Pacific B usiness R eview I nternational

A Refereed Monthly International Journal of Management Indexed With THOMSON REUTERS(ESCI)
ISSN: 0974-438X
Imapct factor (SJIF): 6.56
RNI No.:RAJENG/2016/70346
Postal Reg. No.: RJ/UD/29-136/2017-2019
Editorial Board

Prof. Mahima Birla
(Editor in Chief)

Dr. Khushbu Agarwal
(Editor)

Ms. Asha Galundia
(Circulation Manager)

Editorial Team

Mr. Ramesh Modi

A Refereed Monthly International Journal of Management

BANKING AWARENESS OF THE RESIDENTS IN THE PRESENT FINANCIAL INCLUSION ERA IN NAGAPATTINAM DISTRICT, TAMIL NADU

Dr. S. Rajaswaminathan

Guest Faculty

Department of Commerce

School of Management

Pondicherry University, Karaikal Campus

Abstract

Reduction of poverty has been an essential objective of development policy since the inception of planning in India. Poverty Eradication, Employment Generation Programmes have been in operation since the post-independence of India, even though poverty and social exclusion continue to dominate socio-economic and political discourse in India. Financial Inclusion and Banking reforms attach vast significance to eradicate the poverty across states and the rural-urban areas. Despite being one of the ten fastest growing economies of the world, India is still home to one-third of the world’s poor. In developing economies like India, the banks have been playing a major role as mobilisers of savings and allocators of credit for production and investment. In case of population who are being poor and illiterate, their banking awareness is supposed to be low due to their lack of knowledge of the financial services offered by the banks and financial exclusion. Henceforth, this paper attempts to identify the banking awareness of the residents in the present financial inclusion era in Nagapattinam district, Tamil Nadu.

Keywords: Banking Awareness, Financial Inclusion, Commercial Banks (CBs)

INTRODUCTION

Financial crisis has had a significant negative impact on lives of individuals globally. Millions of people have lost their livelihoods, homes and savings. One of the major reasons for the crisis was that the financial system was focused on furthering its own interests and lost its linkage to the real sector and with the society at large especially vulnerable sections of society. Banking services are essentially for welfare of the public. Unrestrained access to public goods and services is the sine qua non of an open and efficient society. It is imperative, therefore, that the availability of banking and payment services to the entire population without discrimination is the avowed objective of public policy. Therefore, Financial Inclusion has emerged as a policy imperative for inclusive growth in several countries across the globe.

Financial inclusion process starts with providing access to basic banking services is the first phase. The mainstream, regulated financial players are capable of bringing about meaningful financial inclusion as they have the ability to make the necessary investment in the build up phase and also cross-subsidise the services in the initial stages till they become self-sustaining. Banks are focussed as the principal vehicle for financial inclusion, also stems from the fact that only they can offer the entire suite of products and services that would facilitate meaningful financial inclusion. Over the past five years, the Reserve Bank of India, as also other policy makers have resolutely pursed the agenda of financial inclusion and achieved discernible progress in improving access to financial services for the masses. However, the progress is far from satisfactory as evidenced by the World Bank Findex Survey (2012).

Nobel Laureate Prof. Amartya Sen has also noted, the thrust of developmental policy in India has undergone a paradigm shift from an exclusive focus on efficiency to one on equity; from the rate and pattern of growth, and on inequalities, distribution of income and wealth to the extent to which people are deprived of the requirements for leading a fulfilling life and suffer ‘capability deprivation’.

OBJECTIVE AND METHODOLOGY

The study has the objective of the banking awareness of the residents in the present financial inclusion era in Nagapattinam district, Tamil Nadu . Agriculture and Fishing along with Para marine activities like dry fish, prawn farming are the major economies in the district. The people of Nagapattinam district having affected by TSUNAMI in the year 2004, and also the cultivable lands are affected regularly by monsoon conditions, thereby the population are living in poor financial conditions with the lack of financial services accessibility. The district has around 103 branches of Nationalised Banks, 33 branches of Private Banks, 5 Pandian Grama Bank (RRB) and 208 Business Correspondents as operators and providers of financial services to the rural and semi-urban areas. The primary data is collected residents of selected blocks of Nagapattinam District through printed questionnaire (both in English and Vernacular language). Based on the population size of three blocks (semi-urban, coastal semi-urban and rural) of the district such as Mayiladuthurai, Nagapattinam and Sembanarkovil have been selected. The following villages (villages having population of more than 2000, population from 1600 to 2000, and population of less than 1600 were chosen as per the state level bankers committee, Tamil Nadu) viz., Varadampattu, Kurichi, Seruthiyur, Akkaraipettai, Agalangan, Andanapeetai, Kidarankondan, Chandrapadi, Visalur have been selected in the Sample blocks on the basis of maximum population in those category villages in the district . Simple random sampling method was adopted to collect the data from the respondent in Nagapattinam District, Tamil Nadu .

ANALYSIS AND INTERPRETATION

Cross tabulation is used to find out the associations and the chi-square test is applied to test the significance of associations. The significant relationship between the selected demographic, banking and borrowing variables and the Awareness on Banking of the residents in Nagapattinam District, Tamil Nadu were analysed.

Table 1.1: Demographic Variables and Present Awareness on Banking of the residents

H0,1: There is no association between Demographic Variables and Present Awareness on Banking of the residents
Demographic Variables Banking Awareness & Pearson Chi-Square
Low High Total Value df Sig. (2-sided) & Results
Region Rural 222 251 473 25.84 2 .000*** Accepted
Semi Urban 29 7 36
Total 251 253 509
Villages Varadampattu 17 34 51 152.58 16 .000*** Accepted
Kurichi 6 37 43
Seruthiyur 19 22 41
Akkaraipettai 65 36 101
Agalangan 62 7 69
Andanapeetai 8 35 43
Kidarankondan 43 31 74
Chandrapadi 7 42 49
Visalur 27 11 38
Total 254 255 509
Block Mayiladuthurai 42 93 135 39.20 4 .000*** Accepted
Nagapattinam 135 78 213
Sembanarkovil 74 87 161
Total 251 258 509
Age 18-30 59 91 150 37.98 6 .000*** Accepted
31-45 87 103 190
46-60 95 53 148
Above 60 10 11 21
Total 251 258 509
Gender Male 158 156 314 .33 2 .847 Rejected
Female 93 102 195
Total 251 258 509

Source: Primary Data | Computed by Researcher *** Significance at 1% Level

The above cross tabulation 1.1, indicates that the association between demographic variables and the present awareness of the residents on banking in Nagapattinam District, Tamil Nadu . The maximum number of respondents having high awareness residing in regions, villages, block age group, and gender are rural (251), Varadampattu (34), Kurichi (37), Seruthiyur (22), Andanapeetai (35), Chandrapadi (42) and Mayiladuthurai (93), Sembanarkovil (87), 18 – 30 (91), 31 – 45 (103), female (100) respectively. The chi-square test indicates that there is a significant association between region, villages, block, age and present awareness on banking at 1% level and whereas gender has no association with present awareness on banking of the residents in Nagapattinam District, Tamil Nadu .

Table 1.2: Demographic Variables and Present Awareness on Banking of the residents

H0,1: There is no association between Demographic Variables and Present Awareness on Banking of the residents
Demographic Variables Banking Awareness & Pearson Chi-Square
Low High Total Value df Sig. (2-sided) & Results
Education level No Formal Education 98 57 155 28.44 8 .000*** Accepted
School Education 111 118 229
Degree/Diploma 36 61 97
Post Graduation 7 8 15
Others 6 7 13
Total 258 251 509
Marital status Single 202 182 384 20.12 4 .000*** Accepted
Married 34 71 105
Others 8 12 20
Total 244 265 509
Family size Less than or equal to 4 158 151 309 5.98 4 .201 Rejected
Between 5 to 8 84 98 182
Above 8 8 10 18
Total 250 259 509
Religion Hindu 193 232 425 22.66 4 .000*** Accepted
Christian 47 15 62
Muslim 11 11 22
Total 251 258 509

Source: Primary Data | Computed by Researcher *** Significance at 1% Level

The above cross tabulation 1.2, indicates that the association between demographic variables and the present awareness of the residents on banking in Nagapattinam District, Tamil Nadu . The maximum number of respondents with high awareness in the education, marital status, family size and religion are 18 – 30 (91), 31 – 45 (103), female (100), School education (118), Degree/Diploma (61), Post Graduation (8), others (7), Married (71), others (12), between 5 to 8 (98), above 8 (10), Hindu (232) respectively. The chi-square test indicates that there is a significant association between educational level, marital status, religion and present awareness on banking at 1% level and whereas family size has no association with present awareness on banking of the residents in Nagapattinam District, Tamil Nadu .

Table 1.3: Demographic Variables and Present Awareness on Banking of the residents

H0,1: There is no association between Demographic Variables and Present Awareness on Banking of the residents
Demographic Variables Banking Awareness & Pearson Chi-Square
Low High Total Value df Sig. (2-sided) & Results
Community Scheduled Class 12 23 35 13.85 6 .031** Accepted
Most Backward 182 152 334
Backward 51 75 126
Forward 6 8 14
Total 251 258 509
Occupation Farmer 67 29 96 30.10 14 .007*** Accepted
Agri Labour 54 69 123
Self Employed 33 55 88
House Wife 36 42 78
Land Lord 8 7 15
Fishing 37 38 75
Dry fish Mart 6 7 13
Employed 10 11 21
Total 251 258 509
Annual income Less than 25,000 201 210 411 19.56 8 .012** Accepted
25,001 to 50,000 21 32 53
50,001 to 75,000 7 8 15
75,001 to 1,00,000 10 7 17
Above 1,00,000 7 6 13
Total 246 263 509

Source: Primary Data | Computed by Researcher ***/** Significance at 1%/5% Level

The above cross tabulation 1.3, indicates that the association between demographic variables and the present awareness of the residents on banking in Nagapattinam District, Tamil Nadu . The maximum number of respondents with high awareness in the community, occupation and annual income are Scheduled (23), Backward (75), Forward (8), Agri labour (69), Self employed (55), House wife (42), Fishing (38), Dry fish Mart (7), Employed (11) and 25001 - 50000 (32) respectively. The chi-square test indicates that there is a significant association between occupation and present awareness on banking at 1% level and community, annual income and awareness on banking at 5% level with present awareness on banking of the residents in Nagapattinam District, Tamil Nadu .

Table 2.1: Banking Variables and Present Awareness on Banking of the residents

H0,2: There is no association between Banking Variables and Present Awareness on Banking of the residents
Banking Variables Banking Awareness & Pearson Chi-Square
Low High Total Value df Sig. (2-sided) & Results
Bank Account Yes 251 258 509 .02 2 .990 Rejected
No 0 0 0
Total 251 258 509
Advantages of bank A/c Yes 211 234 445 6.80 4 .147 Rejected
No 40 24 64
Total 251 258 509
No of Accounts 1 115 102 217 38.84 6 .000*** Accepted
2 - 3 97 109 206
4 - 5 36 36 72
More than 5 6 8 14
Total 254 255 509
Type of Account No Frill A/c 35 24 59 20.67 10 .023 Rejected
Savings Bank A/c 151 141 292
Current A/c 32 38 70
Recurring Deposit A/c 7 20 27
Fixed Deposit A/c 25 22 47
others 6 8 14
Total 256 253 509
Info about No-frill A/c Bank Officials 58 35 93 41.35 14 .000*** Accepted
SHG Members 69 82 151
NGOs 23 16 39
Neighbours 48 36 84
Village Panchayat 10 34 44
Farmer Clubs Posters 6 7 13
Village Meetings 13 26 39
Newspapers/Advertisements 24 22 46
Total 251 258 509

Source: Primary Data | Computed by Researcher *** Significance at 1% Level

The cross tabulation 2.1, between banking variables and present awareness on banking indicates that the maximum respondents with high awareness having bank A/c, banker explained the advantages of bank A/c, number of A/c, type of A/c, and information about No-frill A/c (253), (234), having 2 - 3 accounts (109), More than 5 accounts (8), Current A/c (38), Recurring deposit A/c (20) and SHG members (82), Village panchayat (34), Village meetings (26) respectively. The chi-square test indicates that there is a significant association between Number of accounts, Information about No – frills A/c and present awareness on banking at 1% level whereas Bank account, Bankers explained advantages of bank account, Type of account have no association with present awareness on banking of the residents in Nagapattinam District, Tamil Nadu .

Table 2.2: Banking Variables and Present Awareness on Banking of the residents

H0,2: There is no association between Banking Variables and Present Awareness on Banking of the residents
Banking Variables Banking Awareness & Pearson Chi-Square
Low High Total Value df Sig. (2-sided) & Results
Document asked for opening an A/c Electoral card 99 153 252 33.12 6 .000*** Accepted
Ration card 140 93 233
Aadaar card 6 6 12
Others 6 6 12
Total 251 258 509
Reason for not having bank A/c Lack of financial knowledge 49 42 91 15.21 8 .055* Accepted
Difficulty in accessing banking services 35 36 71
Poor Financial condition 93 95 188
No Necessity 67 59 126
others 7 26 33
Total 251 258 509
Having bank A/c with cheque book Yes 102 114 216 3.46 6 .749 Rejected
No 154 139 293
Total 256 253 509
Purpose of bank visit Deposits 108 80 188 11.95 8 .153 Rejected
Withdrawal 90 117 207
Loans 29 37 66
Repayment 10 8 18
others 14 16 30
Total 251 258 509

Source: Primary Data | Computed by Researcher ***/* Significance at 1%/10% Level

The cross tabulation 2.2, between banking variables and present awareness on banking indicates that the maximum respondents with high awareness were asked the document by the banker for opening an A/c, reason for not having A/c , Bank A/c with cheque book and Purpose of bank visit are Electoral card (153), Aadhaar card (6), Difficulty in accessing banking services (36), Poor Financial condition (95), No necessity (59), and Others (26), (114) and withdrawals (117), loans (37), others (16). The chi-square test indicates that there is a significant association between document asked and present awareness on banking at 1% level, Reason for not having A/c and present awareness on banking at 10% level whereas Bank A/c with cheque book, Purpose of bank visit have no association with present awareness on banking of the residents in Nagapattinam District, Tamil Nadu .

Table 2.3: Banking Variables and Present Awareness on Banking of the residents

H0,2: There is no association between Banking Variables and Present Awareness on Banking of the residents
Banking Variables Banking Awareness & Pearson Chi-Square
Low High Total Value df Sig. (2-sided) & Results
Instructions in Tamil Yes 164 200 364 10.58 4 .032** Accepted
No 87 58 145
Total 251 258 509
Reason for having bank A/c To receive Govt. payments from MNREGS 110 133 243 20.94 10 .021** Accepted
To receive Govt. payments from schemes 12 21 33
For receiving remittances 36 14 50
For saving money 64 50 114
To request a loan 25 25 50
others 6 13 19
Total 253 256 509
Who help to open A/c Village Panchayat Members (GRS) 80 78 158 3.61 8 .890 Rejected
Bank Officials 42 43 85
Neighbour 29 30 59
Friends/Relatives 94 99 193
Others 6 8 14
Total 251 258 509
How frequently save in A/c Don't save / never 35 22 57 8.90 8 .350 Rejected
At least once a month 55 76 131
Less than a month 44 37 81
I put in money as and when I can 111 115 226
others 6 8 14
Total 251 258 509
Advice about money matters No, no where 30 24 54 40.95 10 .000*** Accepted
Family/friends 114 133 247
Bank 31 47 78
Financial Adviser 50 13 63
Social worker 17 26 43
others 9 15 24
Total 251 258 509

Source: Primary Data | Computed by Researcher ***/** Significance at 1%/5% Level

The cross tabulation 2.3, between banking variables and present awareness on banking indicates that the maximum respondents with high awareness about instructions in Tamil, reason for having bank A/c , who helped to open an A/c, how frequently save in A/c and advice about money matters are (200), to receive Govt. payments from NREGS ( 133 ), to receive Govt. payments from schemes other than NREGS ( 21 ), to request a loan (25), others (13), bank Officials (43), neighbour (30), friends/relatives (99), others (8), at least once a month (76), I put in money as and when I can (115), others (8) and family/friends (133), Bank (47), Social worker (26), others (15) respectively. The chi-square test indicates that there is a significant association between instructions in Tamil, reason for having bank A/c and present awareness on banking at 5% level , advice about money matters and present awareness on banking at 1% level whereas who helped to open A/c, how frequently save in A/c have no association with present awareness on banking of the residents in Nagapattinam District, Tamil Nadu .

Table 3.1: Borrowing Variables and Present Awareness on Banking of the residents

H0,3: There is no association between Borrowing Variables and Present Awareness on Banking of the residents
Borrowing Variables Banking Awareness & Pearson Chi-Square
Low High Total Value df Sig. (2-sided) & Results
House hold borrowed Yes 167 174 341 .411 2 .814 Rejected
No 84 84 168
Total 251 258 509
The place where borrowing the money Not Availed 85 83 168 42.83 10 .000*** Accepted
Banks 126 76 202
Relatives 25 49 74
Friends 7 26 33
Moneylenders 6 7 13
others 7 12 20
Total 256 253 509
Reason for taking bank loan Not Availed 135 172 307 39.71 12 .000*** Accepted
Low rate of interest 79 38 117
Good deal/good rate 7 6 13
Offered/arranged by the banks 6 9 15
It is easy 6 6 12
Trustworthy lender 17 16 33
others 6 6 12
Total 256 253 509

Source: Primary Data | Computed by Researcher *** Significance at 1% Level

The cross tabulation 3.1, between borrowing variables and present awareness on banking indicates that the maximum respondents with high awareness about house hold borrowed, the place where borrowed, reason for taking bank loan are (174), relatives (49), friends (26), money lenders (7). The chi-square test indicates that there is a significant association between the place where borrowed, reason for taking bank loan and present awareness on banking at 1% level whereas house hold borrowed has no association with present awareness on banking of the residents in Nagapattinam District, Tamil Nadu .

Table 3.2: Borrowing Variables and Present Awareness on Banking of the residents

H0,3: There is no association between Borrowing Variables and Present Awareness on Banking of the residents
Borrowing Variables Banking Awareness & Pearson Chi-Square
Low High Total Value df Sig. (2-sided) & Results
Type of loan Not Availed 130 177 307 34.76 12 .001*** Accepted
Housing loan 27 17 44
Agricultural loan 9 12 21
Educational loan 50 19 69
Vehicle loan 7 8 15
Personal loan 23 18 41
Business Loan 6 6 12
Total 252 257 509
Amount of loan Not Availed 145 162 307 42.26 12 .000*** Accepted
Up to Rs. 50,000 58 43 101
Rs. 50,001 to Rs. 1,00,000 18 18 36
Rs. 1,00,001 to Rs. 1,50,000 9 10 19
Rs. 1,50,001 to Rs. 2,00,000 8 8 16
Rs. 2,00,001 to Rs. 2,50,000 7 8 15
Rs. 2,50,001 & Above 7 8 15
Total 252 257 509
Year of loan Not Availed 134 173 307 26.06 8 .001*** Accepted
2001 - 2003 8 11 19
2004 - 2006 22 16 38
2007 - 2009 47 28 75
2010 - 2012 40 30 70
Total 251 258 509

Source: Primary Data | Computed by Researcher *** Significance at 1% Level

The cross tabulation 3.2, between borrowing variables and present awareness on banking indicates that the maximum respondents with high awareness about type of loan, amount of loan and year of loan are agricultural loan (12), vehicle loan (8), business Loan (6), Rs. 1,00,001 to Rs. 1,50,000 (10), Rs. 2,50,001 & Above (8) and 2001 - 2003 (11). The chi-square test indicates that there is a significant association between the type of loan, amount of loan and year of loan at 1% level with present awareness on banking of the residents in Nagapattinam District, Tamil Nadu .

CONCLUSION

Banks have to play an extra role in promoting financial awareness and ensuring financial inclusion in collaboration with business correspondents and self help groups including NGOs, can definitely help in effectively overcoming this task. Commercial banks have to concentrate on building a sustainable, scalable and cost-efficient business delivery model by leveraging upon technology. Financial inclusion and inclusive growth are no longer just policy choices, but are policy imperatives, which would determine the long-term financial stability and sustainability of the economic and social order, going forward. India and its population need to ensure that all are collectively willing to walk that extra mile to ensure that fellow countrymen get easy access to the financial system and are able to leverage this access to improve their economic and social well-being.

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