance in Kanpur." International Journal in Management & Social Science 5.11 : 176-191. 2. Bruner II, G. (2017). Marketing Scales Handbook. Ft. Worth, TX: GCBII Productions, LLC. 3. Gautam Vikas. (2011) ―Service Quality Perception of Customers about Insurance Companies." Indian Journal of Marketing 41.3 pp 8-20. 4. Shafiu Mohammed, Mohammad N Sambo, Hengjin Dong (2011). "Understanding Client Satisfaction with a Health Insurance Scheme in Nigeria: Factors and Enrollees Experiences." Health Research Policy and Systems 9 (1), 20 5. Syed Zafar Abbas Naqvi.(2014) ,A Study of Customer Satisfaction in Health insurance companies in India (with Special Reference to Eastern U.P)..IRJMSH International Research Journal of Management Sociology & Humanities ,Vol.5 www.IRJMSH.com
SERVICE QUALITY OF BANKING SERVICES OF FEDERAL BANK: AN ENQUIRY AMONG YOUTH USING SERVQUAL APPROACH *Ms. Ruksana K B, 4th Semester M. Com Student, Government College, Tripunithura, Ernakulam, Kerala **Dr.Vineeth. K. M., Assistant Professor Of Commerce, Government College, Tripunithura, Ernakulam, Kerala
ABSTRACT The customers of the banks are from all walks of life from uneducated peasants, company employees to global companies conducting the commercial activities all over the world. The banks should please all these types of customers who are from various social groups. Being a service provider, the roles of these banks are very crucial in creating a good perception in the customer„s minds about the banks. Since the services provided by the banks could bring or estrange a customer, much stress is put on the service delivery by many of the banks. The relation between the customer satisfaction and service quality has undergone an intense examination by a few service quality investigators (Bolton & Drew, 1994; Bitner & Hubbert, 1994). Parasuraman et al. (1985) recommended the SERVQUAL framework to evaluate the level of customer satisfaction. Parasuraman et al. (1988) proposed a SERVQUAL model that is based on five dimensional constructs of perceived service quality called as tangibles, reliability, responsiveness, assurance and empathywith item reflecting both expectation and perceived performance. Parasuraman (2000) voiced that excellent customer service and excellent marketing are the two sides of the same coin. This paper aims to the study the service quality and customer satisfaction of Federal Bank, being the largest private sector bank in Kerala. The proposed study is empirical in nature. Suitable descriptive and inferential statistics shall be used to draw inferences. Key Words: Banking Service, Customer Satisfaction, Service Quality, SERVQUAL
Introduction Development is a process of growth in economic condition. Economic development aims to increase standard of living in the nation. Banking sector plays an imposition role in our economy. Banking sector is an international indicator of economic development. Among banking institutions commercial banks play vital role. Banking sector in India are facing new challenges from technology, other internal as well as external factors. Statement of the Problem Good quality of service leads to customer creation. It also includes high growth and increase cut throat competition in banking service sectors. It has important role for organization to identify and evaluate their performance. This paper examines quality of banking service and customer satisfaction. In this study five dimension are used namely tangibility, reliability,
responsiveness, assurance and empathy and comparing these dimensions with expected and perceived variables of service quality in Federal bank.
Why Federal Bank? Federal Bank is one of major private sector commercial retail bank in India. Headquarters was situated in Aluva. As per 2019, it has 1251 branches. Federal Bank is innovate first computerized transaction in all branches. It use advance technology services to customer. It provides service like credit cards, consumer banking, corporate banking etc . The history of Federal bank lies on the pre Independence period. It was established in 23 April 1931 as Travancore federal bank and in 2 Dec 1949 it was renamed as federal bank. Late K.P. Hormis was the founder of Federal Bank. They focus on spread digitally transaction in all branches. Federal Bank have 8 million customer support. It was handled more than 15% India's inflow transactions.
Objectives of the Study The present study aims to assess the service quality of Federal Bank using the SERVQUAL approach from the customers‘ view point belonging to the youth category.
Methodology The present study is empirical in nature assessing the service quality dimensions primary data has been collected using google forms from customers of Federal Bank using the SERVQUAL (Parasuraman, Zeithaml, and Berry 1986, 1988) The constructs of Tangibility (4 items), Reliability (5 items), Responsiveness (4 items), Assurance (4 items) and Empathy (5 items) showed reliability as the Cronbach‘s Alpha for each were above 0.7 (Nunally, 1978) The data collected were not found to be normally distributed as the KS test produced a p value less than 0.05 Nonparametric procedure of Wilcoxon‘s Signed Rank Test is applied to draw the inferences along with mean scores and percentages.
Results Table 1 Profile of the Sample Variable / Category
Gender
Education
Region of Residence
Frequency
%
Female
20
66.7
Male
10
33.3
Total
30
100.0
Graduation
19
63.3
Post-Graduation
8
26.7
Upto SSLC
3
10.0
Total
30
100.0
Rural
13
43.3
Urban
17
56.7
Total
30
100.0
Source: Computed from Survey Data The sample covers the basic demographics of gender, region and education.
Table 2 Experience of Using Federal Bank Account Experience
Frequency
%
5 to 10 years
5
16.7
Less than 5 years
25
83.3
Total
30
100.0
Source: Computed from Survey Data Most the customers, being youth have an experience of using SBI for a period of less than 5 years.
Table 3 Service Quality of Federal Bank Expected Expected Tangibility Expected Reliability Expected Responsiveness Expected Assurance Expected Empathy
Mean
SD
Perceived
4.0667
0.62606
4.1933
0.60454
3.6417
0.81654
4.0833
0.60291
3.5933
0.69577
Perceived Tangibility Perceived Reliability Perceived Responsiveness Perceived Assurance Perceived Empathy
Mean
SD
Z
P Value
4.1833
0.68523
-0.733
0.464
4.0467
0.64473
-1.336
0.181
3.6083
1.09797
-0.075
0.940
3.9333
0.60861
-1.533
0.125
3.7800
1.03637
-1.344
0.179
Source: Computed from Survey Data #Wilcoxon‘s Signed Rank Test **Highly Significant *Significant The satisfaction of perceived service quality is visible in all the dimensions. The absolute difference is found to be not statistically significant.
Discussion The study could reveal that federal bank service quality is creating satisfaction as neither delight not distress is found to be significant. Technological innovations are found to take the bank to a higher level of acceptance among the youth.
Reference 1. https://www.federalbank.co.in/about-us 2. https://www.slideshare.net/mobile/ranpariyah/federal-bank-pvt-ltd 3. https://www.researchgate.net/publication/334823921_SERVICE_QUALITY_IMPACT_ON_ CUSTOMER_SATISFACTION_A_STUDY_OF_FEDERAL_BANK_IN_INDORE_CITY 4. http://indianresearchjournals.com/pdf/IJMFSMR/2013/December/26.pdf
A STUDY ON THE ATTITUDE OF NON-MUTUAL FUND INVESTORS ON MUTUAL FUND SAHI HAI ADVERTISEMENTS *Mr.Marvin Sabu, M.Phil. Scholar, SMBS, MG University Kottayam, email: [email protected]
Key words: Mutual Fund Sahi Hai, advertisements, non-mutual fund investors, financial literacy scores, awareness, attitude I.
Introduction
Association of Mutual Fund in India (AMFI) has launched ―Mutual Fund Sahi Hai‖ campaign on March 2017 under the guidance of SEBI. Mutual Fund Sahi Hai is AMFI‘s investor awareness programme intended to bring the attention of investors or the public towards mutual fund investment. This campaign extensively uses different media (both online and offline media) for advertisements in different languages. Due to the campaign increase in awareness has helped the industry add more than 5 million new investors between March 2017 and June 2018 (AMFI-CRISIL, 2018). SEBI has mandated mutual funds to set apart 2 basis points of their net assets for investor education. Half of this amount is shared with AMFI for better utilisation of the funds. AMFI has utilised the fund to start the new media campaign that is Mutual Fund Sahi Hai campaign(AMFI launches „Sahi Hai‟ campaign for mutual fund awareness, 2017). Since 2 years of inception of this campaign, it is the right time to evaluate the effectiveness of this campaign. This study concentrates only on role of Mutual Fund Sahi Hai advertisements (ads) among non-mutual fund investors. This study evaluates the non-mutual fund investor‘s attitude towards Mutual Fund Sahi Hai ads and also the general awareness level of nonmutual fund investors towards the mutual fund. II.
Objectives of the Study 1. To understand the awareness level of non-mutual fund investors on the mutual fund as an investment avenue. 2. To the role of Mutual Fund Sahi Hai ads on the creation of a positive attitude among non-mutual fund investors. 3. To analyse whether the awareness of mutual fund among non-mutual fund investors was due Mutual Fund Sahi Hai campaign.
Hypotheses of the study 1. H01: There is statistically no significant difference in the level of awareness on mutual fund between male and female non-mutual fund investors. 2. H02: There is statistically no significant difference in attitude towards Mutual Fund Sahi Hai ads among respondents of different financial literacy scores. 3. H03: There is statistically no significant difference in awareness level on mutual fund between respondents of different financial literacy scores. III.
Review of the Literature
A study on the influence of mutual fund advertisements on mutual fund purchase intention has revealed that informational advertisements are useful and increase awareness level investors. The study also reveals that based on gender and financial literacy one the mode of advertisement preference on mutual fund varies. This study left back a hint for study on the effectiveness of mutual fund ads among non-mutual fund investors(Dey, Chauhan, & Chakraborti, 2015). Advertising is considered as a force which moves a potential purchaser towards to final step that is, purchase through series of steps. The 3 main functions of advertising are information/ideas, create favourable attitude/feelings towards the product and finally to bring an action that is, the acquisition of the product. The study brings the final concepts that realistic measurement of advertising effectiveness must in the light of the functions of advertising. The measurement of the effectiveness of advertising should provide a measurement of changes at all levels and should not confine to a single step (Lavidge & Steiner, 1961). IV.
Research Methodology
The study is a cross-sectional study in nature which investigates only specific part that is, salaried persons in Kottayam district who have not invested in the mutual fund.
The sampling method used: Judgemental sampling method
Sample size: 75
Tools for analysis: Tables, charts, percentages, mean comparison, Spearman rankorder correlation and hypothesis tests such as Kruskal-Wallis test and Man-Whitney U test were used as the sample data are not normally distributed. Likert‘s five-point
scale was used to evaluate the opinion of respondents. Statistical software SPSS and MS Excel were used. Cron-Bach alpha test was used to test the reliability of scales.
Data collection tool: Structured questionnaire was distributed among respondents both online and directly. Getfoureyes.com website was used to design the questionnaire.
V.
Conceptual Model
Figure 1.1 Conceptual model of attitude towards the advertisement
Hedonic/Pleasure
Product information
Positive attitude towards advertisement
Social image/role
Figure 1.1 is a depiction of determinant factors of attitude towards advertisements which is used in many studies especially in (Petrovici & Marinov, 2007). This conceptual model was used for the study in order to evaluate the respondent‘s attitude towards Mutual Fund Sahi Hai advertisements.
VI.
Analysis of the Study
Descriptive Statistics of respondents
Table 1.1 Gender * age Crosstabulation
Age 25-30
Total
31-40
Male
47
4
51
Female
15
9
24
62
13
75
Gender
Total Source: Primary Data
Most of the respondents are male (68%) and among the age group 25-30 years (83%) Table 1.2 Financial Literacy Score * gender Crosstabulation Count gender Male
Total
Female
0
2
0
2
1
5
2
7
2
5
8
13
3
18
8
26
4
9
4
13
5
12
2
14
51
24
75
Score
Total Source: Primary Data
From Table 1.2 it is clear that the majority of respondents have financial literacy score of 3 (30.2%). While in the gender-wise majority of female respondents lies in scores 2 and 3 (66.66%).
Table 1.3 Media on which respondents watch the Mutual Fund Sahi Hai ads the most Frequency
Per cent 6
8.0
Offline medias
59
78.7
Online medias
10
13.3
Total
75
100.0
Not Sure
Source: Primary Data From table 1.3, it is evident that the majority of respondents (78.7%) watch Mutual Fund Sahi Hai ads on traditional/offline media like print, radio, TV etc. Reliability Statistics (Cron Bach‟s Alpha) Awareness
Role of Mutual Fund Sahi Hai ads
Attitude on Mutual Fund Sahi Hai Ads
on Awareness 0.70
0.76
0.81
The reliabilities of scales have been measured on the basis of Cron Bach‘s Alpha value. The Cron Bach‘s Alpha values are 0.7 (Awareness), 0.760 (Effectiveness) and 0.812(Attitude) which proves that internal consistency of scales is satisfactory or acceptable.
Table 1.4 Awareness level of respondents on mutual fund investment Mean Awareness of Mutual Fund Investment
score
The minimum amount required for mutual fund investment
3.05
Systematic Investment Plan (SIP)
3.51
Investment alternative mutual fund
3
Benefits of mutual fund Market risk on mutual fund investment
2.53 3.55405405
Total Mean Score
3.13
Source: Primary Data The awareness level of respondents is measured on a 5-point scale ranging from 1(very low) to 5 (very high). The total mean score on awareness is (mean value 3.13) which proves that the respondents as a whole have a moderate level of awareness on the mutual fund. Table 1.5 Role of Mutual Fund Sahi Hai ads on creating awareness on mutual fund Role of Mutual Fund Sahi Hai ads in creating
Mean
awareness on;
score
The minimum amount required for mutual fund investment
2.73
Systematic Investment Plan (SIP)
2.90
Mutual fund investment
3.01
Market risk on mutual fund investment
2.85
Total Mean Score
2.87
Source: Primary Data The lower mean score (mean value 2.87) from table 1.5 itself is a clear indication that the Mutual Fund Sahi Hai ads are not effective among the respondents in creating awareness on mutual fund investment.
Table 1.6 Attitude towards „Mutual Fund Sahi Hai‟ advertisements Factors
Attitude towards „Mutual Fund Sahi Hai‟ advertisements
Hedonic
The ads of Mutual Fund Sahi Hai are enjoyable
Mean score Factor Mean score 3.01 3.05
(AT1) Sometimes I take pleasure in recalling such ads
3.07
(AT2) Sometimes Mutual Fund Sahi Hai ads bring
3.07
pleasant memories to my mind (AT3) Product
Mutual Fund Sahi Hai Ads are a valuable source
2.95
2.95
Information of information on mutual funds (AT4) Ads keep me up to date on features of mutual
2.86
funds (AT5) Such ads contribute to my knowledge about
3.05
mutual funds (AT6) Social
Mutual Fund Sahi Hai ads have a significant role
Image/ role
in creating awareness among people on mutual
3.49
3.14
fund (AT7) I like to talk about the content of Mutual Fund
3.00
Sahi Hai ads to my friends/ colleagues (AT8) From the ad, I understand mutual fund is a
2.92
fashionable investment opportunity. (AT9) Total Mean Score
3.05
3.05
Source: Primary Data Table 1.6 depicts the mean score of factors determining the attitude of respondents towards ads of Mutual Fund Sahi Hai such as Hedonic, Social role/image and Product information. From table 1.6 the total mean score (mean value 3.05) indicates that respondents have a moderate attitude towards the Mutual Fund Sahi Hai ads. Among factors determining the attitude of respondents towards advertisements, the factor Social role has the highest mean score (mean value 3.14) followed by Hedonic (mean value 3.05) and product information (mean value 2.95).
Table 1.7 Gender wise evaluation of Mutual Fund Sahi Hai ads on creating awareness on mutual fund Role of Mutual Fund Sahi Hai ads in creating awareness on; The minimum amount required for mutual
Female (Mean score)
Male (Mean score)
2.61
fund investment
2.82
Systematic investment Plan (SIP)
2.96
2.90
Mutual fund investment
3.09
2.65
Market risk on mutual fund investment
3.35
2.86
Total Mean Score
3.00
2.81
Source: Primary Data Mutual Fund Sahi Hai ads have only little role in creating awareness among male and female respondents on mutual fund investment. But comparatively such ads are moderately operative among female than male respondents. This fact can be interpreted from mean scores of both genders. Table 1.8 Gender wise evaluation of attitude towards „Mutual Fund Sahi Hai‟ advertisements
Attitude towards „Mutual Fund Sahi Hai‟ Factors
advertisements
Mean score Male
Female
Factor Mean Score Male Female
The ads of Mutual Fund Sahi Hai are enjoyable (AT1)
2.80
2.87
3.08
3.04
3.04
3.13
2.96
2.91
3.08
2.61
3.06
3.30
Sometimes I take pleasure in recalling such Hedonic
ads (AT2) Sometimes Mutual Fund Sahi Hai ads bring pleasant memories to my mind (AT3)
2.97
3.01
3.03
2.94
Mutual Fund Sahi Hai Ads are a valuable Product
source of information on mutual funds (AT4)
Informat
Ads keep me up to date on features of mutual
ion
funds (AT5) Such ads contribute to my knowledge about mutual funds (AT6)
Mutual Fund Sahi Hai ads have a significant role in creating awareness among people on mutual fund (AT7) Social
I like to talk about the content of Mutual
Image/ap
Fund Sahi Hai ads to my friends/ colleagues
peal
(AT8)
3.57
3.26
2.53
2.74
2.78
2.87
2.96
2.99
2.97
2.99
From the ad, I understand mutual fund is a fashionable investment opportunity. (AT9) Total Mean Score
2.96 2.97
Source: Primary data From Table 1.8 it is evident that both genders have a moderately positive attitude towards Mutual Fund Sahi Hai ads and comparatively male respondents (mean value 2.99) have bit more attitude than female respondents (mean value 2.97). Female respondents show a more positive attitude towards hedonic element in the ad while male respondents show more attitude towards product information. Table 1.9 Mann-Whitney Test Test Statisticsa AW mutual
AW market
fund
risk
AW SIP
AW
AW Benefits
Minimum
of mutual
amount
fund
Mann-Whitney U
544.00
568.00
511.50
491.50
587.50
Wilcoxon W
844.00
1894.00
811.50
791.50
887.50
-0.80
-0.53
-1.18
-1.47
-.289
0.43
0.59
0.24
0.143
0.77
Z Asymp. Sig. (2tailed) a. Grouping Variable: gender
H0: There is statistically no significant difference in the level of awareness on mutual fund between male and female non-mutual fund investors. H1: There is a statistically significant difference in the level of awareness on mutual fund between male and female non-mutual fund investors. Since p-value at 5% significance level is greater than .05 we accept the null hypothesis that there is statistically no significant difference in the level of awareness on mutual fund between male and female non-mutual fund investors. Kruskal-Wallis Test Table 1.10 Test Statisticsa,b AT 1
Chi-
3.98
AT 2
6.73
AT 3
AT 4
AT 5
AT 6
AT 7
AT 8
AT 9
6.13
9.94
10.4
2.29
7.03
4.40
9.36
2
Square df Asymp.
5
5
5
5
5
5
5
5
5
.55
.24
.29
.08
.06
.81
.22
.49
.10
Sig. a. Kruskal Wallis Test b. Grouping Variable: Financial Literacy Score Source: Primary data H0: There is statistically no significant difference in attitude towards Mutual Fund Sahi Hai ads among respondents of different financial literacy scores. H1: There is a statistically significant difference in attitude towards Mutual Fund Sahi Hai ads among respondents of different financial literacy scores. Since the p-value is greater than significance level .05 we accept the null hypothesis that There is statistically no significant difference in attitude towards Mutual Fund Sahi Hai ads among respondents of different financial literacy scores.
Kruskal-Wallis Test Table 1.11.1 Ranks
Financial Literacy Score Awareness
N
Mean Rank
0
2
51.50
1
7
16.36
2
13
30.23
3
26
33.79
4
13
44.00
5
14
56.36
Total
75
Source: Primary data Table 1.11.2 Test Statisticsa,b Awareness Chi-Square
21.736
Df Asymp. Sig.
5 .001
b. Grouping Variable: Financial Literacy Score
H0: There is statistically no significant difference in awareness level on mutual fund between respondents of different financial literacy scores. H1: There is a statistically significant difference in awareness level on mutual fund between respondents of different financial literacy scores. The Kruskal Wallis test of the hypothesis substantiates that there is a difference in the level of awareness on mutual fund on respondents based on their financial literacy scores. The pvalue less than significance level .05 substantiate this fact and support the alternate hypothesis. The highest mean rank 56.36 is for the group with financial literacy score 5. This proves respondents with financial literacy score 5 have the highest awareness level on mutual fund than other groups.
Spearman Rank- Order Correlation Table 1.12 Correlations Awareness
Financial Literacy Score
1.000
.461**
.
.000
75
75
.461**
1.000
.000
.
75
75
Correlation Coefficient Awareness
Sig. (2-tailed) N
Spearman's rho Correlation Financial Literacy Score
Coefficient Sig. (2-tailed) N
**. Correlation is significant at the 0.01 level (2-tailed).
Since the p-value is less than .05 significance level Spearman rank correlation test is statistically significant. The spearman‘s correlation coefficient is 0.46 which suggest that there is a moderately strong, positive correlation between awareness level and financial literacy scores. VII.
Results and Discussions
1. Majority of respondents watch Mutual Fund Sahi Hai ads on traditional media like print, radio, TV etc. 2. Respondents have a moderate level of awareness on the mutual fund as an investment avenue. Respondents are much more aware on SIP and market risk associated with the mutual fund but they are least aware of the benefits of the mutual fund. Mutual Fund Sahi Hai ads have only little role in creating awareness among male and female respondents on mutual fund investment. But comparatively such ads are moderately operative among female than male respondents. 3. Mutual Fund Sahi Hai ads are not operative among respondents in creating awareness on the mutual fund. Comparatively such ads are moderately operative among female respondents than male respondents. 4. Respondents have a moderate attitude towards the Mutual Fund Sahi Hai ads and among 3 factors, social image factor of ads have created a more positive attitude towards the Mutual Fund Sahi Hai ads.
5. Both male and female respondents have a moderately positive attitude towards Mutual Fund Sahi Hai ads and comparatively male respondents have bit more attitude than female respondents. Female respondent shows a more positive attitude towards hedonic element in the ad while male respondents show more attitude towards product information. 6. There is statistically no significant difference in the level of awareness on mutual fund investment between male and female non-mutual fund investors. We can say that regardless of the gender level of awareness on mutual investment is moderate. 7. There is statistically no significant difference in attitude towards Mutual Fund Sahi Hai ads among respondents of different financial literacy scores. 8. Respondents having financial literacy score 0 have pleasure in recalling Mutual Fund Sahi Hai ads compared to other groups. In the case of respondents having financial literacy score 5, they are interested in talking about the content of Mutual Fund Sahi Hai ads to their friends/ colleagues. 9. Respondents with different financial literacy scores have a difference in the level of awareness on the mutual fund. 10. There is a moderately strong, positive correlation between awareness level and financial literacy scores of respondents. VIII.
Conclusion Mutual Fund Sahi Hai is the ambitious project of AMFI. In a nation like India where participation of people on mutual fund investment is less than 1.5% of total population (Team Cafemutual, 2018) such advertisement campaigns are crucial. The study investigates the awareness level of non-mutual investors on mutual fund and their attitude towards Mutual Fund Sahi Hai advertisements. The study clearly carves out the fact that the level of awareness of respondents on a mutual fund is moderate and Mutual Fund Sahi Hai ads have not significant role in creating awareness on mutual fund among respondents. The respondents under study have a moderately positive attitude towards Mutual Fund Sahi Hai ads among both gender male and female. This is an indication that marketers should design the advertisement in a way to boost the awareness level of people on the mutual fund. Apart from social image other factors of advertisement like hedonic, mutual fund information have to reckon.
REFERENCES 1.
AMFI launches ‗Sahi Hai‘ campaign for mutual fund awareness. (2017, March 15). Retrieved from https://economictimes.indiatimes.com/mf/mf-news/amfi-launches-sahi-hai-campaign-for-mutual-fundawareness/articleshow/57647966.cms
2.
AMFI-CRISIL. (2018). Digital Evolution.
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Dey, D. K., Chauhan, Y. K., & Chakraborti, R. (2015). Does advertising strategy matter in influencing mutual
fund
purchase?
Journal
of
Financial
Services
Marketing,
20(1),
23–33.
https://doi.org/10.1057/fsm.2014.29 4.
Lavidge, R. J., & Steiner, G. A. (1961). A Model for Predictive Measurements of Advertising Effectiveness. JOURNAL OF MARKETING, 4.
5.
Petrovici, D., & Marinov, M. (2007). Determinants and antecedents of general attitudes towards advertising: A study of two EU accession countries. European Journal of Marketing, 41(3/4), 307–326. https://doi.org/10.1108/03090560710728354
6.
Pollay, R. W., & Mittal, B. (1993). Here‘s the Beef: Factors, Determinants, and Segments in Consumer Criticism
of
Advertising.
JOURNAL
OF
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https://doi.org/10.1177%2F002224299305700307 7.
Team Cafemutual. (2018). Less than 1.5% of India‘s population invests in MFs—Cafemutual.com. Retrieved 26 December 2019, from Cafemutual website: https://cafemutual.com/news/industry/12632less-than-15-of-indias-population-invests-in-mfs
RECENT TRENDS IN INDIAN BANKING SECTOR *Ms.Dhanyamol P, Assistant Professor, St. Mary‘s college of Commerce and Management Studies, Thuruthiply, e-mail:[email protected] ** Ms.Malu Surendran, Assistant Professor, Mary‘s college of Commerce and Management Studies, Thuruthiply, e-mail:[email protected]
INTRODUCTION Indian economic environment is witnessing path breaking reform measures. The financial sector, of which the banking industry is the largest player, has also been undergoing a metamorphic change. Today the banking industry is stronger and capable of withstanding the pressures of competition. While internationally accepted prudential norms have been adopted with higher disclosures and transparency, Indian banking industry is gradually moving towards adopting the best practices in accounting, corporate governance and risk management. Interest rates have been deregulated, while the rigor of direct lending is being progressively reduced. Today we have a fairly well developed banking system with different classes of banks-public sector banks, foreign banks, private sector banks-both old and new generation, regional rural banks and co-operative banks with the Reserve Bank of India as the fountain Head of the system.in the banking field, there has been an unprecedented growth and diversification of banking industry has been stupendous that it has no parallel in the annals of banking anywhere in the world. During the last 51 years since 1969, tremendous changes have taken place in the banking industry. The banks have shed their traditional functions and have been innovating, improving and coming out with new types of the services to cater to the emerging needs of their customers. Massive branch expansion in the rural and underdeveloped areas, mobilization of savings and diversification of credit facilities to either to neglected areas like small scale industrial sector, agricultural and other preferred areas like export sector etc. have resulted in the widening and deepening of the financial infrastructure and transferred the fundamental character of class banking into mass banking. Objectives of the study To examine recent trends and developments in banking sector.
To study the emerging trends in banking technology. To present the technological developments in Indian banking sector. RECENT TRENDS AND DEVELOPMENTS IN BANKING SECTOR 1) Electronic Payment Services-E Cheques Now a days we are hearing about e-governance-mail, e-commerce etc. In the same manner, a new technology is being developed in US for introduction of e- cheque , which will eventually replace the conventional paper cheque .India, as harbinger to the introduction of echeque, the Negotiable Instruments Act has already amended to include; Truncated cheque and E-cheque instruments. 2) Real Time Gross Settlement (RTGS) Real Time Gross Settlement system introduced in India since March 2004, is a system through which electronics instructions can be given by the banks to transfer funds from their account to the account of another bank. The RTGS system is maintained and operated by the RBI and provides a means of efficient and faster fund transfer among banks. As the name suggests, funds transfer between banks takes place on a ‗Real Time‘ basis. Therefore money can reach the beneficiary‘s bank has the responsibility to credit the beneficiary‘s account within two hours. 3) Automated Teller Machine (ATM) Automated Teller Machine is the most popular devise in India, which enables the customers to withdraw their money 24 hours a day 7 days a week. It is a device that allows customer who has an ATM card to perform routine banking transactions without interacting with a human teller.in addition to cash withdrawal, ATMs can be used for payment of utility bills, funds transfer between accounts, deposit of cheques and cash into accounts, balance enquiry etc. 4) Point Of Sale Terminal Point Of Sale Terminal Is a computer terminal that is linked online to the computerized customer information files in a bank and magnetically encoded plastic transaction card that identifies the customer to computer. During a transaction, the customer‘s account is debited and retailer‘s account is credited by the computer for the amount of purchase.
5) Electronic Funds Transfer (EFT) Is a system whereby anyone who wants to make payment to another person/company etc. can approach his bank and make cash payment or give instruction/authorization to transfer funds directly from his own account to the bank account of the receiver/beneficiary .Complete details such as the receiver‘s name, bank account number, account type (savings or current account?) 6) Cash dispensers. Cash withdrawal is a basic service rendered by the bank branches. The cash payment is made by the cashier or teller of the cash dispenses is an alternate to time saving. The operations by the machine are cheaper than manual operations and this machine is cheaper and fast than that of ATM. The customer is provided with plastic card, which is magnetically quoted after completing the formalities, the machine allows the transactions for required amount. 7) Electronic clearing service In 1994,RBI appointed a committee to review the mechanism in the banks and also to review the electronic clearing service .The committee recommended in its report that electronic clearing service credit clearing facility should be made available to all cooperative bodies or government institutions for making repetitive low value payment like dividend ,interest ,refund ,salary, pensioner commission ,it was also recommended by the committee electronic clearing service –Debit clearing may be introduced for pre-authorized debits for payments of utility bills insurance premium and installments to leasing and financing companies .RBI has been necessary step to introduce these schemes ,initially in Chennai ,Mumbai ,Calcutta ,New Delhi 8) Bank Net Bank Net is a first national level network in India which was commissioned in February 1991 .It is communication network established by RBI on the basis of recommendation of the committee appointed by it under the chairmanship of the executive director T.N.A Lyre. 9) Chip Card The customer of the bank is provided with a special type of credit card which bears customers name, code etc. The credit amount of customer account is written on the credit card with
magnetic methods. The computer can read these magnetic spots. When customer uses this card, the credit amount written on the card starts decreasing. After use of number of times, at one stage, the balance becomes nil on the card. 10) Phone Banking Customers can now dial up the banks designed telephone number and he by dialing his ID number will be able to get connectivity to banks designated computer. The software provided in the machine interactive with computer asking to dial the code number of service required by him and suitably answers him. By using automatic voice recorder for simple queries and transactions and manned phone terminals for complicated queries and transactions, the customer can actually do entire non cash relating banking on telephone: anywhere, any time. 11) Tele-banking Tele banking is another innovation, which provided the facility of 24 hour banking to customer. Tele banking is based on the voice process facility available on bank computers. The caller usually a customer calls the bank anytime and can enquire balance in his account or other transaction history.in this system computer at bank are connected to a telephone link with the help of a modem. Voice processing facility provided in the software .This software identifies the voice of caller and provides him suitable reply. Some banks also use telephonic answering machine but this is limited use some brief functions. This is only telephone answering system and now Tele banking .Telebanking is becoming popular since queries at ATM‘s are becoming too long. 12) Internet Banking Internet banking enables customer to do banking transactions through the banks website on the internet. It is a system of accessing accounts and general information on bank products and services through a computer while sitting in its office or home .This is also called virtual banking. It is more or less bringing the bank to your computer. In traditional banking one has to approach the branch in person, to withdraw cash or deposit a Cheque or request a statement of accounts etc. but internet banking has changed the way of banking. Now everyone can operate all these type of transactions on his computer through website of bank. All such transactions are encrypted using sophisticated multi-layered security architecture, including firewalls and filters. One can be rest assured that one‘s transactions are secure and confidential.
13) Mobile Banking Mobile banking facility is an extension of internet banking. The bank is an association with the cellular service providers offers this service. For this service, mobile phone should either be SMS or WAP enabled. These facilities are available even to those customers with only credit card accounts with the bank. Conclusion In the days to come, banks are expected to play a very useful role in the economic development and the emerging market will be providing business opportunities to harness. As banking in India will become more and more knowledge supported, capital will emerge as the finest asset of the banking system .Ultimately banking is people and not just figures. To conclude it all, the banking sector in India is progressing with the increased growth in customer base, due to the newly improved and innovative facilities offered by banks .The economic growth of the country is an indicator for the growth of the banking sector
References 1)http:/www.mbaknol.com/business-finance/recent -trends -in -Indian banking sector. 2)http:/www.mbainfoline.com/Articles on Management /Recent trends in banking.hrm. 3)http:/www.moneycontrol.com/news/press release /reporttrend progress banking India 2010-11-617218.html.
OPPORTUNITIES AND
CHALLENGES OF
INDIAN BANKING
SECTOR *Ms. Preethy M.G, St. Mary‘s College of Commerce and Management studies Thuruthiply **Ms.Surya Sudhakaran, St. Mary‘s College of Commerce and Management studies Thuruthiply
INTRODUCTION The banking industry in a country is the lifelines of the economy and plays an influential role in initiating and supporting economic growth. Increasing emphasis on globalization of the Indian economy has opened up a new avenues and challenges for Indian banks. Financial sector reforms and liberalization of prudential regulation have thrown in a lot of opportunities for Indian bank to grow and diversify their areas of business operation. The tempo of development for the Indian banking industry has been remarkable over the past decade. It is evident from the higher pace of credit expansion; expanding profitability and productivity similar to banks in developed markets, lower incidence of non- performing assets and focus on financial inclusion have contributed to making Indian banking vibrant and strong. Indian banks have begun to revise their growth approach and re-evaluate the prospects on hand to keep the economy rolling. In this paper an attempt has been made to review various challenges which are likely to be faced by banking industry. Banking industry is the back bone for growth of any economy. The journey of Indian Banking Industry has faced many waves of economic crisis. Recently, we have seen the economic crisis of US in 2008-09 and now the European crisis. The general scenario of the world economy is very critical. It is the banking rules and regulation framework of India which has prevented it from the world economic crisis. In order to understand the challenges and opportunities of Indian Banking Industry, first of all, we need to understand the structure of Indian Banking Industry. The banks play a stellar role in the development of the nation with its high social content and commitment. The banks act as a development agency and are the source of hope and aspirations of the masses. Banking and finance is like oxygen to any democracy. The structure of the banking system is determined by two basic factors – economic and legal. The development of the economy and the spread of banking habit call for increasing banking services. The demand for these banking services affects the banks‟ structure and organization...
OBJECTIVE The objective of this paper is to explain Indian banking sector and challenges faced by the banking sector METHODOLOGY This paper is the outcome of a secondary data on banking sector with special reference to Indian context. To complete these annual reports, various books, journals and periodicals have been consulted, several reports on this particular area have been considered and web search has also been done. REVIEW OF LITERATURE RBI (2001) with the popularity of PCs easy access to internet www banks increasingly use internet as a channel for receiving instructions and delivering their products and services to their customers. This form of banking generally referred to as internet banking, although the range of products and services to their customers. this form of banking generally referred to as internet banking, although the range of products and services offered by banks very widely both in their content and sophistication. AVASTHI& SHARMA (2000) have analyzed in their study that advances in technology are set to change the face of banking business. Technology has transformed the delivery channels by banks in retail banking.it has also impacted the markets of banks. The study also explored the challenges that banking industry and its regulator face. B janki (2002) analyzed that how technology is affecting the employee‘s productivity .there is no doubt in India particularly public sector banks will need to use technology to improve operating efficiency and customer services. The focus on technology will increase like never before to add value to customer services, develop new products, strengthen risk management. HISTORICAL BACKGROUND Bank's act 1876 i.e. Bank of Calcutta, Bank of Bombay and Bank of Madras were set up, which laid foundation for modern banking in India. In 1921, all presidency banks were amalgamated to form the Imperial Bank of India. Imperial bank carried out limited number of central banking functions prior to establishment of RBI. It engaged in all types of commercial banking business except dealing in foreign exchange. Reserve Bank of India Act was passed
in 1934 & Reserve Bank of India (RBI) was constituted as an apex body without major government ownership. Banking Regulations Act was passed in 1949. This regulation brought RBI under government control. Under the act, RBI got wide ranging powers for supervision & control of banks. The Act also vested licensing powers & the authority to conduct inspections in RBI. In 1955, RBI acquired control of the Imperial Bank of India, which was renamed as State Bank of India. In 1959, SBI took over control of eight private banks floated in the erstwhile princely states, making them as its 100% subsidiaries. It was 1960, when RBI was empowered to force compulsory merger of weak banks with the strong ones. It significantly reduced the total number of banks from 566 in 1951 to 85 in 1969. In July 1969, government nationalized 14 banks having deposits of Rs. 50 crores & above. In 1980, government acquired 6 more banks with deposits of more than Rs.200 crores. Nationalisation of banks was to make them play the role of catalytic agents for economic growth. The Narasimha Committee report suggested wide ranging reforms for the banking sector in 1992 to introduce internationally accepted banking practices. The amendment of Banking Regulation Act in 1993 saw the entry of new private sector banks. A bank is a financial institution that provides banking and other financial services to their customers. Banking Industry in India functions under the sunshade of Reserve Bank of India the regulatory, central bank. Banking Industry mainly consists of Commercial Banks and Co-operative Banks The commercial banking structure in India consists of: Scheduled Commercial Banks, Unscheduled Bank. Scheduled commercial Banks constitute those banks which have been included in the Second Schedule of Reserve Bank of India (RBI) Act, 1934. RBI in turn includes only those banks in this schedule which satisfy the criteria laid down vide Section 42 (60) of the Act. Some co-operative banks are scheduled commercial banks although not all co-operative banks are. Being a part of the second schedule confers some benefits to the bank in terms of access to accommodation by RBI during the times of liquidity constraints. At the same time, however, this status also subjects the bank to certain conditions and obligation towards the reserve regulations of RBI. For the purpose of assessment of performance of banks, the Reserve Bank of India categories them as public sector banks, old private sector banks, new private sector banks and foreign
MAJOR CHALLENGES OF INDIAN BANKS Risk management and Financial Consumer Protection: The emerging area globally is the protection of the customers. During the scams and financial crisis, the customer class is affected the most and worst hit in the crisis. There are many discriminatory information issues, lack of transparency in transactions and extra charges with hidden information Product innovations have not focused on customer requirements and have, instead, aimed at serving the interests of the service provider. Financial Inclusion: The extent of financial inclusion in the Indian financial system continues to be low despite several steps having been taken by the Government and the Reserve Bank of India. Financial inclusion has become a necessity in today‘s business environment. In financial inclusion there is no ―one-size-fits-all‖ approach. But the banks must recognize three important prerequisites for maximising the benefits of financial inclusion efforts. One is the holistic approach to provision of financial services, not just credit or deposit alone. Next is Meeting the needs of small firms and to focus on segments of population excluded by gender or geographical remoteness. The unbanked masses constitute a unique but important stakeholder group for banks, even though they may not be bank customers. This is a huge business opportunity for banks to meet the expectations of this group through financial inclusion efforts. Financial institutions have to keep a check of various perspectives like environmental concerns, corporate governance, social and ethical issues while introducing any product. Poor people in the country should be given proper attention to improve their economic condition. Several initiatives have been done by RBI to achieve greater financial inclusion over a period of time. Revolution of Information Technology: Banks must focus on leveraging technology to build new business models and delivery channels that are tailored to the needs of the targeted population. With the help of technology it is possible to increase the financial inclusion efforts, provided it is implemented in a planned manner. But the increasing complexity, flexibility, and difficulty of product and servicing offerings makes the effective use of technology critical for handling the risks linked with the business. Managing technology is, therefore, a key challenge for the Indian banking sector. Developing or acquiring the right technology, deploying it optimally, and then
leveraging it to the maximum extent is essential to achieve and maintain high service and efficiency standards while remaining cost-effective and delivering sustainable returns to shareholders. Banks may have to go for mobile banking services for a cluster of villages. Alternatively, technological institutions have to come out with low-cost, self-service solutions/ ATMs. The government and the RBI should actively support such research efforts. To face competition it is necessary for banks to absorb the technology and upgrade their services. Rigorous Competition: Globalization effect resulted in the forceful competition for the domestic banks. As the foreign banks opened their branches or subsidiaries in India, it becomes a major challenge for Indian banks to survive with international standards. RBI regulations have kept the banking industry open for foreign and private banks over a period of time. Due to lower entry barriers by the authorities, many players like private banks, foreign banks and non-banking finance companies etc. entered the banking sector. Entry of foreign banks and new private sector banks has started the high technology revolution. Therefore, banks have to follow the prompt and efficient customer service for survival and growth in highly competitive environment, which calls for suitable customer centric policies and customer friendly processes. Employees‟ Retention: Due to high competition in banking industry, revenue is on top priority for banks. Banking industry has transformed from transactional and customer service-oriented to an increasingly aggressive environment. But banking employees are often resistant to perform up to new expectations. Customer centric banking industry fails to retain valuable employees can mean the loss of valuable customer relationships. Employees are becoming disappointed because of frequent changes in the system. Their diminishing morale results in less revenue. Banking industry is anxious about employee retention from all levels, tellers to executives to customer service representatives because competition is always moving in to hire them away. Social and Ethical Aspects: Banking industry undertakes the responsibility of social and ethical aspects. But in practical this is a biggest challenge for banks to consider these aspects in their working.
Along with profit maximization, banks have to support the organizations which have social and ethical concerns. Security/ Cyber threats: In our new digital India, with the growing penetration of computers and smartphones, and increasing access to the internet, Indians are taking to digital channels for their banking needs. Due to which, cybercrime is becoming a greater threat. The RBI classifies frauds as transactions involving any cheating, negligence, misappropriation of funds, or forged documents. ―Not only simple attacks using phishing, vishing and social engineering, but also increasingly audacious attacks by organised gangs with or without backing by state players have come to light,‖ the RBI said. Authorities recommended that banking industry should invest in defensive software and regularly measure the risks at hand, not just for internal processes but also for the outside vendors that the lenders employ. Bank Fraud: Banking regulators are also concerned with the increased number of fraudulent transactions in banks. And banks are often seen unwilling to report these cases. All corporate loan-related fraud cases get seasoned for two to three years as NPAs before they are reported as fraud,‖ the RBI said in the report. In the last five years, the volume of bank fraud has increased by 19.6% to 5,064 cases. New payment and finance banks: More and more new payments banks and small finance banks are launching their operations. Specific segment is being catered by these banks. In future these banks will increase their share. And when we talk about banks return on investments, they are not making enough profits. Their shareholders expectations are not met when it comes to return on investment or return on equity. Rural Coverage Indian local banks specially state bank groups having a good coverage and many branches in rural areas. But that is quite lacking technical enhancement. The services available at cities are specifically not available to rural branches, which are necessary if banks want to compete now a day.
Transparency and Disclosures In order to bring about meaningful disclosure of the true financial position of banks to enable the users of financial statements to study and have a meaningful comparison of their positions, a series of measures were initiated by RBI. It covered a No. of aspects such as capital adequacy, asset quality, profitability, country risk exposure, risk exposures in derivatives, segment reporting and related party disclosures etc. With a view to moving closer towards international best practices and International Accounting Standards and the disclosure need under pillar 3 of Basel II, RBI has proposed enhanced disclosures of certain qualitative aspects. Banks are required to formulate a formal disclosure policy that addresses the banks‘ approach for determining what disclosures it will make and the internal controls over the disclosure process. CONCLUSION In the digital age, banks need to be careful while handing the contemporary issues. Banks should go for transparent and non-discriminatory pricing of assets. It must be ensured that poor do not subsidize the provision of banking services to the rich. The risk-return tradeoff involved in various operations must be analysed. We usually say that higher the risk more is the return you will get. But banks must study the systematic and unsystematic risk so that they can take only that risk which is under their control and are in alignment with the banks and customer long term gains. And while maintaining relationship with customers and resolving their problems banks can use technology like interactive video ATMs for distributing costs among branches. And providing access to specialists via video conferencing is another way to bring specific skill sets into branches. The business operations of banks should be customer-centric in nature. This should be reflected in all aspects of banking operations including creation of customized products and services, pricing of services, delivery channels, etc. Banks should, inherently, be flexible in their operations so that they have the ability to meet the evolving stakeholder expectations. The culture of efficient risk management needs to be imbibed in the organization‘s ethos so that everyone from the top management to frontline managers in the field shares a common vision of risk management. Banks are the lifeline of any economy and it is the collective responsibility of all of us to ensure that we have a strong, resilient and inclusive banking system geared up to face all domestic and global challenges. In this complex and fast changing environment, the only
sustainable competitive advantage is to give the customer an optimum blend of technology and traditional service. SUGGESTION As per the above discussion we can say that the biggest challenge for banking industry is to serve the mass market of India. Companies have shifted their focus from product to customer. the better we understand our customers ,the more successful we will be in meeting their needs .in order to mitigate above mentioned challenges Indian banks must cut their cost of their services .another aspect to encounter the challenges is product differentiation. Apart from traditional banking services, Indian banks must adopt some product innovation so that they can compete. Technology up gradation is an inevitable aspect to face challenges. Expansion of branch size in order to increase market share is another tool to combat competitors, therefore Indian nationalized and private sector banks must spread their wings towards global market as some of them have already have done it. Indian banks are trustworthy brands in Indian market; therefore these banks must utilize their brand equity as it is a valuable asset for them. REFERENCES and BIBLIOGRAPHY Goyal, K. A. and Joshi, V. (2012) ―A Study of Social and Ethical Issues in Major announcements in the Union Budget 2012–13 for the Banking Sector. Avasthi G P M (2000 - 01), ―Information Technology in Banking: Challenges for Regulators‖, Prajnan, Vol. XXIX,No. 4, pp. 3 – 17 www E-journals.com
INDIAN BANKING SECTOR: CHALLENGES AND OPPORTUNITIES *Dr. Bincy Baby, Assistant Professor, Department of Commerce, St.Peter‘s College, Kolenchery **Minnu Meria Joy, Assistant Professor, Department of Commerce, St.Peter‘s College, Kolenchery
Introduction The banking sector in India has made quick strides in restructuring and aligning itself to the changing business environment.
In the recent time we have witnessed that the world
economy is facing some tortuous circumstances like bankruptcy of banking and financial institution, debt crisis in major economies of the world and euro zone crisis. The scenario has become skeptical causing recession of major economies like US and Europe .This constitute some serious questions about the growth and maintaining the sustainable development. Union minister Nitin Gadkari said‖ Banking sector is facing a lot of challenges and problems .In this time financing with transparency and return on that finance has certainly become a big examination for banks‖. However, amidst of this entire crisis Indian banking industry was among the few to maintain its endurance. The growth of banking industry has been astounding over the past decade .It is indisputable from the higher pace of credit expansion and expanding productivity similar to banks in developed markets, lower incidence of non - performing assets and focus on financial inclusion which have contributed in making Indian banking sector strong and vibrant. Indian banks have begun to revise their growth approach and re-evaluate the prospects on hand to keep the economy riding. The Indian banking sector is faced with multiple and concurrent challenges such as increased competition, rising expectation, and diminishing customer loyalty. Thus banking industry is changing at a phenomenal speed. Objective of the Study: The objective of this paper is to explain the challenges and opportunities of national and commercial banks in changing banking scenario. Importance and need of the study Before the establishment of banks, financial activities were handled by money lenders and individuals. At that time the interest rates were very high and there were no security of public
savings and no uniformity regarding loans. The organized banking sector works within the financial system to provide loans, accept deposits and provide other services to their customers. Organized banks provide security to the savings of customers and they are controlling the supply of money and credit. Now banks are seriously facing challenges in the new regulations formed by the Authorities, sluggish economy etc., and at the same banks have lot of opportunities to develop. At this juncture this study is more relevant. Methodology This paper is the outcome of a secondary data on Indian banking sector with special reference to Indian context. To complete this, annual reports, web sites, journals, magazines, articles, news paper and media reports etc. have been considered Challenges of Indian Banking Sector
Rising expectation Today‘s consumer is smarter and more informed than previous times and they expect a high degree of personalization and convenience out of their banking experience. New generation of customers in banking have more innate understanding of technology which results in an increased expectation of digitized experiences. Consumers want the best no matter who provides it. They want apps with a better UX and 24/7 access and frictionless service. Consumers are willing to test and find the right services. From all the ways expectations are changing, there is one crystal clear message to bank, startup or fintech wanting to attract customers and to keep them.
Losses in rural branches Most of the rural branches are running at a loss because of high overheads and prevalence of the barter system. Government policies have played a part in making the rural banking business less profitable, especially for the private banks. Private banks are facing difficulties to extend credit to farmers when public sector banks can offer loans at very less percentage than private banks. Credit policies of the public sector banks also make hindrance among the private banks rural development.
Non-Performing Assets Now-days, banks are whimpering with the burden of non-performing assets. High volumes of nonperforming asset in banks have eroded their capital base and restricted
their ability to lend. The causes of NPA‘s are usually attributed to the lack of effective monitoring and supervision on the part of banks, lack of effective lenders recourse, and weakness of legal infrastructure and lack of effective debt recovery strategies. It is truly felt that these debts, if not recovered, will eat into the very vitals of banks. Commercial banks at present do not have any mechanism to ensure that their loans and advances are, in fact, going into productive use in the larger public interest. Lending excessively to big corporate without proper credit rating also made the situation worse. Most of them are also unable to maintain capital adequacy ratio. SBI chairman Rajnish Kumar said that Indian banks are now on the top of the situation on the problem of nonperforming assets. The gross percentage of NPA in Indian public sector banks accounts for 90% of total NPA while private sector accounts for remaining 10%.
Advance to priority sector As far as advances to the priority sectors are concerned, the progress has been slow. This is partly attributable to the fact that the bank officials from top to bottom could not accept nationalization gracefully, namely, diversion of a certain portion of resources to the top priority. This is also attributable to the poor and unsatisfactory loan recovery rates from the agricultural and small sectors. Banks struggle to meet PSLC‘s target fixed by RBI.
Competition from Non-Banking financial institution As far as deposit mobilization is concerned, commercial banks have been facing stiff challenges from non-banking financial intermediaries such as mutual funds, housing finance corporations, leasing and investment companies. All these institutions compete closely with commercial banks in attracting public deposits and offer higher rates of interest than are paid by commercial banks.
Entry of foreign banks The Reserve Bank and Indian government kept banking industry unbolted for the participants of foreign banks. The foreign banks were allowed to set up branches in India. The present era of competition has witnessed various multinational banks like American bank, Hong Kong bank, City bank, etc., These banks have set the tone and to an extent
also the standard for technological improvement with product innovation. Foreign and smaller private sector banks have registered higher increase in deposits. One reason seems to be that non-nationalized banks offer better customer service. This creates the impression that a diversion of deposits from the nationalized banks to other banks has probably taken place. After 2009 the local subsidiary of foreign banks will be treated at domestic banks though they will have to sell at least 26% of there equity to Indian public. Average size of the Indian bank is niggardly low in comparison to any foreign banks. The major question before the Indian commercial banks, therefore, is to acquire competitive size.
Competition from new banks and private sector banks
The new banks have set the tone and to an extent also the standard for technological improvements with product innovations, which dominated the traditional PSBs. So, these banks have to run in a market which has no geographical barriers and will have to develop abilities of product innovations well as delivery comparable to the best in the world. Currently private sector market share is 30 percent. Private sector banks could take as much as 60 percent of market share over the next 10 years (sukumar Rajah MD of Franklin Templeton).
Slow down economy India‘s financial sector may be in deep distress, but leading banks are budgeting for 7 per cent GDP growth over the next five years to lift the economy to $4trillion mark by 2024. US-China trade war and rise in oil prices remain key risks to the growth momentum. The public sector lender believes global economy growth may decelerate to around 3 per cent in 2019. Economist at SBI, Nomura Holdings and capital Economics Ltd. lowered their growth forecasts for the quarter ended September to between 4.2% to 4.7%.
Gap between progress and performance One major weakness of the nationalized banking system in India is its failure to sustain the desired credit pattern and fill in credit gaps in different sector. Even though there has been a re-orientation of bank objectives, the bank staff has remained virtually static and the bank procedures and practices have continued to remain old and outmoded. The
post nationalization period has seen a widening gap between promise and performance. The main reason seems to be the failure of the bank staff to appreciate the new work philosophy and new social objectives.
Political pressures Nationalized banks often face lots of difficulties due to various political pressures. Such pressures are created in the selection of personnel and grant of loans to particular parties without considering their creditworthiness. Above 10% of Central Banks reportedly face political pressure in an average year.
Opportunities of Indian banking Industry
Indian Consumer The biggest opportunity for the Indian banking industry is the Indian consumer. Demographic shift in terms of income levels and cultural shift in terms of life style aspirations are changing. This will be a key driver of economic growth going forward. The Indian consumer now seeks to fulfill the lifestyle aspirations at a younger age with an optimal combination of equity and debt to finance consumption and asset creation. Consumer represents a market for a wide range of products and services.
Revolution of Information Technology The banking industry has implemented IT for improving different areas like customer services and CRM, managing its operation, house -keeping, monitoring and controlling risk management, managing its human resource etc. The transformation in banking services is providing various advantages to customers with anytime, anywhere access to their accounts as well as power to operate their accounts. Efficient use of technology has facilitated accurate and timely management of the increased transaction volumes of banks which comes with larger customer base.
Growing economy Bloomberg Economics says the Indian economy will start recovering soon, and in the next year, India would see a rise in rural incomes. India‘s economy could take a sharp upturn to 7.1 percent in FY 2021 from 5.7 per cent in FY 2020. India is one of the top 10 economies in the world. The banking sector has tremendous potential to grow. India‘s banking sector is currently valued at Rs. 81 trillion. The economic growth has
been driven by the expansion of the services that have been growing consistently faster than other sectors. World Biggest Economies for 2019 and 2020
Country USA
Rank
1
China
Japan
Germany
UK
India
France
Italy
Brazil
Canada
2
3
4
5
6
7
8
9
10
Source: www.focus-economics.com
Banking deregulation Reduction in banking regulation brings major changes in banking industry. It gives the banking industry more self authority.
Increased client borrowing Reserve Bank of India has raised the micro loan limits to ensure higher flow of funds to the economically weaker section as their role in the economy has grown over the years with the government‘s inclusive agenda. This will allow clients to avail a higher loan amount from RBI regulated formal financial institutions. (Manoj Nambiar, Chairperson Micro finance institution)
An increase in the number of banks The financial and economic conditions in the country are far superior to any other country in the world. Indian banking industry has recently witnessed the roll out of innovative banking models like payment and small finance banks. RBI‘s new measures helps to the restructuring the domestic banking industry. As of September 2018, the Government of India launched India Post Payments Bank and opened branches across 650 districts to achieve the objective of financial inclusion.
Increased money supply By increasing the amount of money in the economy, the central bank encourages private consumption. Increasing the money supply also decreases the interest rate,
which encourages lending and investment. The increase in consumption and investment leads to a higher aggregate demand. Suggestions Banking companies should bring policies to become customer centric than product centric. To mitigate the facing challenges, Indian banks must cut their cost of their services Banks must adopt product differentiation. Indian banks must adopt product innovation to compete. Conclusion The banking industry is undergoing a radical shift by new competition from Fintech, changing business models, mounting regulation and compliance pressures and disruptive technologies. Post liberalization era has witnessed environment changes which are directly affects the problems and challenges in banking sector. This article discusses the various challenges and opportunities. The Indian banks should take different policies to upgrade themselves so as to compete and survive in the market. To mitigate the challenges of Indian banks, they have to cut their cost of their services and apart from traditional banking services, Indian banks must bring product differentiation and innovation. Bibliography Alpesh shah et.al,Indian Banking 2020: Making the Decade‘s Promise Come True, www.beg.com, www.ficci-banking.com, www.iba.org.in Cellasamy , P (2010) ― Modern banking management‖, Himalaya Publishing House. Javed Iqbal and FirdousQazi, ―challenges and opportunities in Indian banking sector‖, IJBMI, ISSN (online) :2319-8028, ISSN :2319-801X Dev, S.M.‖Finacil Inclusion: Issues and Challenges‖, Economic and Political Weekly. Manoj Kumar,‖ Banking Sector Reforms in India‖, International Research Journal of Commerce
Ratna Manikyam K., ―Indian Banking Sector-Challenges and Opportunities‖, IOSR Jounral of Business and Management, ISSN:2319-7668, Vol 16, Issue2. www.ibef.org http://www.banknetindia.com eee.google.com www.ijbmi.org http://en.wikipedia.org
THE MEGA BANK MERGERS: WHAT MATTERS MOST? *Smarty P. Mukundan , Faculty, State Bank Institute of Leadership (SBIL), Kolkata. **Delma Thaliyan, Assistant Professor, FISAT Business School, Hormis Nagar, Angamaly, Ernakulam Abstract The mega merger plan of the finance ministry to consolidate 10 public sector banks into four large entities for revival and boosting the economy has come with mixed reactions. While there has been an assurance from the ministry that there will be no HR issues in the process of merger, it has lot of challenges. If done a reality check, world over, there is evidence that amalgamations, mergers and takeovers have a great impact on manpower. At present the basis on which banks have been merged is primarily based on their IT compatibility, customer reach and competitiveness, there remains a greater challenge in integrating the HR issues. Though the top executives of all the merging banks have assured that there wouldn’t be any layoffs or retrenchment, allaying the fear and anxiety of the employees remains a pressing issue for all these banks. Extension of benefits to the employees, manpower deployment in the name of branch rationalisation, promotion opportunities of employees especially at the middle and senior levels, recruitment policies at entry level, cultural fit of the organisations are some of the problems which the authors perceive. While the above are only the tip of the iceberg, the boards and the top management have a bigger role in boosting the employee confidence, act as change agent and role model positive change as a merged entity. Human resource integration needs to be handled at various levels, for which a full-fledged action plan before and post-merger needs to be worked out for a smooth transition. The paper discusses some of the impending challenges that merging banks are likely to face and some of the priority areas to be focused for a seamless integration of the merging banks to deliver the desired results of what the finance ministry has originally envisaged. Keywords: Mergers, Bank, HR challenges, Culture Issues, HR priorities.
Introduction Merger and acquisitions have always been considered as a major strategic initiative in the Indian banking industry for larger size, increased market share, faster growth and to reap the benefits of economies of scale in operations. The M&A in financial sector in India has largely been driven by the objective of leveraging the synergies that arise out the consolidation process (Goyal & Joshi 2012). If we look at the history of merger of Banks in India there has been quite a few mergers that has helped the business to grow manifold. The merger of New Bank of India with Punjab National Bank is one of the first merger between nationalised banks and is considered to be a successful one which paved the way later on, for further mergers. In 2017, the State Bank of India absorbed five of its associates; State Bank of
Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala, State Bank of Travancore and the Bharatiya Mahila Bank which can be considered as one the largest merger in the history of banking Industry making it enter the league of top 50 global banks. In 2018, Vijaya Bank and Dena Bank was merged with Bank of Baroda and became effective from April 1, 2019. On 30th August 2019, Finance Minister Nirmala Sitharaman announced the megamerger of banks reducing the number of public sector banks (PSB‘s) from 27 to 12 after the consolidation process. 10 public sector banks are to be merged into four. Under the scheme of amalgamation, Indian Bank will be merged with Allahabad Bank (anchor bank - Indian Bank); PNB, OBC and United Bank to be merged (PNB will be the anchor bank); Union Bank of India, Andhra Bank and Corporation Bank to be merged (anchor bank - Union Bank of India); and Canara Bank and Syndicate Bank to be merged (anchor bank - Canara Bank). Post the mega merger, PSU banks that will remain independent are Indian Overseas Bank, Uco Bank, Bank of Maharashtra, Punjab and Sind Bank, Bank of India and Central Bank of India (See Figure 1). The objective behind such an initiative is to revive the banks with capital infusion and giving a boost to the economy and ensure good governance. With the proposed merger PSBs will have an enhanced capacity to credit, greater risk appetite with a wider national presence and global outreach too. At the operational and financial level, mergers may sound good reaping the synergies, but they also pose huge challenges at the HR level and cultural level which also needs a clear due diligent integration strategy.
Source : Modi govt's mega bank merger drive: Now there will be only 12 PSU banks, India Today Web Desk, August 30, 2019. Retrieved on Dec 2, 2019 from https://www.indiatoday.in/business/story/nirmala-sitharaman-psu-bank-mergerpnb-obc-canara-allahabad-syndicate-bank-1593544-2019-08-30
The Employee Concerns Merger can bring in value deals, but the goal of such merger can be derailed if the employee concerns are not addressed. Merger often leave employees anxious, unsupported and unsure about what lie in store for them and therefore the employee concerns and cultural issue need to be a priority agenda. Presently, the government has come up with the merger plan based on the IT symmetries and not on any other parameters. Asymmetries are likely to occur due to this and hence the employees do have their own anxieties on how manpower would be deployed. For instance in the case of PNB-OBC UBI merger the anchor bank do not have much presence in the north and north eastern part of the county which can be covered by UBI and utilise the geographic synergies, but there exists an overlap of operations for PNB & OBC in other parts of the country which may need a massive rationalisation of branches. (Ray, 2019). Also, while there exist synergies in terms of location which can be cashed upon the cultural alignment also needs to be investigated. Yet another apprehension is looking at the modalities of relocating the headquarters of the merged entity; for example Union Bank of India and the merging banks like Corporation Bank and Andhra Bank has its headquarters at Mumbai, Bengaluru and Hyderabad respectively making the integration process extremely cumbersome (Mishra, 2019). Post-merger, it is likely that there will be duplication of many
roles in several departments and the merged entities will have to deal with the HR cost and reorganization of roles to avoid duplication. Being PSB‘s the chances of attrition may be less, but there could be a perceived lack of career opportunities in the minds of the employees (Acharya & Lele, 2019; Mishra, 2019). If we examine the previous episodes of mergers that have occurred, there could be multiple heads for different verticals like risk, stressed assets, credit, operations etc and there is a good chance that in the name of rationalisation many employees may lose their seniority. Several functions like cash management, treasury and corporate lending are consolidated mostly at the anchor level banks which calls for retraining and redeployment of employees for the merging banks. Furthermore, the present merger plan is based on common IT platforms and to synchronise the reports and MIS requirements as per the anchor banks requirement it will take at least 12-18 months wherein training the employees on the newer versions of the merging entities is imminent (Mishra, 2019; Adhikari, 2019; Ravi, 2019). Reports say that recruitment at the entry level was very cosmetic during the time of previous mergers of PSB‘s (Nair, 2019). And now in the wake of ten PSB‘s merging to three big entities it will have its implications on the hiring at the entry levels too. A megamerger of this scale will definitely witness the closure of many branches and in the name of the branch and zonal office rationalisation several employees would be displaced and the only option that they will be left with would be either to relocate or disassociate themselves. To allay the fear of any discrimination, the top management have already announced that the HR integration would be done through an automated software but still the implementation remains a major challenge for the merging entities (Acharya, 2019). Though the government has assured there would be no retrenchment at any level due to the merger exercise, preceding mergers in the public sector banking space had offered the employees the option of voluntary retirement schemes (VRS) which is an option to disassociate from the organisation and hence the fear may be present in the minds of the employees. If these concerns are not managed well within the employees, it may lead to suboptimal outcomes which will adversely affect the performance of the merged entity (Mathur, 2019; Krishanmurthy, 2017). The various PSB‘s being merged have different welfare schemes, allowances and different categorisation of posts and therefore needs to be assuaged as these may be a cause of great anxiety amongst the employees in the present circumstances (Nair, 2019; Mishra, 2019).
To summarise, some of the major concerns of the employees like parity in extension of benefits and compensation packages to the employees, manpower deployment in the name of branch rationalisation, promotion opportunities of employees especially at the middle and senior levels, recruitment policies at entry level and retraining of the employees need to handled in a sensitive manner so that it appeals to the employees. Culture Issues in Mergers In any merger process, if we look at the economic or financial perspective mergers often looks perfect, but the reality is that mergers are not between organisations but between humans; their shared values and individual personalities in the organisations. Every organisation will have its unique culture in terms of shared values, norms and practices which has evolved over a period and followed by the employees and guided by the leaders. An introspection as to the pros and cons of merging two or more cultures, their effects on the structure, their decision-making styles and way of working may harm or slow down the trajectory of growth. According to studies culture is responsible for close to 30% of failed mergers (Fuchs, Joseph, Hansfield, Seleya, Usden, 2017) . Culture is powerful and implicit and mostly seen from the leadership styles ( dictatorial to participative); when decision making is done ( consultative or consensus or democratic ); change readiness (willingness vs unwillingness to change and take risks); in the way people work together (Individual or group efforts) ; in the way people view success (Individual or team ) etc and therefore is felt only when done (Fuchs, Joseph, Hansfield, Seleya , Usden, 2017; Summerfield, 2019) . While the primary objective of the mega merger of the banks are to grow big and reap economies of scale, there is a good chance that tensions, and clashes will occur if a cultural compatibility is not assessed before the merger (Gelfand, Gordon, Li, Choi, & Prokopowicz, 2018). So, if the organisational culture integration is not attended well, the very popular quote of Peter Drucker that ‗culture eats strategy for breakfast‟ may perhaps hold good! It is said that 40-80% of the mergers fails to meet their objectives because of poor execution (Dunbar, 2014). The most cited reason for this is a lack of collective leadership to drive the transition. According to successful practitioners‘ leadership at the time of integration is imperative and is one of the critical skills. Leadership at the top to strategize and in the middle level to execute becomes vital in the integration process. They need to play multiple roles of a strategist, cheerleader, counsellor and executioner and engage the employees in the whole process.
Change initiatives suggested Having discussed the various HR and culture issue that are perceived and may arise postmerger certain priority areas are discussed for a seamless merger of the banks. While one of the major fears of retrenchment of workforce the employees had in their minds has been addressed by the top management of the anchor banks by promising that there will be no retrenchment of staff, there are several intangibles that need to be dovetailed into the integration strategy for a smooth transition.
Working committees has been formed by the banks to discuss issues of integration, but it is suggested that such committees may be formed across the merging banks. A steering committee that comprise of top officials from across the banks may be formed and entrusted to oversee and implement the merger process. The idea of hiring external consultants are there in the cards, but it would be ideal if an internal committee also is involved in the implementation of the integration.
Adopt the best practices of welfare schemes, compensation packages etc of the merging entities and implement them uniformly with no discrimination.
The first hundred days are often said to be crucial for any kind of merger process to be effective. The reports of some of the top consulting firms like Wills tower Watson and Deloitte reveals that an effective and open employee communication has been the topmost priority of almost all the successful merger activities compared to the less successful ones. Generally, in the absence of facts, people feel like filling the blanks, therefore being transparent always help. Engage the employees and explain the need for adopting new norms and practices in the wake of a merger. An open communication that gains acceptance of the proposed changes will help in alleviating the perceived threat the employees may feel. Bringing in people for a purposeful dialogue, by asking questions, giving a platform to share their anxieties and discuss the realities of integration etc will go a long way in getting the people ready for the change process.
It is important to know the culture of the anchor banks as well as the merging banks. A culture assessment before merger will help to gauge the differences and chalk out the necessary interventions. The PSB‘s who are getting merged may negotiate culture by identifying those processes and practices where employees may fit in and may not.
Encourage the employees to come out of their comfort zones and be ready for change by means of purposeful dialogues.
Leaders should be given training on how to be sensitive to the employee concerns and adopt resonant leadership styles. Leaders who have a good rapport with employees may be exclusively handpicked during the transition process to make the process much easier. They should be following more of an affiliative or coaching style of leadership where the employees feel that they are valued, fulfilled and connected.
Training leaders on certain critical skills of how to coach, providing feedback and helping employees to get meaningful work needs to be done. Bringing in top executives of merging entities together at one single platform and giving them a change leadership training or culture sensitivity training will also help to unfreeze the mindset of the leaders and be ready to drive the change. External leadership coaches or institutes may be roped in for this purpose.
Conclusion The objective of having mergers of PSB‘s is to strengthen regional focus and national presence and thereby boost the economy. To ensure that the goal is not derailed in the process of merger a range of factors from a people perspective needs to be considered. The people anxieties and culture challenges being a crucial element, it demands for the same rigour and planning as it is for the financial and operational integration in mergers. A perfect alignment of strategy, organisational culture, leadership efforts and an open honest communication can make a merger successful. References 1. Goyal, K. A., & Joshi, V. (2012). Merger and acquisition in banking industry: A case study of ICICI Bank Ltd. International Journal of Research in Management, 2(2), 30-40. 2. Acharya N., Lele A (2019) Banks form GM-level teams for merger ease, may hire advisory firms. Business Standard. Sept. Retrieved on Oct 5 2019 https://www.businessstandard.com/article/finance/banks-form-gm-level-teams-for-merger-ease-may-hire-advisory-firms119090500066_1.html 3. Adhikari A (2019). BT Buzz: Chequered past of bank mergers - where they fail, and succeed. Business Today. Retrieved on oct 12 ,2019 https://www.businesstoday.in/sectors/banks/bt-buzz-have-bankingmergers-in-the-past-really-paid-off/story/378325.html 4. Dunbar, J. K. (2014). The leaders who make M&A work. Harvard Business Review, 92(9), 28. 5. Gelfand, M., Gordon, S., Li, C., Choi, V., & Prokopowicz, P. (2018). One reason mergers fail: the two cultures aren‘t compatible. 6. Mathur R. (2019). Solving the ‗people‘ challenge of the mega merger. People Matters. Retrieved on Nov 21,2019. https://www.peoplematters.in/article/guest-article/solving-the-people-challenge-of-themega-merger-24003
7. Mishra R.(2019). The human impact of big-bang bank mergers, Business Line. Retrieved on oct 12 ,2019 https://www.thehindubusinessline.com/specials/people-at-work/the-human-impact-of-big-bangbank-mergers/article29511500.ece 8. Nair V., (2019) PSU Bank Mergers: What Consolidation Means For Lakhs Of Employees, Bloomberg Quint, Retrieved on Nov 9, 2019 : https://www.bloombergquint.com/business/psu-bank-mergerswhat-consolidation-means-for-lakhs-of-employees 9. R. Krishnamurthy (2017). Public Sector Mergers : A Reality Check. Economic and Politic Weekly. 52 (22). July 10. Ravi S. (2019) Bringing human resources to forefront of Bank mergers. Deccan Herald. Retrieved on Dec 12, 2019. https://www.deccanherald.com/opinion/panorama/bringing-human-resources-toforefront-of-bank-mergers-787902.html 11. Fuchs M.,Joseph T., Hansfield C., Seleya T., Usden M., (2017). Driving M&A value through HR Integration: Getting it Right. Deloiite Report. 12. Summerfield R., (2019). Cultural Issues in M&A.Financial World Magazine. Retrieved online on Nov 28, 2019. https://www.financierworldwide.com/cultural-issues-in-ma#.Xg7KCUczbIU. 13. Nirmala Sitharaman announces big reforms for Public Sector Banks. Economic Times Online, August 30 2019. Retrieved on Nov 21,2019, https://economictimes.indiatimes.com/news/economy/policy/nirmala-sitharaman-announces-freshreforms-special-agencies-to-monitor-loans-above-rs-250-crore-to-avert-another-nirav-modi-likesituation/articleshow/70909169.cms
A study on the perception of customers towards merger of SBI and its associates with special reference to Kottayam Town Ruth Maria Joy (M. Phil Student, SMBS, MGU) Sarina Thomas (M. Phil Student, SMBS, MGU)
ABSTRACT In June 2016, the Indian government approved the merger of six banks with the State Bank of India (SBI), the largest bank in India. The banks to be merged were State Bank of Bikaner and Jaipur (SBBJ), State Bank of Travancore (SBT), State Bank of Mysore (SBM), State Bank of Patiala (SBP), State Bank of Hyderabad (SBH) and Bharatiya Mahila Bank (BMB). Merger is defined as the combination of one or more corporations, LLCs, or other business entities into a single business entity; the joining of two or more companies to achieve greater efficiencies of scale and productivity. This study throws light on the perception of customers towards the merger of SBI and its associates with special reference to Kottayam town. The primary objective is (i) To assess the perception of customers towards merger of SBI and its associates. The secondary objectives being (ii) To make a comparison of opinion towards pre and post-merger of SBI (iii) To determine the major challenges in merger of SBI among customers. Keywords: Merger, associate banks, customers‟ perception 1. INTRODUCTION The State Bank of India, the country‘s oldest bank and a premier in terms of balance sheet size, number of branches, market capitalization and profits has gone through a momentous phase of change and transformation. State Bank of Bikaner & Jaipur, State Bank of Mysore, State Bank of Travancore, State Bank of Patiala, State Bank of Hyderabad; and the Bharatiya Mahila Bank merged with the parent effective April 1, 2017. The consolidation helped SBI reduce 1,805 branches and rationalised 244 administrative offices. Staff expenses declined 2.34 percent and overall employee count fell by 15,762 due to retirement despite 3,211 new additions. In all, the bank saved Rs 1,099 crore in the year 2018.
Statement of Problem India is an emerging economy where banking sector had expanded from metropolitan cities to its remotest areas. In this scenario the merging of SBI is proving to be a milestone to the country‘s growth. According to various records it has become one of the profitable decision for bank. Customers are the backbone of any business. Without satisfiying their needs and wants no business can survive in the long run. The present paper attempts to study on the perception of customers towards merger of SBI and its associates with special reference to Kottayam Town. Objectives The primary objective is (i)
To assess the perception of customers towards merger of SBI and its associates.
The secondary objectives being 1. To make a comparison of opinion towards pre and post-merger of SBI 2. To determine the major challenges in merger of SBI among customers. Hypotheses of the Study H0: There is no significant difference in the opinion of customers towards pre and postmerger of SBI based on age H0: There is no significant difference in the opinion of customers towards pre and postmerger of SBI based on occupation H0: There is no significant difference in the opinion of customers towards pre and postmerger of SBI based on education H0: There is no significant difference in the opinion of customers towards pre and postmerger of SBI based on income H0: There is no significant difference in the opinion of customers towards pre and postmerger of SBI based on gender 2. RESEARCH METHODOLOGY The research design adopted for the study is descriptive and exploratory. The first stage of study includes collecting the secondary data from magazines, newspapers, websites etc.
Second stage is of data collection through primary source. Out of the population consisting of SBI customers, a sample of 100 from Kottayam Town was selected.
Simple random
sampling was used for the selection of sample. The primary data is collected through Google form document. Primary data collected is analysed using Percentage Analysis and ANOVA. 3. LITERATURE REVIEW Manas Baidya (2017) in the study ―Efficiency Study on Proposed Merger Plan of State Bank of India SBI and its Subsidiaries: A DEA Perspective(2017)‖ reveals
that the merger
proposal of SBI associates may bring in fully technical efficiency but not fully scale efficiency of the merged entity. In order to be fully technical and scale efficient, merged SBI has to reduce its present number of employees substantially and should follow the prudent operating practices of three peer banks namely Corporation Bank, Axis Bank and Federal Bank. B. Rajesh Kumar, K.M. Suhas (2014) ―An Analytical Study on Value Creation in Indian Bank Mergers‖. According to the study, it is found that merger announcements are valuecreating activities for the acquirer banks. At the same time, merger announcements erode shareholder wealth for the target banks. The framework of pre-merger and post-merger comparison of the operating performance of the acquirer banks was based on three models whereby the cash flow was deflated by market value of assets, book value of assets, and income. It is also found that it does not provide evidence to support the view that corporate performance improves after mergers.
4. Analysis and interpretation Table No. 1 Demographic Factors
Demographic factors
Age
Gender
Groups
Frequency
18-25
36
25-45
45
45-65
17
65 and Above
2
Male
47
Education level
Female
51
Prefer not to say
2
Undergraduate
3
Graduate
48
Post graduate
49
Others
0
28 Occupation
Professional Govt employee Private employee
Income
10
34
Others
28
Below 2,50,000
23
2,50,0005,00,000 5,00,00010,00,000 Above 10,00,000
28
31
8
Source: Primary data H0: There is no significant difference in the opinion of customers towards pre and postmerger of SBI based on age
Table No. 2 Opinion of Customers Towards pre and post merger and Age – ANOVA ANOVA Sum of Squares Between Groups QUALITY
3
.629
Within Groups
59.113
96
.616
Total
61.000
99
1.201
3
.400
Within Groups
12.909
96
.134
Total
14.110
99
7.555
3
2.518
Within Groups
79.485
96
.828
Total
87.040
99
8.906
3
2.969
Within Groups
69.604
96
.725
Total
78.510
99
Between Groups ADVANTAGES OF MERGRE
Between Groups CUSTOMER SATISFACTION
Mean Square
1.887
Between Groups EFFECT OF CHANGE
df
F 1.021
2.976
3.041
4.095
ANOVA Sig. Between Groups QUALITY
.387
Within Groups Total Between Groups
EFFECT OF CHANGE
.035
Within Groups Total Between Groups
ADVANTAGES OF MERGRE
.033
Within Groups Total Between Groups
CUSTOMER SATISFACTION
.009
Within Groups Total
Source: Table 1 Since from the Table it is clear that the significance value is more than 0.05 in quality, the Null hypothesis is accepted. It indicates that among different ages there is no significant difference in based on opinion of customers towards pre and post-merger of SBI. While in
case of factors like effect of change (favourable 83% and unfavourable 17%), advantages of merger (accessibility, avoid unnecessary charges, improvised services, convenient ATM services) and customer satisfaction (68% satisfied, neutral 28%, dissatisfied 4%) the significance value is less than 0.05, so null hypothesis is rejected. H0: There is no significant difference in the opinion of customers towards pre and postmerger of SBI based on occupation
Table No. 3 Opinion of Customers Towards pre and post merger and Occupation ANOVA
Sum of Squares QUALITY
EFFECT OF CHANGE
ADVANTAGES OF MERGRE
CUSTOMER SATISFACTION
Between Groups
df
Mean Square
3.042
3
1.014
Within Groups
57.958
96
.604
Total
61.000
99
1.667
3
.556
Within Groups
12.443
96
.130
Total
14.110
99
3.498
3
1.166
Within Groups
83.542
96
.870
Total
87.040
99
2.818
3
.939
Within Groups
75.692
96
.788
Total
78.510
99
Between Groups
Between Groups
Between Groups
F
1.680
4.286
1.340
1.191
ANOVA Sig. QUALITY
Between Groups
.177
Within Groups Total EFFECT OF CHANGE
Between Groups
.007
Within Groups Total ADVANTAGES OF MERGRE
Between Groups
.266
Within Groups Total CUSTOMER SATISFACTION
Between Groups
.317
Within Groups Total Source: Table 1 Since from the Table it is clear that the significance value is more than 0.05 in quality, advantages of merger and customer satisfaction the Null hypothesis is accepted. It indicates that among different occupations there is no significant difference in opinion of customers towards pre and post-merger of SBI. While in case of factor like effect of change (favourable 83% and unfavourable 17%) the significance value is less than 0.05, so null hypothesis is rejected. H0: There is no significant difference in the opinion of customers towards pre and postmerger of SBI based on education
Table No. 4 Opinion of Customers Towards pre and post merger and Education ANOVA
Sum of Squares Quality
Effect of Change
Advantages of Merger
Customer Satisfaction
df
Mean Square
Between Groups
7.818
2
3.909
Within Groups
53.182
97
.548
Total
61.000
99
Between Groups
1.080
2
.540
Within Groups
13.030
97
.134
Total
14.110
99
Between Groups
3.459
2
1.729
Within Groups
83.581
97
.862
Total
87.040
99
Between Groups
7.519
2
3.759
Within Groups
70.991
97
.732
Total
78.510
99
F
7.130
4.019
2.007
5.136
ANOVA Sig. Quality
Between Groups
.001
Within Groups Total Effect of Change
Between Groups
.021
Within Groups Total Advantages of Merger
Between Groups
.140
Within Groups Total Customer Satisfaction
Between Groups
.008
Within Groups Total Source: Table 1
Since from the Table it is clear that the significance value is more than 0.05 in advantages of merger the Null hypothesis is accepted. It indicates that among different occupation there is no significant difference in opinion of customers towards pre and post-merger of SBI. While in case of factor like effect of change, quality and customer satisfaction, the significance value is less than 0.05, so null hypothesis is rejected.
H0: There is no significant difference in the opinion of customers towards pre and postmerger of SBI based on income
Table No. 5 Opinion of Customers Towards pre and post merger and Income - ANOVA
Sum of Squares Quality
Effect of Change
Advantages of Merger
Customer Satisfaction
df
Mean Square
Between Groups
1.212
3
.404
Within Groups
59.788
96
.623
Total
61.000
99
Between Groups
1.094
3
.365
Within Groups
13.016
96
.136
Total
14.110
99
.126
3
.042
Within Groups
86.914
96
.905
Total
87.040
99
Between Groups
6.313
3
2.104
Within Groups
72.197
96
.752
Total
78.510
99
Between Groups
F
.649
2.690
.046
2.798
ANOVA Sig. Quality
Between Groups
.586
Within Groups Total Effect of Change
Between Groups
.051
Within Groups Total Advantages of Merger
Between Groups
.987
Within Groups Total Customer Satisfaction
Between Groups
.044
Within Groups Total Source: Table 1
Since from the Table it is clear that the significance value is more than 0.05 in quality, effect of change, advantages of merger the Null hypothesis is accepted. It indicates that among different income there is no significant difference in opinion of customers towards pre and post-merger of SBI. While in case of factor like customer satisfaction, the significance value is less than 0.05, so null hypothesis is rejected.
H0: There is no significant difference in the opinion of customers towards pre and postmerger of SBI based on gender
Table No. 6 Opinion of Customers Towards pre and post merger and Gender - ANOVA
Sum of Squares Quality
Effect of Change
Advantages of Merger
Customer Satisfaction
df
Mean Square
Between Groups
4.160
2
2.080
Within Groups
56.840
97
.586
Total
61.000
99
.514
2
.257
Within Groups
13.596
97
.140
Total
14.110
99
.042
2
.021
Within Groups
86.998
97
.897
Total
87.040
99
Between Groups
9.427
2
4.713
Within Groups
69.083
97
.712
Total
78.510
99
Between Groups
Between Groups
F
3.550
1.835
.023
6.618
ANOVA Sig. Quality
Between Groups
.033
Within Groups Total Effect of Change
Between Groups
.165
Within Groups Total Advantages of Merger
Between Groups
.977
Within Groups Total Customer Satisfaction
Between Groups
.002
Within Groups Total Source: Table 1
Since from the Table it is clear that the significance value is more than 0.05 in effect of change, advantages of merger the Null hypothesis is accepted. It indicates that among different income there is no significant difference in opinion of customers towards pre and post-merger of SBI. While in case of factor like customer satisfaction and quality, the significance value is less than 0.05, so null hypothesis is rejected.
Figure 1 Challenges faced by customers
Since from the figure it can be interpreted that maintenance of minimum balance in 2 accounts is major difficulty faced by customers after merger.
Findings Respondents mostly were holding account for 8-12 years (34%) followed by 48(33%) and more than 12 years (21%). Respondents use the account high (49%) moderate (24%) very high (23%) Effect of changes in deposit and lending rate of SBI after merger on customer is positive (83%) The advantages considered by customers are accessibility (63%), avoid unnecessary charges (5%), improvised services (17%), convenient ATM services (15%) The level of customer satisfaction (68% satisfied, neutral 28%, dissatisfied 4%) Study indicates that among respondents having different ages there is no significant difference in based on opinion of customers towards pre and post-merger of SBI based on quality. While there is difference based on advantages of merger, customer satisfaction and effect of changes.
It indicates that among different occupations there is no significant difference in opinion of customers towards pre and post-merger of SBI based on advantages of merger and customer satisfaction. While there is difference based on effect of change, quality and customer satisfaction It indicates that among different income there is no significant difference in opinion of customers towards pre and post-merger of SBI based on quality, effect of change and advantage of merger. While there is difference based on customer satisfaction. It indicates that among different income there is no significant difference in opinion of customers towards pre and post-merger of SBI on effect of change and advantages of merger. While in case of factor like customer satisfaction and quality there is difference.
CONCLUSION From the analysis and interpretation, it can be concluded that SBI merger had a major impact on its customers. SBI merging into one of the largest banking service provider in India did have its positive as well as negative impacts to customers. But the positive effects have overcome the negative effects. Even though the impact is not fully understood in few years the limitations need to be concern of the authorities for better service to the customers.
SUGGESTIONS
By providing opportunities to solve loan issues major concern for customers will be resolved
Difficulty of maintaining multiple accounts should be reduced so that confusion lack of clarity will be avoided.
Minimum balance issues needed to be solved so that there will be reduced complaints of high unnecessary charges.
LIMITATION AND FURTHER SCOPE The sample selected for the study is very small, so the limitation of the sample will affect the study. The study is conducted after two years of merger, so it is not a sufficient period to study the impact or perception of the customers of SBI. Only limited factors affecting the perception and impact of merger of SBI and its associates are studied. Further studies can be conducted on the various factors. And is conducted only on Kottayam district it can be conducted in the whole state or in India.
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A STUDY ON THE AWARENESS AND PERCEPTION TOWARDS YONO CASH OF SBI *Ms.Aswathy P C (M.Phil Student SMBS MG University) **Ms. Gopika Gopan (M.Phil Student SMBS MG University) INTRODUCTION The Automated Teller Machine (ATM) is a self-service machine that performs some human teller functions like balance enquiry, bills payments, mini statements, Fund Transfer, Cash Deposit and so on. ATM mechanism are carried out through the use of a debit/credit card which enables the card holder(s) to access and carry out banking transactions without a teller. The State Bank of India has launched the YONO Cash service for its customers which will allow them to withdraw cash from ATMs without their debit cards. It is also called a card less cash withdrawal feature. This facility is available only to SBI customer. The prime objective of launching SBI YONO is preventing misuse of ATM cloning and theft. A part of SBI's digital banking platform, You Only Need One (YONO), the card less cash withdrawal service will be available across 16,500 ATMs of the bank in the country. Such SBI ATMs will be called YONO Cash Point. The initiative will address concern of using debit card at the ATMs for cash withdrawals by eliminating possible risk associated with it. Apart from that a lot of other banking services can also be done using YONO Cash. Services 1. Balance Enquiry/Account Statement (Last 150 transactions)/Spend Analysis (Accessible through Home Page => "Accounts") 2.
Update account details like email id, mobile number, nominee etc,. (Accessible through Menu => "Service Request")
3.
Apply/Activate/Block ATM Card (Accessible through Menu => "Service Request")
4. Apply Cheque Book/Stop Cheque (Accessible through Menu => "Service Request") 5. Open/Close Fixed/Recurring Deposits (Accessible through Home Page => "Accounts" => "My Deposits") 6. Apply new/View existing Loans in SBI (Accessible through Menu => "Loans") 7. Buy new/Link existing SBI Credit Card, Demat Account, Mutual Funds, Insurance (Accessible through Home Page => "Accounts") 8. Online Shopping, Bill Payments, Booking Train Tickets (Accessible through Menu => "Shop and Order")
9. Money
Transfer
(Accessible
through
Home
Page
=>
"YONO
Pay")
Amount upto Rs.10,00,000 can be transferred to any bank account daily. Payments up to Rs.10,000 will be processed instantly but payments above Rs.10,000 may take up to 4 hours for processing. And, adding beneficiary is must for payments above Rs.10,000 which also may take up to 4 hours for processing. STATEMENT OF THE PROBLEM In the present day world, the revolutionary development of the information and communication technology has contributed towards the development of banking sector. One of the recent development in the banking sector is YONO (You Only Need One) Cash. YONO is an integrated digital banking platform enable users to access a variety of financial and other services such as flight, train, bus and services such as online shopping, medical bill payments. Customers can use it on their smartphones to withdraw cash, make transactions and payments. This study is an attempt to analyse the customer perception towards the usage of YONO Cash service provided by SBI. OBJECTIVES The major objectives of the study are: ● To understand the concept, registration and services offered by YONO Cash of SBI. ● To analyse perception towards the usage of YONO Cash among SBI Customers by understanding the usage, satisfaction and problem faced in YONO Cash. HYPOTHESIS 1. H0: There is no significant difference in the usage of various services of YONO cash based on gender of the respondents. 2. H0: There is no significant difference in the usage of various services of YONO cash based on age of the respondents. 3. H0: There is no significant difference in the usage of various services of YONO cash based on annual income of the respondents. 4. H0: There is no significant difference in the usage of various services of YONO cash based on occupation of the respondents. 5. H0: There is no significant difference in the problems faced while using YONO cash based on gender of the respondents. 6. H0: There is no significant difference in the problems faced while using YONO cash based on age of the respondents. 7. H0: There is no significant difference in the problems faced while using YONO cash based on annual income of the respondents.
8. H0: There is no significant difference in the problems faced while using YONO cash based on occupation of the respondents. RESEARCH METHODOLOGY
Selection of sample
The target population for the study was the users of YONO Cash of SBI. Data were collected from the students, business men, government employees, private employees etc. in Kottayam District. A sample of 75 was selected for the purpose of the study by using convenient sampling technique.
Collection of data
Both primary and secondary data are used for the study. Primary data were collected from the sample respondents through structured questionnaire. Secondary data will be collected from books, journals, and websites.
Tools of analysis
Data collected were suitably classified and analysed based on the objectives of the study. For this purpose, percentage, Mean and ANOVA were used.
LIMITATION OF THE STUDY The limitations of the study are listed below; ● Availability of resources and time are important limiting factor for this study. ● The reliability of the study depends on reliability of the information given by the respondents. Some of the respondents might have provided the biased information. ● Inherent limitation of sampling technique may also have the study to a certain extent. ANALYSIS DEMOGRAPHIC PROFILE OF THE RESPONDENTS Gender Male Female Total Age 18-30 years 30-50 years Above 50 years Total Education SSLC Higher Secondary
Number 22 53 75 Number 34 26 15 75 Number 3 6
Per cent 30.0 70.0 100.0 Per cent 45.0 35.0 20.0 100.0 Per cent 4.0 8.0
Graduation Post-Graduation Others Total Profession Student Govt Employees Private Employees Business Others Total Annual Income 0-150000 150000-300000 300000-500000 Above 500000 Total
14 49 3 75 Number 16 11 28 14 6 75 Number 16 29 12 18 75
19.0 65.0 4.0 100.0 Per cent 21.0 15.0 37.0 19.0 8.0 100.0 Per cent 21.0 39.0 16.0 24.0 100.0
Table 1: Awareness of YONO Cash Frequency
Percent
Friends/Relatives
28
37.0
Advertisement
26
35.0
Bank Employees
18
24.0
Others
3
4.0
Total
75
100.0
Interpretation: Table 1 reveals that most of the respondents get awareness of YONO Cash through friends/relatives. And 35 per cent respondents aware about YONO cash through advertisement and 24 per cent aware about YONO cash through Bank employees and only 4 per cent through other means. Table 2: Usage of YONO Frequency
Percent
On alternative days
13
17.0
Once a week
23
31.0
Once a month
39
52.0
Total
75
100.0
Interpretation: Table 2 reveals that majority of the respondents are using YONO cash only once in a month. 31 per cent of the respondents are using YONO cash once a week and only 17 per cent are using YONO cash on alternative days. Table 3: Reasons for using YONO Cash Reasons
Mean
Rank
To avoid Long Queue
2.88
4
Avoid Burden of carrying cash
2.64
6
24*7 transaction
2.65
5
Time saving
3.07
1
Cost effectiveness
3.04
2
Convenience
2.95
3
Interpretation: Table 3 depicts the reasons/ factors that motivate people to use YONO cash by comparing the mean value of each related factors. The factor with highest rank is given rank 1. Thus, it is evident that most of the respondents are of the opinion that ―Time Saving‖ is the main reason for using YONO cash. They really have a strong opinion that YONO Cash is ―Cost Effectiveness‖ which placed as Rank 2 position. Accordingly, Convenience, avoiding long queue and 24*7 transaction which came in 3rd, 4th, 5th rank respectively. Last rank is given to the reason ―Burden of carrying cash‖. Table 4: Usage - Descriptive Statistics Mean
Rank
Withdrawal
3.93
2
Deposit
3.05
5
Loan
2.55
7
Investment
2.53
8
Shopping
3.79
6
Insurance
2.37
9
Balance Enquiry
4.36
1
Bill payment
3.81
3
Travel Ticket
3.44
4
Interpretation: Table 4 shows the respondents‘ opinion regarding the usage of various services of YONO Cash by comparing the mean value of each related factors. Rank 1 is given to the factor having highest mean. Thus, it is clear that most of the respondents are using YONO Cash for Balance Enquiry and since it is ranked 1. Second rank is given to Withdrawal. Accordingly, Bill Payment, Travel Ticket, Deposit come in 3rd, 4th and 5th rank respectively. The last rank is given to ―Insurance‖ which is ranked as 9. Table 5: Satisfaction - Descriptive Statistics Mean
Rank
Convenience
4.36
2
Security
4.12
3
Time saving
4.41
1
Sufficient No of ATM providing YONO Cash
3.72
4
Interpretation: Table 5 shows the respondents‘ opinion regarding the satisfaction towards the various factors by comparing the mean value of each related factors. Rank 1 is given to the factor having highest mean. Respondents are highly satisfied with ‗Time saving‘ since it is ranked in the 1st position. Convenience is ranked in the second position. Respondents are least satisfied with the sufficient no of ATM providing YONO cash. Table 6: Problems-Descriptive Statistics Mean
Rank
Non availability of YONO Cash at ATM
3.75
1
Lack of security
3.17
5
Lack of knowledge
3.63
3
Service charge
3.72
2
Technology linkage issue
3.35
4
Interpretation: Table 6 shows the respondents‘ opinion regarding the problem faced while using YONO cash by comparing the mean value of each related factors. Rank 1 is given to the factor having highest mean. Non availability of YONO cash at ATM is the major problem faced by the users of YONO cash. Service charge is ranked in the second position. Accordingly, Lack of knowledge, Technology linkage issue and Lack of security were ranked in 3rd, 4th and 5h position. HYPOTHESIS There is no significant difference in the usage of various services of YONO cash based on age of the respondents. Table 7: Usage of various services and Age of the respondents – ANOVA Sum of df Mean F Sig. Squares Square Withdrawal Between Groups 3.253 2 1.626 1.202 .307 1.353 Within Groups 97.414 72 Total 100.667 74 Deposit Between Groups 1.533 2 .766 .467 .629 1.642 Within Groups 118.254 72 Total 119.787 74 Loan Between Groups 3.733 2 1.866 .786 .459 2.373 Within Groups 170.854 72 Total 174.587 74 Investment Between Groups 2.030 2 1.015 .498 .610 2.037 Within Groups 146.637 72 Total 148.667 74 Shopping Between Groups .097 2 .048 .043 .958 1.118 Within Groups 80.490 72 Total 80.587 74 Insurance Between Groups 10.311 2 5.156 2.592 .082 1.989 Within Groups 143.236 72 Total 153.547 74 Balance Between Groups 1.409 2 .704 .876 .421 .804 Within Groups 57.871 72 Total 59.280 74 Bill Between Groups 2.930 2 1.465 2.485 .090 payment .590 Within Groups 42.457 72 Total 45.387 74 Travel Between Groups 25.794 2 12.897 7.447 .001 Ticket 1.732 Within Groups 124.686 72 Total 150.480 74
In order to find out whether there is any significant difference in the usage of various services of YONO Cash based on age, One way ANOVA was applied. It is revealed from the above table that, except ―Travel Ticket‖, the significant value is more than 0.05, hence the null hypothesis is accepted with a conclusion that there is no significant difference in the usage of various services of YONO cash among the different age groups. But in case of ―Travel ticket‖, the significant value is less than 0.05. So the hypothesis is rejected and conclude that there is significant difference in the usage of the service ―Travel Ticket‖ among the different age groups. There is no significant difference in the usage of various services of YONO cash based on gender of the respondents. Table 8: Usage of various services and Gender of the respondents – ANOVA
Withdrawal
Deposit
Loan
Investment
Shopping
Insurance
Balance
Bill payment
Travel Ticket
Between Groups Within Groups Total Between Groups Within Groups Total Between Groups Within Groups Total Between Groups Within Groups Total Between Groups Within Groups Total Between Groups Within Groups Total Between Groups Within Groups Total Between Groups Within Groups Total Between Groups Within Groups Total
Sum of Squares .773 99.894 100.667 2.998 116.789 119.787 2.295 172.292 174.587 2.114 146.552 148.667 .467 80.120 80.587 .315 153.232 153.547 .278 59.002 59.280 .285 45.101 45.387 .112 150.368 150.480
df 1 73 74 1 73 74 1 73 74 1 73 74 1 73 74 1 73 74 1 73 74 1 73 74 1 73 74
Mean Square .773 1.368
F
Sig.
.565
.455
2.998 1.600
1.874
.175
2.295 2.360
.972
.327
2.114 2.008
1.053
.308
.467 1.098
.425
.516
.315 2.099
.150
.700
.278 .808
.344
.559
.285 .618
.462
.499
.112 2.060
.054
.816
It is revealed from the above table that the significant value is more than 0.05, hence the null hypothesis is accepted with a conclusion that there is no significant difference in the usage of various services of YONO cash in both male and female respondents. There is no significant difference in the usage of various services of YONO cash based on Profession of the respondents. Table 9: Usage of various services and Profession of the respondents – ANOVA Sum of df Mean F Sig. Squares Square Withdrawal Between Groups 17.551 4 4.388 3.695 .009 1.187 Within Groups 83.116 70 Total 100.667 74 Deposit Between Groups 22.125 4 5.531 3.965 .006 1.395 Within Groups 97.662 70 Total 119.787 74 Loan Between Groups 16.656 4 4.164 1.846 .130 2.256 Within Groups 157.931 70 Total 174.587 74 Investment Between Groups 12.291 4 3.073 1.577 .190 1.948 Within Groups 136.376 70 Total 148.667 74 Shopping Between Groups 26.350 4 6.588 8.502 .000 .775 Within Groups 54.236 70 Total 80.587 74 Insurance Between Groups 36.963 4 9.241 5.548 .001 1.665 Within Groups 116.584 70 Total 153.547 74 Balance Between Groups 9.884 4 2.471 3.502 .012 .706 Within Groups 49.396 70 Total 59.280 74 Bill Between Groups 2.216 4 .554 .898 .470 payment .617 Within Groups 43.171 70 Total 45.387 74 Travel Between Groups 24.808 4 6.202 3.455 .012 Ticket 1.795 Within Groups 125.672 70 Total 150.480 74 It is revealed from the above table that, in case Loan, Investment and Bill payment, the significant value is more than 0.05, hence the null hypothesis is accepted with a conclusion that there is no significant difference in the usage of various services of YONO based on the profession/Occupation of the respondents. But in case of Withdrawal, Deposit, Shopping,
Insurance, Balance Enquiry and Travel Ticket, the significant value is less than 0.05. So the hypothesis is rejected and conclude that there is significant difference in the usage of these service among the based on the occupation of the respondents. There is no significant difference in the usage of various services of YONO cash based on annual income of the respondents Table 10: Usage of various services and Annual Income of the respondents – ANOVA
Withdrawal
Deposit
Loan
Investment
Shopping
Insurance
Balance Enquiry Bill payment Travel Ticket
Between Groups Within Groups Total Between Groups Within Groups Total Between Groups Within Groups Total Between Groups Within Groups Total Between Groups Within Groups Total Between Groups Within Groups Total Between Groups Within Groups Total Between Groups Within Groups Total Between Groups Within Groups Total
Sum of Squares 6.395 94.272 100.667 43.648 76.139 119.787 14.991 159.596 174.587 2.578 146.089 148.667 8.431 72.156 80.587 29.923 123.624 153.547 23.894 35.386 59.280 3.289 42.097 45.387 12.437 138.043 150.480
df 3 71 74 3 71 74 3 71 74 3 71 74 3 71 74 3 71 74 3 71 74 3 71 74 3 71 74
Mean Square 2.132 1.328
F
Sig.
1.605
.196
14.549 1.072
13.567
.000
4.997 2.248
2.223
.093
.859 2.058
.418
.741
2.810 1.016
2.765
.048
9.974 1.741
5.729
.001
7.965 .498
15.981
.000
1.096 .593
1.849
.146
4.146 1.944
2.132
.104
It is revealed from the above table that, except Depositw, Balance Enquiry, Shopping and Insurance, the significant value is more than 0.05, hence the null hypothesis is accepted with a conclusion that there is no significant difference in the usage of these services of YONO based on the annual income of respondents. But in case of Deposit, Insurance, Balance
Enquiry, Shopping and Insurance the significant value is less than 0.05. So the hypothesis is rejected and conclude that there is significant difference in the usage of the service ―Travel Ticket‖ among the different age groups. There is no significant difference in the problems faced while using YONO cash based on age of the respondents. Table 11: Problems faced and Age of the respondents – ANOVA Sum of Squares
df
Mean Square
F
Sig.
1.109 .416
2.663
.077
NonAvailability of YONO Cash at ATM Lack of security
Between Groups Within Groups
2.217 29.970
2 72
Total
32.187
74
Between Groups Within Groups Total
6.649 56.098 62.747
2 72 74
3.324 .779
4.267
.018
Lack knowledge
Between Groups Within Groups
5.395 68.152
2 72
2.697 .947
2.850
.064
Total Between Groups Within Groups Total
73.547 .507 28.613 29.120
74 2 72 74
.253 .397
.637
.532
Between Groups Within Groups
.864 56.122
2 72
.432 .779
.554
.577
Total
56.987
74
of
Service charge
Technology linkage issue
It is revealed from the above table that, in case of problems except ―Lack of Security‖, the significant value is more than 0.05, hence the null hypothesis is accepted with a conclusion that there is no significant difference in the various problems of YONO cash based on the age of respondents. But in case of ―Lack of Security‖ the significant value is less than 0.05. So the hypothesis is rejected and conclude that there is significant difference in the various problems of YONO cash based on the age of respondents. There is no significant difference in the problems faced while using YONO cash based on gender of the respondents.
Table 12: Problems faced and Gender of the respondents – ANOVA
Non availability of YONO Cash at ATM Lack of security
Between Groups Within Groups Total
Sum of Squares 3.689 28.497 32.187
df 1 73 74
Mean Square 3.689 .390
F
Sig.
9.450
.003
Between Groups 4.311 1 4.311 5.385 .023 .800 Within Groups 58.436 73 Total 62.747 74 Lack of Between Groups .664 1 .664 .665 .417 knowledge .998 Within Groups 72.883 73 Total 73.547 74 Service charge Between Groups .642 1 .642 1.646 .203 .390 Within Groups 28.478 73 Total 29.120 74 Technology Between Groups 8.320 1 8.320 12.481 .001 linkage issue .667 Within Groups 48.666 73 Total 56.987 74 It is revealed from Table 12 that in case of problems Non availability of YONO at ATM, Lack of Security and Technology Linkage Issue, the significant value is less than 0.05. Hence the null hypothesis is rejected with the conclusion that there is significant difference in these problems faced in YONO cash based on the Gender of the respondents. But in case of problems factors Lack of Knowledge and Service charge, significant value is greater than 0.05. So the null hypothesis is accepted with the conclusion that there is no significant difference in these problems among both male and female. There is no significant difference in the problems faced while using YONO cash based on profession of the respondents. Table 13: Problems faced and Profession of the respondents – ANOVA
NonAvailability of YONO Cash at ATM Lack of security
df
Between Groups Within Groups Total
Sum of Squares 5.892 26.295 32.187
Between Groups Within Groups Total
18.020 44.726 62.747
4 70 74
4 70 74
Mean Square 1.473 .376
F
Sig.
3.921
.006
4.505 .639
7.051
.000
Lack of knowledge Service charge Technology linkage issue
Between Groups Within Groups Total Between Groups Within Groups Total Between Groups Within Groups Total
27.475 46.071 73.547 1.601 27.519 29.120 12.270 44.717 56.987
4 70 74 4 70 74 4 70 74
6.869 .658
10.436
.000
.400 .393
1.018
.404
3.067 .639
4.802
.002
Table 13 shows that all the problem factors except ―service charge‖ is having significant value less than 0.05. Hence the null hypothesis is rejected with the conclusion that there is significant difference in these problems faced in YONO cash based on profession/occupation of the respondents. But in case of Service charge, sig value is more than 0.05 and hence the hypothesis is accepted with the conclusion that there is no significant difference in these problems faced in YONO cash based on profession/occupation of the respondents. There is no significant difference in the problems faced while using YONO cash based on annual income of the respondents. Table 14: Problems faced and Annual Income of the respondents – ANOVA
NonAvailability of YONO Cash at ATM Lack of security
Between Groups Within Groups Total
Sum of Squares 2.563 29.624 32.187
df 3 71 74
Mean Square .854 .417
F
Sig.
2.048
.115
Between Groups 8.780 3 2.927 3.851 .013 .760 Within Groups 53.966 71 Total 62.747 74 Lack of Between Groups 11.615 3 3.872 4.439 .006 knowledge .872 Within Groups 61.932 71 Total 73.547 74 Service Between Groups .635 3 .212 .528 .665 charge .401 Within Groups 28.485 71 Total 29.120 74 Technology Between Groups 8.286 3 2.762 4.026 .011 linkage issue .686 Within Groups 48.701 71 Total 56.987 74 It is clear from Table 14 that in case of factors like Lack of Knowledge, Lack of Security and Technology Linkage issue the significant value is less than 0.05. Hence the null hypothesis is
rejected with the conclusion that there is significant difference in these problems faced in YONO cash based on annual income of the respondents. But in case of Service charge and non-availability of YONO cash at ATM, sig value is more than 0.05 and hence the hypothesis is accepted with the conclusion that there is no significant difference in these problems faced in YONO cash based on annual income of the respondents. FINDINGS 1. Gender wise analysis shows that 70% of the respondent are females. 2. Majority of the respondents (52%) are from the age group of 18-30 years and 28% respondents are from 30-50 years and only 20% respondents are above 50 years. 3. Majority of the respondents (66%) are having Post Graduation. 4. Out of 50 respondents, 36 per cent are private employees. 5. Most of the respondents have an annual income of Rs.150000-300000. 6. Most of the respondents get awareness of YONO Cash through advertisement. 7. Majority of the respondents are using YONO cash only once in a month. 8. Most of the respondents are of the opinion that ―Time Savings‖ is the main reason for using YONO cash. 9. Most of the respondents are using YONO Cash for Balance Enquiry. 10. Respondents are highly satisfied with Time saving aspect of YONO cash. 11. Non availability of YONO cash at ATM is the major problem faced by the users of YONO cash. 12. There is no significant difference in the usage of various services (Withdrawal, deposit, loan, investment, shopping, insurance and bill payment) of YONO cash among the different age groups. There is significant difference in the usage of the service ―Travel Ticket‖ among the different age groups. 13. There is no significant difference in the usage of various services of YONO cash in both male and female respondents. 14. There is no significant difference in the usage of various services of YONO such as Loan, Investment and Bill payment based on the profession/Occupation of the respondents. But in case of Withdrawal, Deposit, Shopping, Insurance, Balance Enquiry and Travel Ticket the difference is significant. 15. There is no significant difference in the usage of certain services of YONO such as withdrawal, loan, investment, bill payment and travel ticket based on the annual income of respondents. But in case of Deposit, Insurance, Balance Enquiry, Shopping and Insurance the difference is significant. 16. There is no significant difference in the various problems of YONO cash such as nonavailability of YONO cash at ATM, lack of knowledge, service charge and technology linkage issue based on the age of respondents. But in case of ―Lack of Security‖ the difference is significant. 17. There is significant difference in the problems faced in YONO cash such as nonavailability of YONO cash at ATM, lack of security and technology linkage issue based on the Gender of the respondents. But in case of problems factors Lack of Knowledge and Service charge there is no significant difference in these problems among both male and female.
18. There is significant difference in the problems faced in YONO cash such as nonavailability of YONO cash at ATM, lack of security, lack of knowledge and technology linkage issue based on profession/occupation of the respondents. But in case of Service charge the difference is not significant. 19. There is significant difference in the problems faced in YONO cash such as Lack of Knowledge, Lack of Security and Technology Linkage based on annual income of the respondents. But in case of Service charge and non-availability of YONO cash at ATM the difference is not significant. SUGGESTION 1. One of the major problem faced by the respondent is non- availability of YONO cash at all ATM. So in order to increase its reach among the customers the bank should take necessary step to make it available in all SBI ATMs. 2. Another problem is the lack of awareness among the customers regarding YONO cash. So the bank should take necessary step to make them aware about it. CONCLUSION The information and communication technology has tremendously contributed towards the development of the banking sector. The SBI has launched the YONO cash service for its customers which will allow them to withdraw cash from ATMs without their debit cards. The present study makes an attempt to find out customer attitude and perception towards YONO cash of SBI in Kottayam District. The study reveals that the most significant problem faced by the customer regarding YONO cash of SBI is non availability of YONO cash at ATM. Majority of the respondents are not happy with the transaction cost charged by the bank for services and their mechanism to address the grievances of the banking customers. Therefore the banks need to concentrate on addressing the grievances of the customers the through efficient redressal measures to enhance the customer satisfaction. REFERENCES https://www.sbiyono.sbi/ https://www.news18.com/news/partner-content/what-is-yono-cash-and-how-you-can-use-it2191885.html https://www.livemint.com/money/personal-finance/how-to-withdraw-cash-from-sbi-atms-anynumber-of-times-without-paying-charges-11570514349129.html
A STUDY ON THE IMPACT OF AGRICULTURE INSURANCE ON RIS K MANAGEMENT AMONG FOOD CROPS FARM ERS IN KERALA *JOSHUA JOHNY, M.Phil Scholar, School of Management and Business Studies, MG University
INTRODUCTION Agricultural sector plays a significant role in the process of Economic development of the country. Agriculture provides food to nation, Labour, contributes raw materials to market of industrial goods and earns Foreign exchange. Agriculture growth directly depends on economic development of our country. Approximately 44 per cent (as per ILO estimate of 2018) of the working population is employed in agriculture and allied sector. However, the contribution of agriculture to GDP has been declining from 52 percent in the 1950s to 30 per cent in the 1990s and further below 20 per cent from 2010 onwards as per data from Ministry of Statistics and Programme Implementation (MoSPI). In 2018-19, the share of Agriculture & Allied Gross Value Added (GVA) in overall GVA was 16 per cent (Ministry of Agriculture and Farmers' Welfare (MoA & FW) Annual Report 201819). Agricultural operation is an uncertain business. In Kerala, agriculturists are face various risks such as social Risks, economic risk and risk due to natural calamities like flood, draught etc. These risks a r e stagnant development of agricultural sector. Due to the risk factor Income of farmers and agricultural economy is in a state of extreme Uncertainty. The need to create a transfer of risk diversification, risk Management, hedging the risk and economic loss sharing mechanism has led to the Implementation of various agricultural insurance schemes. Agricultural Insurance is a means of protecting the agriculturist against financial losses Due to uncertainties arising from named or all unforeseen perils beyond their control. Agriculture insurance is a financial tool used by the agriculturist to transfer production risk associated with farming to a third party via payment of premium that reflect the true long term cost of the Insurer assuming those risk. The developments of agricultural insurance protecting and reducing the socio economic and Natural risk among the agriculturists. Therefore, agricultural insurance for Farmers helps greatly in minimize risk across the states. STATEMENT OF PROBLEM Based on the literature review it is found that agriculture sector face many risk like earthquake, storm, landslide, flood, draught and pest attack etc. which affect the crop yield severely. Besides the occurrence of natural calamities, sudden fall in prices of agriculture commodities is another most important factor of loss of farmer's income. In this context introduction of agriculture insurance is an emerging need. In this study focused on effectiveness of agriculture insurance scheme in risk management and its performance.
SIGNIFICANCE OF STUDY Agriculture is major source of income to our economy. Due to the risk element farmers are not ready to invest in agriculture. Activists and scholars have offered a number of conflicting reasons for farmer suicides, such as monsoon failure, high debt burdens, genetically modified crops, government policies, public mental health, personal issues and family problems. There are also accusations of states fudging the data on farmer suicides. As per an affidavit submitted by the Union of India to the Supreme Court on July 6, 2017, about 12,602 farmers and cultivators committed suicide in the year 2015. Of this, 4,291 farmers committed suicide in Maharashtra having the highest suicide rate. 60% of Indian agriculture land is still at the mercy of uncertain rains and with ground water dwindling constantly. Agriculture insurance is a prevarication tool which is used as a precautionary measure against future losses. Agriculture insurance safeguards the farmers from future losses due to the occurrence of disasters and frequent changes in price of the agriculture products. The need for agricultural insurance is increasing day by day. By studying the impact of agriculture insurance and risk management among food crops farmers helps to get idea regarding performance of agriculture insurance and importance of insurance in agriculture field. And also it helps to analyse the usage of agriculture insurance among food crops farmers. OBJECTIVES The objective of the study is to analyse the impact of agriculture insurance on risk management among food crops farmers especially in state of Kerala. The other objectives are as follows;
To analyse the kinds of risks involved in agriculture.
To analyse the socio-economic background of farmers in Kerala.
To analyse the overall performance of agriculture insurance by various insurance companies in Kerala and their insurance schemes.
To examine farmers attitude towards agriculture insurance.
To examine perceptive of farmers regarding risk management strategies.
Hypothesis of the Study Hl: There is significant difference among farmers preference to different sources for availing agricultural insurance among three different districts (Alappuzha, kottayam and Palakkad) in Kerala. RESEARCH METHODOLOGY This study is based on primary data collected from farmers and insurance companies in Kerala and also use secondary source to analyse statistic regarding agriculture sector. Stratified sampling technique is applied to collect data from Alappuzha, Kottayam and Palakkad district in Kerala.
THE ROLE OF AGRICULTURAL INSURANCE IN RISK MANAGEMENT IN THE FARMERS' PERCEPTIVE: EMPIRICAL ANALYSIS Agriculture Risk Analysis Among Food Crop Farmers Table 1.1 Risk level
High Medium Low Total
Wea ther and natu 126 ral (50.4) disa 102 sters (40.8) 22 (8.8) 250 (100)
Pest Attac k & Plant 141 Disea (56.4) se 91 (36.4) 18 (7.2) 250 (100)
Agriculture risk analysis
Sources of risk Mark Inp Debt Failur eting ut e of mar g New diffic ket Tech 58 s 61 85 (34) nolo 68 ultie (23.2) (24.4) (27.2) gy 94 122 135 161 (37.6) (48.8) (54) (64.4) 98 67 30 (12) 21 (39.2) (26.8) 250 (8.4) 250 250 250 (100) (100) (100) (100)
Price volati lity 71 (28.4) 112 (44.8) 67 (26.8) 250 (100)
Unsuc cessful Invest ment 43 (17.2) 63 (25.2) 144 (57.6) 250 (100)
Any Others
15 (6) 187 (74.8) 48 (19.2) 250 (100)
Source: Survey data * Figures in the brackets are percentages The overall response discloses that 50.4 percentages and 56.4 percentage of the farmers are highly faced weather or natural disasters and pest attack/plant disease respectively. Weather or natural disasters and pest attack or plant disease are the major source of risk faced by the farmers. From the above survey data reveals that the other source of risk like marketing difficulties, price volatility of food crops and unsuccessful investment are affect least extent to the farmers. The medium risk category includes Failure of new technology (64.4%), debt (54%) and input market (48.8%) etc. Farmer‘s Experience Of Crop Loss Tablel.2 Experience of Alappuzha No Of
crop loss
Palakkad- no of respondents
37 (49)
every year 36 (48)
total
Source: survey data.
Figures shown in bracket are percentages
The above tablel.2 discloses that 97 % of respondents faced crop Loss in Alappuzha district. The remaining 3% of respondents have not experienced the crop loss which may be because they are the large growers. The result of discussions revealed that most of the marginal and small growers are affected by the adverse climate change. The district wise analysis showed the same trend on the crop loss experience. The analysis revealed crop loss was more severe in Alappuzha and least in Kottayam. Fig 1.1 Experience of crop loss
State Wise Analysis Of Pradhan Mantri Fasal Bima Yojana In South India Table 1.3 State wise analysis of Pradhan Kerala M antri Fasal Bima Yojana- Agriculture Tamilnadu Karnataka Insurance scheme
No of Farmers Insured
Andra
Telangana
1,395,35
Insured (in heelers) Sum Insured in Rs. Cr Farmers Rs.inCr GOl Rs. Cr State in Rs. Cr Gross premium in Rs. Cr Claims paid in Rs. Cr No Of Farmers benefitted of farmers
23.09 %
84.75%
39.03%
37.43%
41.79 %
Source: Prad han Mantri Fasal Bima Yojana Ministry Of Agriculture & Farmers Welfare; 2017 data (pmfby .gov.in) The Prime Minister Fasal Bima Yojna (PMFBY) is the recently launched crop insurance scheme in India in order to overcome some of the limitations in the existing crop insurance schemes. According to ICAR-NIAP Annual Report 2018-19, the coverage of farmers and cultivated area under Prime Minister Fasal Bima Yojna (PMFBY) decreased, while the sum insured increased between 2016-17 and 2017-18. Yield loss estimation, standardizing the use of technology for crop loss assessment and timely settlement of claims, high actuarial premium rates, increasing the coverage of shared and tenant croppers and creating awareness among farmers on the crop insurance are the key issues of concern for PMFBY. During 2016-17, 56.28 million hectare cultivated area (28.63% of gross cropped area) of 57.32 million farmers was covered under PMFBY in the country. The claims to premium ratio of the scheme at the All India level was 0.72. The ratio was more than one in Andhra Pradesh (1.06), Karnataka (1.19), Kerala (1.34) and Tamil Nadu (2.79). The proportion of farmers benefitted through the PMBFY scheme at the all India level was 24.96 per cent (14.30 million farmers). The proportion of farmers benefitted was higher in Andhra Pradesh, Gujarat, Karnataka, Maharashtra, and Tamil Nadu in comparison to the other states. Average sum insured per ha of insured area in the major states ranged from Rs. 17,017 in Rajasthan to Rs.60,493 in West Bengal. The average sum insured per ha in the country stood at Rs. 36, 145. In 2017-18, PMFBY covered an area of 52.10 million hectares of GCA, covering 52.00 million farmers in 2017-18, the total sum insured being Rs. 2,07,896 crores. This shows a decline in the number of farmers covered and area insured by 9.09 per cent and 7.61 per cent, respectively compared to the previous year, though the sum insured increased by 2.18 per cent.
From the table 1.3, it is evident that kerala is the leading South Indian states for earning benefits from the crop insurance scheme PMFBY. In south India, Tamilnadu farmers are most benefited (84.75%) from PMFBY in the case of Rabi and second is Kerala farmers (69.14%). Except Telangana, Rabi farmers are most benefited from the scheme while compared to Kharif msurance. Fig 1.2 Opinion of Farmers About The Influence Of Crop Insu rance On Risk Mitigation
TableI .4 Opinion of Farmers About The Influence Of Crop Insurance On Risk Mitigation Response
Alappuzha No 39 Of(52.7) Strongly Agree Respondents 23 (31) Agree 8 (10.8) Neutral 4 (5.4) Disagree 0 (0) Strongly 74 (100) Disagree Total Source: survey data percentages
Kottayam No Of 42 (43.3) Respondents 31 (31.9) 20 (20.6) 3 (3.1) 1 (1) 97 (100)
Total Palakkad No Of 34 (46.5) 115 (47.1) Respondents 16 (21.9) 70 (28.6) 11 (15) 39 (15.9) 9 ( 12.3) 16 (6.5) 3 (4.1) 4 ( 1.6) 73 (100) 244 (100) Figures shown in bracket are
The overall response indicates that 47.1% of respondents 'strongly agree' with the crop insurance as a risk mitigation strategy, while 28.6% 'agree' and 1.6% 'strongly disagree' with it as risk mitigation strategy. 52.7% of respondents in Alappuzha, 46.5% in Palakkad and 43.3% in kottayam strongly agreed with the crop insurance as a risk mitigation strategy. Few of them disagree with the statement because of the delay in settlement of claims and some of them are doing the farming activity on leased land. In the case of leasing, the land owners are least interested to insure their farm from risk.
Farmer's Preference To Various Sources For Availing Agricultural Insu rance Table I .5 Source
Preference To Various Sources For Availing Ag ricultural Insurance
Alappuzha Ran Index k Of Prefere nce 5.23 6 (Weight 3.68 5 ed Averag 2 e2.71 Score) 2.62 1
Kottayam Index Of Preference (Weighted Average 5.32 Score) 3.78
Palakkad Ran Index Of k Preference (Weighted Average 5.31 6 Score) 4 3.85
Overall Ran Index k Of Prefere nce 5.29 6 (Weight 4 3.77 ed Averag 2 e2.67 Score) 2.41 1
Ran k
6 Rural agent 4 Commer cial bank 2.65 2 2.64 2 Cooperati ve 2.30 2.31 Private 1 1 societ insuran y ce 2.75 2.76 2.82 3 3 3 3 Governm 2.94 compa ent 3.54 4 3.87 5 3.95 5 3.79 5 Others ny Source: Survey data Chi square = 0.333 The table 1.5 discloses the preference to various sources for availing agricultural insurance by the farmers. The index of preference was calculated by using weighted average mean and it is ranked according to their preference to various source for availing agricultural insurance. The overall index of preferences indicated that private insurance company, Cooperative Societies and Government agencies scored first, second and third rank respectively. The least preference was for the rural agents for availing agricultural msurance. The district wise analysis showed no variation in the given preferences of the first, second, third and sixth rank among the three districts. As per the index of preference, a slight variation can be seen in the fourth and fifth rank's preference to each source for availing agricultural insurance. In Kottayam and Palakkad the fourth and fifth rank were given to commercial banks and 'other category' respectively. In Alappuzha district, respondents prefer fourth to 'other category' and fifth to 'commercial banks'. Hl: There is significant difference among farmers preference to different sources for availing agricultural insurance among three different districts in Kerala. Friedman's Chi square test was used to test whether there is any significant difference in the preference to each source for availing agricultural insurance among three districts in Kerala. Chi square value is 0.333 and P > 0.05; The result showed that there is no difference in the preferences to each sources among the three selected districts in Kerala. Therefore, the null hypothesis is accepted .
SUMMARY SUGGESTIONS OF
FINDINGS, AND
CONCLUSION
According to ICRA NIPA Annual report , he agriculture sector grew at annual rate of 2.9 per cent during 2011- 12 to 2017-18. The performance of agriculture varied across the sub-sectors and regions. The sub-sectors like livestock and fisheries sub-sectors registered significantly higher growth of 7.2 per cent and 8.5 per cent, respectively, as compared to crop sub- sector. Overall, the average monthly income of agricultural households has increased by 40 per cent from Rs. 6,426 to Rs. 8,931 in India. The analysis of socio- economic background of farmers in Kerala reveals that majority of the farmers are in the age group of 50 to 75 years. 75% of the respondents has only school education and have an annual income less than Rs. 150000. The analysis of farmers attitude toward agriculture insurance reveals that lack of awareness about agriculture insurance scheme and insurance providers was the most important reason for not availing agriculture insurance. It is realized that the agricultural department's officials take initiative in implementing the schemes properly and passing information to the general public in our country. It is better to conduct agricultural risk awareness classes or programmes through Medias and online platforms. It will be better to provide toll free helpline facility to all farmers for the purpose of communicating the risk related events to government and insurance providers. Promote ICT enabled agriculture especially in villages and rural areas. Establish weather station in all notified risk prone areas and to give accurate report to the farmers regularly. To take necessary steps to provide all weather related information through local newspaper and media. Create necessary updation related to the farmers in website like Kissan Kerala. It is necessary to make compulsory enrolment of the name of all farmers in their own respective agricultural department.
Ag riculture Insurance Schemes In India J...
National
J... Pilot
Agricultural
Modified
Insurance
National
Scheme (NAIS)
Agricultural Insurance Scheme (MNAIS)
J... Pilot Weather Based Crop Insurance Scheme (WBCIS) J... Pilot
Coconut
J... Pradhan
Mantri
Palm
Insurance
Fasal
Bima
Scheme (CPIS) Yojya (PMFBY)
J... Restructured J... Unified
Weather Based Crop Insurance Scheme (RWBCIS) Package Insurance Scheme (UPIS)
Ag riculture Insurance Companies in India
Following compames
are to
the maJor msurance providing agricultural
insurance in India;
D D D D
IFFCO Tokio Oriental Insurance Shriram General Insurance Royal Sundaram D United India D Cholamandalam Ms General Insurance D AIC (Agriculture Insu rance Company) D Reliance General D Tata AIG D ICICI Lombard General Insu rance D Bajaj Allianz D HDFC Ergo D SBI General D National Insurance D New India Insurance Despite vanous schemes launched from time to time in the country, agriculture insurance has served very limited pu rposes. The coverage in terms of area, number of farmers and value of agriculture output is very small, payment of indemnity based on the area approach misses affected farmers outside the compensated area, and most of the schemes are not viable. This requires renewed effort by the government in terms of designing appropriate mechanism and providing financial support for agriculture insurance. At the same time, formal risk mitigation mechanism such as agriculture extension systems, pest prediction and management system, formal credit lending systems and future contracts were evolved with support from both private and public sectors. The analysis of the farmers' perception about agricultural insurance shows that they are not fully satisfied with the present crop insurance scheme because of tedious procedure for availing claims, the loss amount is not fully recovered, only certain crops are covered under insurance scheme, crop insurance scheme is available only in certain areas. Faced with significant losses from natural calamities, a number of general insurers are understood to be reviewing their crop insurance portfolios and even considering moving out of the segments. According to the report of Business line, Due to high reinsurance rate, ICICI Lombard general insurance already announced its decision to exit crop insurance under the Pradhan Mantri Fasal Bima Yojana. Cholamandalam MS General Insurance, Tata AIG and Shriram General Insurance also seems to have exited the field during 2019-20. Due to natural calamities in the year 2018-19 in Maharastra, Hari yana, Andra pradhesh and Chattisgarh; insurance companies are need to pay a higher amount in the form of claims to the farmers which will be higher than the premium. According to government data, the gross premium under PMFBY in FY 2019 is estimated to be 20923 crore, while the claims amounted to 27550 crore. This also shows that crop insurance business also need government support. There are no to opinions on the importance agriculture insurance market in India, two third of the farmers here still depend upon the seasonal factors for their earnings. Thus government should set up insurance companies right from the village, district and to state level for encouraging farmers to insure themselves from the risk involved in agriculture and allied activities. So the task before the government is to protect the farmers from the agrarian crisis. It will pave the way for the economic development of the country.
REFERENCE
1. L Madhusudhan (2015) agriculture role in Indian economy. 2. H Narayanan (2006) Indian insurance a profile, Jaisco publishing house, 438- 456. 3. Sun Liangyuan, Z. Y. (2001). Characteristics and Risk Management of Agricultural Risk in Transitional Period. Journal Issues of Agricultural Economy.
4. Gosh subir (2009) Agriculture msurance concepts and country initiatives, The Icfai university press. 5. Reddy, N. H (2017).Weather index based crop insurance in Karnataka. A study with special reference to food crops. University of Mysore.
6. Jose, Josheena (2016). A study on the impact of the agriculture insurance and risk management, Mg University.
7. K, M. K. (2009). In working paper No.54 Kerala research programme on Local Development Centre for development studies, Thiru vananthapuram. 8. www.ncap.res.in. (2008). Retrieved from google: http://www.neap.res.in
9. Pradhan Mantri Fasal Bima Yojana Ministry Of Agriculture & Farmers Welfare; 2017 http://www.pmfby.gov .in
data
A STUDY ON THE IM PACT OF AGRICU LTURE INSURANCE ON RIS K MANAGEM ENT AM ONG FOOD CROPS FARM ERS IN KERALA JOSHUA JOHNY M.Phil Scholar School of Management and Business Studies, MG University INTRODUCTION Agricultural sector plays a significant role in the process of Economic development of the country. Agriculture provides food to nation, Labour, contributes raw materials to market of industrial goods and earns Foreign exchange. Agriculture growth directly depends on economic development of our country. Approximately 44 per cent (as per ILO estimate of 2018) of the working population is employed in agriculture and allied sector. However, the contribution of agriculture to GDP has been declining from 52 percent in the 1950s to 30 per cent in the 1990s and further below 20 per cent from 2010 onwards as per data from Ministry of Statistics and Programme Implementation (MoSPI). In 2018-19, the share of Agriculture & Allied Gross Value Added (GVA) in overall GVA was 16 per cent (Ministry of Agriculture and Farmers' Welfare (MoA&FW) Annual Report 2018- 19). Agricultural operation is an uncertain business. In Kerala, agriculturists are face various risks such as social Risks, economic risk and risk due to natural calamities like flood, draught etc. These risks stagnant development of agricultural sector. Due to the risk factor Income of farmers and agricultural economy is in a state of extreme Uncertainty. The need to create a transfer of risk diversification, risk Management, hedging the risk
and economic loss sharing mechanism has led to the Implementation of various agricultural
insurance schemes. Agricultural Insurance is a means of protecting the agriculturist against financial losses Due to uncertainties arising from named or all unforeseen perils beyond their control. Agriculture insurance is a financial tool used by the agriculturist to transfer production risk associated with farming to a third party via payment of premium that reflect the true long term cost of the Insurer assuming those risk. The developments of agricultural insurance protecting and reducing the socio economic and Natural risk among the agriculturists. Therefore, agricultural insurance for Farmers helps greatly in minimize risk across the states. STATEMENT OF PROBLEM Based on the literature review it is found that agriculture sector face many risk like earthquake, storm, landslide, flood, draught and pest attack etc. which affect the crop yield severely. Besides the occurrence of natural calamities, sudden fall in prices of agriculture commodities is another most important factor of loss of farmer's income. In this context introduction of agriculture insurance is an emerging need. In this study focused on effectiveness of agriculture insurance scheme in risk management and its performance.
SIGNIFICANCE OF STUDY Agriculture is major source of income to our economy. Due to the risk element farmers are not ready to invest in agriculture. Activists and scholars have offered a number of conflicting reasons for farmer suicides, such as monsoon failure, high debt burdens, genetically modified crops, government policies, public mental health, personal issues and family problems. There are also accusations of states fudging the data on farmer suicides. As per an affidavit submitted by the Union of India to the Supreme Court on July 6, 2017, about 12,602 farmers and cultivators committed suicide in the year 2015. Of this, 4,291 farmers committed suicide in Maharashtra having the highest suicide rate. 60% of Indian agriculture land are still at the mercy of uncertain rains and with ground water dwindling constantly. Agriculture insurance is a prevarication tool which is used as a precautionary measure against future losses. Agriculture insurance safeguard the farmers from future losses due to the occurrence of disasters and frequent changes in price of the agriculture products. The need for agricultural insurance for the increasing day by day. By studying the impact of agriculture insurance and risk management among food crops farmers helps to get idea regarding performance of agriculture insurance and importance of insurance in agriculture field. And also it helps to analyse the usage of agriculture insurance among food crops farmers. OBJECTIVES The objective of the study is to analyse the impact of agriculture insurance on risk management among food crops farmers especially in state of Kerala. The other objectives are as follows; To analyse the kinds of risks involved in agriculture. To analyse the socio-economic background of farmers in Kerala. To analyse the overall performance of agriculture insurance by various insurance compames in Kerala and their insurance schemes. To examine farmers attitude towards agriculture insurance. To examine perceptive of farmers regarding risk management strategies.
Hypothesis of the Study Hl: There is significant difference among farmers preference to different sources for availing agricultural insurance among three different districts (Alappuzha, kottayam and Palakkad) in Kerala. RESEARCH METHODOLOGY This study is based on primary data collected from farmers and insurance companies in Kerala and also use secondary source to analyse statistic regarding agriculture sector. Stratified sampling technique is applied to collect data from Alappuzha, Kottayam and Palakkad district in Kerala.
THE ROLE OF AGRICULTURAL INSURANCE IN RISK MANAGEMENT IN THE FARMERS' PERCEPTIVE: EMPIRICAL ANALYSIS Agriculture Risk Analysis Among Food Crop Farmers
Table 1.1 Risk level
Agriculture risk analysis Sources of risk
Pest Attack & Plant Disease 141 (56.4) 91 (36.4)
Marketin g difficultie s 58 (23.2)
Input market
Debt
61 (24.4)
85 (34)
94 (37.6)
18 (7.2)
98 (39.2)
122 (48.8) 67 (26.8)
135 (54)
Low
Weather and natural disasters 126 (50.4) 102 (40.8) 22 (8.8)
Total
250 (100)
250 (100)
250 (100)
250 (100)
High Medium
Failure of New Technolo
Price volatility
Unsuccessf ul Investment
Any Others
68 (27.2)
71 (28.4)
43 (17.2)
15 (6)
112 (44.8)
63 (25.2)
187 (74.8)
30 (12)
161 (64.4) 21 (8.4)
67 (26.8)
144 (57.6)
48 (19.2)
250 (100)
250 (100)
250 (100)
250 (100)
250 (100)
gy
* Figures in the brackets are percentages
Source: Survey data
The overall response discloses that 50.4 percentage and 56.4 percentage of the farmers are highly faced weather or natural disasters and pest attack/plant disease respectively. Weather or natural disasters and pest attack or plant disease are the major source of risk faced by the farmers. From the above survey data reveals that the other source of risk like marketing difficulties, price volatility of food crops and unsuccessful investment are affect least extent to the farmers. The medium risk category include Failure of new technology (64.4%), debt (54%) and input market (48.8%) etc. Farmer's Ex perience Of Crop Loss Tablel.2 Experience of crop loss Alappuzha Palakkad- no of No Of respondents
37 (49)
every year 36 (48)
total Source: survey data.
Figures shown in bracket are percentages
The above tablel.2 discloses that 97 % of respondents faced crop Loss in Alappuzha district. The remaining 3% of respondents have not experienced the crop loss which may be because they are the large growers. The result of discussions revealed that most of the marginal and small growers are affected by the adverse climate change. The district wise analysis showed the same trend on the crop loss experience. The analysis revealed crop loss was more severe in Alappuzha and least in Kottayam.
Fig 1.1 Experience of crop loss
State Wise Analysis Of Pradhan Mantri Fasal Bima Yojana In South India
Table 1.3 State wise analysis Pradhan M antri Fasal Bima Yojana- Agriculture Insurance scheme
Kerala Kharif
Rabi
28,364 22,913.1 9 148.17
Tamilnadu
Karnataka
Andra
Telangana
Kharif
Rabi
Kharif
Rabi
Kharif
Rabi
Kharif
Rabi
45,874
146,220
1,597,43 5 1,850,63 3.71 9,662.84
264,467
193,396 1,068.20
770,366. 32 4,059 .36
236,958
222.93
1,380,79 2 1,664,63 7 4,378.62
819,390
115,254. 67 837.58
1,581,49 7 1,825,23 1.88 8,875 .09
156,875
31,727
1,395,35 3 1,263,70 3 6,547.67
No of Farmers Insured Area Insured (in heelers) Sum Insured in Rs. Cr Farmers Premium in Rs. Cr GOl in Rs. Cr
3.76
4.10
23.44
107.00
235.52
69.10
228.97
18.15
158.98
23.89
4.38
10.24
20.46
555.21
810.42
306.37
465.59
73.28
216.53
17.97
State in Rs. Cr
4.38
10.24
20.46
555.21
810.42
306.37
465.59
73.28
216.53
17.97
Gross premium in Rs. Cr Claims paid in Rs. Cr No Of Farmers benefitted Percentage of farmers benefitted
13
24.59
64
1,217.41
1,856
681.84
1,160
164.70
592
59.84
7.95
26.63
40.95
3,413 .20
807.90
697.32
494.63
246.94
440.28
14.52
18,956
31,718
33,763
617,385
810,016
597,978
84,756
342,455
13,586
66.83%
69.14%
23.09 %
1, 182,66 9 84.75%
39.03%
58.66%
37.43%
54.02%
41.79 %
5.13%
Source: Prad han Mantri Fasal Bima Yojana Ministry Of Agriculture 2017 data (pmfby .gov.in)
& Farmers Welfare;
1,530.71
The Prime Minister Fasal Bima Yojna (PMFBY) is the recently launched crop insurance scheme in India in order to overcome some of the limitations in the existing crop insurance schemes. According to ICARNIAP Annual Report 2018-19, the coverage of farmers and cultivated area under Prime Minister Fasal Bima Yojna (PMFBY) decreased, while the sum insured increased between 2016-17 and 2017-18. Yield loss estimation, standardizing the use of technology for crop loss assessment and timely settlement of claims, high actuarial premium rates, increasing the coverage of shared and tenant croppers and creating awareness among farmers on the crop insurance are the key issues of concern for PMFBY. During 2016-17, 56.28 million hectare cultivated area (28.63% of gross cropped area) of 57.32 million farmers was covered under PMFBY in the country. The claims to premium ratio of the scheme at the All India level was 0.72. The ratio was more than one in Andhra Pradesh (1.06), Karnataka (1.19), Kerala (1.34) and Tamil Nadu (2.79). The proportion of farmers benefitted through the PMBFY scheme at the all India level was 24.96 per cent (14.30 million farmers). The proportion of farmers benefitted was higher in Andhra Pradesh, Gujarat, Karnataka, Maharashtra, and Tamil Nadu in comparison to the other states. Average sum insured per ha of insured area in the major states ranged from Rs. 17,017 in Rajasthan to Rs.60,493 in West Bengal. The average sum insured per ha in the country stood at Rs. 36, 145. In 2017-18, PMFBY covered an area of 52.10 million hectares of GCA, covering 52.00 million farmers in 2017-18, the total sum insured being Rs. 2,07,896 crores. This shows a decline in the number of farmers covered and area insured by 9.09 per cent and 7.61 per cent, respectively compared to the previous year, though the sum insured increased by 2.18 per cent. From the table 1.3, it is evident that kerala is the leading South Indian states for earning benefits from the crop insurance scheme PMFBY. In south India, Tamilnadu farmers are most benefited (84.75%) from PMFBY in the case of Rabi and second is Kerala farmers (69.14%). Except Telangana, Rabi farmers are most benefited from the scheme while compared to Kharif msurance.
Fig 1.2
Opinion of Farmers About The Influence Of Crop Insu rance On Risk Mitigation
TableI .4 Opinion of Farmers About The Influence Of Crop Insurance On Risk Mitigation Response
Alappuzha No Of Respondents
Kottayam No Respondents
Of
Palakkad No Respondents
Of
Total
Strongly Agree Agree Neutral Disagree Strongly Disagree
39 (52.7) 23 (31) 8 (10.8)
42 (43.3) 31 (31.9) 20 (20.6)
34 (46.5) 16 (21.9) 11 (15)
115 (47.1) 70 (28.6) 39 (15.9)
4 (5.4) 0 (0)
3 (3.1) 1 (1)
9 ( 12.3) 3 (4.1)
16 (6.5) 4 ( 1.6)
Total Source: survey data
74 (100)
97 (100)
73 (100)
244 (100)
Figures shown in bracket are percentages
The overall response indicates that 47.1% of respondents 'strongly agree' with the crop insurance as a risk mitigation strategy, while 28.6% 'agree' and 1.6% 'strongly disagree' with it as risk mitigation strategy. 52.7% of respondents in Alappuzha, 46.5% in Palakkad and 43.3% in kottayam strongly agreed with the crop insurance as a risk mitigation strategy. Few of them disagree with the statement because of the delay in settlement of claims and some of them are doing the farming activity on leased land. In the case of leasing, the land owners are least interested to insure their farm from risk.
Farmer's Preference To Various Sources For Availing Agricultural Insu rance
Table I .5 Source
Rural agent Commercial bank Cooperative society Private insurance company Government Others
Preference To Various Sources For Availing Ag ricultural Insurance
Alappuzha
Kottayam
Palakkad
Overall
Index Of Preference (Weighted Average Score)
Rank
Index Of Preference (Weighted Average Score)
Rank
Index Of Preference (Weighted Average Score)
Rank
Index Of Preference (Weighted Average Score)
Rank
5.23 3.68
6 5
5.32 3.78
6 4
5.31 3.85
6 4
5.29 3.77
6 4
2.71
2
2.65
2
2.64
2
2.67
2
2.62
1
2.30
1
2.31
1
2.41
1
2.94 3.54
3 4
2.75 3.87
3 5
2.76 3.95
3 5
2.82 3.79
3 5
Source: Survey data Chi square = 0.333 The table 1.5 discloses the preference to various sources for availing agricultural insurance by the farmers. The index of preference
was
calculated
by
using weighted average mean and it is ranked according to
their preference to various source for availing agricultural insurance. The overall index of preferences indicated that private insurance company, Cooperative Societies and Government agencies scored first, second and third rank respectively. The least preference was for the rural agents for availing agricultural msurance. The district wise analysis showed no variation in the given preferences of the first, second, third and sixth rank among the three districts. As per the index of preference, a slight variation can be seen in the fourth and fifth rank's preference to each source for availing agricultural insurance. In Kottayam and Palakkad the fourth and fifth rank were given to commercial banks and 'other category' respectively. In Alappuzha district, respondents prefer fourth to 'other category' and fifth to 'commercial banks'. Hl: There is significant difference among farmers preference to different sources for availing agricultural insurance among three different districts in Kerala. Friedman's Chi square test was used to test whether there is any significant difference in the preference to each source for availing agricultural insurance among three districts in Kerala. Chi square value is 0.333 and P
>
0.05; The result showed that there is no difference in the preferences to
each sources among the three selected districts in Kerala. Therefore, the null hypothesis is accepted .
SUMMARY SUGGESTIONS OF
FINDINGS, AND
CONCLUSION
According to ICRA NIPA Annual report , he agriculture sector grew at annual rate of 2.9 per cent during 2011- 12 to 2017-18. The performance of agriculture varied across the sub-sectors and regions. The sub-sectors like livestock and fisheries sub-sectors registered significantly higher growth of 7.2 per cent and 8.5 per cent, respectively, as compared to crop sub sector. Overall, the average monthly income of agricultural households has increased by 40 per cent from Rs. 6,426 to Rs. 8,931 in India. The analysis of socio- economic background of farmers in Kerala reveals that majority of the farmers are in the age group of 50 to 75 years. 75% of the respondents has only school education and have an annual income less than Rs. 150000. The analysis of farmers attitude toward agriculture insurance reveals that lack of awareness about agriculture insurance scheme and insurance providers was the most important reason for not availing agriculture insurance. It is realized that the agricultural department's officials take initiative in implementing the schemes properly and passing information to the general public in our country. It is better to conduct agricultural risk awareness classes or programmes through Medias and online platforms. It will be better to provide toll free helpline facility to all farmers for the purpose of communicating the risk related events to government and insurance providers. Promote ICT enabled agriculture especially in villages and rural areas. Establish weather station in all notified risk prone areas and to give accurate report to the farmers regularly. To take necessary steps to provide all weather related information through local newspaper and media. Create necessary updation related to the farmers in website like Kissan Kerala. It is necessary to make compulsory enrolment of the name of all farmers in their own respective agricultural department.
Ag riculture Insurance Schemes In India J...
National
J... Pilot
Agricultural
Modified
Insurance
National
Scheme (NAIS)
Agricultural Insurance Scheme (MNAIS)
J... Pilot Weather Based Crop Insurance Scheme (WBCIS) J... Pilot
Coconut
J... Pradhan
Mantri
Palm
Insurance
Fasal
Bima
Scheme (CPIS) Yojya (PMFBY)
J... Restructured J... Unified
Weather Based Crop Insurance Scheme (RWBCIS) Package Insurance Scheme (UPIS)
Ag riculture Insurance Companies in India
Following compames
are to
the maJor msurance providing agricultural
insurance in India;
D D D D
IFFCO Tokio Oriental Insurance Shriram General Insurance Royal Sundaram D United India D Cholamandalam Ms General Insurance D AIC (Agriculture Insu rance Company) D Reliance General D Tata AIG D ICICI Lombard General Insu rance D Bajaj Allianz D HDFC Ergo D SBI General D National Insurance D New India Insurance Despite vanous schemes launched from time to time in the country, agriculture insurance has served very limited pu rposes. The coverage in terms of area, number of farmers and value of agriculture output is very small, payment of indemnity based on the area approach misses affected farmers outside the compensated area, and most of the schemes are not viable. This requires renewed effort by the government in terms of designing appropriate mechanism and providing financial support for agriculture insurance. At the same time, formal risk mitigation mechanism such as agriculture extension systems, pest prediction and management system, formal credit lending systems and future contracts were evolved with support from both private and public sectors. The analysis of the farmers' perception about agricultural insurance shows that they are not fully satisfied with the present crop insurance scheme because of tedious procedure for availing claims, the loss amount is not fully recovered, only certain crops are covered under insurance scheme, crop insurance scheme is available only in certain areas. Faced with significant losses from natural calamities, a number of general insurers are understood to be reviewing their crop insurance portfolios and even considering moving out of the segments. According to the report of Business line, Due to high reinsurance rate, ICICI Lombard general insurance already announced its decision to exit crop insurance under the Pradhan Mantri Fasal Bima Yojana. Cholamandalam MS General Insurance, Tata AIG and Shriram General Insurance also seems to have exited the field during 2019-20. Due to natural calamities in the year 2018-19 in Maharastra, Hari yana, Andra pradhesh and Chattisgarh; insurance companies are need to pay a higher amount in the form of claims to the farmers which will be higher than the premium. According to government data, the gross premium under PMFBY in FY 2019 is estimated to be 20923 crore, while the claims amounted to 27550 crore. This also shows that crop insurance business also need government support. There are no to opinions on the importance agriculture insurance market in India, two third of the farmers here still depend upon the seasonal factors for their earnings. Thus government should set up insurance companies right from the village, district and to state level for encouraging farmers to insure themselves from the risk involved in agriculture and allied activities. So the task before the government is to protect the farmers from the agrarian crisis. It will pave the way for the economic development of the country.
REFERENCE
1. L Madhusudhan (2015) agriculture role in Indian economy. 2. H Narayanan (2006) Indian insurance a profile, Jaisco publishing house, 438- 456. 3. Sun Liangyuan, Z. Y. (2001). Characteristics and Risk Management of Agricultural Risk in Transitional Period. Journal Issues of Agricultural Economy. Agriculture msurance concepts and country initiatives, The Icfai university press. 5. Reddy, N. H (2017).Weather index based crop insurance in Karnataka. A study with special reference to food crops. University of Mysore.
4. Gosh subir (2009)
6. Jose, Josheena (2016). A study on the impact of the agriculture insurance and risk management, Mg University.
7. K, M. K. (2009). In working paper No.54 Kerala research programme on Local Development Centre for development studies, Thiru vananthapuram. 8. www.ncap.res.in. (2008). Retrieved from google: http://www.neap.res.in
9. Pradhan Mantri Fasal Bima Yojana Ministry Of Agriculture & Farmers Welfare; 2017 data http://www.pmfby.gov .in
A STUDY OF M-WALLET AWARENESS AND USAGE IN SOUTH KERALA **Ms. SHAHANA A. SALAM, Mr. UNNI P.V, M. Phil Scholars, School of Management & Business Studies, Mahatma Gandhi University, Kottayam
ABSTRACT M-Wallet or Mobile Wallet is a virtual wallet that stores the payment card information on a smart phone. Mobile wallets are a convenient way for a user to make in-store payments and can be used at merchants listed with the mobile wallet service provider. After Demonetization, M-Wallet played a vital role in the economy. This study tries to analyze M-Wallet awareness and usage in South Kerala. The purpose of this paper is to find out the relationship between the awareness and usage of M-Wallets. Another purpose is to study demographic features influence the usage of the M-Wallets. The study is based on both primary and secondary data. The data can be divided into categories such as – primary data and secondary data. The primary data was collected from 200 respondents over 6 districts (such as Thiruvananthapuram, Kollam, Pathanamthitta, Alapuzha, Kottayam and Idukki) in Kerala by using a structured questionnaire method. The data was collected using cluster sampling among the m-wallet users. The secondary data used for the study was collected from various sources like websites, journals, magazines and newspapers.
KEYWORDS: M-Wallets, Smartphone, Demonetization, Economy
I. INTRODUCTION M Wallet is a relatively new concept in the field of economy. When we investigate the history of economic transaction, it is totally effortless economic way. Today everyone considers mobile as an unavoidable device in day to day life. So many applications are there with mobile of which this will be the most convenient one. If large purse wallet and cash can be replaced like this, it will be a wonderful experience. As technology is being advanced, more and more users can be attracted. At present, instead of physical wallet people used to pay through mobile wallets. Mobile Wallets are known as virtual wallets which act as a container that stores your credit card or debit card information on your mobile device. Instead of using cash or debit card for any payment, you can just pay through your Smartphone, smart watch or tablet. Using m-wallets, you can do the online and offline transaction to merchant registered with the mobile wallet service provider. Millions of users in India are doing their daily transaction from small to big amount through virtual wallets – as they are getting discounts on purchase provided by the mobile wallet service provider.
These type of easy economic transactions came in to wide use recently. As a Part of ensuring e literacy to everyone, the usage will be in hike. Transaction of commodities were replaced by metallic coins and there after paper money. It has been replace d by e wallets and now trending towards M wallets. Overview of the Mobile Wallet Market in India : Since the dawn of the digital era in India, most of our attention has moved from face to face conversation online. It is only because of the youths of the new generation in India who started trusting the internet and realized the importance of going digital. Many innovations, ideas, and inventions have been introduced on the path of digital India to make the dream of Digital India a reality. According to RBI data,(Deloitte analysis):The mobile wallet industry has been on a strong growth trajectory in the past five years. Between FY13 & FY17, transaction volume and value saw a phenomenal CAGR c.120%, both having more than doubled between FY16 and FY17 itself. There are a number of tailwinds pushing the industry along its growth trajectory, which include increased technology adoption, overall growth of the e-commerce industry and rising need for convenience among consumers. 01. Increased technology adoption: Mobile phone subscriptions in India have crossed the 1 billion mark in 2016. Of these, an estimated 371 million users subscribe to mobile internet. As the number of affordable smartphones entering the market increased and tariffs on data plans continued to decrease, the user base for mobile wallets also expanded drastically in the last five years 02. .E-Commerce growth: The Indian e-Commerce industry has seen remarkable growth to have reached c. USD 38 billion by 2016. With the preference to shop online, adoption of mobile wallets, which provide an alternative for cash, and card transactions has also increased. A number of online merchants have also been providing incentives to consumers for using mobile wallets as their payment mode. For example, Flipkart gives a 10-20% discount on orders paid through mobile wallets. 03. Consumer need for convenience: Consumer need for convenience can be seen across a number of industries, including food, and the mobile wallet industry is benefiting from that trend. Ease of usage, especially with money transfer and bill payment services are a big draw for the younger user base.
Mobile wallet transactions in FY13 to FY17
India‘s journey in the field of the mobile wallet is making its way towards success. From the launch of 1s mobile wallet, India has now over 15 mobile wallets with over 70 million users. After that, on the way of Digital India, India has never looked back and now India is the world‘s largest-growing mobile payments market. On the road of success, everyone faces lots of hurdles. Similarly, in the process of adopting mobile wallets during demonetization, Indian citizens faced some harsh challenges but now use of mobile wallet is very common in India. As we all know, the use of smartphones is increasing exponentially in India, and this increase is directly helping the mobile wallets system to get some great existence. According to eMarketer, India has 337 million active smartphone users until November 2018. Now, according to Cisco, by 2022, there will be 829 million smartphone users in India, which will be 60% of the total population. With so many people using smartphones in India, the use of mobile wallets are also increasing day by day. According to the report released by eMarketer over the total number of smartphone users in India in 2018, India had 73.9 million people using mobile wallets. TYPES OF MOBILE WALLETS IN INDIA: There are four types of Mobile Wallets in India Open, Semi-open, Semi-closed and closed. Open wallets are the ones that allow you to buy goods and services, withdraw cash at ATMs or banks and transfer funds. These services can only be jointly launched with a bank. M-Pesa by Vodafone and ICICI is one such example. Apart from the usual merchant payments, it also allows you to send money to any mobile number account. Airtel-Money is a semi-open wallet, which allows you to transact with merchants that have a contract with Airtel. You
can‘t withdraw cash or get it back. You will have to spend what you load. Then these are closed accounts, which are quite popular with e-commerce companies, where a certain amount of money is locked with the merchant in case of a cancellation or return of the order, or gift cards. Lastly these are semi-closed wallets like PayTM which do not permit cash withdrawal or redemption, but allow you to goods and services at listed merchants and perform financial services at listed locations. II. STATEMENT OF THE PROBLEM In India, Mobile wallets are becoming favorite day by day. And people are making a great habit of using mobile wallets in daily life. However, India still has to cover a significant distance to achieve the target of Cashless India. Nowadays, many mobile applications like PayTM, Mobikwik, PayPal, PhonePe, Google Pay have been developed to give massive support to the cashless transaction. But still, 2019 will be crucial for India because many more new technologies will be added to attract users with some joyful cash back offers. Many cities in India are remaining to adopt mobile wallets, and 2019 will be the year for those cities. Various Mobile Application Development Companies are also developing on-demand apps for mobile wallets. Apart from mobile wallets, various other apps and technologies will be in the discussion in 2019, but still, mobile wallets will remain on top in India. III. OBJECTIVES
To study the awareness towards the usage of mobile wallets in South Kerala
To find out the impact of various demographic variables on the usage of mobile wallets
To identify factor influencing the usage of mobile wallets
To find out the problems faced in using mobile wallets.
IV. HYPOTHESIS H01: There is no significant difference in the awareness of mobile wallets based on Age, Gender, Qualification, Occupation and Monthly Income of the respondents. H02: There is no significant difference in the usage of mobile wallets services based on the age, gender, Qualification, occupation and monthly/family income of the respondents H03: There is no significant relation of factors influencing and level of satisfaction of using mobile wallets
V. REVIEW OF LITERATURE Junadiª, Sfenriantob(2015): In A Model of Factors Influencing Consumer‘s Intention To Use E-Payment System in Indonesia the consumer‘s intention to use e-payment system in Indonesia is examined. It is based on UTAUT to investigate customer‘s intention to use epayment technology in Indonesia. There are 2 (two) external variables added to UTAUT model. The external variables are culture and perceived security. Culture will be used to explain more details about consumers habits while perceived security will explain how secure e-payment system that consumers feel accordance with the conditions of Indonesian society today. Nidhi singh, Shalini Srivastava, Neena Sinha(2017):―Consumer Preference and Satisfaction of M-Wallets: A Study on North Indian Consumers‖ explores the relationship between perception, preference and satisfaction of mobile wallet users. Furthermore, in this study the effects of gender and age of consumers on their perception, preference and satisfaction with mobile wallets will be studied. The impact of perception, preference and satisfaction on the usage rate of mobile wallets will also be studied. Consumers‘ awareness about technology advancement is growing rapidly, and their changing perception is leading to an increased usage of mobile wallets in India. Consumers‘ demand has increased with technology advancements. This study is based on the integrated UTAUT model (Shin, 2009) to examine consumers‘ perception, preference, satisfaction level, and actual usage of mobile wallets India. They have added one additional variable, Hedonism, to evaluate consumers‘ perception on mobile wallet usage (Wentzel et al., 2013). Demographic variables, like age and gender, are also tested on perception, satisfaction and mobile wallet usage. Their results are consistent with prior research, as it shows a positive correlation between consumers‘ perception and satisfaction. All the eight variables are found to be significant. The current study confirms the importance of consumers‘ perception on satisfaction. The scholars have discussed that mobile wallets have been created to enhance consumers‘ overall experiences, thus leading to satisfaction. In this study, They found that there is a significant positive correlation between preference and satisfaction. This means if consumers are satisfied with the benefits of mobile wallet, they prefer using all its services, and increase their usage with time. Shaeril Michael Almeida, George Jose(2017): The primary objective of Adoption & Practices of Mobile Wallet Users‘ in Bengaluru is to identify the influence of Benefits & Uses and Intension to Use on the adoption of mobile wallet among the users in the district of Bengaluru. Secondly the study tries to understand their practices in m-wallet among the
users. The data collected through a pre structured interview schedule from the mobile wallet users using simple random sampling was further analysed using one sample t-test, rank analysis and other statistical techniques. Their result that within a short period of time, mobile wallet has been more preferred mode than mobile banking and credit card payments but still less preferred than internet banking. Debit card is the most preferred mode among the respondents. Though the amount spends through mobile wallet and other digital modes are still very less compared to the cash transactions in the Indian economy. Intension to Use has more influence on the adoption of mobile wallets than Benefits & Uses factors. Social status, peer group influence and reduced cost are not the factors that influence the adoption of mobile wallet among the users. Mobile wallet users‟ are more found of using open wallets and semi-open wallets than closed wallets. High speed internet revolution along with the demonetization policy has increased the users of mobile wallet. But the new regulations of KYC norms will not be positive for existing users of mobile wallet and might decrease the existing users or amount spend. Aydin & Burnaz, (2016):In―Adoption of mobile payment system: A study on mobile wallets‖explained that Consumers attitude development and intension to use in Turkey was taken for adoption of mobile payment systems or on mobile wallet and according to (Aydin & Burnaz, 2016), time saving was the major reason as a benefit or use which influenced them to adopt mobile wallet. Also regarding benefits and uses of mobile wallet to adoption, as per (Business Insider, 2016) report titled ―The mobile payment report: Market Forecasts, Consumer trends and the barrier and benefits that influence adoption‟ identified availability of wide spread services and promotional benefits in the forms of cash discounts, cash back & other promotions in the form of coupons. Madan & Yadav,( 2016):―Behavioural Intension to Adopt Mobile Wallet: A Developing Country Perspective‖ stressed various factors under the behavioral intension to adopt mobile wallet and identified the effect of social factors has no significance with performance expectancy of mobile wallet through a structural equation among 210 respondents. In a study of (Thakur & Srivastava, 2014) The study on the title ―Adoption Readiness, Personal Innovativeness, Perceived Risk and Usage Intension across customer groups for Mobile Payment Services in India‖
identifies the users‟ usage intension of adapting to newer
technology to be the major reason to adopt mobile wallet. Dong-Hee Shin(2009):―Towards an understanding of the consumer acceptance of mobile wallet‖ seeks to validate a comprehensive model of consumer acceptance in the context of mobile payment. It uses the unified theory of acceptance and use of technology (UTAUT)
model with constructs of security, trust, social influence, and self-efficacy. Structural equation modeling is used to construct a predictive model of attitudes toward the mobile wallet. Individuals‘ responses to questions about attitude and intention to adopt/use a mobile wallet were collected and analyzed with various factors modified from UTAUT. While the model confirms the classical role of technology acceptance factors (i.e., perceived usefulness and ease of use are key antecedents to users‘ attitude), the results also show that users‘ attitudes and intentions are influenced by perceived security and trust. In the extended model, the moderating effects of demographics on the relations among the variables were found to be significant. The proposed model brings together extant research on mobile payment and provides an important cluster of antecedents to eventual technology acceptance via constructs of behavioral intention to use and actual system usage. Deepak Chawla and Himanshu Joshi(2019):The purpose of ―Consumer attitude and intention to adopt mobile wallet in India – An empirical study‖ is to empirically examine the factors that influence a consumer‘s attitude and intention to use mobile wallets using a sample representative of Indian users. The finding that security impacts trust indicates that vendors should establish user trust in mobile wallet by ensuring that their expectations of safe and secure transaction are met. This can be achieved by developing reliable, robust, secure and transparent infrastructure for rendering mobile wallet services. Apart from vendors, mobile wallet service providers (banks, financial institutions, insurance companies, retailers, etc.) should educate their users about the do‘s and don‘ts off mobile wallet, security features of mobile wallet and highlight how to safely transaction through mobile wallet.
VI.
RESEARCH METHODOLOGY: The study titled A Study of M-Wallet Awareness and Usage in South Kerala is based on both primary and secondary data.
Research Design:The data can be divided into categories-primary and secondary data.
The
primary
data
was
collected
200
respondents
from
6
districts(Thiruvananthapuram, Kollam, Pathanamthitta, Alappuzha, Kottayam and Idukki) of Kerala by using a structured questionaire method. The data was collected using convenient sampling among 150 m-wallet users. The secondary data used for the study was collected from various sources like websites, journals, magazines and newspapers.
Population: The universe of the study is the Mobile users in kerala, focused on 6 districts such as Thiruvananthapuram, Kollam, Pathanamthitta, Alappuzha, Kottayam, and Idukki. From the mobile users the data of 150 mobile wallet users were collected by means of a survey. Sampling techniques: Convenient sampling method is used in this study. Techniques of Data analysis: After collecting data from the respondents it was fed into the computer using Microsoft Excel. Then the analysis of the data was done by using the application package SPSS. In the analysis, simple mathematical and statistical tools & techniques like tables, graphs, averages, percentage, rank analysis and „one way ANOVA are used. Period of Study: Present study has gathered primary and secondary sources of information related
to A Study of M-Wallet Awareness and Usage in South Kerala for the
past 7 years from 2013 to 2019.
VII. SCOPE OF THE STUDY The study titled A Study of M-Wallet Awareness and Usage in South Kerala is most focused on Thiruvananthapuram, Kollam, Pathanamthitta, Alappuzha and Kottayam Districts of Kerala State. Further the study considers overall age group of people for its responses to conduct data analysis and arrive at findings of the study.
VIII. LIMITATION OF THE STUDY The limitations of the study are listed below; ● Availability of resources and time are important limiting factor for this study. ● The reliability of the study depends on reliability of the information given by the respondents. Some of the respondents might have provided the biased information. ● Inherent limitation of sampling technique may also have the study to a certain extent.
IX. ANALYSIS Table 1: DEMOGRAPHIC PROFILE OF THE RESPONDENTS Number
Percent
MALE
102
51.0
FEMALE
98
49.0
Total
200
100.0
BELOW 20
23
11.5
21-40
121
60.5
41-50
19
9.5
51 and above
37
18.5
Total
200
100.0
UPTO +2/DIPLOMA
19
9.5
GRADUATE
58
29.0
PG/PROFESSIONAL
123
61.5
Total
200
100.0
STUDENT
59
29.5
SELF EMPLOYED
88
44.0
EMPLOYER
15
7.5
EMPLOYEE
19
9.5
OTHERS
19
9.5
Total
200
100.0
UPTO RS15000
38
19.0
RS15001-30000
34
17.0
RS 30001-45000
19
9.5
45001-60000
45
22.5
GENDER
AGE
QUALIFICATION
OCCUPATION
MONTHLY INCOME
ABOVE 60000
22
11.0
NIL
42
21.0
Total
200
100.0
Source: Primary data
Table 2 : AWARENESS OF MOBILE WALLETS Response
Number Respondents
Percent
Yes
150
75.0
No
50
25.0
Total
200
100.0
Source: Primary data
Interpretation: Table 2 shows that Out of 200 respondents,75% of the respondents get awareness of M-Wallets and only 25% of respondents didn‘t get awareness of M-Wallets
Table 3: USAGE OF MOBILE WALLETS Duration
Number of Respondents
Percent
On daily
68
45.3
Once a week
71
47.3
Once a month
11
7.3
Total
150
100.0
Source: Primary data
Interpretation: Table 3 Reveals that out of 150 users of M-Wallets 47% of the respondents are using Mobile Wallets only once a week and 45% of respondents using mobile wallets on daily. Only 7.3% of users using M-Wallets once a month. Table 4: PREFERABLE MOBILE WALLETS M-Wallets
Number of Respondents
Percent
PAYTM
60
40.0
MOBIKWIK
35
23.3
PHONEPAY
41
27.3
AMAZONE PAY
2
1.3
OTHERS
12
8.0
Total
150
100.0
Interpretation: Table 3 shows that Source: Primary data
Interpretation: Table 4 shows that PayTM is the most preferable Mobile-Wallet among the 5 categories of M-Wallets, chosen by the 150 users in this survey is 40%.
Table 5: PURPOSES OF MOBILE WALLETS BY RESPONDENTS Purpose
Number Respondents
Percent
TRANSACTION
6
4.0
SHOPPING
6
4.0
RECHARGING
2
1.3
BILL PAYMENT
41
27.3
ALL THE ABOVE
83
55.3
OTHERS
12
8.0
Total
150
100.0
Source: Primary data
Interpretation: Table 5 shows that 55.3% mobile wallet users use for it for the purpose of financial transaction, shopping, recharging of DTH, mobile phones etc.., various bill payments and all other related uses.
Table
6:
FACTOR
INFLUENCING
THE
USAGE
OF
M-WALLETS
RESPONDENTS Factors
Strongly
Somewhat
disagree
disagree
(in %)
(in %)
PEU
1.3
0
QT
1.3
ST
1.3
influencing the usage of M-Wallets
Neither
Somewhat
Strongly
agree
agree
(in %)
(in %)
10.7
26.7
61.3
0
16.3
18
65.3
5.3
24
26.7
42.7
agree disagree (in %)
or
BY
BPO
1.3
2.7
18.7
34.7
42.7
UR
1.3
12
19.3
30.7
36.7
TS
0
0
8.7
21.3
70
LTC
0
6
17.3
20.7
56
Source: Primary data
Interpretation: Table 6 depict that the factors influencing the usage of mobile wallets. Where; PEU: Percieved Ease of Use, QT: Quick Transaction, ST: Secure Transaction, BPO: Better Promotional Offers, UR :Useful Rewards TS: Time Saving and LTC: Less Transactional Cost. Most of the respondents strongly agree with the factors influencing the usage of Mobile Wallets.
Table 7: LEVEL OF SATISFACTION OF USING M-WALLETS Level
Number of Respondents
Percent
Not Satisfied
2
1.3
Moderate
25
16.7
Fully Satisfied
123
82.0
Total
150
100.0
Source: Primary data
Interpretation: Table 7 shows the level of satisfaction in using mobile wallets. Out of 150 users, 82% of users are satisfied in using mobile wallets.
Table 8: TRANSACTION FAILURE FACED BY RESPONDENTS Levels of Failure
Number of Respondents Percent
RARELY
98
65.3
FREQUENTLY
25
16.7
MOSTLY
5
3.3
NEVER
22
14.7
Total
150
100.0
Source: Primary data
Interpretation: Table 8 represents the transaction failure faced rarely by respondents is 65.3%.It may be due to transaction failure or lack of internet.
HYPOTHESIS TESTING:
There is no significant difference in the awareness of mobile wallets based on Age, Gender, Qualification, Occupation and Monthly Income of the respondents.
Table
9:
AWARENESS
OF
MOBILE
AGE,GENDER,QUALIFICATION,OCCUPATION
WALLETS AND
ON
MONTHLY
INCOME OF RESPONDENTS - ANOVA Sum of Squares
df
Mean Square
F
Sig.
0.441
0.724
0.026
0.871
0.445
0.642
0.132
0.97
0.195
0.964
AGE Between Groups
0.251
3
0.084
Within Groups
37.249
196
0.19
Total
37.5
199
Between Groups
0.005
1
0.005
Within Groups
37.495
198
0.189
Total
37.5
199
Between Groups
0.169
2
0.084
Within Groups
37.331
197
0.189
Total
37.5
199
Between Groups
0.101
4
0.025
Within Groups
37.399
195
0.192
Total
37.5
199
Between Groups
0.188
5
0.038
Within Groups
37.312
194
0.192
Total
37.5
199
GENDER
QUALIFICATION
OCCUPATION
MONTHLY INCOME
Source: Primary data
To find out whether there is any significant difference in the awareness of mobile wallets on the bases of Age, Gender, Qualification, Occupation and Monthly Income of the respondents, ANOVA was applied. This table shows that the significant value is more than 0.05, hence the null hypothesis is accepted. Hence the conclusion that there is no significant difference in the awareness of mobile wallets based on Age, Gender, Qualification, Occupation and Monthly Income of the respondents.
There is no significant difference in the usage of mobile wallets based on the Age, Gender, Qualification, Occupation and Monthly Income of the respondents
TABLE 10: USAGE OF MOBILE WALLETS ON THE BASES OF AGE,GENDER,QUALIFICATION,OCCUPATION
AND
MONTHLY
INCOME OF RESPONDENTS - ANOVA Sum of Squares
df
Mean Square
F
Sig.
2.304
.078
7.017
.009
1.646
.195
.379
.823
AGE Between Groups
10.101
3
3.367
Within Groups
286.379
196
1.461
Total
296.480
199
Between Groups
10.147
1
10.147
Within Groups
286.333
198
1.446
Total
296.480
199
Between Groups
4.874
2
2.437
Within Groups
291.606
197
1.480
Total
296.480
199
Between Groups
2.287
4
.572
Within Groups
294.193
195
1.509
Total
296.480
199
GENDER
QUALIFICATION
OCCUPATION
MONTHLY INCOME Between Groups
33.513
5
6.703
Within Groups
262.967
194
1.356
Total
296.480
199
4.945
.000
Source: Primary data
Table 10 shows that Except Monthly Income, the significant value more than 0.05, therefore the null hypothesis is accept with the conclusion is There is no significant the Age, Gender, Qualification and Occupation
of the respondents. But in case of Monthly Income the
significant value is less than 0.05.So the hypothesis is rejected and conclude that there is significant difference in the usage of mobile wallets based on monthly income among the respondents.
There is no significant relation of factors influencing and level of satisfaction of using mobile wallets
TABLE 11: factors influencing and level of satisfaction of using mobile walletsANOVA Sum
of
Squares
df
Mean Square
F
Sig.
46.273
.000
28.965
.000
52.496
.000
PERCIEVED EASE OF USE Between Groups
49.145
3
16.382
Within Groups
51.688
146
.354
Total
100.833
149
Between Groups
37.622
3
12.541
Within Groups
63.211
146
.433
Total
100.833
149
Between Groups
59.646
4
14.911
Within Groups
41.188
145
.284
QUICK TRANSACTION
SECURE TRANSACTION
Total
100.833
149
BETTER PTOMOTIONAL OFFERS Between Groups
43.981
4
10.995
Within Groups
56.852
145
.392
Total
100.833
149
Between Groups
51.287
4
12.957
Within Groups
49.006
145
.338
Total
100.833
149
Between Groups
36.845
2
18.422
Within Groups
63.989
147
.435
Total
100.833
149
Between Groups
47.120
3
15.707
Within Groups
53.713
146
.368
Total
100.833
149
28.043
.000
38.337
.000
42.321
.000
42.693
.000
USEFUL REWARDS
TIME SAVING
LESS TRANSACTION COST
Source: Primary data
Table 11: depicts all the factors that influencing the usage of mobile wallets are fully satisfied. Because of all factors having significant value less than 0.05 (ie; 0.00).Hence the null hypothesis is rejected with the conclusion that There is significant relation of factors influencing and level of satisfaction of using mobile wallets.
X.
FINDINGS 1. In our study shows that 51% of respondents are males and 75.5% of the respondents are the age group of 21-40 years. 2. 65.5%of respondents are having post graduate or Professionals. 3. Majority of respondents are Self-employed but they have well financial status. 4. Out of 200 respondents, 75% having awareness of M-Wallets through advertisement, friends, family and other sources. And they also using M-Wallets
5. Out of 150 users M-Wallets 47% of the respondents are using Mobile Wallets only once a week .and 45% of respondents using mobile wallets on daily .only 7.3% of users using M-Wallets once a week. 6. PayTM is the most preferable Mobile-Wallet among the 5 categories of MWallets, chosen by the 150 users in this survey is 40%. 7. Majority of mobile wallet users use for it for the purpose of financial transaction, shopping, recharging of DTH, mobile phones etc.., various bill payments and all other related uses. 8. Most of the respondents are argued that M-Wallets are easy to use, to provide quick
and secure transaction, save time, reduce transactional cost and they
provide better promotional offers and useful rewards. 9. Majority of respondents have fully satisfied and recommended others 10. The transaction failure faced rarely by respondents is 65.3%.It may be due to transaction failure or lack of internet 11. .Some respondents opinion there are some problem faced in using mobile wallets. They are lack of awareness of M-Wallets, Lack of security, Transaction failure and Cannot transfer Cash in Wallet to account
XI.
CONCLUSION In recent times Mobile wallet play an important role in our day to day life. Mostly it is used by youngsters in the range of 20 to 40 years. Anyhow age group of people above 40 years started using Mobile wallets. It is very useful for all people in the area of shopping, recharging, bill payment, booking tickets, ordering food and others. In addition to this Mobile Wallet Apps provide more promotional offers and rewards for the widespread use of it. At the same time users have concern with the transaction failure and safety of Mobile-Wallets. The purchasing power has increased while using m-wallets which intern decreases the saving capacity of users. Considering all the above facts we can say that the Mobile Wallet users are satisfied in using Mobile-Wallets for different purpose in their day to day life.
REFERENCES
Aydin, G., & Burnaz, S. (2016). Adoption of mobile payment system: A study on mobile wallets. Journal of Business, Economics and Finance, 5(1), 73-92.
Madan, K., & Yadav, R. (2016). Behavioural intention to adopt mobile wallet: a developing country perspective. Journal of Indian Business Research, 8(3), 227-244.
Shin, D.-H. (2009), ―Towards an understanding of the consumer acceptance of mobile wallet‖, Computers in Human Behaviour, Vol. 25, pp. 1343-1354.
Deepak Chawla and Himanshu Joshi.(2019),‖ Consumer attitude and intention to adopt mobile wallet in India – An empirical study‖ International Journal of Bank Marketing © Emerald Publishing Limited 0265-2323DOI 10.1108/IJBM-09-2018-02
Sardar, D. R. (2016, December). Perference towards mobile wallets among urban population of Jalgaon city. Journal of Management, 3(2), 1-11. Retrieved from www.iaeme.com
https://www.gadgetsnow.com/
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https://magnetoitsolutions.com
https://www2.deloitte.com/
RECENT TRENDS IN INDIAN BANKING *Ms. JANISBEN BINO, Faculty, University Christian College, Alwaye, Kerala, email: [email protected]
INTRODUCTION „Necessity is the mother of invention‟, banks are now finding solace in new-age technologies such as artificial intelligence (AI), Machine Learning and more. The applications of AI and ML in data analytics and customer service create the opportunity for exponentially more personalized and faster customer experiences, significantly better insights, and, automation of back-end workflows. Artificial Intelligence also enables banks to manage huge volumes of data at record speed to derive valuable insights from it. Features such as AI bots, digital payment advisers and biometric fraud detection mechanisms lead to higher quality of services to a wider customer base. All this translates to increased revenue, reduced costs and boost in profits. OBJECTIVE OF THE STUDY
To get an insight into latest trends in Banking
To become aware of the response of Banking industry to changing economic environment
METHODOLOGY The present review paper is based on the Secondary data. It analyses the available literature on Trends in the banking sector in India. The Secondary data pertaining to the study was obtained from the various journals, books, and websites of the concerned Banks. LITERATURE REVIEW Forrester, 2010 • Next-generation business intelligence takes shape, combining real-time access with pervasiveness, agility, and self-service • SaaS and cloud-based platforms become standard • Apps and business processes go mobile on powerful devices and faster networks • Telepresence gains widespread use • Customer community platforms integrate with business apps • Apps and business processes go mobile on powerful devices and faster networks
Ovaskainen and Tinnilä, 2011 • globalization and widening markets • integration of technologies and business processes • evolution of business models • increasing role of services and change of demand structures • need for multi-channel solutions and channel management • increasing role of cooperative networks and partnerships • structural changes in business • increasing knowledge-intensity HOW AI HELPS BANKING SECTOR Most of the banks have started embracing AI and related technologies worldwide. As per the survey by National Business Research Institute, over 32 percent financial institutions use AI by the means of recommendation engines, voice recognition and predictive analysis. Banks are using AI technology for enhancing the customer experience by giving it a personalized touch. One major hindrance to AI adoption is legacy systems. Since banking is a more traditional industry, leaders are reluctant to upgrade or change current technology processes. The problem is these legacy systems often prevent seamless integration of AI. With the surge of financial technology (fintech) companies, however, banks need to use technology to remain competitive. Consumers want more from banks, and AI can help deliver on that. And machine learning, a subset of AI, is dynamic and allows banks to rely less on human experts, which means employees can focus more on improving the customer experience. AI banking apps can work wonders. It is easy to assist the users in financial planning with AI strategies. For example, if the user wants to buy a new house, the mobile banking app can guide the user with budget and other related details on the basis of current expenditure and income. If we talk about some of the current examples like, State Bank of India, the largest bank in India, last year conducted ―Code for Bank‖ hackathon to encourage developers to build solutions leveraging futuristic technologies such as AI and Blockchain into the banking sector. Private bank like HDFC Bank and ICICI Bank have already introduced chat-bots for customer service. Some have even gone ahead with placing robots for customer service.
Canara Bank installed Mitra and Candi robots at some of its offices. While there are numerous implications of machine learning in the banking experience, here are Recommendations Engines Nine areas where the technology will improve it substantially:1. Fraud Detection 2. Managing Customer Data Base 3. Risk Modelling for investment banks 4. Personalized Marketing 5. Lifetime value prediction 6. Real-time and predictive analytics 7. Customer segmentation 8. Customer Support
DATA ANALYTICS Data Analytics has transformed the way traditional banks worked in the past and has been very helpful in informing decision-making. Through associated big data tools, banks can gain greater visibility into customers‘ behaviors, assess the probability of risk and help small businesses. Big Data combines various data sources like the company, its channel partners, customers, suppliers, social media and even external data suppliers. The banker today doesn‘t ask the customer their requirements while they predict the same through various data Analytics tools. The Data analytics tools are used now a day‘s for •
Improved Customer Relations
•
Internal Controls and Risk Management
•
Helps Small Businesses
According to NASSCOM, the big data analytics industry in India is expected to reach $16 billion by 2025. By deploying analytics, the BFSI sector aims to solve three major business challenges – performance, risk accessibility and profitability.
VOICE RECOGNITION Banking in the branches has been a thing of the past the new trend entering the banking system is Voice. Big banks and financial companies have started to offer banking through virtual assistants - Amazon's Alexa, Apple's Siri, and Google's Assistant - in a way that will
allow customers to check their balances, pay bills and, in the near future, send money just with their voice. And with the rapid adoption of Zelle, a bank-to-bank transfer system, it soon could be possible to send money to friends or family instantly with voice commands. But the potential to do such sensitive tasks through a smart speaker raises security concerns. Virtual assistants and smart speakers are still relatively new technologies, and potentially susceptible to being exploited by cyber criminals. The Indian banking has also started using the same but as still there are various loop holes and security concern the system is not adopted completely. This is an emerging area in banking where in without any physical communication we will be able to do our basic banking through the use of technology. Some of the examples of banking are as follows: 1. SIA of SBI 2. Eva of HDFC 3. iPal of ICICI
FINTECH IN BANKING Financial institutions, financial procedures, and financial services have drastically evolved and improved in the last few decades. With the evolution of technology, the entire industry has undergone a massive transformation that has changed the way the financial procedures are carried out and the way the financial institutions operate. The collaboration between finance and technology has led to a radical change in several aspects of finances like banking, investment, trading, crypto-currency and more. This evolution has led to the popularity of a term ―Fintech‖, Fintech is much more than just a reference to financial technology. It is often referred to as the innovative technology that is used to improve the traditional financial methods and develop effective solutions for financial services which are at par with the latest technological trends. Banking software and mobile banking applications are classic examples of development in financial technology. Like every other country, India has also experienced the marvels of financial technology in the banking and finance sector. For India, which is a cash-driven country, this is a step towards creating a cashless society. With a range of Fintech services and Fintech software, it has changed the way the people carry out daily transactions and handle their money.
This dynamic transformation brought upon by the association of technology and the financial sector has opened a gateway for the Fintech ecosystem in India. The current FinTech ecosystem in India consists of startups, digital payment players (most notably Paytm), banks, insurance companies and big tech players like Amazon, Google Pay and Facebook-owned WhatsApp. Google rolled out India-centric Tez while both Samsung and Amazon introduced Samsung Pay and Amazon Pay. On the other hand, there are home-grown digital payment firms like Paytm, PhonePe, MobiKwik and FreeCharge (which are all are UPI-enabled) are strengthening their arsenal. Interestingly, Paytm, which is India‘s largest online payments and mobile wallet company, has invested $786 million in mobile payments to date. At its nascent stage, this sector seems to be growing at a very rapid pace with market full of start-ups and support from the banking sector and the Government. According to a report by the National Association of Software and Services Companies (NASSCOM), there are about 400 firms in India with a large amount of foreign investments invested in fintech market. As per the report, the fintech software and services market of India is expected to grow into an $8 billion market by 2020. It is estimated to grow by 1.7 times. OBESRVATION At the end, I would like to highlight AI, Data Analytics, and in general the Fintech revolution will enable banks to leverage human and machine capabilities optimally to drive operational and cost efficiencies for delivering personalized services. CONCLUSION AI will not only empower banks by automating its knowledge workforce, it will also make the whole process of automation intelligent enough to do away with cyber risks and competition from FinTech players. AI will enable banks to leverage human and machine capabilities optimally to drive operational and cost efficiencies, and deliver personalized services. All of these benefits are no longer a futuristic vision to accomplish for banks. By adapting AI, leaders in the banking sector have already taken actions with due diligence to reap these benefits.
REFERENCES 1.
Adapa, S. (2011). Continued and frequent use of internet banking by Australian consumers: Identification of the factor components. Journal of Internet banking and commerce. 16(2), 1-17
2.
Bask, A. Merisalo-Rantanen, H. Tinnilä, M. & Lauraeus, Th. (2012). Evolution of the Banking Industry and Future Trends – Case Finland. in Aspara, J. Rajala, R. and Tuunainen V.K.T. (Eds.) The Future of Banking Services, Aalto University Publication Series Business+Economy, Helsinki: Unigrafia, 2012.
Web Sites Visited • http://www.rbi.org.in • http://www.iba.org.in • http://www.banknetindia.com • http://www.worldbank.org • http://www.internetworldstats.com
ISBN: 978-93-5396-231-9