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Editorial Board A Refereed Monthly International Journal of Management
Prof. B. P. Sharma
(Editor in Chief)
Prof. Mahima Birla
(Editor)
Prof. Harshita Shrimali
(Consultative Editor)
Dr. Khushbu Agarwal
(Additional Editor)
Ms. Asha Galundia
(Circulation Manager)

 Editorial Team

Dr. Devendra Shrimali
Dr. Dharmesh Motwani
Mr. Jinendra Vyas
 
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April 2015

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.

REFERENCES

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  2. BASIX. (2010). Report on Conducting an Assessment Study of design and delivery of Financial Literacy among poor across 7 UN Focus states. Submitted to UNDP.
  3. Demirguc-Kunt, A., & Klapper, L. (2012). Measuring Financial Inclusion, Global Findex Database.
  4. Mehrotra, N., Puhazhendhi, V., Nair, G. G., & Sahoo, B. B. (2009). Financial Inclusion: An Overview. National Bank for Agricultural and Rural Development.
  5. Rangarajan, C. (2008). Report of the committee on financial inclusion. Government of India report.
  6. Thyagarajan, S., & Venkatesan, J. (2008). Cost-Benefit and Usage Behaviour Analysis of No Frills Accounts: A Study Report on Cuddalore District. RBI College for Agricultural Banking and IFMR (December 2008), http://www. microfinancegateway.org/p/site/m/template. rc/1.1,4146.
  7. World Bank Group (Ed.). (2010). Towards Universal Access: Addressing the Global Challenge of Financial Inclusion. World Bank Publications.

 

 
 

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