CHAPTER-5 DATA ANALYSIS AND DISCUSSIONS - …shodhganga.inflibnet.ac.in/bitstream/10603/8674/14/14... · · 2014-05-27CHAPTER-5 DATA ANALYSIS AND DISCUSSIONS ... measuring Financial

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CHAPTER-5

DATA ANALYSIS AND DISCUSSIONS

This chapter examines how the performance of financial inclusion for demand

side and supply side would be measured based on the data derived from the survey

and a description of various quantitative measures. According to Jankowicz (2005),

the value of structured approach is that it allows one to standardize questions, making

a more numerate statistical based analysis possible. The research questionnaire aims

at covering various factors using a set of structured questions to know the real

situation of the respondents into the survey. Questions were directed towards the

empirical structure of economic output, in terms of access to finance, access to

savings and borrowings among social and sectoral groups who were excluded from

finance and to eliciting each respondent’s level of financial inclusion or capability and

the effects of some factors on their inclusiveness. The factors covered are bank

charges/rates, economic/employment & income status, complexity of services, level

of financial knowhow, identification requirements, and perception of quality of

service. Each research relevant question will be outlined statistically and described

qualitatively.

In order to enhance their participation in financial inclusion and to make

appropriate changes in the policies, the researcher tries to analyze access to finance,

savings mode and the capacity to borrow and their participation in different sources of

credit and loans. It is divided into four sections as follows:

1. Section-I presents the theory of Asymmetric Information and importance.

2. Section-II presents the supply side component analysis of Andhra Pradesh

banking structure, in this stage the researcher will measures the Index of

Financial Inclusion, district wise in Andhra Pradesh based on secondary data of

Banking statistics.

3. Section III: Demographic profile and socio-economic conditions of the sample

house hold.

4. Section IV: will discuss the demand side requirement for the financial inclusion,

particularly, access to finance, awareness on financial product and services,

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awareness on ICT use of technology and access to insurances and other source of

finance

5. Section V: would arrive at the regression results, based on the secondary data, the

factor influencing access to different sources of credit are examined through the

entire study. The study provides detailed empirical analysis of the data collected

and test the hypotheses formulated for the study.

SECTION-I

5.1 Theory of Asymmetric Information and its impact

The externality of asymmetric information between the financial institutions

and the disadvantaged section of the population may be the main cause of overall

exclusion. Besides, the geographical distance from bank, diffident, financial illiteracy,

gender-inequality, paucity of income and collateral assets, lack of proof of identity of

the disadvantaged people are the plausible causes of financial exclusion. On the other

hand shortage of staff, high transaction cost, economic viability of the extension of

branch etc. are the common problems of the financial institutions in extending

financial services to the disadvantaged section. So, there is a vast scope of achieving

total financial inclusion in a country if it adopts necessary steps to reduce the

information gap, led to the emergence of the theory of asymmetric information.

Financing through collective groups is used by the formal credit market to overcome

its informational disadvantage to lend successfully to the poor borrowers

The theory of asymmetric information states that SHGs, micro-finance and

informal sector lending thrive due to the advantage they have over formal sectors

regarding the sources of information, about its prospective clients and the credit

worthiness especially among budding women micro-entrepreneurs.208

.

Many micro-credit programmes rely on group-based lending institutions to

resolve the problem of imperfect information in business enterprises. By using a

group-based approach to lending, the small-scale micro-credit programmes have

provided more credit than the traditional financial institutions in rural areas. Group-

based lending may help to identify target households better than individual lending

208

Tariq Md. Shahriar, Rural Finance , Annotated Bibliography Series Series No. 3,

Bangladesh.2007

172

which penetrate into the markets and perpetuate to reinforce the existing socio-

economic inequities and access to scarce financial resources. In contrast, group

lending help the poor women self-select programs, making it a powerful instrument of

identification and targeting. In the available literature, it is well documented that

many micro-credit programs have attained the utmost objective of reaching large

number of clients with small amounts of resources209

.

Government-directed financial institutions are developed in order to provide

the poor women to have access to credit as initiated by SHG-Bank Linkage

Programme of NABARD. The crucial factors that provide the poor women with

viability formal sources are logically discussed from the rationing mechanism210

. The

most important factor is the physical collateral such as land and other tangible assets,

which are considered by the formal lender to assess the borrower’s credit capacity to

repay. In other words, the demand for physical collateral, limits the access of poor

women like landless farmers, daily wage laborers, small holders and small-scale

micro-entrepreneurs to formal sources of credit. On the other hand, informal lenders

substitute third-party guarantees. It is alarming that the rural poor are marginalized

due to their social contacts that provide these substitutes to reflect easy access towards

informal sources. These collateral substitutes depend on the ability of the lender to

obtain information about the creditworthiness of the borrower at a lower cost.

The impact of asymmetric information in financial markets has long been of

interest to economists and the recent financial crisis has intensified research on the

effects of asymmetric information in mortgage lending and securitization (e.g. Elul,

2011; Keyset al., 2010)211

. Most of this research has focused on asymmetric

information about characteristics of the borrower such as their income prospects. The

expected return from making a mortgage, however, depends both on the value of the

housing collateral as well as on the borrower's ability to make interest payments. Due

to the illiquid and heterogeneous nature of housing as an asset it is likely that there is

also asymmetric information about collateral values, in particular given the significant

209

Terry F. Buss Microenterprise in International Perspective: An Overview of the Issues, International Journal of Economic Development, Suffolk University, Boston, 2007.

http://www.spaef.com/file.php?id=1007. 210

NABARD Rport. Microfinance & micro-enterprises development status. Mumbia: NABARD, 2009. 211

Elul, R., Securitization and mortgage default," Federal Reserve Bank of Philadelphia

Working Paper, 2011, pp. 09{21.

http://www.spaef.com/file.php?id=1007.

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resources that mortgage lenders spend on appraisals and inspections to improve their

valuation of the house before making a lending decision.

The recent innovative policy of SHG collective lending by the formal sources

has taken into consideration the joint liability of SHGs in place of physical collateral.

It is also known as collective trust policy. Hence, the disadvantages of the poor such

as lack of physical assets, has been overcome by the group or collective lending. It is

noteworthy to answer the question how the interesting aspect of factor influences the

group members’ access to the group loan? Can the micro-credit be an alternative to

informal credit in rural and urban areas? The access to credit of women entrepreneurs

is limited by the limited demand and supply of credit structures. The poor women

generally demand credit in small amounts for non-productive purposes such as

consumption, health, education, marriages, petty production, petty trade, or personal

demands of the husbands. This does not match with the supply menu of banks

requirements, which consists of large amounts of loan for productive purposes such as

crop investment, small business ventures, and marketing strategies. It is not the

rigidity of the banks but their constraints due to high transaction costs and risk on

account of asymmetric information that may not extend such credit to individual

borrowers.

In most cases, individual borrowers on the other hand, face the problems of

absorbing large amounts of credit for some unwanted purposes. Loan contract does

not only take place between individual borrower and formal lender basically because

of a mismatch in credit structure. The collective group lending reduced the mismatch

between demand and supply because the bank extends credit in lump sum amounts to

SHGs and the group uses the amount according to its own needs based on productive.

Hence the questions are 1) what factors will influence the access of women

entrepreneurs for formal credit through groups? 2) Can micro-credit supplement the

formal credit in meeting the credit needs of poor women entrepreneurs? 3) Whether

micro-credit increased access to institutional credit, thereby reducing borrowing from

informal sources? In the succeeding sections, an attempt is made to answer the above

questions by a comparative analysis between formal, informal, and micro-credit

among women SHGs.

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SECTION-II

5.2 Supply Side Analysis

In this section the researcher will attempt to measure and understand financial

inclusion by looking at supply of banking outreach indicators such as number of

deposit and credit accounts, number of bank branches, average deposit and credit

amount per account and credit utilized and demand for (indicators of household level

access such as the proportion of households have saving, credit and insurance

facilities) financial services.

The possibility of reaching out Data is critical on designing to measure the

supply side of banking structure in Andhra Pradesh. Therefore, it is possible to start

measuring Financial Inclusion with data available financial supervisory authorities

collect data for prudential Purposes these regulatory reports could be used to provide

information on the state of Financial Inclusion.

5.2 .1 How to build a supply-side FI measurement?

The process could be divided in two complementary activities:

A. Construction of a Database

Figure: 5.1 Constructing of a Database

Source: Researcher Design

1. Identify available data for FI: the researcher have indentified regulatory banks

reports from RBI(Central Bank), A.P State Lead bank and local bank

branches specific request to FI

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2. Identify social and demographic variables for FI: the researcher have

identified the other sources such as Andhra Pradesh population census 2011

for all the districts, Human Development Index and poverty Index for all the

districts

3. Build a dynamic data base with all the stakeholders such as banks, MFIs ,

SHGs, Insurance, postal savings, Farmers clubs

4. Determine institutions & level of information: the researcher will identify the

relevant financial institutions and information.

B, Analysis of Information: Separate composite Financial Inclusion Indices (FIIs)

using supply side data as follows:

Figure: 5.2 Analysis of Information


1. Develop indicators: the researcher developed the indicators based on a cross

reference analysis from banking reports, NABARD reports, Financial Reports

from Gov of India and A.P

2. Map the Indicators: the researcher identified the geographic & demographic

gaps, disparities between districts and mandals of study area in Andhra

Pradesh. Based on identified the gaps and developed map for the research

study.

3. Analyse the A.P State FI: the researcher analysed the current situation of

Andhra Pradesh and each measured the Index of financial Inclusion for the

entire district. Finally present complementary to each other to get a

comprehensive picture. Using the household level data, it also analyzes the

role of informal sector vis-à-vis formal sector, particularly, with regard to

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credit conclusions. Describes the measures of FIIs for banking outreach and

household level access. Results and analysis based on the indices have been

elaborated in section

5.2.2 Indices for Financial Inclusion

In the Indian context, financial inclusion is referring to the formal financial

systems that provide access to finance for all type of population. The formal system

comprises Scheduled Commercial Banks (SCBs), Regional Rural Banks (RRBs), Co-

operatives, Post Offices, Insurance companies and their associates. The proposed

indices are for banking outreach and household level access.

5.2.3 FII based on Banking Outreach

For banking outreach, indicators like the number of bank accounts per 100

adult persons (as banking penetration or as access), number of bank branches per

million people (as availability of banking services or as coverage), number of ATMs

per million people (as coverage), amount of bank credit and amount of bank deposit

(as use/output of the banking system) have been used in recent studies to indicate the

extent of financial inclusion. These indicators are largely from banking sector; they

do not cover other institutional sources like post-offices, Micro-Finance Institutions

(MFIs), and co-operatives.

5.2.4 Geographical Map of Andhra Pradesh

Andhra Pradesh (AP) is one of the relatively large states in India... According to

2011 census the table 5.1 explains as follows:

Table: 5.1 Geographical map of Andhra Pradesh

Total

Districts

Area

Total Population Mandals

Villages

Urban Rural Total

23 23383s.qk 3,61,46,836 5,63,12,785 9,24,59,621 1107 28547

The total district were 23 with 23383 sqk geographical area and total

population from urban( 3,61,46,836) and rural (5,63,12,785) with total 9,24,59,621,

with 7.1% of population, ranking fourth in terms of geographical area and fifth in

terms of population among the Indian states. The total Blocks or Mandals are 1107

with 28547 villages. The density of population at 308 per square km is lower than the

density 382 at all-India level. The Scheduled Castes and Scheduled Tribes account

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respectively for 16.2% and 6.6% of the total population in the state. About one-tenth

of the state population is belonging to religious minority community.

5.3 Banking at glance

Over the years, the spread of commercial banking network in India has

skewed in favour of metropolitan centres. The ‘defining event’ in the build-up of

financial architecture in India was the nationalisation of major commercial banks. In

the case of Andhra Pradesh the Public Sector banks 25, 19 private banks, 2

cooperative Banks and 6 RRB Bank were divided into four categories showed in

table 5.2

Table: 5.2 Total Banks in Andhra Pradesh

Category Number of Banks Percentage

Metro banks 1148 13.59

Urban 2046 24.23

Semi Urban 2203 26.09

Rural 3045 36.06

Total 8442 100

Sources: SLBC Report, 2012

The aftermath of nationalisation witnessed a remarkable spread of the

banking system to the unbanked and under-banked rural areas. The table 5.2 indicates

that category of banks spread in Andhra Pradesh that total number of rural banks

3045, urban banks 2046, semi urban banks 2203 and metro banks 1148 banks credit

outlets at present operating in the Andhra Pradesh. These networks apart from

working as financial institutions also play a pivotal role in the development and

transformation of the rural and agrarian economy... Therefore, there a significant

progress was made in terms of coverage of the rural population by formal credit

institutions

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Figure: 5. 3 Categories of Banks in AP

The figure 5.2 showed that spreading of banks in Andhra Pradesh as category

wise, the majority 36 % of the branch were spread in the rural areas, while 14% of the

banks were spread in metro areas of Andhra Pradesh and 26% of the banks were

spread in semi urban areas whereas 24% of the banks were spread in urban areas of

Andhra Pradesh. Notwithstanding concerted and multi-pronged efforts to extend

institutional credit to all sections of society, the dependence on informal sources of

credit has not decreased in rural areas and has, in fact, increased in several regions.

The banking outreach continues to be unevenly spread with poorer regions at a

particularly disadvantaged position

5.3.1 Business Analysis of Banks

A sizeable share of population in India continues to remain outside the formal

banking system despite considerable expansion in branch network. Alternative

strategies are being experimented with to meet the objective of financial inclusion.

The table 5.3 revels showed:

14%

24%

26%

36%

Banking Structure in AP

Metro banks

Urban

Semi Urban

Rural

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Table: 5.3 Situation of the banks in AP

Business Rs. In cores

S.No Particulars Rs. in Cores

1 Total Deposits in the State 3,08,248

2 Total Advances in the State 3,48,764

3 Credit Deposit Ratio (RBI norm of 60%) 113.14%

4 Total priority sector advances 1,62,915

5 % of Priority Sector advances to Net Bank Credit

(RBI Norm 40%)

49.78%

The table 5.3 indicates overall banking performance in Andhra Pradesh. The total

deposits in the state Rs. 3,08, 248 cores for the year of 2011-12, total advances in the

states Rs3,48,764, cores while credit deposit ratio based on RBI norms( 60%) Rs.

113.14%, it shows Andhra Pradesh have sufficient credit depots ratio, whereas total

priority sector advances Rs 1, 62,915 cores. However the priority sector advances to

net bank credit have 49.78% in AP that is 9% more based on RBI norm 40%.

Table: 5.4 Outstanding Priority sector Advances (Rs. in Cores)

S.No Particulars Rs. In cores

1 Agricultural Advances

% of Agri. Adv. to NBC (RBI norm 18%)

90,654

(27.70%)

2 Non Farm Sector

(% to Net Banking Credit)

27,244

(7.81%)

3 Other Priority Sector Advances

(% to Net Banking Credit)

45,017

(12.91%)

4 Total Priority Sector Advances 1,62,915

5 Educational Loans 5,519

6 Housing Loans 26,702

7 SHGs loan 13,153


Agricultural advances as at the end of September, 2011 are Rs.90, 654 crores

constituting

27.70% of previous year`s Net bank credit as against the RBI norm of 18%.

Total Agricultural advances registered a growth of 9.10% over March, 2011

and 18.35% over

September, 2010 (i.e., year to year growth).

Total Priority sector advances are Rs.1, 62,915 crores as on 30.09.2011

constituting 49.78%

previous year`s Net bank credit as against the prescribed RBI norm of 40%.

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Priority sector advances registered a growth rate of 5.63% over March, 2011

and 16.00% over


5.3.2 Penetrations of banks in Andhra Pradesh

It is believed in general that financial development is robustly and positively

related to economic development. In Andhra Pradesh they have shown diverse

economic growth and are at different levels of socio-economic development. As a

consequence, they may be expected to show different levels of banking penetration. In

view of this, emphasising only on banking density (defined in terms of population per

office) may not be adequate to highlight the extant disparity in banking spread across

districts. Accordingly, Table 5.4

Table: 5.5 Penetrations of Banking and Business in Andhra Pradesh

S.No Sector March2009 March

2010

March2011 Sept 2011

1 No of Branches

Rural 2733 2857 2997 3057

Semi Urban 1754 1941 2107 2203

Urban 1601 1922 2030 2046

Metro 911 956 1077 1148

2 Deposits 205899 245686 283600 308248

3 Advances 210294 269760 327275 348764

4 CD Ratio 102.13 109.80 115.40 113.14

5 Crop Loans 28665 33986 41752 45906

6 Agriculture

Term Loans

including allied

activities

22822 34672 41346 44748

7 Total

Agriculture %

to ANBC

51487

(34,78%

68658

(32.65)

83098

(30.80%)

90654

(27.70)

8 SSI & Rural

Artisans(MSE)

21128 22868 27033 27244

9 Other Priority

Sector

277710 34989 44096 45017

10 Total Priority

Sector % to

ANBC (-(RBI

norm-40%)

100325

(67.78%)

126515

(60.16%)

154227

(57.17%)

162915

(49.78)


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Number of bank branches in the State as on 30.09.2011 is 8454. During the

Half year under reference 243 branches were opened (Rural-60, Semi urban-

96, Urban-16 and Metro-71).

The Credit Deposit Ratio of banking sector in Andhra Pradesh as on

30.09.2011 is 113.14% as against the stipulated ratio of 60%. The incremental

CD ratio during the year is 87.18%.

Deposits of banking sector in A.P. are Rs.3, 08,248 crores as at the end of

Sept, 2011 with a growth rate of 8.69% from March, 2011 and 20.30% from


Aggregate advances of banking sector in A.P. as at the end of September,

2011 are Rs.3,48,764 crores registering a growth rate of 6.57% over March,

2011 and 18.80% over September, 2010 (i.e., year to year growth).

.Figure: 5.4 Penetrations of Banks in Andhra Pradesh

The Figure 5.4 presents the scenario of banking penetration in Andhra Pradesh

population group-wise number of Scheduled Commercial Banks (SCBs) spread since

2009 tom2011 September. There are about 8444 branches of SCBs in Andhra

Pradesh. All the category wise majority of the banks were penetrated since 2009 to

2011. It means there are big business opportunities in all categories of banks to spread

of their financial services into new areas or new path. These trends indicate that the

banking system is still hesitant on various grounds to purvey credit to the poor and

low income groups especially in the rural areas.

0

5

10

15

20

25

30

35

40

March.2009 March.2010 March. 2011 Sept.2011

Pentration of Banks

Rural

Semi Urban

Urban

Metro

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Figure: 5.5 Status of CD Ration from 2009 to 2011


The figure 5.5 indicates that Andhra Pradesh Credit-Deposit Ratio (CDR)

stood at 23% per cent in 2009, which was about few points lower than in 2011partly

reflecting buoyant credit growth in the recent years. While the CDR has increased for

all population-groups during the decade ending 2011, it remains in the range of 26 per

cent in 2009 and substantially higher in 2011. The direction of change appears to be

contrary to the objective of financial inclusion, which is to provide financial services

and timely and adequate credit needed by vulnerable groups such as weaker sections

and low income groups at an affordable cost.

5.4 Regional Rural Banks

Regional Rural Banks main focus of lending is to Agriculture and Allied

activities in rural and semi urban and urban areas. Reserve Bank and NABARD and

sponsored banks are reviewing the performance of RRBs at regular intervals.

Performance of Regional Rural Banks is important parameters to consider for

financial inclusion and their role also important. See the table

Table: 5.6 Total Deposits of RRBs

S.No Name of the RRB March.2010 Sept.2010 March.2011 Sept.2011

1 APGVB 3804.51 3910.39 4794.72 4583.08

2 APGB 3517.33 3656.04 4079.05 4162.69

3 CGGB 640.93 652.02 759.16 764.79

4 DGB 2261.53 2093.19 2600.94 2453.13

5 Sapthagiri Grameena 1243.97 1378.63 1553.62 1663.1

6 Total 11468.3 11690.3 13787.5 13626.8


23%

25% 26%

26%

CD Ratio

March.2009

March.2010

March. 2011

Sept.2011

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Deposits: the total deposits in the year between 2010 and 2011 increased from Rs.11,

690.27 Crores to Rs.13, 626.79 Crores registering a growth of Rs1, 936.52 crores

which are 16.56 %.

Table: 5.7 Total Deposit ratios in Percentage

S.No Name of the RRB March.2010 Sept.2010 March.2011 Sept.2011

1 APGVB 101.59 111.7 102.08 112.64

2 APGB 101.31 104.96 105.2 118.41

3 CGGB 104.17 127.65 111.63 132.41

4 DGB 71.17 86.1 75.59 88.92

5

Sapthagiri

Grameena 111.31 113.76 112.95 120.13

Total 96.71 106.14 99.76 112.15

The table no 5.5.1 clearly shows CD Ratio of RRBs between the year 2010 and 2011,

we can observed that overall deposit CD ratio increased from 106.14 % to 112.15%.

When it come bank wise APGVB CD ratio 111.7% in 2010 increased up to 112.64%

in 2011 and APGB CD ratio 104.31% and increased up to 118.4% in the year of 2011.

However we can observe in the figure 5.6

Figure: 5.6 RRBs CD Ratio

The figure 5.6 indicates that overall scenario of RRBs during the 2010 and 2011. Out

of five banks the major CGCB banks showed higher CD ratio than the four banks

during 2010 and 2011, while the DGB have the least CD ratio in 2010 and 2011

among the four banks and the Sapthagiri Grameena banks have nearer CD ratio with

0

20

40

60

80

100

120

140

RRBs CD Ration

March.2010

Sept.2010

March.2011

Sept.2011

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APGVB during 2010 and 2011, whereas APGB have similar level of CD Ratio during

2010 and 2011.

5.5 Financial Inclusion: Implementation Status in Andhra Pradesh

Reserve Bank of India has directed that Lead Banks may constitute a Sub

Committee of District Consultative Committees (DCCs) to draw a road map by

March, 2010 to provide banking services through a banking outlet in every village

have a population of over 2000. Such banking outlets may not necessarily being

extended through brick and mortar branch but can be provided through any of the

various forms of ICT – based strategies, including through BCs. As Convenor Bank

for SLBC of Andhra Pradesh, we have advised all the DCCs to constitute Sub

Committees and complete the preparation of Road maps in the districts. All the DCCs

have constituted Sub Committees and completed the allocation of villages among

banks. The Banks in Andhra Pradesh have to provide banking services in 6699

villages by the end of March, 2012 as advised by RBI.

According to Andhra Pradesh State Lead Bank (APSLB) there are 17 Public

Banks, 3 private banks and 5 RRBs are working towards Financial Inclusion given

their target to cover number of villages 6699, whose villages should be above 2000

population. As on 2012 March the majority of the villages were able to cover in

Andhra Pradesh.

5.5.1 Implementation of Financial Inclusion Plan (FIP) by RRBs

In Andhra Pradesh state, 6655 villages where the population is above 2000 were

allotted to various banks mostly in their respective area of operations. Of which 1964

villages have been allotted to all RRBs for providing banking services under the plan.

Progress as on 2011

Table: 5.8 Implementation of Financial Inclusion

RRBs No of villages

covered

Cumulative

achievement

% of

Achievement

Total

Andhra Pradesh

Grameena Bank

546 81 14.84 465

Andhra Pradesh

Grameena Vikas Bank

869 378 43.50% 491

Chaithanya Godavari

Grameena Bank

128 0 0 128

Deccan Grameena

Bank

252 0 05 252

Sapthagiri Bank 169 2 1.18% 167

Total 1964 461 23.4 1503

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About the RRB role in Financial Inclusion, the table 5.6.1 showed that the

majority of the bank’s 461 branches were covered in the 1964 villages , when it

comes banks wise, Andhra Pradesh Grameena Vikas bank is able to cover 869 banks

with in cumulative period, it means they were able to cover 43.50% of the villages,

while Chaithanya Godavari Grameena Banks covered only 128 villages and AP

Grameena banks are able to cover 546 villages in the given period whereas Deccan

Grameena Bank is able to cover 252 villages and Sapthagiri bank cover 169 villages

in a period of time.

5.6 Measuring Index of Financial Inclusion

The most important pattern is equal access to finance by all segments of the

society, i.e. inclusive nature of financial system. Some important dimensions of

financial inclusion are that all sections of the society should have timely and adequate

availability of financial services to ensure access at affordable cost. The Index of

Financial Inclusion is to measure level of financial inclusion in the present condition.

This index is based on three basic dimensions of an inclusive financial system (a)

banking penetration, (b) availability of the banking services and (b) usage of the

banking system.

a) Banking penetration: Banking penetration is definitely the most critical

parameter for measuring the depth financial inclusion and is measured as a

ratio of bank accounts to the total population.

b) Availability of Banking Services: The second parameter, availability of

banking services provides an indication to the number of bank outlets

available per 1000 people to deliver financial services. The bank outlets may

include the brick and mortar branches, ATMs, business correspondents, etc.

c) Usage of Banking Services: The third parameter seeks to determine the usage

of banking services going beyond mere opening of accounts. Therefore, this is

evaluated on the basis of outstanding deposits and credits.

The RBI measured the Index of Financial Inclusion for Indian States,

based on the volume of outstanding deposit and credit as proportion on the net

district domestic product is used for measuring three dimensions. Therefore,

the researcher formulated the hypothesis as follows:

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Table: 5.9 Testing of Hypothesis

H-value Interpretation

(H1) 0.5 < IFI ≤ 1

High Level Financial inclusion

(H2) 0.3 ≤ IFI < 0.5 Medium financial inclusion

(H3) 0 ≤ IFI < 0.3 Low level financial inclusion

The proposed IFI takes values between 0 and 1, zero indicating lowest financial

inclusion (i.e., complete financial exclusion) and 1 indicating complete financial

inclusion.

Figure 5.7: Indian States-wise index of financial inclusion

Sources: RBI Report, 2011

The figure 5.7 clearly showing the empirical results based on the three dimensions

that if the Index value is H1 0.5 < IFI ≤ 1 high financial inclusion, so the state of

Kerala value is ‘1’, it means completely financial inclusion , Maharashtra IFI value is

0.9 and Karnataka value 0.8 of IFI value. Therefore, these three states have the high

level financial Inclusion in India. In H2 if 0.3 ≤ IFI < 0.5 the medium of financial

inclusion, the other states such as Tamil Nadu value of Index is 0.5, Punjab value

0.52, Andhra Pradesh value 0.4, Himachal Pradesh value 0.42, Sikkim value 0.45, and

Haryana value 0.3 have the medium financial inclusion. There are some of the States

have wider extent of financial inclusion as compared to other States of India

In the third stage H3 0 ≤ IFI < 0.3 means low level of financial inclusion. The

extent of financial inclusion is found to be significantly low in North-Eastern and

Eastern States, i.e., Assam, Nagaland, Manipur, Odisha, Bihar, West Bengal, etc.

187

Though the index and findings of the report in reference are based on empirical study,

they are possibly not way off the ground realities (RBI Report 2011).

5.7 District wise Measuring Index of Financial Inclusion for Andhra Pradesh

The researcher calculated the District-wise Financial Inclusion in Andhra

Pradesh. The overall scenario of Andhra Pradesh that 23 districts for which a 3-

dimensional IFI has been computed by using data on 3 dimensions of financial

inclusion, through this calculation Andhra Pradesh districts may know their IFI

values, which district leads with the highest value of IFI followed can see in the

table 5.10

Table 5.10 Measuring District wise IFI for Andhra Pradesh:

District D1

(Penetration)

D2

(Availability)

D3

(Usage)

IFI IFI

Rank

High Financial Inclusion(0.51)

Hyderabad 0.25 0.91 0.89 0.77 1 Krishna 0.23 0.8 0.75 0.65 2 Ranga Reddy 0.22 0.77 0.63 0.59 3

Medium financial Inclusion (0.3-0.5) West Godavari 0.2 0.67 0.63 0.55 4 Guntur 0.18 0.67 0.61 0.53 5 East Godavari 0.18 0.53 0.51 0.49 6 Karimnagar 0.17 0.49 0.45 0.43 7 Nellore 0.16 0.45 0.43 0.42 8 Khammam 0.16 0.44 0.42 0.41 9 Chittor 0.15 0.42 0.41 0.4 10 Visakhapatnam 0.15 0.39 0.37 0.37 11 Medak 0.14 0.37 0.35 0.33 12 kadapa 0.13 0.34 0.32 0.31 13

Low Financial Inclusion(<0.3) Prakasham 0.12 0.32 0.3 0.29 14 Warangal 0.11 0.3 0.29 0.27 15 Nizamabad 0.11 0.29 0.27 0.25 16 Adilabad 0.1 0.28 0.26 0.25 17 Nalgonda 0.09 0.27 0.25 0.24 18 Kurnool 0.09 0.26 0.24 0.23 19 Anantapur 0.08 0.24 0.22 0.2 20 Srikakulam 0.07 0.21 0.2 0.19 21 Vizianagaram 0.06 0.18 0.17 0.18 22 Mahbubnagar 0.05 0.17 0.17 0.16 23

Source: Researcher Calculations

.

188

The table 5.9 shows the empirical results based n the three dimensions. The first

hypothesis formulated as H1 0.5 < IFI ≤ 1 high level financial inclusion, it can be seen

from the table 5.9 that there are only three districts have the 0.5 to 1 values. The Index

value for Hyderabad is 0.77, it means the Hyderabad district has nearer to complete

financial inclusion, the Index value for Krishna district is 0.65, and the Index value

for Ranga Reddy is 0.59 belonging to the high Index of Financial Inclusion group

with IFI values were near to one. The second hypothesis is H2 if 0.3 ≤ IFI < 0.5 the

medium level of financial inclusion, the other districts such as the other ten districts

West Godavari district is the fourth rank of IFI with value of 0.55, the other one is the

Guntur district has fifth rank with IFI value 0.52, East Godavari is the sixth rank with

IFI value of 0.50, Karimnagar is seventh rank with value of 0.43, Nellore is eight rank

with value of 0.42, Khamman is the ninth rank with value of 0.41, Chittor is the

tenth rank with value of 0.4 and Visakhapatnam is the eleventh rank with value of

0.37, Medak is 12th

rank with value of 0.33, Kadpa is the thirteenth with value of

0.31 these are all under medium financial inclusion. The third Hypothesis is H3 if

0.3 ≤ IFI < 0.5 the low level of financial inclusion values, these districts Prakasham is

the fourteenth rank with value of 0.29, Warangal is the fifteenth rank with value of

0.27, Nizambad sixteenth rank with value of 0.25, Adilabad is the seventeenth rank

with value of 0.25, Nalgonda eighteenth rank with value of 0.24, Kurnool is the

nineteenth rank with value of 0.23, Anathapur is the twentieth rank with value of 0.2,

Srikakulam twenty one rank with value of 0.19, Vijayanagaram twenty two rank

with value of 0.18, Mhabubnagar twenty two rank with value of 0.16, all these district

had low financial inclusion.

According to the Index of Financial Inclusion values the least three districts such as

Srikakulam, Vijayanagarm and Mahbubnagar districts have considered for the

research study areas in my thesis.

5.8 Situation Analysis of three Districts

In the second stage, the researcher calculated overall 23 districts of

IFI for Andhra Pradesh. So based on the IFI rank at district level of Andhra

Pradesh, the researcher found three districts were in the low IFI ranks, it

means low financial inclusion. These districts are Mahbubnagar,

Srikakulam, and Vijayanagarm. Then the researcher measure the IFI for

three districts under the priority selected Unit (PSU) as follows:

189

Table: 5.11 Overview of Banking Sector in three districts

Districts

Total

Mandal

Total

Villages

Rural

Semi

Urban

Urban

Total

Deposit

%

CD

%

Srikakulam 37 1872 108 67 34 209 1 4

Vijayanagarm 34 1548 91 72 47 210 1 3

Mahbubnagar 64 1553 146 87 30 263 1 5

Total 118 3973 345 226 111 682 3 12


The table 5.10 indicates that overall scenario of three districts. The table

clearly showed that the number of mandals in three districts 118 mandals, total

villages 3973. Whereas the banks were category wise showed that the number of rural

banks 345 in three districts, semi urban banks 226, and urban banks 111only in three

districts. The total banks in three districts only 682, while the deposit ratio in

percentage is very low over all of these districts only 3 per cent, when comes to

overall CD ratio only 12 percent in three districts compare to Andhra Pradesh .

1. With regards to Srikakulam districts the number of total mandals 37, villages

1872. Whereas rural banks only 108, semi urban banks 67 and urban banks 34,

overall 209 banks in Srikakulam district. When it come to utilization of

banking services deposit ratio in percentage only 1% and CD ratio in

percentage 4% comparative of Andhra Pradesh.

2. In respect to Vijayanagarm district, the number of mandal 34, villages 1543,

whereas the rural banks where as the number of rural banks 91, semi urban

banks 72 and urban banks 47. The number of total banks only 210 banks in

Vijayanagarm district, when it comes to banking services , the Vijayanagarm

district was very low of deposit ratio in percentage just only 1% compare with

Andhra Pradesh and CD ratio in percentage just 3% only with compare to A.P.

3. Regarding to Mahaboobnagar district population was very high but

development wise very low. In that district the number of mandals 64, villages

1553 and the number of rural banks 146, semi urban banks 87 and urban banks

30 only. So the overall the total number of banks 263 in Mahbubnagar district.

When we observed the banking performance in Mahbubnagar district, the

deposit ratio only 1% and CD ratio just 5% compare with other district of

Andhra Pradesh. Therefore, base on the banking performance that how far

these district were financially backward.

190

Figure: 5.8 Three Districts Banks Scenario

The figure 5.7 showed that the overall scenario of existing situation analysis of

three districts. In the above figure second column showing the high level of villages

in Srikakulam districts with compare of other two districts, while first column

showing that 5.44 per cent of the mandals have the Mahbubnagar district among three

districts and banks also high 4.13 per cent of the banks in Mahbubnagar district, while

least column is the deposit ratio, the deposit ration showing the three district have

only 1% of the deposit ratio compare to Andhra Pradesh, whereas CD ratio some

difference between three districts that is 5% for Mhabubnagar, 4% for Srikakulam and

3% for the Vijayanagarm. However, the overall district clearly indicates that even

today the majority of the population in rural areas and with proportion of population

there are no sufficient banks in three districts.

5.9 Demographic Situation Analysis of the Mahbubnagar District

The researcher analysed each district and it demographic situation

analysis includes the sets of methods that allow us to measure the dimensions

and dynamics of populations. According to 2011 census the table as follows:

Table: 5.12 Overall Scenario of Mahbubnagar District

S.No Particulars Units Census 2011

1 Total Population 40.99 Lakhs

2 Rural 34.32 Lakhs

3 Urban 6.72 Lakhs 4 Male 57.87 %

5 Female 32.83 %

6 Population Density 190 sq.km

7 Population Growth 8.07 %

8 Total Villages 1553 %

9 Total Mandals 64 % Source: District website, 2012

0 1 2 3 4 5 6 7

3.34

6.55

3.6

1.67 3.18 2.54

1

4 3.07

5.42

3.03 2.31

3.42 2.55

1

3

5.44 5.44 4.87

1.47

4.13 3.2

1

5

Three Districst Banks Scenario

Srikakulam

Vizianagaram

Mahbubnagar

191

The table 5.12 indicates the overall scenario of Mahbubnagar district, the total

population is 40.99 lakhs, with in that rural population 34.32 lakhs and urban

population 6.71 lakhs, whereas males 57.87 percent and female has 32.87 percent of

the population. The population density 190 member for squire kill meter (sq.km) with

population growth 8.07 per cent age. The number of total villages are 1553 and

mandals 64.

Table: 5.13 Banking Situation in Mahbubnagar District

Category No. of Bank Branches in the District

Rural 149

Semi-Urban 89

Urban 31

Metro 0

Total Banks 269

Total Deposit 3723.69

Total Advances 4383.93

CD Ratio 117.73 Source: Lead Bank website,2012

The table 5.13 showed that the number of banks and their performance,

the number of total banks 269 with rural bank’s 249 branches, semi urban

bank’s 89 branches and urban 31 bank branches, but there are no metro banks

in that district. The total deposit Rs.3723.69 and total advances Rs.4383.93

during period of 2011-12 as on March.

Figure: 5.9 No of Branches in the District

The figure 5.9 indicates that out of 269 total banks the majority 55 per cent of the

rural banks branches are working in the district, while there are no metro banks

55% 33%

12%

0%

No. of Bank Branches in the District

Rural

Semi-Urban

Urban

Metro

192

and 33 per cent of the banks semi urban whereas 12 percent of the banks working

in urban. However, still many banks needed for the district people.

5.9.1 Mandal wise measurement of IFI: Mahabubnagar was continuing the most

backward position. The researcher measured mandal wise IFI index for Mahbubnagar

using three basic dimensions of an inclusive financial system. These are:

1) Banking penetration: The availability of the banking services are the most

critical parameter for measuring the depth financial inclusion and is measured as a

ratio of bank accounts to the total population. There are no new banks since last

three years, because of Microfinance Institutions working in those areas.

2) The Availability of Banking Services: In Mahbubnagar overall there are 269

banks, but the population is 40 lakhs and majorities more the 60 percent f the

population live in rural area, dependent only on agriculture. Therefore, the

availability of banking services provides an indication to the number of bank

outlets available per 1000 people to deliver financial services. The bank outlets

may include the brick and mortar branches, ATMs, business correspondents, etc.

3) The usage of banking services: this is the most important parameter to measure

the behaviour of the people’s savings and credit use for their everyday life. In

Mahbubnagar the overall savaging ratio very low that is 1% and CD ratio 5% o to

compare overall Andhra Pradesh Therefore; this is evaluated on the basis of

outstanding deposits and credits. Accordingly, the volume of outstanding deposit

and credit as proportion on the net district domestic product is used for measuring

this dimension. Using data on all three dimensions (Penetration, Availability, and

Usage) to measuring IFI values have been computed. The Hypothesis formulation

based on the literature review and preview studies. The researcher predict for

quantitative study model. Depending on the values of IFI, states and districts are

categorized into three categories, viz.

(i) 0.5 < IFI ≤1 – high financial inclusion

(ii) 0.3 ≤ IFI <0.5 – medium financial inclusion

(iii) 0 ≤ IFI <0.3 – low financial inclusion

193

Figure: 5.10 Mahbubnagar Mandal wise Financial Inclusion Index

Source: Researcher design

5.9.2 Empirical Results:

In the chart 5.10 the empirical hypothesis results are shown based on the three

dimensions that if the Index value is H1 0.5 < IFI ≤ 1 high financial inclusion. The

empirical hypothesis results are divided into three categories:

1) In Mhabubnagar district out of 64 mandals, 3 mandals such as Mahbubnagar

had the first rank with IFI value of 0.68, Nagarkurnoor is in the second rank

with IFI value 0.65 and Gadwal is the third rank with IFI value 0.62, are high

level Financial Inclusion Index. These three mandal belongs to the high IFI

group with IFI values of 0.5<IFI ≤ 0.7, therefore the hypothesis tested results

that there is significantly high level,

2) The second hypothesis is H2 if 0.3 ≤ IFI < 0.5 the medium level of financial

inclusion, the other 7 mandals such as (please see the chart no 5.13)

Narayanapeta is the fourth rank with IFI value of 0.48 , wanparthy is the fifth

rank with IFI value of 0.45, Kodnagal is the sixth rank with IFI value of 0.42 ,

Jadcharla is the seventh rank with IFI value of 0.38 and Alamara is the eighth

rank with IFI value of 3.5, Kalwakurthy is the ninth rank with IFI value of

0.32, and Devekadra is the tenth rank with IFI value of 0.3 had the medium

level of Financial inclusion Index.

194

3) The third Hypothesis is H3 if 0.3 ≤ IFI < 0.5 the low level of financial

inclusion values, the majority of 54 mandals IFI values is between 0 ≤ IFI

<0.3, these mandals Bomeraspate is the eleventh rank with IFI value of 0.29,

Kosgi is the 12th rank with IFI value of 0.28, Doulatbad is the thirteenth rank

with IFI value of 0.27 , Damgodda is the fourteenth rank with IFI value of

0.26, Maddur is the fifteenth rank with value of 0.25, Kolkonda is the

sixteenth rank with the value of 0.24, the other mandals have a low IFI

values, hovering between 0.0 and 0.2. But least Buthpoor is the six three rank

with value of 0.13 and Atchempet is the least sixty four rank with IFI value of

0.1 are the very low level of financial inclusion it means that IFI value is just

above ‘0’. Those mandals very low in banking penetration, banking services,

and using banking credit were very low of financial inclusion.

The researcher found major observations in Mahbubnagar district. Why Atchempet

and Buthpoor are zero level of financial inclusion, because the majority of the

households are going to migrate for the work all most all of the days, they are

available for only 60 to 90 days in their homes that are also if they have any

agricultural cultivation.

5.10 Situation Analysis of the Srikakulam District

Population growth in the district showed decrease from 2001 census to 2012.

Anticipated household or population growth may indicate changes in their livelihood.

An analysis of household and/or overall population growth provides the “big picture”

of potential for financial access demand in a community. However, further analysis is

necessary to identify Banking preferences within a community. The table 5.14 shows

the changes

195

Table: 5.14 Overall Scenario of Srikakulam District



2 Rural Population 22.63 Lakhs

3 Urban Population 4.36 Lakhs

4 Male 67.9 %

5 Female 44.19 %

6 Population Density 433 Sq.km


Source: District website of Srikakulam

The table 5.14 showed that the overall scenario of Srikakulam district, according to

2011 the total population 26.99 lakhs, within that rural population 22.63 lakhs and

urban population 4.36 lakhs, whereas male 67.9 per cent of the population and female

44.19 per cent of the population. In this district the population density 433 sq.klm

with population growth 6.38 percent of the population.

Table: 5.15 Banks Scenario

Category No. of Banks Branches

Rural Banks 111

Semi urban 70

Urban Banks 30

Total Bank Branches 211

Total Deposits Rs. 2740

CD Ratio 104.6

Source: Lead Bank

The table 5.15 indicates that the total number of bank branches 211 in Srikakulam

district, while the rural bank branches 111, semi urban branches 70 and urban bank

branches 30. In Srikakulam there 1872 villages but banks are only 111 branches. The

total deposits Rs 2740 cores for the year of 2011 to 2012, CD ratio 104.6 for 211

banks. It shows that there no sufficient bank branches for the rural people.

196

5.10.1 Measuring Mandal wise IFI index for Srikakulam District

Srikakulam is also continuing in the most backward position since long. The

researcher measured mandal wise IFI index for Srikakulam using three basic

dimensions (a) Banking Penetration, (b) Availability of Banking Services, and (c)

Usages of banking services of an inclusive financial system. It cab seen the chart

5.14.2 IFI levels in each category.

The chart 5.11 clearly indicates empirical results and the three dimensions

(Penetration, Availability, and Usage) of measuring IFI values have been computed as

mandal wise for Srikakulam district. And also the Hypothesis is tested with

measurement of Index of Financial Inclusion as quantitative model. Depending on the

values of IFI, states and districts are categorized into three categories, viz.




Figure: 5.11 Mandal wise IFI Index for Srikakulam District

Source: Researcher’s design

197


The empirical hypothesis results divided into three categories:

1. High Level Index of Financial Inclusion(IFI): The empirical hypothesis results

showed based on the three dimensions that if the Index value is H1 0.5 < IFI ≤ 1

high financial inclusion out of 37 mandals, only 3 mandals have high level

Financial Inclusion index ranks such as Srikakulam, Etcherla and Takkala are

high level Financial Inclusion Index than the other mandals. Srikakulam is the

first rank with IFI value of 0.7, Etcherla is the second rank with IFI value of 0.6,

and Takkala is the third rank with IFI value of 0.5 value of Index. The given

hypothesis is if 0.5<IFI ≤ 1 Financial inclusion nearer to achieve, than these

three mandals hypothesis is significantly high level of IFI value of Srikakulam

IFI value is 0.7 with all three dimensions such as banking penetration, availability

of banking services and use of banking services, Whereas Takkala mandal have

just on broader line with the IFI value 0.5 and Etcherla IFI value is 0.6, it is

between 05 < 0.6 the hypothesis tested results that there is significantly high

level,

2. Medium Level Index of Financial Inclusion: The second hypothesis is H2 if

0.3 ≤ IFI < 0.5 the medium level of financial inclusion, while only 7 mandals

(please see the chart no 5.14.3) have the medium level of Index such as Gara

mandal is the fourth rank with IFI value of 0.44, Amadalavalasa Imandal is the

fifth rank with IFI value of 0.43 , Narasannapeta mandal sixth rank with IFI value

of 0.42, and other mandals Plakonda seventh rank with IFI value of 0.38, Rajam

mandal eight rank with IFI value of 0.36, Palsa mandal ninth rank with IFI value

of 0.34 and Ichpuram mandal tenth rank with IFI value of 0.32 had the medium

level of Financial inclusion Index. Based on the hypothesis, if 0.3 ≤ IFI <0.5 IFI

value lower than, medium financial inclusion with value of 0.3 to 0.4. The

hypothesis significantly low level of Index of Financial Inclusion.

3. Low Level Index of Financial Inclusion: The third Hypothesis is H3 if 0 ≤ IFI <

0.3 the low level of financial inclusion values. The researcher found that the

remain other 27 mandals were the low level of Financial Inclusion Index. The

hypothesis is 0 ≤ IFI < 0.3 low financial inclusion, these are Ranastalam mandal

eleventh rank with IFI value of 0.28, Laveru mandal 12th

rank with IFI value of

198

0.27, G.sigdam mandal thirteenth rank with IFI value of 0.26, Santakaviti mandal

fourteenth rank with IFI value of 0.25, vangara mandal fifteenth rank with IFI

value of 0.24, ramdalavalasa mandal sixteenth rank with IFI value of 0.18,

sarubujili mandal seventeenth rank with IFI value of 0.17, and all other mandsl,

but least Hirmadalam 0.14, Kotturu 0.12 and L.n Pata Value of IFI 0.1, these

mandals have the most back ward in financial inclusion. The empirical results

substantiate that the district have low level of financial inclusion especially in

credit accounts. Srikakulam district need more comprehensive indicator of Index

of Financial Inclusion. The researcher found that major observations in

Srikakulam district. Why L.N peta and Kotturu mandals are nearer to zero level of

financial inclusion, because of the majority villages are segregated from main

villages and it is cost affective to banking infrastructure and problem of migration

of household.

5.11 Situation Analysis of the Vijayanagarm District

According to the 2011 census, Vizianagaram district has a population of

2,342,868. This shoes, the district has a population density of 358 inhabitants per

square kilometer (930 /sq mi). Vijayanagarm with total villages: 1548, Mandal 34.

Table: 5.16 Population Scenario of Vijayanagarm District



2 Rural Population 18.52 Lakhs

3 Urban Population 4.90 Lakhs

4 Male 51.37 %

5 Female 49.73 %

6 Population Density 358 Sq.km


Source: District website of Srikakulam

The table 5.16 indicates 2011 census that the total population is 23.42 lakhs, within

that rural population is 18.52 lakhs and urban population is 4.90 lakhs. The majority

63 per cent of the male population while 40.73 per cent of the female population in

Vijayanagarm district.

199

Table: 5.17 Banks Scenario

Category No. of Banks

Branches

Rural Banks 97

Semi urban 61

Urban Banks 45

Total Bank Branches 203

Total Deposits 2510.59

CD Ratio 86.61

Source: Lead Bank

The table 5.17 indicates the overall banks in district, the number of total bank

branches 203 are working in this district, as category wise the number of rural bank

branches 97, semi urban bank branches 61 and urban bank branches 45 working in the

urban areas, where as the total deposit in Rs.2510.59 crores with the CD ratio 86.62

with 203 bank branches.

5.11.1 Measuring Mandal wise Index of Financial Inclusion for Vijayanagarm

district

In Vijayanagarm district there are 34 mandals with 1548 villages. The

researcher will measure the all the mandals IFI with three dimension as used the other

districts.

The figure 5.14 clearly indicates empirical results that the three dimensions

(Penetration, Availability, and Usage) to measuring IFI values have been computed as

mandal wise for Srikakulam district. And also the Hypothesis tested with

measurement of Index of Financial Inclusion as quantitative model. Depending on the

values of IFI, states and districts are categorized into three categories, viz.




200

Figure: 5.14 Mandal wise Index of Financial Inclusion for Vijayanagarm district



The empirical hypothesis results divided into three categories:

(1) High Level Index of Financial Inclusion(IFI): The empirical hypothesis

results showed based on the three dimensions that if the Index value is H1 0.5

< IFI ≤ 1 high financial inclusion, out of 34 mandals, the major influenced

mandals such as Vijayanagarm, Pravathipuram and Saluar mandals have high

level Financial Inclusion index ranks with value of Vijayanagarm is the first

rank with IFI value of 0.67, Pravathipuram is the second rank with IFI value

of 0.58 and Salura is the third rank with IFI value of 0.52. The given

hypothesis is if 0.5<IFI ≤ 1 Financial inclusion nearer to achieve, therefore,

Vijayanagarm is still need to achieve complete of financial inclusion. Whereas

Pravathipuram IFI value is 0.58 and Saluar IFI value 0.52 than these three

mandals of hypothesis is significantly high level with dimensions of banking

penetration, availability of banking services and use of banking services,

(2) Medium Level Index of Financial Inclusion: The second hypothesis is H2 if

0.3 ≤ IFI < 0.5 the medium level of financial inclusion, the researcher found

that only 5 mandals (please see the chart no 6.15.2) have the medium level of

201

Index. There are Kurupam, Bobbili, Cheepurupalli, Srungavarapukota,

gajapathinagaram. Based on that hypothesisth0.3 ≤ IFI <0.5 IFI value lower

medium financial inclusion with value of 0.3 to 0.49. So the Kurupam mandal

have the fourth rank with IFI value of 0.48, Bobbili have the fifth rank with

IFI value of 0.44, Cheepurupalli have the sixth rank with IFI value of 0.40,

Srungavarapukota have the seventh rank with IFI value of 0.36,

gajapathinagaram have the eight rank with IFI value of 0.32. All these value

indicating said hypothesis is 0.3 < 0.5 had the medium level of Index of

Financial Inclusion, the hypothesis significantly medium level in these

mandals of Vijayanagarm district of Andhra Pradesh

(3) Low Level Index of Financial Inclusion: The third Hypothesis is H3 if 0. ≤

IFI < 0.3 the low level of financial inclusion values. The researcher found that

the remained majority of the mandals have low level index of financial

inclusion. The Badagni is the ninth rank with IFI value of 0.28,

Jiyyammavalasa is the tenth rank with IFI value of 0.27, Lakkavarpuhota is

the eleventh rank with IFI value of 0.26, vepadaand is the 12th

rank with IFI

value of 0.25, all other 22 mandal have the least IFI ranks. But least of IFIs

values Gummalazmupuram is the thirty three two rank with IFI value of 0.13,

Komarade is the thirty three rank with IFI value of 0.12 , Makkuva is the thirty

four rank with IFI value of 0.1. These mandals have the most back ward in

financial inclusion. The empirical results substantiate that the district

have low level of financial inclusion especially banking penetration,

availability of banking services and use of banking services. The researcher

found that major observations in Vijayanagarm district. the structure of the

villages are segregated from main villages and it is cost affective to banking

infrastructure, migration of household.

202

SECTION-III

5.12 Demographic and Socio-Economic Conditions of Selected Households

This section deals with the status of Financial Inclusion and the performance

relevant to their socio-economic conditions with the evidence on the effects of

demographic factors’ except for an individual’s race, age and sex on a wide range of

financial inclusion measures, including access to finance, savings behaviour of

sample respondents, credit delivery by banks or financial institutions. It examines the

underlying reasons for the use of these variables in Financial Inclusion monitoring

and surveillance. However, there are other constrains to access to finance, resources

and behavioural patterns associated with age sex, community, religion which underlie

the complex differences in access to finance.

Social exclusion is a complex phenomenon, dynamic and multi-dimensional,

linking various dimensions of life from which people are excluded based on a

network of interlocking economic, social, political, and demographic factors. An

understanding of the extent, nature, and determinants of financial inclusion is a

precondition for effective public policy to reduce exclusion in India and around the

world.

Study Attribute: Any research study needs to consider the demographic,

sociological, and economic attribute of the sample respondents. In this section an

attempt is made to study the social aspects like age, literacy, family size, caste and

some economic aspects like number of earning members, have bank account and

assets of the sample households. In this regards keeping mind, a survey was

conducted during period from 2011 March to August 2011, which selected based on

IFI index rank, a sample of 780 rural house hold from the Ultimate Area

Units(Villages) under the study have between collected with the help of an interview

schedule.

The researcher selected three districts, based on IFI index rank namely

Srikakulam is in the lowest rank (21), and Vijayanagarm (22), Mahaboobnagar (23)

IFI index rank is very low for three districts.

In the third stage, Mandals or Blocks were selected based on mandal-wise

Index ranks from those three districts, within those mandals ultimate area units

203

(villages) have been selected. These sample households have been chosen based on

the particular characteristics such as their must be belongs to social or sector group

and must be below poverty line(followed by IKP data) in view the probability

proportional to their actual number in the total number of sample households, in the

study area.

The overall 3 districts of IFI ranks with low level, IFI mandal ranks with low

level and two backward villages where the social groups were high in the size of

population, in the final Household selection 65 HHs from each villages (from Andhra

Pradesh 3 Districts based on IFI ranks, each district 6(3x2=6) Mandals, from each

mandal two villages (6x2=12) HHs 65 (65x12=780) 780 HHs in this study.

Financial inclusion cannot be understood in isolation. It needs to be

understood in the context of other dynamics within a country or community. To fully

comprehend financial inclusion, it is important to know things like the demographic

and socio-economic profile of the sample respondents, the different ways in which

people generate income, their life realities, and their perceptions regarding financial

services. These and other questions are core to understanding the financial inclusion

landscape within a country or community.

1. Age Composition:

Financial inclusion also differs in important ways by individual characteristics

such as gender, education level, age, and rural or urban residence. There are

significant disparities in account penetration along gender lines measuring access to

finance, its determinants, and its impact of additional factors such as age distribution

is also playing an important role to penetrate financial services. The age of the head of

the household may influence his decision making capacity and production capacity of

the household. If he is too young, he lacks experience in decision making and if he is

old, he cannot take decision in time and this may influence the production capacity of

the household. Similarly, the age compositions of family members help assess the

available workforce in the family and its impact on productivity of the household.

Age is an important demographic attribute of any human group. Age plays an

important role in pursuing and undertaking any activity. The ageing process of

populations due to demographic change affects the economy in various ways. Its

impact is found on the socio-economic activities.

204

The analysis has two categories such as in the first step the researcher will

analyse the overall situation of the table and in the second step the researcher will

give a detailed interpretation of each district situation. Table-4.5 shows the

distribution of respondents by age group:

Table 5.18 Distribution of Households by Age Composition

Age in

Years

Mahbubnagar Srikakulam Vijayanagarm Overall Total

15-20 14

(5.38)

12

(4.69)

17

(6.56)

43

(5.54)

20-30 86

(33.09)

75

(28.84)

81

(31.15)

242

(31.02)

30-40 111

(42.69)

98

(37.69)

99

(38.07)

308

(39.48)

40-50 37

(14.23)

60

(23.02)

55

(21.15)

152

(19.48)

50-60 12

(4.61)

15

(5.76)

8

(3.07)

35

(4.48)

Total 260

(100)

260

(100)

260

(100)

780

(100)

Note: Figures in Brackets are percentage

The table 5.18 showed that out of 780 sample respondents, the majority 31.02 per cent

of the respondents were distributed among the age class between 20 to 30, this is the

highly productive age to produce as an optimize of the outcomes, but unfortunately

there are lack of opportunities, lack of access to resources and markets, while least

4.48 per cent of the sample respondents were distributed among the age class between

50 to 60. Suppose that age ready for relief for the stating old age, even though the

majority of Indians were working without rest at the age of 60 years and 19.48 per

cent of the respondents were distributed among age class between 40 to 50 years age

old. Whereas 5.54 per cent f the respondents distributed among age class between 15

to 20 years of age old. This is very young age, if they are not able to utilise in a proper

way, in the coning generation they may face lot of problems to survive. If they have

skills, a professional technical skill leads to enter global opportunities

Regarding Mahabubnagar district, the age composition out of 260 sample house

hold , the majority of 42.69 per cent of the sample respondents were distributed

among age class between 30 to 40 years old, while 4.61 per cent of the

respondents were distributed among age class between 50 to 60 years old and

205

33.09 per cent of the respondents were distributed among age class between 20

to 30 years old whereas 14.23 percent of the respondents were distributed

among age class of 40 to 50 years old and 5.38 per cent of the respondents were

distributed among age class between 15 to 20 years old age. In this district the

majority of the population age 30 to 40, it means that is the high level of returns

on age as productive factor, but the majority of the respondents were don’t have

work to prove their productivity factor.

In respect to Srikakulam district, out of 260 sample respondents, the majority

37.69 per cent of the respondents were distributed among age class of 30 to 40

years, while 4.69 per cent of the respondents were distributed among age class

between 15 to 20 years old age and 28.84 per cent f the respondents were

distributed among age class between 20 to 30 years old age. Whereas 23.02 per

cent of the respondents were distributed among age class between 40 to 50 years

old and 5.76 per cent of the respondents were distributed among age class

between 50 t 60 years.

Regarding Vijayanagarm district out of 260 sample respondents, the majority

38.07 per cent of the respondents were distributed among age class between 30

to 40 years old, while 3.07 per cent of the respondents were distributed among

age class between 50 to 60 years old and 31.15 per cent of the respondents were

distributed among age class between 20 to 30 years , 21.15 per cent of the age

group distributed among age class between 40 to 50 years whereas 6.56 per cent

f the respondents were distributed among the age class of 15 to 20 years old. In

Vijayanagarm district the majority 38.07 per cent of the sample respondents

belongs to 30 to 40 years old, with work expertise as professional and non

professional. The dynamic purchasing power indicator is built that takes the

development of different age groups into account and gives a first impression of

the effects of ageing on the development of income and consumption behaviour.

2.Total Family Members by Age Composition: Demographic change in the sense of

an ageing population proceeds for more depending, if the total family members were

aged people in their family members, the consequences and challenges resulting

from ageing are hence of increasing dependent ratio in the families and then family

consumption power r savings may become poor. The impact of demographic change

and possible ways to soften or circumvent negative influences on family income and

206

then national income. The regional differences depend on the initial position such as

population density, age structure, and economic condition. See the table as follows:

Table 5.19 Distribution of Total Family Members by Age Composition

Age in Years

Mahbubnagar

Srikakulam

Vijayanagarm

Overall Total

15-20 38

(14.61)

43

(16.53)

37

(12.23)

118

(15.12)

20-30 94

(37.21)

112

(43.07)

117

(47.02)

323

(41.44)

30-40 76

(28.26)

63

(24.26)

73

(28.07)

212

(27.17)

40-50 44

(16.91)

32

(12.30)

27

(10.38)

103

(13.20)

50-60 8

(3.01)

10

(3.84)

6(2.30) 24

(3.07)

Total 100

260

(632)*

100

260

(712)*

100

260

(649)*

100

780

(1993)*


Note: * are the total family members from each district

The table 5.19 indicates that overall total 1993 (780 Households) family

members in three districts, out of 1993 the majority 41.44 per cent of the family

members age distributed among the class between 20 to 30 years old, while 3.07 per

cent of the family members distributed age class between 50 to 60 years old and 27.17

per cent of the family members distributed age between 30 to 40 years old, 13.20 per

cent of the family member distributed age between 40 t 50 years old, whereas 15.12

per cent of the family members distributed age between 15. To 20 years old. The

analysis mainly indicates the purchasing power of an average representative consumer

in financial services, if the members of family are more members in the three regions.

I. Regarding Mahbubnagar district, out of 632 total members(260 Households),

the majority 37.21 per cent of the family members distributed age wise

between 20 to 30 years old, while 3.01 per cent of the family members

distributed age between 50 to 60 years old and 28.26 per cent of the family

members distributed age wise between 30 to 40 years old, 16.91 per cent of

the family members distributed age wise between 40 to 50 years old whereas

14.61 per cent of the family members distributed age wise between 15 to 20

years. However, the analysis revealed that if they have more members in the

207

family then the expenses and consumption structure is different from family to

family region to region, considerably between different socio-economic

groups. If the number of persons declines the number of households will

grows as large families in Mahbubnagar.

II. With respect to Srikakulam District, out of 712 family members(260

households), the majority 43.07 per cent of the family members distributed

age between 20 to 30 years old, here we can observed the differentiate

between Mahbubnagar district and Srikakulam district that this district have

near 6 per cent of the family members are younger’s generation, while least

3.84 per cent of the family members distributed age between 50 to 60 years

old and 24.26 per cent of the family members distributed age between 30 to 40

years old, 12.30 per cent f the family members distributed age between 40 to

50 years whereas 16.53 per cent of the family members distributed age

between 15 to 20 years old. The overall observations in Srikakulam are that

the consumption power some better than the Mahbubnagar district though it is

shown in the data Household budget survey.

III. Regarding Vijayanagarm, the total 649 family members (260 Households) in

the district. The majority 47.02 per cent of the family members distributed age

between 20 to 40 years old, it is 7 per cent higher from Mahbubnagar and 2

per cent form Srikakulam district, while least 2.30 per cent of the family

members distributed age between 50 to 60 years old. The differences among

three districts were higher in Srikakulam and Mahbubnagar district. The other

majority 28.07 per cent of the family members distributed age between 30 to

40 years old, 10.38 per cent of the family members age between 40 to 50 years

old whereas 12. 23 per cent of the family members distributed age between

15to 20 years old of the Vijayanagarm district. Moreover, based the analysis

of three districts, Vijayanagarm had the better future and opportunities to

improve socio-economically.

3. Gender Composition: There are significant disparities in penetration along gender

lines. Women are one of the groups currently excluded from the development the

strategic priorities in a way that benefits not only women and associated vulnerable

groups, but the system as a whole. There is need for inclusion of women and gender

concerns within financial, without gender concerns the development may not reach

208

the fruitful results. The inclusion of women within the finance inclusion may be

considered part of a democratic entitlement, which is entitled to be included in its

governance.

. Table: 5.20 Distribution of Gender Composition

Gender Mahbubnagar Srikakulam Vijayanagarm Overall

Total

Male 135

(56.61)

125

(59.59)

140

(57.60)

400

(51.28)

Female 125

(43.39)

135

(40.41)

120

(42.40)

380

(48.72)

Total 260

(100)

260

(100)

260

(100)

780

(100)


Access to credit is gendered, including access to its size and quality. The

table 5.20 indicates the gender distribution in three districts. The overall scenario

showed that the majority 51.28 per cent of the respondents were distributed towards

men, while 48.71 per cent of the respondents were distributed towards females.

However, the gender composition is more than the female in the study areas.

Regarding Mahbubnagar district gender composition, the majority 56.61 per

cent of the respondents were male, while 43.39 per cent of the respondents

were female in the Mahbubnagar district.

With regarding to Srikakulam district, 40.41 per cent of the respondents were

female, while 31.25 per cent of the respondents were male

In respect to Vijayanagarm district, out of 260 households, the majority

57.66per cent f the respondents were male, while 42.40 per cent of the

respondents were females in the district.

4.Households by Size of the Family: Economists have long been interested in

understanding the factors that determine impact of family size for development.

Family environment is widely believed to be a primary component, but it is difficult

to parcel this out into specific characteristics. Greater family size may negatively or

positively affect outcomes through resource concentration, because the average

maturity level in the household is lower. The empirical literature on the effects of

family size on development outcomes generally supports a negative relationship

between family size and “quality of life” (usually education), even after controlling

209

for socioeconomic factors. The table explains the three districts situation of the

family size

Table: 5.21 Distributions of Households by Size of the Family

Age in

Years

Mahbubnagar

Srikakulam

Vijayanagarm

Overall

Total

Less than 5 221

(85)

197

(75.76)

207

(79.62)

625

(62.14)

5 to 6 34

(13.08)

54

(20.78)

47

(18.31)

135

(17.30)

7 & above 5

(1.92)

9

(3.46)

6

(2.07)

20

(20.56)

Total 260

(100)

260

(100)

260

(100)

780

(100)


The table 5.21 showed that out of 780 households, the majority 62.14 per

cent of the respondents family size less than 5 family members in three districts,

while 17.30 per cent of the respondents family size 5 to 6 members , whereas 20.56

per cent of the respondents family size 7 & above members in their family members.

1) Regarding Mahbubnagar, the majority 85 per cent of the family size is less

than the 5 members in their families, while 1.92 per cent of the family size

have more than 7 and above in their family members, whereas 13.08 per

cent of the family size have 5 to 6 members in their families.

2) With regarding to Srikakulam district, the majority 75.76 per cent of the

respondents family size have less than 5 members in their families, while

least 2.07 per cent of the respondents family size have 7 & above members

in their family members, whereas 20.78 per cent of the respondents family

size have 5 to 6 members in their family members.

3) In Vijayanagarm district, the majority 79.62 per cent of the respondent’s

family size has less than 5 members in their families, while least 2.07 per

cent of the family size 7 & above whereas 18.31 percent of the

respondent’s family size has 5 to 6 members in their families.

5.Average Family Size: Family size was recognized as another variable affecting

financial inclusion status f households. Strategies have recognized the importance f

210

family size in determining the financial inclusion status of households. Larger

families tend to have higher expenditure and lack of proportionate income induces

dependence on sources of finance including formal sources of finance and thus

boosting up level of Financial inclusion

Table: 5.22 Distributions of Households by Average Family Size

Family Size Mahbubnagar

Srikakulam

Vijayanagarm

Overall

Total

No. of Households 260 260 260 780

No of Family

Members 632 712 649 1993

Average Family Size 2.43 2.73 2.49 2.52

Source: Computed from primary data

The table 5.22 showed that the number of family members 1993 with 780

households. Out of 780 households distributed equally for each district as 260

households. The total average of family size is 2.52 and for Mahbubnagar district

number of family members 632 with the average family size is 2.43; Srikakulam

district number of family members 712 with the average family size is 2.73 and the

Vijayanagarm district number of family size 649 with the average family size of 2.49.

6.Household Literacy Level: Literacy is a prerequisite for creating investment

awareness, and hence intuitively it seems to be a key tool for financial inclusion.

There are various socio-cultural, economic issues that hinder the process of financial

inclusion, such as in demand side, level of understanding the personal financial

investment, family investment. Due to lack of awareness and illiteracy. From supply

side, lack of avenues for investment (such as poor bank penetration), unwillingness of

banks to do financial inclusion. Therefore, there is a need to understand the household

literacy level in those three districts. The below table will explain the level of literacy

level of households in three districts.

211

Table: 5.23 Distributions of the Heads of Households by Literacy Level

Literacy level

Mahbubnagar Srikakulam Vijayanagarm

Overall

Total

Illiterate 116

(44.63)

135

(51.94)

106

(40.78)

357

(45.78)

Primary 70

(26.92)

66

(25.38)

74

(28.46)

210

(26.92)

Secondary 51

(19.61)

42

(16.15)

56

(21.53)

149

(19.10)

Post

Secondary

23

(8.84)

17

(6.53)

24

(9.23)

64

(8.20)

Total 260

(100)

260

(100)

260

(100)

780

(100)


The table 5.23 indicates that the overall literacy level scenario of three

districts. The majority 45.78 per cent of the respondents were illiterates among three

districts, while 8.20 per cent of the respondents were post secondary level education

and 26.92 per cent of the respondents were primary standard level of education, 19.10

per cent of the respondents were secondary level of education.

Regarding Mahbubnagar district, the majority 44.63 per cent of the respondents

were illiterates, while 8.84 per cent of the respondents were post secondary level

and 19.61 per cent of the respondents were secondary level education

In Srikakulam district, the majority 51.94 per cent of the respondents were

illiterates, while least 6.53 per cent of the respondents were have post secondary

level education and 25.38 per cent of the respondents were have primary level

education where as 16.15 per cent of the respondents were have the secondary

level education.

In Vijayanagarm district, the majority 40.78 per cent of the respondents were

illiterates, while the least 9.23 per cent of the respondents were have post

secondary level education, 28.46 per cent of the respondents were have the

primary level education whereas 21.53 per cent of the respondents were have

secondary level of education

The researcher made observations among three districts, the majority 51.92

illiterates in Srikakulam district; it is 5 per cent of the higher than the two

212

districts. In the primary education level also Srikakulam is the 1.5 per cent least

among three district and Secondary level education 12 per cent of the backward

from other two districts, whereas post secondary level education Srikakulam

have only 6.53 per cent of the respondents were in post secondary level

education, the difference between these three districts Srikakulam is the least per

cent of the post secondary level education

7. Households by Community(Caste):

Caste-based exclusion and discrimination are essentially “structural in

nature” and comprehensive and multiple in coverage, involving as their very basis the

denial of equal opportunities. The practice of caste-based exclusion and

discrimination is defined as “living mode exclusion” or exclusion from political

participation, alongside exclusion from and disadvantages in accessing social and

economic opportunities (UNDP-Sa-Dhan Report, 2011)212

In India, banking sector and other financial institutions have not succeeded

in providing financial services to rural sector and also to marginalized section of

society like scheduled caste and tribes, women, landless labourers etc. Financial

exclusion thus helped in enhancing the social and economic segregation in India. Both

supply and demand side factors are responsible for this malfunction. On the demand

side, lack of awareness, illiteracy, unemployment, low income status, social exclusion

of people etc are some of the major hindrances for financial inclusion. On the supply

side, procedural rigidity, attitude problem of the bankers, ineffective government

intervention etc. is some of the main obstacles.

212

http://www.undp.org/content/dam/india/docs/dalit_minority_fin_exclusion_interface_2010_a

_report.pdf

http://www.undp.org/content/dam/india/docs/dalit_minority_fin_exclusion_interface_2010_a_report.pdf

http://www.undp.org/content/dam/india/docs/dalit_minority_fin_exclusion_interface_2010_a_report.pdf

213

Table: 5.24 Distributions of Households by Community

Community Mahbubnagar Srikakulam Vijayanagarm Overall Total

OC

15

(5.78)

12

(4.62)

15

(5.79)

42

(5.39)

BC

96

(36.92)

115

(44.23)

67

(25.76)

278

(35.64)

SC

112

(43.07)

35

(13.46)

108

(41.53)

255

(32.69)

ST

37

(14.23)

98

(37.69)

70

(26.92)

205

(26.28)

Total

260

(100)

260

(100)

260

(100)

780

(100)

Note: Note: Figures in Brackets are percentage

The majority of the social groups and sectoral group were economically

backward by the caste system. Those populations belonging to the Scheduled Caste,

Scheduled Tribes, and Other Backward Classes have lower chances of accessing

institutional debt. The exceptions are states such as a Rajasthan and Maharashtra

where members belonging to the Scheduled Tribe and Scheduled Caste respectively,

are more likely to access institutional debt.

The table 5.24 indicates overall and district wise situation of household by

community in three districts. The majority 35.64 per cent of the respondents

belonging to backward caste, while least 5.39 per cent of the respondents were

belonging to other caste and 32.69 per cent of the respondents were belonging to

Scheduled caste whereas 26.28 per cent of the respondents were belonging to

Scheduled Tribes in three districts

1. Regarding Mahbubnagar out of 260 sample respondents, the majority 43.07

per cent of the respondents were belonging to SC, while least 5.78 per cent of

the respondents were belonging to other caste and 36.92 per cent of the

respondents were belonging to Backward caste, where as 14.23 per cent of the

sample respondents were belongings to STs in the Mahbubnagar district.

2. In respect to Srikakulam district out of 260 sample respondents, the majority

44.61 per cent of the respondents were belonging to STs, while the least 4.62

per cent of the respondents were Other Castes and 37 per cent of the

respondents belonging Backward Castes where as 13.46 per cent of the

respondents were belonging to SCs

214

3. In case of Vijayanagarm district, the majority 41.53 per cent of the

respondents were belonging to SC, while 5.79 per cent of the respondents

were belonging to other caste and 26.92 per cent of the respondents were

belong to STs whereas 25.76 per cent of the respondents were belonging to

backward castes. A clear pattern could be detected from the relation between

community (caste) and level of financial inclusion among social and sectoral

groups.

8. Households by Religion: The religious communities may have diversity in beliefs

and approaches, but are united for the nation. Indian Religions are instinct part of the

nation with diversified approach in believes and approach to practice. The Economic

development of the nation needs strategic utilization of natural, physical, human,

financial, and social resources. Unless we establish socio-economic justice through

resource allocation among religious communities, it is meaningless to talk about the

inclusive growth. The most important reason for financial exclusion of Indian

Muslims, rather advocated financial inclusion of Indian Muslims through participation

in Scheduled banks. Since majority of Indian Muslims are poor and orthodox, their

financial exclusion is mainly due to prohibition of interest in Islam. We must not

forget that Indian Muslims shares 18.35% Indian population living below poverty

line.

. Table: 5.25 Distributions of Households by Religion

Religion Mahbubnagar Srikakulam Vijayanagarm Overall Total

Hindu

147

(56.53)

215

(82.69)

209

(80.38)

571

(73.20)

Muslim

64

(24.64)

14

(5.38)

21

(8.07)

99

(12.69)

Christian

45

(17.30)

25

(9.63)

26

(10.02)

96

(12.32)

Others

4

(1.53)

6

(2.30)

4

(1.53)

14

(1.79)

Total

260

(100)

260

(100)

260

(100)

780

(100)


The table 5.25 indicates that the overall scenario of three districts and also

explaining each district as an individual, the majority 73.20 per cent of the

respondents were belongs to Hindi religion as we know that India is Hindu nation,

while 1.79 per cent of the respondents were other religion group and 12.69 per cent of

215

the respondents were belonging Muslims where as 12.32 per cent of the respondents

were belonging to Christian religion. However, the sample respondents were

belonging to Hindu religion. Religious minorities have faced social stigmatization

throughout the history of India; caste based as well as class based. Such exclusion has

undoubtedly led to political and economic discrimination, let alone their exclusion

from the developmental processes of the country.

With respect to Mahbubnagar, out of 260 sample respondents the majority

56.53 per cent of the respondents were belonging to Hindu religion, while1.53

per cent of the respondents were belongs to other religion and 24.64 per cent

of the respondents were belonging to Muslims whereas 17.30 per cent of the

respondents were belonging Christians

Regarding Srikakulam district, the majority 82.69 per cent of the respondents

were belong to Hindu religion, while least 2.30 per cent of the respondents

were belong to other religion and 9.63 per cent of the respondents were belong

to Christian whereas 5.38 per cent of the respondents were belong to Muslims

in the study areas of Srikakulam district

With regard to Vijayanagarm, the majority 80.38 per cent the respondents

were belongs to Hindu religion, while1.53 of the respondents were other

religion, and 10.02 of the respondents were belongs to Christians and where as

8.07 per cent of the respondents were belonging to Muslims. There are so

many barriers to reach of the banks; the situation of the minority groups

worsens due to the already existing discrimination what they face in everyday

life. Inaccessibility to bank accounts and formal credit markets still leaves

them secluded, underprivileged, and exploited.

9. Households Occupation: The relationship between house hold occupation

and financial access. The theoretical relationship between occupation and

access to financial services and growth is not straightforward. Therefore,

occupation is the main factor to decided level of consumption of finance

services. According to the theoretical literature, there are several mechanisms

through occupation leads to stable consumption. Here the researcher explains

the category of occupation among three districts. In the table which may be

related – and this also varies depending on which resources consist of earnings

from a chosen occupation.

216

Table: 5.26 Distributions of Households by Occupation

Occupation Mahbubnagar Srikakulam Vijayanagarm Overall

Total

Cultivator 56

(21.57)

47

(18.07)

49

(18.84) 152

(19.48)

Agricultural

labour

115

(44.23)

125

(48.07)

119

(45.80) 359

(46.02)

Construction

labour

23

(8.84)

18

(6.92)

21

(8.07)

62

(7.94)

Industrial labour 12

(4.61)

10

(3.89)

9

(3.46) 31

(3.97)

Livestock 19

(7.30)

29

(11.15)

24

(9.23) 72

(9.23)

Household

Industry

7

(2.69)

10

(3.84)

8

(3.07)

25

(3.25)

Trade/Commerce 9

(3.46)

6

(2.30)

9

(3.46) 24

(3.07)

Salaried People 8

(3.07)

7

(2.69)

9

(3.46) 24(3.07)

Profession

/self-employee

11

(4.23)

8

(3.07)

12

(4.61)

31

(3.97)

Total 260

(100)

260

(100)

260

(100)

780

(100)


Now a day’s the households typically are multi-occupational and multi-

generational, the table 5.26 describes the overall scenario of household’s occupation

among three districts. The majority 46.02 per cent of the households have their

occupation as agriculture labors in three districts, while least 3.07 per cent of the

households have their occupation as trade/commerce and 19.48 per cent of the

respondents have their occupation as cultivators, with regard to livestock the majority

9.23 per cent of the respondents have their occupation as livestock and 7.94 per cent

of the households have their occupation as construction labours in three districts. In

the professional occupation such as employed people or salaried people have 3.07 per

cent of the respondents occupied as their main sources, whereas 3.97 per cent of the

respondents have their occupation as self-employed, household industry 3.25 per cent

of the respondents,

217

With regard to Mahbubnagar district, the majority 44.23 per cent of the

respondents have their occupation as agricultural labor, while 3.07 per cent of

the respondents have their occupation as salaried people, as following 21.57

per cent of the respondents have their occupation as cultivators and 7.30 per

cent of the respondents have their occupation as livestock rarer.

In respect to Srikakulam district, the majority 48.07 per cent of the

respondents have their occupation as agricultural labours, while 2.69 salaried

people have their occupation as salaried people and 18.84 per cent of the

respondents have their occupation as cultivators, in the other 11.15 per cent of

the respondents have their occupation as livestock rarer in the Srikakulam

district, whereas 10 per cent of the respondents have their occupation as

industrial labour,, only 3.89 per cent of the respondents have their occupation

as household industry

Regarding Vijayanagarm district, the majority 45.80 per cent of the

respondents have their occupation as agriculture labor, while 3.07 per cent of

the respondents were house hold industry and 18.84 per cent of the

respondents have their occupation as their cultivators, as follows 8.07 per cent

of the respondents have their occupation as construction labours, in the

livestock 9.23 per cent of the respondents and 4.61 per cent of the respondents

have their occupation as professional or self-employed, in the trade 3.46 per

cent of the respondents have following as their occupation.

10. Distribution of Households annual Income: The poor households typically are

multi-occupational and multi-generational; Household annual income by households

is the capacity to earn, spend and consume based on their earning capacity within the

family or as an individual. How households are able to earn and the financial

competence of those who make decisions on behalf of the household and whether

there is a relationship between financial competence and household wellbeing are

discussed

218

Table: 5.27 Distributions of Households by Annual Income

Annual Income Mahbubnagar Srikakulam Vijayanagarm Overall

Total

Less than 10,000 22

(8.46)

13

(5)

24

(9.23)

59

(7.56)

10,000to 20,000 95

(36.53)

112

(43.07)

107

(41.15)

314

(40.25)

20,000 to 30,000 90

(34.64)

89

(34.23)

75

(28.84)

254

(32.56)

30,000 to 40,000 34

(13.07)

33

(12.69)

35

(13.46)

102

(13.07)

40,000 to 50,000 12

(4.61)

9

(3.48)

11

(4.23)

32

(4.13)

50,000 & above 7

(2.69)

4

(1.53)

8

(3.09)

19

(2.43)

Total

260

(100)

260

(100)

260

100)

780

(100)


The table 5.27 indicates that the overall scenario of households annual income,

the majority 40.25 per cent of the sample respondents were able to earn their annual

income Rs 10,000 to .20000 to use current income to enhance future income

sustainability through re-investment in income generating activity.; to endure income

shocks through savings; and to enhance the wellbeing of members of the household,

while the least 2.43 respondents were able to earn their annual income Rs. 50,000 and

above and 32.56 per cent of the respondents were able to earn their annual income

between Rs. 20.000 to 30,000, as follow 13.07 per cent of the respondents were able

to earn their annual income between Rs. 30,00 to 40,000, whereas 7.59 per cent of the

respondents were able to earn their annual income less than Rs 10,000 and only 4.13

per cent of the respondents were able to earn their annual income between Rs 40.00 to

50,000 in the all three districts. Therefore, it can understand that whether by enabling

earn sufficient annual income for children to continue in formal education beyond

primary school, or by enabling the purchase of household assets, including household

durables.

Regarding Mhabubnagar district analysis, out of 260 families the majority 36.53

per cent of the respondents were able to earn their annual income between Rs.

10,000 to 20,000, while only 2.69 per cent of the respondents have the income

above Rs.50,000 and 34.64 per cent of the income of the respondent s annual

219

income range between Rs. 20,000 to 30,000, as following the others 13.07 per cent

of the respondents were able to earning by annual income between Rs.30,000 to

40,000 only, whereas 8.46 per cent of the respondents were even not able to earn

by annual income less than Rs.10,00 and 4.61 per cent of the sample respondents

were able to earn their annual income between Rs. 40,000 to 50,000 only as

household income. Moreover, the majority of the sample household by annual

income between Rs.10,000 to 20,000 only in the district of Mahabubnagar district

of Andhra Pradesh.

In respect to Srikakulam district, the majority 43.07 percent of the house hold by

annual income between Rs.10, 000 to 20,000 only. It seems that Srikakulam the

majority of the sample respondents were less income then the Mahbubnagar

district. While the least 1.53 per cent of the respondents have their annual income

more than Rs.50, 000 & above. And as followed by the other majority group 34.23

per cent of the respondents were able to earn by their annual income between Rs

20,000 to 30,000 only , in the range between Rs. 30,000 to 40,000 only 12.69 per

cent of the sample respondents have their those level of annual income, whereas

5.00 per cent of the respondents were able to earn by their annual income less than

Rs. 10,000, but in the other side 3.48 respondents have their annual income

between Rs. 40,000 to 50,000 in Srikakulam district of Andhra Pradesh.

In Vijayanagarm district, the majority 41.15 per cent of the respondents were able

earn their annual income between Rs. 10,000 to 20,000, it can be observed that

Vijayanagarm district was somehow better than the Srikakulam district. And also

the high level income group in this district 3.09 per cent of the respondents have

their income between Rs. 50,000 & above and 28.84 per cent of the respondents

were able to earn their annual income between the range Rs. 20,000 to 30,000 and

as follows 13.46 per cent of the respondents have their annual income in the range

Rs.30,000 to 40,000, whereas 9.23 per cent of the respondents have their income

not even Rs.10,000 but less than Rs.10,000 and finally 4.23 per cent of the

respondents were able to earn their annual income between Rs. 40,000 to 50,000

rang of the sample respondents in the Vijayanagarm district of Andra Pradesh.

Therefore, the researcher came to know that based on the primary data analysis that

income related inequality in financial inclusion varies widely across within the

Andhra Pradesh districts. The basis that the management of money within the

household is as important as the quantum of money earned by the household.

220

Therefore, whilst also seeking to understand the relationship between financial

competence and household income. However, the income related inequality in

financial inclusion cannot be considered as synonymous to income inequality. A

notable result is that greater availability of banking services fosters financial

inclusion, particularly among the poor.

11. Distributions of Households by Land Hold Pattern: Economic growth is the

continuous improvement in the capacity to satisfy the demand for goods and

services, resulting from increased production scale, and improved productivity

(innovations in products and processes) of the land leads to economic growth. The

tangible asset such as land is the life Secure and natural resources rights are

essential for poverty reduction, agricultural development, and economic growth in

any nation. Therefore, the researcher would explain the land holding pattern of the

households in three districts as follow:

Table: 5.28 Distributions of Households by Land Hold Pattern

Land Holding Pattern Mahbubnagar Srikakulam Vijayanagarm Overall

Total

No land 101 (38.84)

94 (36.15)

114 (43.84)

309 (39.61)

Less than One Acre 53

(20.38)

67

(25.76)

28

(10.76)

127

(16.28)

1 to 2 32

(12.30)

43

(16.53)

50

(19.23)

146

(18.71)

2 to 3 31 (11.95)

27 (10.42)

30 (11.57)

88 (11.28)

3 to 4 22

(8.46)

19

(7.30)

23

(8.84)

64

(8.20)

4 to 5 13 (5)

7 (2.69)

10 (3.84)

30 (3.84)

5 and above 8

(3.07)

3

(1.15)

5

(1.92)

16

(2.08)

Total 260

(100)

260

(100)

260

(100)

780

(100)


The survey results revealed that out of 780 sample respondents, over 39 per

cent of the population in the three districts surveyed is as agricultural labourers. The

result has revealed that 18.71 per cent households occupy land holdings in the size of

the land 1 to 2 acre on an average, while the least 2.08 per cent of the households have

land holding pattern in the size between 5 and above acres. But 16.18 per cent of the

respondents were have less than the one acre in three district and 18.71 per cent of the

households have the land hold in the size of 1 to 2 acres, as the follows 11.28 per cent

of the respondents were have the land holding in size between 2 to 3 acres, where as

221

3.84 per cent of the respondents were have the land holding in size between 3 to 4

acres. Through the primary research the researcher came to know that the majority of

the respondents were landless in three districts.

1) Regarding Mahbubnagar district, out of 260 sample respondents, the majority

38.84 per cent of the respondents do not have any own land, they were belongs to

agricultural labour and leaseholder in their villages, while 3.07 per cent of the

respondents have the land holding pattern in size between 5 and above acres and

20.38 per cent of the respondents were have the land holding pattern in size of

less than one acre, followed by the other group 12.30 per cent of the respondents

have occupied the land holding pattern in size between 1 to acres. Further 11.95

per cent of the respondents have occupied that the land holding pattern in size

between 2 to 3 acres and 8.46 per cent of the respondents have more than 3 acres

to 4 acres, whereas 5 per cent of the respondents have occupied more than 5 acres

and above acres in the Mahbubnagar district.

2) Followed by Srikakulam district, the majority 36.15 per cent of the respondents

were purely dependent on agriculture work only, while the least 1.15 per cent of

the respondents were have occupied the land holding pattern in size between 3

acres and 25.76 per cent f the respondents were have occupied the less than one

acres in the district. As followed that 16.53 per cent of the respondents were have

occupied the land holding pattern in size between 1 acre top 2 acres, and also

7.30 per cent of the respondents were occupied the land holding pattern in size

between 3 acre to 4 acre. However, 2.69 per cent of the respondents were have

the more than 4 acre to 5 acres in the district, where as 10.42 per cent of the

respondents have just occupied the land holding pattern size between 2 acre to 3

acres in the Srikakulam district of Andhra Pradesh

3) With regard to Vijayanagarm the majoirty39.61 per cent of the sample

respondents did not have any own land and they were dependent on agriculture as

their main occupation agriculture labour in the Vijayanagarm district. But in the

other aspect 1.92 per cent the sample respondents were have occupied the land

holding pattern size in 5 acres and more in the Vijayanagarm district, it is 1.7 per

cent high than the Srikakulam district. Following 19.23 per cent of the

respondents were occupied the land holding pattern in size between 1 acre to 3

acres and also 19.23 per cent of the respondents were have occupied the land

222

holding pattern size in 1 acre to 2 acres, here also 11.57 per cent of the

respondents have occupied that land holding patterns in size between 2to 3 acre,

finally 8.84 per cent of the respondents have occupied the land holding pattern

size between 3 acre to 4 acres in the district of Vijayanagarm of Andhra Pradesh.

However, the overall scenario of the district was occupied majority of landless

population.

12. Distribution of Households by Source of Income: Theories and subsequently

empirical evidence have demonstrated that income distribution has a significant

impact on the growth process. The observed relationship between inequality and

economic growth was interpreted as capturing the effect of the growth process on the

distribution of income. Therefore, the better source is the pathway for better economic

development. The researcher would explain the how sample respondents getting the

income to survival life in three districts.

Table: 5.29 Distributions of Households by Source of Income

Source of Income

Mahbubnagar Srikakulam Vijayanagarm

Overall

Total

Crop Income 31

(11.96)

27

(10.43)

29

(11.18)

87

(11.19)

Wage Income 112

(43.07)

118

(45.38)

111

(42.69)

341

(43.71)

Live Stock 45

(17.30)

47

(18.07)

46

(17.69)

138

(17.69)

Rearing of Cattle 32

(12.30)

41

(15.76)

40

(15.38)

113

(14.48)

Household

Industry 13

(5)

8

(3.07)

9

(3.46)

30

(3.84)

Trade/Commerce 10

(3.84)

6

(2.30)

9

(3.46)

25

(3.20)

Salaried income 6

(2.30)

5

(1.92)

8

(3.07)

19

(2.43)

Profession/Self -

Employment 11

(4.23)

8

(3.07)

8

(3.07)

27

(3.46)

Total 260

(100)

260

(100)

260

(100)

780

(100)


The analysis has identified a variety of factors that may explain how the

sample respondents get income from different sources through diversification. The

table 5.12 explains the overall scenario of their source of income of the sample

223

respondents in three districts. The majority 43.71 per cent of the respondents have the

main source is the wage income, while 17.69 per cent of the respondents were have

the sources of the income from livestock and 14.48 per cent of the respondents

income from rearing of cattle, as follow others 11.19 per cent of the respondent have

their income from only agriculture crop, whereas 3.84 per cent of the respondents

were getting their income from household industry, and the others 3.46 per cent of the

respondents were getting income from self employment only.

Regarding Mahbubnagar district, out of 260 sample respondents the majority

43.07 per cent of the respondents are getting their income from daily wage

only. The fundamental cause of household income diversification is, because

they depended on agriculture, while the least 2.30 per cent of the respondents

were getting their income from salaries and 17.30 per cent of the respondents

were able to get their income by participating in live stock activities to

generate income. About other category of sources of income 12.30 per cent of

the respondents were getting their income from rearing of cattle, the others

following 11.96 per cent of the respondents have getting their income from

their main source is that on agriculture crop income, whereas 4.32 per cent of

the respondents getting their income from self employment and only 3.84 per

cent of respondents have their income from trade/commerce.

In Srikakulam district, the household member’s contribution to the household

total income differs according to their age. Thus, different households might

have different consumption and labor units from the Mhabubnagar district.

These differences may lead to diverse in labor allocation decisions and

strategies to exploit the labor resource among different households. the

majority 45.38 per cent of the sample respondent getting their income by

source is wage income, while 1.92 per cent of the respondent getting their

income by the source of salaried and 18.07 per cent of the respondents have

their income by the source of livestock, as the other follows 15.76 per cent of

the respondents getting their income from the source of cattle rearing only, the

further group 10.43 per cent of the respondents getting their income by the

sources of agriculture crop whereas as 3.07 per cent of the respondent have

their income by the source of self employment, finally very few 2.30 per cent

of the respondents getting their income by the source of trade/ commerce

224

With regard to Vijayanagarm also the majority 43.71 per cent of the

respondents get their income by the source of daily wage income because the

household structure may not only determine resources availability and

consumption patterns but also other activities that can be undertaken by

households., while very few 3.07 per cent of the respondents get their income

by the source of salaries, as the other group also 3.07 per cent of the

respondents are getting their income from the main sources of self

employment and 17.69 per cent of the respondents are getting their income by

the other sources like livestock, further 15.38 per cent of the respondents are

getting their income from the source of cattle rearing whereas 11.18 per cent

of the respondents purely depend on only agriculture income which impacts

on households and the level of income. On the other hand, the level of income

also affects the household demographic structure through which type of

source of getting income migration of household members, these causes of

long term changes in the personal distribution of income.

5.13 Distribution of Households type: The type of houses reflects on their status of

development and income of the sample respondents. The researcher would analyse of

three districts sample respondents that what type of houses they are living with

facilities.

Table: 5.30 Distributions of Households by type of House

Type of House Mahbubnagar Srikakulam Vijayanagarm Overall

Total

Thatched House

75

(28.84)

89

(34.23)

61

(23.46)

225

(28.84)

Govt Scheme

House

113

(43.46)

129

(49.63)

118

(45.38)

360

(46.15)

Own Title House

60

(23.07)

34

(13.07)

65

(25.01)

159

(20.38)

Own small

Building

12

(4.63)

8

(3.07)

16

(6.15)

36

(4.63)

Total

260

(100)

260

(100)

260

(100)

780

(100)


The table 5.30 indicates three districts households scenario of the

respondents, the majority 46.15 per cent of the respondents have living government

subsides schemes of houses, while the least 4.63 per cent of the respondents were

225

living only in thatched houses and 28.84 per cent of the respondents were living only

in thatched houses, 20.38 per cent of the respondents living own title house,

Regarding Mahbubnagar district, the majority 43.46 per cent of the

respondents were living in government subside scheme houses, while 4.63 per

cent of the respondents living in own small building type of houses and 28.84

per cent of the respondents only living in thatched houses, the others 23.07 per

cent of the household living in the own title house whereas

In Srikakulam district the majority 49.63 per cent of the sample respondents

living in government subside housing schemes, while only 3.07 per cent of the

households living own small buildings and 34.23 per cent of the respondents

living in thatched houses whereas 13.07 per cent of the house hold living in

own title house

With regard to Vijayanagarm district, the majority 45.38 per cent of the

respondents were living in government housing schemes, while very few

sample respondents 6.15 per cent living in own small building and 23.46 per

cent of the respondents were living

5.14 Distributions of Households by Assets Value

The distribution of household assets value across the three districts reflects

their status of the economic development. The analysis shows that wealth is more

unequally distributed across households than is the case for income. However, based

on their category of house have the value e in the existing market, but the majority of

the houses does have the minimum market price, because these majority of them

government subsidy scheme houses. However, only very few house that may have

minimum market value of their assets. While aggregate data can give an indication of

average household assets value and it helps to examine the distributional aspects of

wealth.

226

Table: 5.31 Distributions of Households by Assets Value

Household

Assets

(In Rupees)

Mahbubnagar Srikakulam Vijayanagarm Overall

Total

Less than

1,00,000

57

(21.92)

84

(32.33)

68

(26.15)

209

(26.79)

1,00,000 to

2,00,000

127

(48.84)

118

(45.38)

129

(49.61)

374

(47.94)

2,00,000 to

3,00,000

40

(15.38)

36

(13.84)

39

(5.02)

115

(14.74)

3,00,000 to

4,00,000

18

(6.92)

9

(3.46)

11

(4.23)

38

(4.87)

4,00,000

tom5,00,000

11

(4.25)

8

(3.07)

7

(2.69)

26

(3.33)

5,00,000 and

above

7

(2.69)

5

(1.92)

6

(2.30)

18

(2.33)

Total 260

(100)

260

(100)

260

(100)

780

(100)


The table 5.31 revealed the overall scenario of three districts household

assets value in the market. The majority 47.94 per cent of the respondent house hold

assets value range between Rs 1,00,000 to 2,00,00 of the three districts, while the

least 2.33 per cent of the household have the high level range between 5, 00,00 and

above and 26.79 per cent of the household assets value less than Rs.1,00,000, as the

other follow that 14.74 per cent of the respondents household assets value range

between Rs.2,00,000 to 3,00,000, whereas 4.87 per cent of the respondents household

assets value in the market between Rs.3,00,000 to Rs.4,00,000 and 3.33 per cent of

the respondents household assets value range between Rs. 4,00,000 to 5,00,000

With regard to Mahbubnagar district, 48.84 per cent of the respondents

household assets value in the market is between Rs.1,00,000 to 2,00,000, while

the highest assets value of the respondents household is only 2.69 per cent out

of 260 sample respondents and 21.92 per cent of the respondents household

assets value is less than Rs.1,00,000, in the range of Rs.3,00,000 to 4,00,000

in the present market rates, whereas 6.92 per cent of the sample respondents

household assets value range between Rs.3,00,000 to 4,00,000 and 4.25 per

cent of the respondents household assets value range between 4,00,000 to

5,00,000

227

In Srikakulam district, the majority 45.38 per cent of the respondents

household assets value range between Rs. 1,00,000 to 2,00,000 while only1.92

per cent of the respondents household assets value in the market range above

Rs. 5,00,00 and the other majority 32.33 per cent of the household assets

value in the market less than Rs.1,00,000 it means that value is less than the

market value and 13.84 per cent of the respondents household assets value

range between Rs. 2,00,000 to 3,00,000 only whereas 3.46 per cent of the

respondents household assets value in the range between Rs.3,00,000 to

4,00,000 and also 3.07 per cent of the respondents household assets value in

the market more that range between Rs. 4,00,000 to 5,00,000

Regarding Vijayanagarm, the majority of 47.94 per cent of the sample

respondents households assets value in the present market range is between

Rs.1,00,000 to 2,00,000 , while only 2.30 per cent of the respondents

household assets value is in the market range above Rs. 5,00,000 and 26.15

per cent of the respondents have the value of their assets in the market less

than 1,00,000 only, and 15.02 per cent of the respondent household assets

value in the market rage between Rs.2,00,000 to 3,00,000 only whereas , 4.23

per cent of the respondents assets value in the present market price is

Rs.3,00,000 to 4,00,000, however, Vijayanagarm district is between two

districts.

SECTION-IV

5.13 Measuring Demand Side financial Inclusion

There is a need to measure the demand side financial inclusion to improve credit

delivery for unbanked population. The empirical structure of economic output in

terms of access to finance, access to savings and borrowings among social and

sectoral groups is excluded from finance. In this direction, the researcher would

measure the real situation of financial inclusion among the backward three districts in

Andhra Pradesh. The Reserve Bank’s own outreach programmes have also been

helpful in spreading awareness and improving financial literacy. However, in view of

the colossal task of financial inclusion, there is a need for the banks to upscale and

mainstream their financial inclusion efforts

228

Financial inclusion has been accorded high importance by the Reserve Bank

to aid the inclusive growth process for the economy. There have been formidable

challenges in this area such as bringing sections of society that are financially

excluded within the ambit of the formal financial system, providing financial literacy

and strengthening credit delivery mechanisms. Apart from the priority sector lending

policy which has been in existence for a long time, a host of initiatives have been

taken in recent years which include the rollout of Financial Inclusion Plans and

expanding the scope of the Business Correspondent (BC) model, improving credit

delivery procedures for the Micro and Small Enterprises (MSE) sectors and

encouraging the adoption of Information and Communication Technology (ICT)

solutions.

The researcher measure the levels of financial access based on the primary data

survey and analyzed the following:

A. Access to Finance

The majority of the countries believe that if there is better access to finance,

then it not only increases economic growth, but also helps fight for poverty, and

reduces income gaps between rich and poor people. Therefore, now a day’s access to

financial services by Social group (SC, ST, BC, and Minorities), Sectoral group

(Agriculture worker, wage workers, general labour, women, informal labour) and

micro enterprises and households has become an increasingly important as a global

trend

The researcher would like to see the following things:

What is the degree of access to and use of financial services by households

and what drives the variation?

Does improved access have an impact on individual welfare at household level

to reduce poverty and economic development?

What policies are effective in expanding outreach and inclusion?

The first step of financial inclusion is have access to banking services. In

showing the amount of people who had access to bank accounts, the survey

gave the following results.

1. Do you have a bank account?

Access to banking has been fairly extensively researched from a number of

perspectives, including individuals, households, communities, and financial service

providers. For the full enumeration survey, the researcher ask the above question, but

229

with respect to individual use. For example, for the Banked Indicator, the researcher

asked: “do you have a bank account?” Responses are aggregated across all members

of the household to arrive at our measure of household usage. In other words, if one

member of the household reports have a bank account, then the whole household is

considered banked for the full enumeration..

Table No: 5.32 Do you have a Bank Account?

Note: Brackets in Percentage

Have the saving or any account in the bank shows access any financial

products and services by the households .The survey have measured the level of any

type of account holding by households( individuals) (that is, those aged 15 years or

over).

Table 5.32 indicates the percentage decomposition of household have accounts in

three districts of Andhra Pradesh. The household survey found that the majority 63.58

per cent of the sample household respondents doesn’t have in any type of accounts

among three district of Andhra Pradesh, while only 36.42 per cent of the sample

household had the accounts as an overall.

In respect to Srikakulam district, out of 260 sample households the majority

71.16 per cent of the sample household respondents doesn’t have any type of bank

account, while only 28.84 per cent have the bank accounts in the Srikakulam

District.

Regard Mahabubnagar district, out 260 sample households, the majority 62.69

per cent of the sample household respondents doesn’t have any type of bank

account, while 37.31 per cent had the bank accounts

In Vijayanagarm district, out of 260 sample households the majority 56.58 per

cent of the households did not have the account, while 43.08 per cent of the

households had the accounts in that district. However, based on the primary data

Account Mahabubnagar Srikakulam

Vijayanagarm Overall

Total

Yes

97

(37.31)

75

(28.84)

112

(43.08)

284

(36.42)

No

163

(62.69)

185

(71.16)

148

(56.92)

496

(63.58)

Total

260

(100)

260

(100)

260

(100)

780

(100)

230

survey results showed that still there are more people have to access at least bank

account come the years. It can be seen in figure 5.13

Figure: 5.13 Do you have a bank account

Figure 5.13 showing the comparative results revealed in the negative way that

the majority 71.15 per cent of the households does not have any bank account in the

district of Srikakulam. When compared to Srikakulam district, Mahabubnagar district

has 8.6 per cent differentiate and Vijayanagarm district has 14.23 per cent of higher

difference, with in the three districts have bank account in Andhra Pradesh. While in

the positive way Vijayanagarm district has the majority 43.07 per cent of the sample

household respondents have the accounts, whereas compare to other two district 5.77

per cent difference from Mahabubnagar and Srikakulam with 14.23 per cent

differentiate with level of household respondents have accounts. However, it is clearly

given the results that Srikakulam district is the very lowest accounts among the

selected sample households; therefore the survey giving the insights for bankers,

governments to focuses these districts.

2. If you have what type of account?

Access to finance a well-functioning financial system can contribute to their

development economically and socially and to empower individuals, in particular

poor people. In this direction the bank account allows them to better integrates into

the economy. If they have any type of account means those households may have

some knowledge about financial functioning system and the financial products &

services.

0

10

20

30

40

50

60

70

80

Mahabubnagar Srikakulam Vijayanagarm

37.3

28.84

43.07

62.69

71.15

56.92

Having Bank Account

Yes

No

231

If the customers have a type of bank account that may show the status as

normal bank users of financial products and services. In that direction expansion of

financial services targeted to poor and low-income populations can play a vital role in

enhancing financial access through have bank account leads life for better

development.

But just have bank account may not help the people, they need to create income-

generating and doing some transactions with that money, then only banks account will

help. Hence they are able to earn and save their money in bank or use the banks as

financial development instruments. However, with little income or collateral, poor

people are seldom able to obtain loans from banks and other formal financial

institutions. And even when they do have income or collateral, the amounts they

require are often too small to appeal to banks.

Here the survey will give the results as to how many households have what category

of bank account in the research area. See the table 5.33

5.33 If you have what type of Account

Type of

Account

Mahabubnagar Srikakulam Vijayanagarm Overall

Total

Savings A/c

23

(8.84)

17

(6.53)

21

(8.07)

62

(7.92)

Current

6

(2.33)

3

(1.15)

9

(3.46)

15

(1.92)

Joint

21

(8.07)

12

(8.65)

9

(3.46)

42

(5.38)

No-Frill

89

(34.23)

95

(32.53)

78

(30.00)

263

(33.90)

Low cost

account

12

(4.61)

15

(5.76)

18

(6.94)

45

(5.76)

SHG Group

109

(41.92)

118

(45.38)

125

(48.07)

352

(45.12)

Total

260

(100)

260

(100)

260

(100)

780

(100)

Table5.33 shows that the most households do not have, access to even basic

financial bank account and their limited access to finance indicates overall scenario of

the survey of have what type of account in the banks. Out of 780 sample respondents

the majority 45.12 per cent of the household have the account in only SHGs group,

while only 1.92 per cent of the sample household had the current account and then

33.90 per cent of the sample household had the no-frill accounts, 7.92 per cent have

232

savings account and 5.76 per cent of the household had low-cost account, whereas

5.38 per cent joint account .However, the majority of the sample house hold had only

in SHG group accounts.

In respect of Vijayanagarm district, out of 260 sample household, the majority

48.07 per cent of the sample household had SHG group account, while only 3.46

per cent of the households had the current account and then 30.00 per cent of the

household had no-frill account, 8.07 per cent savings accounts, whereas 6.94 per

cent of the sample respondents had low cost account and only 3.46 per cent have

joint account among the sample respondents in Vijayanagarm district.

With regard to Srikakulam district, out of 260 sample respondents the majority

45.38 per cent of the sample respondents have SHG group account, while only 1.15

per cent have current account and 32.53 per cent of the sample household have the

no-frill account and 6.53 per cent have savings account, whereas 5.76 per cent of

the household have the low cost account, finally 8.05 per cent of the per cent of the

sample respondents have the joint account in the district of Srikakulam.

In Mahabubnagar district, out of 260 sample respondents the majority 41.92 per

cent of the sample respondents have the SHG group accounts, while only 2.33 per

cent have in current account and 34.23 per cent of the sample respondents have the

no-frill accounts, 8.84 per cent in savings account, 8.07 per cent in joint account

whereas only 4.61 per cent of the sample respondents have the low cost account in

Mahabubnagar district. However, the majority of the account has through only

SHG group linkages only.

Figure: 5.14 if you have what type of account

0

10

20

30

40

50

Savings A/c

Current Joint No-Frill Low cost account

SHG Group

Type of Accounts

Mahabubnagar

Srikakulam

Vijayanagarm

233

Figure 5.14 presents the survey which yields if households have bank account

in different categories. It can be observed from the figure that the majority of the

household have SHG group accounts in three districts, while the least have current

account and then low cost account. But the no-frill account has the second major

account in three district whereas saving account is a little bit upper than the current

account in three district. Therefore, the results revealed that the majority of the sample

household; have SHG group account and give the insights that government need to

improve some more business strategies for SHG bank linkage to get more accounts in

the sample areas.

3. Which financial institution do you have accounts?

As economic environment is rapidly changing towards access to finance

by the rural poor people and the customers are becoming more demanding and

sophisticated. In this direction, financial institutions need efficiency and courtesy as

the most important attributes in determining overall customer satisfaction, especially

towards the rural poor people and while other important attributes were convenience

of location, range of services, reputation, and availability of innovations. In the

present competitive banking scenario accessibility, availability and affordability with

cost affective of borrowing, customer service, user-friendly technology, and more

sophisticated customer products are important components within the marketing mix

and the number of services offered by the financial institutions to achieve the

financial inclusion.

Customer choice is the most important choosing the bank account based on customer

services, convenience, online banking facilities and overall bank environment, but the

rural scenario is different that convenience of location, opening hours and suitable

affordable financial products and services. The analysis results will give which

financial institutions are choosing by the rural people in following table 5.34

234

5.34 Accounts in financial institution

Type of

Financial

Institutions


Total

Commercial

Bank

95

(36.55)

75

(28.86)

105

(40.38)

275

(35.25)

Cooperative

banks

56

(21.53)

68

(26.15)

73

(28.07)

197

(25.28)

Microfinance

bank

74

(28.46)

83

(31.92)

67

(25.79)

224

(28.71)

Postal

services

35

(13.46)

34

(13.07)

15

(5.76)

84

(10.76)

Total

260

(100)

260

(100)

260

(100)

780

(100)

As a set of determinant factors that have a significant role in selection of

financial institutions to open a bank account. Table 5.34 shows scenario of the

household have accounts in type of financial institutions. Out 780 sample respondents

the majority 35.25 per cent of the account have in commercial banks, while only

10.76 per cent of the sample households have accounts in postal services and in other

majority 28.71 per cent of the sample household have their accounts with link up

Microfinance banking, whereas 25.28 per cent have in cooperative banks. However,

the majority of the households have account in commercial or microfinance banks.

Regarding Vijanagaram district, out of 260 sample households the

majority 40.38 per cent of the sample household have accounts in

commercial banks only, while only 5.76 per cent postal services and 28.07

per cent of the sample household have accounts in cooperative banks,

25.79 per cent in microfinance banks whereas 5.76 per cent in postal

services.

With Respect to Srikakulam district, out of 260 sample households the

majority 31.92 per cent of the sample household have accounts in

microfinance institutions, while only 13.07 per cent of the accounts in

postal’s services and 28.86 per cent of the sample household have accounts

in commercial banks, 26.15 per cent in cooperative banks in the district.

In Mahabubnagar district, the majority 35.55 per cent of the sample

households has accounts in commercial banks; while in postal services

235

13.46 per cent and 28.46 per cent of the sample household have account in

microfinance institutions whereas 21.53 per cent of the sample households

have accounts in cooperative banks of the district.

Figure: 5.15 Type of Financial Institution

Finance is an essential ingredient of human being for economic activity. Figure

5.15 clearly indicates that the majority 40.48 per cent of the sample household

respondents have their accounts in commercial banks with in the three districts of

Andhra Pradesh. While least 13.46 from Mahabubnagar district, 13.07 Srikakulam

and 5.76 from Vijayanagarm have accounts in postal services and the other major

31.92 per cent household respondents from Srikakulam, 28.46 per cent from

Mahabubnagar and 25.76 per cent of the sample household from Vijayanagarm

district have accounts in Microfinance banks(privative sector) whereas 28.07 per cent

from Vijayanagarm, 26.15 per cent from Srikakulam and 21.53 per cent of the sample

households have their account in cooperative banks in three districts of Andhra

Pradesh.

4. What type of ID proofs your submitting to open the account?

Access to finance services by rural poor households under inclusive finance with

opening bank account is a very critical issue for the poor people due to lack of

documents and lack of awareness on access financial products and services and other

government subsidy schemes. The following table would bring the results that why

0

5

10

15

20

25

30

35

40

45

Commercial Bank

Cooperative banks

Microfinance bank

Postal Services

35

21.53

28.46

13.46

28.84 26.15

31.92

13.07

40.38

28.07

25.76

5.76

Type of Financial Institutions

Mahabubnagar

Srikakulam

Vijayanagarm

236

type of proofs have been submitted by sample households in the sample areas of three

districts of Andhra Pradesh.

5.35 What type of ID proofs your submitting to open the account?

Type of Account Mahabubnagar Srikakulam Vijayanagarm Overall

Total

Voter card

83

(31.92)

75

28.84)

77

(29.61)

235

(30.12)

Aadhar Card

20

(7.69)

11

(4.23)

13

(5.00)

44

(5.66)

Ration card

154

(59.23)

172

66.15)

168

(64.61)

494

(63.33)

Any Govt official

letter

3

(1.16)

2

(0.78)

2

(0.78)

7

(0.89)

Total

260

(100)

260

(100)

260

(100)

780

(100)

Table5.35 and graph 5.17 indicated that out of 780 sample respondents the

majority 63.33 per cent of the sample respondents have given their ration card as

proof to open their bank account, while 0.89 per cent have some government official

letter to open account and 30.12 per cent of the sample respondents have voter cards

to open their account whereas 5.66 per cent of the have Aadhar card to open their

bank accounts.

In Vijanagaram district, out of 260 sample respondents, the majority 64.61

per cent of the sample respondents have given their ration card as for proof to

open account, while only 0.78 given government official letter and 29.16 per

cent of the sample respondents given their voter card to open their bank

account where as 5.00 per cent given their Aadhar card for identity proof to

open bank account.

Regarding Srikakulam district, out of 260 sample respondents the majority

66.15 per cent of the sample respondents have given their Ration card for as

identity proof to open bank account, while 0.78 per cent given government

official letter and 29.61 per cent of the respondents have given their voter card

to open account whereas 4.23 per cent given their Aadhar Card as proof of

identity proof to open bank account

237

In Mhabubnagar district, out of 260 sample respondents the majority 59.23

per cent of the sample respondents have given their identity proof as Ration

card to open their bank account, while 1.16 per cent have given government

official letter whereas 7.69 per cent of the respondents given their Aadhar card

as their identity proof to open their account.

Figure: 5.16 Type of Identity proof submitting in the Bank

Figure 5.16 presents the survey results that the majority of the households

have submitted as identity proof to the bank ‘ration card’ while very less household

government official and the other majority submitted as their identity voter card

whereas the remain households submitted Aadhar card as their identity to open bank

account in three district of Andhra Pradesh.

5. Do you have Individual or group or joint account?

All the Financial Institutions have to consider that to achieve a massive

expansion of banking services over the medium term, or at least something closer to

the medium term than to the long term it is necessary to have access to finance

.Therefore, have the bank account as an individual or joint or group would lead the

expanding and deepening financial services for poor people and should

simultaneously be a concern of poverty reduction.

Access to the financial system facilitates making and receiving financial

payments and reduces their cost. Safe savings, appropriately designed loans for the

0

10

20

30

40

50

60

70

Voter card Aadhar Card

Ration card Any Govt official letter

Identity proof

Mahabubnagar

Srikakulam

Vijayanagarm

238

poor and low-income households and payments services can help people help

themselves to increase incomes, acquire capital, manage risk, and work their way out

of poverty. In this direction table 5.36 brings the results as follow:

5.36 Do you have Individual or group or joint account?

Individual

/Group/Joint

Account


Total

Individual

23

(8.84)

16

(6.15)

26

(10.01)

65

(11.53)

SHG Group

167

(64.23)

175

(67.30)

187

(71.92)

529

(64.63)

Joint

12

(4.63)

9

(3.48)

12

(4.61)

33

(4.23)

NREGP

58

(22.30)

60

(23.07)

35

(13.46)

153

(19.61)

total

260

(100)

260

(100)

260

(100)

780

(100)

The table 5.36 indicates overall scenario of the sample respondents have their

accounts in the banks. Out 780 sample respondents, the majority 64.63 per cent of the

sample respondents have SHG Group accounts, while only 4.23 per cent have joint

account and 19.61 per cent of the respondents have NREGP account where as 11.53

per cent of the sample respondents have individual account.

In Vijayanagarm district, out of 260 sample respondents the majority 71.92

per cent of the sample respondents have SHG group accounts while only 4.61

per cent of joint and 13.46 per cent in NREGP whereas 10.01 per cent of the

sample respondents have individual account of the district.

Regarding Srikakulam district, out 260 sample respondents, the majority

67.30 per cent of the sample respondents have SHG group accounts while only

3.48 per cent joint account and 23.07 per cent of the sample respondents have

the NREGP account whereas 6.15 per cent of the sample respondents have the

individual accounts in the district.

In Mahabubnagar district, out 260 sample respondents the majority 64.23

per cent of the sample respondents have SHG Group account, while only 4.63

per cent in joint account and 22.30 per cent of the account NREGP accounts

239

whereas 8.84 per cent of the sample respondents have individual accounts in

the district. However, the majority of the respondents have only SHG group

accounts and NREGP group accounts only.

Figure: 5.17 Individual/Group/Joint Account

Figure 5.17 presents the survey results scenario that the majority of the sample

household have account in SHG group, while only very few in joint accounts and the

other majority have in NREGP whereas the remaining have individual bank accounts

in three districts of Andhra Pradesh. Therefore, it can be observed from the survey

results, about the existing gap through identifying the important bank account

selection determinants and concludes with some policy implications which are

expected to have an impact on the marketing efforts.

6. Where do you have account?

Access to banking services is viewed as a key determinant of economic

well-being for rural households, especially in low-income communities. The usage of

formal banking products to an array of individual and household characteristics

associated with variation in the development of the financial infrastructure across

country.

Therefore, having the banking accounts particularly in commercial banks or RRBs

may have more available and affordable services such as Savings and credit products

make it easier for households to align income and expenditure patterns across time, to

0

10

20

30

40

50

60

70

80

Individual SHG Group Joint NREGP

Individual/Group/Jontint Accounts

Mahabubnagar

Srikakulam

Vijayanagarm

240

insure themselves against income and expenditure shocks, as well as to undertake

investments in human or physical capital. Hence, the importance attributed that

opening banking account in any financial institutional may striking financial access

differs across households. The survey will give the analytical results to know the real

situation of household in the following table:

5.37 Where do you have account?

Account in Mahabubnagar Srikakulam Vijayanagarm Overall

Total

Commercial Bank

34

(13.07)

25

(9.61)

36

(13.84)

95

(12.17)

Cooperative

25

(9.63)

19

(7.30)

28

(10.76)

72

(9.23)

Post office

42

(16.15)

39

(15.00)

44

(16.92)

125

(16.15)

SHG/MFI

137

(52.69)

164

(63.07)

135

(52.30)

436

(55.89)

BC

22

(8.46)

13

(5.00)

17

(6.18)

52

(6.66)

Total

260

(100)

260

(100)

260

(100)

780

(100)

The analytical results in the table 5.37 indicates that out of 780 sample

respondents the majority 55.89 per cent of the sample respondents have their account

only SHG/MFI’s while least 6.66 per cent in BCs centres and 16.15 per cent of the

sample respondents have account in post offices, 12.17 per cent have commercial

banks whereas 9.23 per cent of the sample respondents have cooperative societies.

In Vijayanagarm district, the majority 52.30 per cent of the sample

respondents have their accounts in SHGs/MFIs while least 6.18 per cent in BC

centres and 16.92 per cent of the sample respondents have their account in

post offices, 13.84 per cent in commercial banks whereas 7.30 per cent of the

sample respondents have the cooperative societies

Regarding Srikakulam district, the majority 63.07 per cent of the sample

respondents have their accounts in SHG group/MFIs while the least only 5.02

per cent BC center and 15.00 per cent in post offices , 9.61 per cent in

commercial banks whereas 7.30 per cent of the sample respondents have their

accounts in cooperative societies.

241

In respect to Mahabubnagar district, the majority 52.59 per cent of the

sample respondents have their account in SHG group/MFIs while only 8.46

per cent in BC centers and 16.15 per cent of the sample respondents have in

post offices, 13.07 per cent of the sample respondents have commercial banks

whereas 9.63 per cent of in cooperative societies. However, the majority of the

sample respondents have their account only in SHGs/MFIs.

Figure: 5.18 where do you have accounts

Figure: 5.18 clearly present the status of rural household where they have

bank accounts in the sample areas of three districts. The majority of the sample

household respondents have their accounts in SHGs/MFIs, while least of the

households accounts have in Business Centres and other majority of rural household

respondents have their account in Post offices and following in commercial banks

whereas few households have their accounts in cooperatives. Therefore, the primary

results survey indicating that the majority of the rural households have their strong

relationship only with SHG or MIFs in three districts of Andhra Pradesh.

7. Do you have ATM?

The use of technology has been the better choice to drive the financial

inclusion programs of banks, as the key objectives of such a program is to reduce the

cost of operations without compromising on customer experience and security. Banks

have the massive opportunity to serve a new demographic and tap into the previously

untouched wallets of the unbanked. In the modern methods of serving the unbanked -

ATMs and the banking correspondent model - have achieved tepid results. It is

0 10 20 30 40 50 60 70

Accounts In

Mahabubnagar

Srikakulam

Vijayanagarm

242

becoming increasingly clear that ATM is the cost effective strategies to reach

unbanked population in the survey way. The survey would analyse the results what is

the percent of the sample household have ATM in the sample area, See the table 5.38

5.38 Do you have ATM

Have ATM Mahabubnagar Srikakulam Vijayanagarm Overall

Total

Yes

57

(21.92)

43

(16.54)

65

(25.00)

165

(21.16)

No

203

(78.08)

217

(83.46)

195

(75.00)

615

(78.84)

Total

260

(100)

260

(100)

260

(100)

780

(100)

The table 5.37 and graph 5.19 clearly indicating that the majority 78.84 per

cent of the sample respondents are don’t have ATMs while only 21.16 per cent of the

sample respondents have ATMs.

Regarding Vijayanagarm district, the majority 75.00 per cent of the sample

respondents don’t have ATMs while 25.00 per cent have ATM in Vijanagaram

district

In Srikakulam district, the majorities 83.46 per cent of the sample respondents

are don’t’ have ATMs while 16.54 sample respondents are have ATMs in the

sample areas


respondents don’t have ATMs while 21.92 per cent of the sample respondents

have ATMs in their areas. Therefore, comparatively Vijayanagarm had the better

then those other two districts.

243

Figure: 5.19 Do you have ATM

Figure.5.19 presents the survey yields in the negative way that the majority 83.46

per cent of the Srikakulam district sample household respondents does not have the

ATMs, while the least 75 per cent of the Vijayanagarm does not, it means the

difference 8.46 per cent of Srikakulam district with high level of not having access to

ATM services, whereas Mahabubnagar district have 78.07 per cent of the household

respondents had the ATM, but it is 5.46 per cent is difference from Srikakulam

district. Hence, the research results give the insight that banks have the big

opportunities to promote ATMs in those sample areas.

8. Utilization of ATM services:

Here the question is that all most all the banks are providing ATM services

for their customers, but what is the usability of ATM by the rural household? Whether

the rural household have such skills to use ATMs in a proper way?

In the present trend of providing the ATM for the rural household, there is not that

much usability because of lack of awareness, lack of access in the rural area. In this

direction the research would analyse the survey of the results in the table as follows:

0

10

20

30

40

50

60

70

80

90


21.92 16.53

25

78.07 83.46

75

Having ATM

Yes

No

244

3.39 If, yes are you utilizing the services

ATM

Services


Total

yes

77

(29.62)

53

(20.38)

68

(26.15)

198

(25.38)

No

183

(70.38)

207

(79.62)

192

(73.85)

582

(74.61)

Total

260

(100)

260

(100)

260

(100)

780

(100)

In researcher view, the usability is low due to lack of knowledge, the limited nature of

services that can be offered through the existing closed loop strategies for mobile

money service the table 5.39 showed the scenario of ATM services utilization of the

sample respondents. The majorities 74.61 per cent of the sample respondents are not

using the ATM series in three district of Andhra Pradesh, while 25.38 per cent of only

using the ATM services.

With regarding to Vijayanagarm district the majority 73.85 per cent of the

sample respondents are not using the ATM services while only 26.15 per cent of

the sample respondents are using the ATM services in the district of

Vijayanagarm of Andhra Pradesh.

In respect to Srikakulam district the majority 79.62 per cent of the sample

respondents are not using the ATM services, while only 20.38 per cent of the

sample respondents are using ATM services in Srikakulam District

In Mahabubnagar district the majority 70.38 per cent of the sample

respondents are not using the ATM services, while 29.62 per cent of the sample

respondents are using the ATM services in Mahabubnagar district of Andhra

Pradesh. When we compare among the three districts Mahabubnagar is the best

to using ATM services other then two districts.

245

Figure: 5.20 ATM Utilization of services

The figure 5.20 clearly indicates that overall scenario of the ATM

utilization services from the sample three districts of Andhra Pradesh. The majority

from Srikakulam 79.61 per cent of the sample household respondents not able to use

ATM services due to lack of knowledge, lack of accessibility and also language in

English, so those who do not able read English they were not able use ATM services.

The Mahbubnagar district 70.38 per cent does not use ATM services and followed by

Vijayanagarm district 73.86 per cent, here the usability of ATM services may lead to

cost affective service for the customer, but the results revealed that they are not aware

of the how to use and optimum use of ATM services. Therefore, all the banks and

financial institutions need to concentration on making capacity build on technology,

financial literacy need to improve the human capacity to use of ATM services by rural

households.

9. Utlisation of Banking Services: Withdrew from bank or ATM

Financial services are essential now a day’s to survive in day to day life of

any body. Gaining access to financial services does not necessarily mean that such

services will be adequately used. In other words, individuals who do not use financial

services are not necessarily constrained by participating in the financial sector. The

survey shows clear early results of unbanked adults do not use financial accounts due

to: lack of money; suitability of financial products and services; and/or high cost

associated with low transaction amounts such population segments usually undertake.

0

10

20

30

40

50

60

70

80


29.61

20.38 26.15

70.38

79.61 73.86

ATM Utilization of Services

yes

No

246

In the survey the researcher will see the status of sample household

respondent’s utilisation of banking services such as withdraw of money from bank or

ATM and other banking services.

5.40 Do you know how to with draw money from bank or ATM

Know how to

Use of ATM

Mahab

ubnagar

Srikaku

lam

Vijayanag

arm

Overall

Total

yes

35

(13.46)

25

(9.62)

39

(15.00)

99

(12.69)

No

225

(86.54)

235

(90.38)

221

(85.00)

681

(87.31)

Total

260

(100)

260

(100)

260

(100)

780

(100)

The table 5.40 indicated that out of 780 sample respondents the majority

87.31 per cent of the sample respondents are don’t know how to use the ATM

services, while only 12.69 per cent of the sample respondents know how to use the

ATM among the sample respondents of three district of Andhra Pradesh.

Regarding Vijayanagarm district, out of 260 sample respondents the

majority 85.00 per cent of the sample respondents don’t know how to use the

ATM services while the least 15.00 per cent only know how to use the ATM

and their services.

In Srikakulam district, out of 260 sample respondents the majority 90.38 per

cent of the sample respondents are don’t know how to use the ATMs and their

services while only 9.62 per cent of the sample respondents are know how to

use in Srikakulam district


sample respondents are don’t know how to use ATMs and their services.

Therefore, these three districts are very backward to utilise ATM services, it

may be one cause of financial inclusion.

247

Figure: 5.21 Utlisation of Banking services: with draw money from bank

The figure 5.21 presents the usability of banking services from the sample

household respondents in three districts. It can observed that the majority 79.61 per

cent of the sample household respondents does not have knowledge how to withdraw

money from bank and ATM from Srikakulam district, while only 20.38 per cent only

know how to withdraw money from bank or ATM and from Vijayanagarm districts

73.86 per cent does not and from Mahabubnagar district 30.38 per cent does not know

that how to withdraw money from bank or ATM services. Therefore, Banks need

design special service accounts beyond a certain population segment or geography

requires that the program is designed in a way that improves usability for the

population segment in question as opposed to relying on what has worked elsewhere.

10. Who will help to use Banking services or ATM services

The majority of the rural populations suffer from lack of education on financial

services and products as well as utilization of technology. Therefore, to improve the

usability of banking services they need to have a good understanding of the local

market dynamics and consumer needs. The challenge for service providers is to create

the systems that are not only user friendly but also, the ability to give quick response,

understand the query in a correct perspective, and revert back with a specific bunch of

possible answers. Hence, in designing such products, careful consideration should be

given to solutions that serve multiple payment needs of the user including person to

airtime top-up, person remittances (domestic and cross border) , bill payments,

0

10

20

30

40

50

60

70

80


29.61

20.38 26.15

70.38

79.61 73.86

Utilization Bankng services: Withdraw and ATM services

yes

No

248

merchant payments and other financial service such as interest bearing savings

account, credit, and insurance.

The researcher will analyse the survey results to know the rural sample

households utilization of bank services and products, who will give knowledge or

little awareness on those products. See the table as follows:

5.41 If you don't know to use ATM or withdraw money from bank, who will

guide you?

Guidelines Mahabubnagar Srikakulam Vijayanagarm Overall

Total

Family members

75

(28.84)

54

(20.76)

82

(31.53)

211

(27.07)

Friends

23

(8.87)

18

(6.95)

27

(10.38)

68

(8.71)

Existing staff in

the bank

119

(45.76)

132

(50.76)

106

(40.76)

357

(45.76)

BC staff

43

(16.53)

56

(21.53)

45

(17.33)

144

(18.46)

Total

260

(100)

260

(100)

260

(100)

780

(100)

The table 5.41emphasized that the sample respondents may not know use

ATM then who are the people helping to use ATM services would analyse the real

situation in three district of Andhra Pradesh. Out of 780 sample respondents the

majority 45.76 per cent of the bank staff or existed bank staff are helping, while only

8.71 per cent of friends helping and 27.07 per cent of the sample respondents are

getting help from family members, whereas 18.46 per cent of the BC staff is helping

to the sample respondents.

In respect to Vijayanagarm district, out of 260 sample respondents the

majority 40.76 per cent of the sample respondents are taking help from

existing staff or bank staff to use the ATM services, while the least 10.38 per

cent of the sample respondents getting help from friends and 31.53 per cent

getting help from family friends, whereas 17.33 per cent of the sample

respondents are taking help from BC staff in the district.


respondents are getting help from existing staff to use the ATM services,

249

while only 6.95 per cent getting help from friends and 21.53 per cent of the

sample respondents are getting help from BCs centers whereas 20.76 per cent

getting help from family members to use the ATM services in the district.


respondents are getting help from existing staff or bank people to use the

ATM services, while the least 8.87 per cent from friends and 28.84 per cent

from family members whereas 16.53 per cent of the sample respondents

getting help from BC centre staff to use ATM services.

Figure: 5.22 Guidelines for ATM services

The figure 5.21 presents the analysis results of overall scenario, that the

majority of the existing bank staff helps the customers to make use of banking

services such as drawing a money from bank or ATM from three district of sample

areas, while least are the friends because in the rural areas all are busy in they work

and then family members are helping giving knowledge how to use the banking

services whereas existing Business Centers staff are able to help them with some

capacity building trainings in the rural areas of sample areas.

28.84

8.84

45.76

16.53

20.76

6.92

50.76

21.53

31.53

10.38

40.76

17.3

0

10

20

30

40

50

60

Family members

Friends Existing staff in the bank

BC staff

Guidelines for Banking services and ATM use

Mahabubnagar

Srikakulam

Vijayanagarm

250

11. Banks providing opportunity for credit or lending services?

Access is an important problem in terms of consumption smoothing, coping

with health and other emergencies, and investing in businesses and farms. Banks

expanding access to even very basic savings and credit services could have large

effects. If increased microloan access has limited effects on most outcomes that

improved access to both credit and savings services improves welfare in rural India.

The survey results the status of banks providing opportunities for credit lending

services in the table 5.42

5.42 Does your bank provides opportunity for credit/lending services?

Lending

Services


Total

yes

115

(44.24)

78

(30.00)

109

(41.92)

302

(38.72)

No

145

(55.76)

182

(70.00)

151

(58.08)

478

(61.28)

Total

260

(100)

260

(100)

260

(100)

780

(100)

The table 5.42 indicates that the majority 61.28 per cent of the sample

respondents are said that they are not able to get opportunity for credit/lending

services from the banks while only 38.72 percent of the samples respondents are able

to get credit/lending services from their located banks.

In respect to Vijayanagarm district 58.08 per cent of the sample respondnerts

are not able to get opportunity for credit lending services from the existed

local banks, while only 41.92 per cent of the respondents are able to get

opportunity for credit lending services from the local banks in the district.


respondents are not able to get opportunity for credit lending services, while

only 30.00 per cent of the sample respondents are getting opportunity for

credit lending services.


respondents are not able get opportunity for credit lending services while only

44.24 per cent are able to get opportunity for credit lending services.

251

Therefore, the majority of the sample respondents are not able to get

opportunity credit lending services in this district of Andhra Pradesh.

Figure: 5.22 Opportunity for Credit Lending

Figure 5.22 presents the survey yields that overall scenario, the majority of

the rural sample household respondents does not have credit lending opportunities in

the sample areas of three districts of Andhra Pradesh. Hence the household

respondents given their results as in negative way, and they told that majority of the

banks never give any financial loans with any recommendations of some local

political leaders and compulsory of guarantee documents, But in the positive way on

an average below 40 per cent able to get credit lending opportunities from the existing

local banks. Therefore, it can be observed the results that still there so much access to

finance barriers in the rural household in India concerns.

12. Account Penetration among Gender

In common self-reported barriers to financial inclusion among women and

rural households the gender gap are larger, particularly, women have very few bank

accounts than the men in rural India. The gender gap persists across relative income

groups among the social group and sector group. The women did not prefer bank

account because someone else in the family already has one. This shows widespread

indirect account use among women in rural India. The survey analyses the status of

penetration among gender in sample areas as follows:

0

10

20

30

40

50

60

70


44.23

30

41.92

55.76

70

58.07

Opportunity for credit lending

yes

No

252

5.43 Accounts penetration by gender

Gender Mahabubnagar Srikakulam Vijayanagarm Overall

Total

Male

203

(78.07)

227

(87.30)

175

(67.31)

605

(77.56)

Female

57

(21.93)

33

(12.70)

85

(32.69)

175

(22.44)

Total

260

(100)

260

(100)

260

(100)

780

(100)

The table 5.43 showed that majority 77.56 per cent of the sample

respondents are men have account in the bank/financial institutions while only 22.44

per cent of the women have the account in the banks among the sample respondents in

three district of Andhra Pradesh.


respondents are men have the accounts while 32.69 per cent of the sample

respondents are women have the account in the district.

In respect to Srikakulam district, the majority 87.30 per cent of the men have

accounts while only 12.70 per cent of the women have the account in the district

In Mahabubnagar district, the majority 78.07 per cent the sample respondents

are men have the accounts while 21.93 per cent women have the accounts

among sample respondents in this district.

Figure: 5.23 Gender Penetrations

0

10

20

30

40

50

60

70

80

90


78.07

87.3

69.3

21.92

12.69

32.69

Gender Penetration

Male

Female

253

Figure 5.23 presents the gender penetration of banking accounts among rural

household respondents in sample areas of three districts in Andhra Pradesh. It can be

observed that the majority of the account holders in three districts are only men with

high per cent of penetration, while only very few percent of the women have bank

account in three districts, but among these three districts very lowest from Srikakulam

district only 12.69 per cent of the sample women household respondents have bank

accounts. The results revealed that the gender gap so for from the women and men in

sample areas of Andhra Pradesh. Therefore, the government has to concentrate to

improve the gender gap to penetrate more accounts for financial inclusion.

13 Account penetrations by education level

Financial inclusion is an important component of any country of financial

development, which is linked to economic growth. If the rural households have the

better enabling environments for accessing financial services, leads to financial

inclusion goal. Despite the differences in account penetration among education have

an account at a bank, credit union, a cooperative, post office, or microfinance

institution across income quintiles, respondents among all income groups may have

high level penetration. The survey results revealed that status of penetration by

education level in three districts of sample areas as follows:

5.44 Account penetration by education level

Educational Mahabubnagar Srikakulam Vijayanagarm Overall

Total

Illiterates

69

(26.53)

52

(20.00)

74

(28.46)

195

(25.00)

Literates

97

(37.30)

130

(43.02)

94

(36.15)

321

(41.15)

Primary

37

(14.23)

39

(15.00)

42

(16.15)

118

(15.12)

Secondary

25

(9.61)

19

(7.30)

23

(8.84)

67

(8.58)

Inter/Degree

17

(6.57)

12

(4.61)

16

(6.15)

45

(5.76)

Postgraduate

15

(5.76)

8

(8.07)

11

(4.25)

34

(4.39)

Total

260

(100)

260

(100)

260

(100)

780

(100)

254

The table 5.44 indicates that out of 780 sample respondents the majority

41.15 per cent of the sample respond literates while least only 4.39 percent have

postgraduate and 25.00 per cent of the sample respondents are illiterates, 15.12 per

cent have primary level education and 5.76 per cent have secondary school level

education whereas 5.76 per cent the sample respondents are have intermediate or

degree level education among the sample respondents in three district of Andhra

Pradesh.

Regarding Vijayanagarm district the majority 36.15 per cent of the sample

respondents are literates while only 4.25 per cent have postgraduate level

education and 28.46 per cent illiterates, 16.15 per cent have primary level

education, 8.84 per cent have secondary school education whereas 6.15 per

cent of the respondents have intermediate or degree level education in this

district.

In Srikakulam district, the majority 45.02 per cent of the respondents are

literates while 4. 61 per cent intermediate or degree and 20.00 per cent of the

sample respondents are illiterates, 15.00 per cent have primary level

education, and 7.30 per cent have secondary level education whereas 8.07 per

cent have postgraduate level education in this district.


sample respondents are literates, while only 5.76 per cent postgraduate level

education and, 26.53 per cent are illiterates 6.57 per cent of the sample

respondents have inter or degree level education whereas 9.61 per cent have

secondary school level education in this district.

Figure: 5.24 Account penetrations by education level

0

10

20

30

40

50

60

Level of Peneration among Educaters

Mahabubnagar

Srikakulam

Vijayanagarm

255

The figure 5.24 presents the overall scenario of banking penetration among

educators in the sample areas of three districts. The majority literates have more

penetration of banking accounts among educators level in three districts of Andhra

Pradesh, while least postgraduate and the other high level penetration among

illiterates and following primary level whereas financially secondary penetrated the

accounts in the sample areas of three districts. For many, the high costs that banks

charge to open and maintain an account make owning one an unobtainable, that

promote basic or low-fee accounts or exempt some depositors from onerous

documentation requirements are associated with high account ownership among rural

household respondents.

14. Account penetration by age group

Age is the most important component for the development of any country.

Age of the rural population may be one major reason why penetration rates are very

low in rural households because lack of access to finance and lack of opportunities to

participate in any development programme among rural users; rural residents assess

their own financial exclusion. Most people interviewed cite “I don’t have enough

money to use one,” as the top reason for not have an account (multiple responses were

allowed). If they are able earn within the productive age then they are able save and

able to penetration of banking accounts, but concern of working capacity with

professional skills and availability of the work.

5.45 Account penetration by age group

Age group Mahabubnagar Srikakulam Vijayanagarm Overall

Total

15-20

23

(8.84)

13

(5.02)

16

(6.15)

52

(6.69)

20-30

38

(14.61)

23

(8.84)

25

(9.15)

86

(11.02)

30-40

106

(40.76)

89

(34.23)

99

(38.55)

294

(37.69)

40-50

67

(25.76)

107

(41.15)

83

(31.92)

257

(32.94)

50 and

above

26

(10.03)

28

(10.76)

37

(14.23)

91

(11.66)

Total

260

(100)

260

(100)

260

(100)

780

(100)

256

The table 5.45 showed the overall scenario that out of 780 sample respondents the

majority of the 37.69 per cent of the sample respondents are age group between 30

year to 40 years while 6.69 per cent are age group between 15 years to 20 years, 32.94

per cent of the sample respondents are age group between 40 years to 50 years and

11.66 per cent are age group above 50 years whereas 11.02 per cent of the sample

respondents are age group between 20 years to 30 years. However, the majority of the

sample respondents are age group between 30 years to 40 years only in the three

districts.

Regarding to Vijayanagarm district, out of 260 sample respondents the

majority 38.55 per cent of the sample respondents are age group between 30

years to 40 years while 6.15 per cent are age group between 15 years to 20

years and 31.92 per cent of the sample respondents are age group between 40

years to 50 years whereas 14.23 per cent of the sample respondents are age

group above 50 years. However, the majority age group between 30 years to

40 years were penetrated the accounts.

In Srikakulam district, out of 260 sample respondents the majority 41.15 per

cent of the sample respondents are age group between 40 years to 50 years

were penetrated bank accounts, while only 5.02 per cent between age group 15

year to 20 years were penetrated and 34.23 per cent of the sample respondents

age group between 30 years to 40 years, 10.76 per cent above 50 years age

group whereas 8.84 per cent of the sample respondents age group between 20

years to 30 years were penetrated accounts in this district.

With regarding to Mahabubnagar district, out of 260 sample respondents the

majority 40.76 per cent of the sample respondents are age group between 30

years to 40 years were penetrated the bank accounts, while 8.84 per cent age

group between 15 years to 20 years and 25.76 percent of the sample

respondents age group between 40 years to 50 years, 10.03 per cent age group

above 50 years whereas 14.61 per cent of the age group between 20 years to

30 years. However, the majority of the sample respondents are penetrated

accounts in this district.

257

Figure: 5.25 Account penetrations by age group

The figure 5.25 shows the overall scenario of banking penetration among age group

within the sample districts of Andhra Pradesh. The majority age group between 30 to

40 years penetrated bank accounts, it is very possible way because that is very

products age. While lest penetration between 15-20 age group and the other high level

of penetration among 40-50 years of age whereas finally very few at the age of 50 and

above years old penetrated the bank accounts in three district of Andhra Pradesh. The

major obstacles, such as documentation requirements and bank branch penetration,

15. Have Business or Business Facility center

Engaging business correspondents (BCs):

In January 2006, RBI permitted banks to engage business facilitators (BFs) and

BCs as intermediaries for providing financial and banking services.

Business correspondents are bank representatives.

They help villagers to open bank accounts.

They help villagers in banking transactions. (Deposit money, take money out

of savings account, loans etc.)

The Business Correspondent carries a mobile device.

The villagers give his thumb impression or electronic signature, and get the

money.

0

5

10

15

20

25

30

35

40

45

15-20 20-30 30-40 40-50 50 and above

Banking peneration among Age Group

Mahabubnagar

Srikakulam

Vijayanagarm

258

Business Correspondents get commission from bank for every new

account opened, every transaction made via them, every loan-application

processed etc. Create awareness about savings.

Give advice to villagers, about how to save/invest money and how to

arrange/manage loans.

Help the villagers to open bank accounts.

Collect loan applications, forward them to bank.

Preliminary processing of loan applications for example: verification of

person’s identity, home-address etc.

Help the Self Help Groups (SHG), to get loans.

Help the bank to collect EMIs and recover loan money.

The BC model allows banks to provide doorstep delivery of services,

especially cash in-cash out transactions, thus addressing the last-mile problem.

The list of eligible individuals and entities that can be engaged as BCs is being

widened from time to time. With effect from September 2010, for-profit

companies have also been allowed to be engaged as BCs. The survey results will

see the status of BC center penetration in the sample areas as follows:

5.45 Do you have BC/BF center

BC/BF center Mahabubnagar Srikakulam Vijayanagarm Overall

Total

yes

63

(24.24)

47

(18.08)

85

(32.70)

195

(25.00)

No

197

(75.76)

213

(81.92)

175

(67.30)

585

(75.00)

Total

260

(100)

260

(100)

260

(100)

780

(100)

The table 5.45 indicates that the majority 75.00 per cent of the sample respondents are

don’t have BC centres in their areas while only 25.00 per cent of the sample

respondents are have the BC centres in three district of Andhra Pradesh.

In respect to Vijayanagarm district, 67.30 per cent of the sample respondents

did not have BCs centres while only 32.73 per cent of the sample respondents

have BC/BF centres in the district of Vijayanagarm

259

Regarding to Srikakulam district, the majority 81.92 per cent of the sample

respondents did not have the BC/BF centres while only 18.08 per cent of the

sample have the BC/BF centres in their areas.


respondents are don’t have BC/BF centres while 24.24 per cent of the sample

respondents are have the BC/BF centers in the district. However, the majority

of the sample respondents did not have the BC/BF centres in three districts of

sample areas.

Figure: 5.25 Do you have BC/BF centers

The figure 5.25 present survey results revealed overall scenario that the

majority of the household respondents does not have the Business centers in their

villages, they have far from their villages and nearer which is bigger than their village,

while least only very few BC centre in three district of sample areas where as least of

the business center in Srikakulam and Mahabubnagar district of the sample household

respondents.

16. Distance of banks from their villages:

In rural India particularly the main problem distance segregated the village

from main revenue villages, and due to this situation lack of infrastructure facilities,

transport facilities and communication problems. Finally, those very remote villages

are going to be disadvantaged from the development sector. The survey results will

give the situation in the sample areas as follows:

0

20

40

60

80

100


24.23 18.07

32.69

75.76 81.92

67.3

BC/BF Centres

yes

No

260

5.46 What is distance from your village?

Distance Mahabubnagar Srikakulam Vijayanagarm Overall

Total

less than one

10

(3.84)

5

(1.92)

7

(2.69)

22

(2.82)

1 to 2 kms

13

(5.02)

10

(3.84)

16

(6.15)

39

(5.02)

2 to 3 kms

15

(5.76)

12

(4.61)

13

(5.02)

40

(5.12)

3 to 4 kms

33

(12.69)

25

(9.61)

27

(10.38)

85

(10.89)

4 and above

189

(72.69)

208

(80.02)

197

(75.76)

594

(76.15)

Total

260

(100)

260

(100)

260

(100)

780

(100)

The able 5.46 shows that out of 780 sample respondents the majority 76.15 per

cent of sample respondents are told that they more than 4 and above Kilo meters,

while 2.82 per cent have less than one kms and 10.89 per cent have 3 to 4 kms, 5.12

per cent have 2 to 3 kms whereas 5.02 per cent of the sample respondents are have 1

to 2 kms distance of the banks in three district.


respondents have more than 4 kms distance for their banking services, while

2.69 per cent of the respondents have less than one Kms and 10.38 per cent

have 3 to 4 kms distance, 6.15 per cent have 2 to 3 kms distance whereas 5.02

per cent of the sample respondents have 2 to 3 kms distance of the banking

services.


respondents are more than 4 kms distance while 1.92 per cent of the sampler

respondnerts have 3 to 4 kms distance and 4.61 per cent have 2 to 3 kms

distance, 3.84 per cent have 1 to 2 kms distance of the banking services.


respondents have more than 4 kms distance from the banks services, while

3.84 per cent less than one KMs distance and 5.02 per cent of the sample

respondents have 1 to 2 kms distance, whereas 5.76 per cent of the sample

respondents have the 2 to 3 kms distance of the banking services.

261

Figure: 5.26 Distance from your Village

The figure 5.26 indicates that the majority of the sample households have the

distance for bank from 4 kilometers to and above from their house, while lease

less than one kilometer and three to four kms have majority of the

respondents, 1-2 kms distance whereas some of the respondents have 2-3 kms

from their villages of the sample areas from three districts.

B. Deposits and Withdrawals

17. Frequency of Bank visiting

Access to basic financial services and withdraws or deposits show that

household capacity of the status of the economy. But even today the majority of the

rural household continues to be as an unbanked population in rural areas. Therefore,

the Government of India, including RBI, has started a number of initiatives aimed at

providing basic financial services for everyone. The survey analyses results will show

the status of bank visiting in a moth to deposits or withdraw see the table:

5.47 How many times visiting bank in a month

Visiting Bank Mahabubnagar Srikakulam Vijayanagarm Overall

Total

Weekly

32

(12.30)

21

(8.07)

36

(13.84)

89

(11.43)

Monthly

77

(29.61)

50

(19.23)

73

(28.07)

200

(25.64)

Every two months

92

(35.40)

68

(26.15)

82

(31.53)

242

(31.02)

Every three

35

(13.46)

89

(34.23)

44

(16.92)

168

(21.53)

Every four & above

24

(9.23)

32

(12.32)

25

(9.64)

81

(10.38)

Total

260

(100)

260

(100)

260

(100)

780

(100)

0

20

40

60

80

less than one

1 to 2 kms

2 to 3 kms

3 to 4 kms

4 and above

Distance

Mahabubnagar

Srikakulam

Vijayanagarm

262

The table 5.47 indicate that the majority 31.02 per cent of the respondents are

accessing every two months, while 10.38 per cent accessing every four or more than

four months and 25.64 per cent of the respondents are accessing once in a month,

21.53 per cent accessing once in every three months whereas only 11.43 per cent of

the sample respondents are accessing once in a weekly. However, the majority of the

sample respondents are only accessing the banks once in a very two months of three

district of Andhra Pradesh.

Regarding Vijanagaram district the majority 31.53 per cent of the sample

respondents are accessing once in very two months only while 9.64 per cent

accessing very four months and above and 28.07 per cent accessing once in a

monthly, 16.92 per cent once every three months where as 13.84 per cent of the

sample respondents are accessing once in a weekly to the banks.

In Srikakulam district, the majority 34.23 per cent of the sample respondents

are accessing the banks once in a every three months, while only 8.07 per cent

accessing weekly and 26.15 per cent of the sample respondents are accessing

once in a every two months and 19.23 per cent once in a month where as 12.32

per cent accessing weekly to the banks.

In respect to Mahabubnagar district, the majority 35.40 per cent of the sample

respondents are accessing once in a very two months, while 9.23 per cent of the

sample respondents are accessing once in every four months and 29.61 per cent

of the accessing once in a monthly, 13.46 per cent once in every three months

where as 12.30 per cent of the sample respondents are accessing weekly to the

banks. However, the majority of the sample respondents are able access in every

two months only.

Figure: 5.27 How many times visiting bank in a month

0 5

10 15 20 25 30 35 40

Weekly Monthly Every two

months

Every three

Every four & above

Accessing Bank in a Month

Mahabubnagar

Srikakulam

Vijayanagarm

263

The figure5.27 present the overall scenario of the survey results, that the majority

household respondents are visiting a bank once in a three months, while least of the

household very few household respondents are visiting a bank once in a week and

other majority once in two months, following others once in every four and above

months whereas the other once in month. The survey results yielded that the majority

of the household respondents are once in a three months visiting bank to use the

services in three districts.

18. Frequency of deposits and withdrawal by account holders

It is clear and an accepted truth that poor people want, need, and do indeed

save. The rural households are provided a safe, easily accessible opportunity to save,

their commitment to saving, and the amounts they manage to save, are remarkable

There is also increasing evidence that poor people are facing an extremely risky

environment when they save and withdraw money in the informal sector. Access to a

strong distribution system is critical in rural areas due to lack of infrastructure

facilities. However, frequency of deposits among rural households is very low due to

lack of income and adequate of finance to save and deposit or withdraw among social

groups. The survey results will give the clear picture to know that situation in rural

areas as follows: 5.48 Frequency of deposits and withdrawals by account holders

Frequency of

Deposits/

Withdrawals


Total

Within Week

4

(1.53)

2

(0.76)

4

(1.53)

10

(1.30)

With In Two

Weeks

6

(2.33)

2

(0.76)

8

(3.07)

16

(2.05)

Within Three

Weeks

40

(15.38)

34

(13.07)

34

(13.07)

108

(13.84)

With In Month

75

(28.84)

65

(25.04)

76

(29.23)

216

(27.69)

Every Two

Months

87

(33.46)

112

(43.07)

60

(23.07)

259

(33.20)

Every six moth

48

(18.46)

45

(17.30)

78

(30.03)

171

(21.92)

Total

260

(100)

260

(100)

260

(100)

780

(100)

264

The table 5.48 showed that the overall scenario of the frequency of deposits

and withdrawals by the account holders in three district of Andhra Pradesh. The

majority 33.20 per cent of the sample respondents are frequency of deposits and

withdrawals by account holders once in every two months only while only 1.30 per

cent able deposits or withdrawals once in week and 21.92 per cent of the sample

respondents are access to frequency of deposits and withdrawals once in every six

months only and 13.84 per cent once in three weeks whereas 2.05 per cent of the

sample respondents are access to make frequency of deposits and withdrawals by

account holders once in two weeks in a month. However, the majority of the sample

respondents are access to made deposits and withdrawals by account holders once in

very two months only.


respondents are access to make frequency of deposits and withdrawals by

account holders once every six months only, while only 1.53 per cent of

weekly in a month and 29.23 per cent once in a month and 23.07 per cent of

the sample respondents once in every two months making deposits and

withdraws by accounting holders where as 3.07 per cent of the sample

respondents are access and making frequency of deposits and withdrawals by

account holders of the district.


are access and making frequency of deposits and withdrawals by account

holders once in every two months while only 0.76 per cent access and making

within a week and 25.04 per cent of the sample respondents are access and

making deposits and withdraw once in a month, 17.30 per cent every six

months whereas 13.07 per cent of the sample respondents are accessing and

making deposits once in three weeks in a months.


sample respondents are access and making deposits or withdrawals by account

holders once in every two months while only 1.53 per cent access to within

week in a month and 28.84 per cent with in moth, 18.46 per cent with in every

six months, whereas only 2.33 per cent access and making deposits within

two weeks in a month by the account holders

265

Figure: 5.28 Frequency of Deposits and withdrawal

The figure 5.28 indicates overall scenario of the frequency of deposits or

withdrawals from the sample survey household respondents in three districts of

Andhra Pradesh. The majority of the sample household respondents have only once in

every two months whether deposit or withdrawal from the three districts, while very

few members of the households within two weeks and other within one month and

some of the household respondents more than three to four months. However, the

majority of the banks also able to reach out to offer savings services to poor people in

remote rural areas.

19. BC centres providing type services

On behalf of a correspondent bank, a BC can collect small value deposits,

disburse and recover small value loans; receive and send small value remittances;

cross-sell third party products such as micro insurance, mutual funds and pension

products, and engage in bill payments for services. The survey results will analyse as

following:

5.49 What type of services getting from BC?

Type Services Mahabubnagar Srikakulam Vijayanagarm Overall

Total

Small value deposits

25

(9.61)

21

(8.07)

28

(10.76)

74

(9.48)

Limited withdrawals

34

(20.03)

24

(9.23)

27

(15.41)

85

(10.89)

Pensions

65

(13.07)

39

(15.00)

35

(13.46)

139

(17.82)

Small value of SHG

Linkage

112

(43.07)

153

(58.84)

139

(53.46)

404

(51.79)

Small value of

remittances

8

(8.07)

5

(1.94)

10

(3.84)

23

(2.94)

Micro insurances

16

(6.15)

18

(6.92)

21

(8.07)

55

(7.08)

Total

260

(100)

260

(100)

260

(100)

780

(100)

0 10 20 30 40 50

Within Week

With In Two

Weeks

Within Three Weeks

With In Month

Every Two

Months

Every six moth

Frequency of Deposits and Withdrawls

Mahabubnagar

Srikakulam

Vijayanagarm

266

The table 5.49 indicating that out of 780 sample respondents the majority

51.79 per cent of the sample respondents are getting services of SHG linkage from the

BC/BF centers, while only 7.08 per cent getting small value of remittances and 17.82

per cent of the sample respondents are getting loan services, 10.89 per cent limited

value of withdraw services and 9.48 per cent savings facilities from the BC/BF

centers.

In Vijayanagarm district, 53.46 per cent of the sample respondents are

getting SGH linkage services from BC/BF centres, while only 3.84 per cent

gold loan services and 13.46 per cent loan services, 15.41 per cent saving

services whereas 8.07 per cent of the sample respondents are getting agri-loan

services from BC/BF centres in the district.


are getting SHG bank linkage services, while only 1.94 per cent gold loan

services and 15.00 per cent loan services, 9.23 per cent getting withdraw

services and 8.07 per cent getting saving services whereas 6.92 per cent

getting small value of remittances from the BC/BF centres in the district.


sample respondents are getting SHG linkage services, while only 6.15 per cent

small value of remittances, 20.03 per cent and 13.07 per cent withdrawal and

getting loan whereas 9.61 per cent of the sample respondents are getting

savings facilities from the district.

267

Figure: 5.29 Type of services from BC/BFs

0

20

40

60

80

100

120

140

160

Small deposits Limited withdrawals

Pensions Small value of SHG Linkage

Small value of remittances

Micro insurances

BC Centers providing Services

Mahabubnagar

Srikakulam

Vijayanagarm

268

BC model has Operational Limit, due to that majority of the remote hamlets

under main villages not able to cover half of the respondents household respondents.

The figure 5.29 Present the BC centers services and implementation at household

levels, the majority of the household respondents are receiving only SHG limited

linkage program, while least pensions and least small value of remittances and other

majority services offering pensions, limited withdrawals and micro insurances.

20. Financial Institutions providing other products to the rural account holders

The focus of financial inclusion is on promoting sustainable development and

generating employment for a vast majority of the population especially in the rural

areas. In most of the time the rural households have lack access to the most basic

banking services such as savings accounts, credit, remittances and payment services,

financial advisory services,. If the banks or any financial institution able provide any

innovative products, the rural households may have an opportunities to use those

products and services, if those products accessible, available and affordable with in

limitations. The survey will give fruitful results as follows:

5.50 Do you patronize the other products financial institution?

Patronize

the other

Products


Total

Yes

213

(81.92)

176

(67.69)

221

(85.00)

610

(78.20)

No

47

(18.08)

84

(32.31)

39

(15.00)

170

(21.80)

Total

260

(100)

260

(100)

260

(100)

780

(100)


78.20 per cent of the sample respondents are willing to patronize the other financial

products providing by the financial institutions, while only 21.80 per cent not willing

the patronize the other financial products in three district of Andhra Pradesh.

When it comes to Vijayanagarm district, the majorities 85.00 per cent of the

sample respondents are patronize the other financial products provided by the

269

financial institutions in the district; while only 15.00 per cent of the sample

respondents are not willing patronize the other products

Regarding to Srikakulam district, the majority 67.69 per cent of the sample

respondents are patronize the other products while 32.31 per cent are not

willing to patronize the other products provided by the financial institutions.


respondents are willing to patronize the other financial products while 18.08

per cent are not willing to patronize the other products by the financial

institutions.

Figure: 5.30 Patronize the other Financial Products

If the banks or any financial institutions are able provide through a

combination of strategies ranging from relaxation of regulatory guidelines, provision

of innovative products, encouraging use of technology, then rural household also may

have great opportunity to prove as developed people. It can be observed from the

figure 5.39 which clearly indicates that the majority of the rural household

independents are willing to take any other type of financial products and services, it

those products and services affordable, accessible and available. While only lest of the

sample household not willing to take other products. However, the majority sample

household respondents are willing to any type of financial products and services in the

sample areas of three districts of Andhra Pradesh.

0

10

20

30

40

50

60

70

80

90


Patronize the other Financial Products

Yes

No

270

21. Level of Awareness on banking services

Financial inclusion can truly lift the financial condition without

understanding of financial products & services? The answer is ‘No’ because the rural

household lack of education and lack of knowledge on financial products & services

as well utilisation of technology. Therefore, without proper capacity building and

proper aware, the standards of lives may not improve in rural households. Therefore,

the most important thing is that improving the capacity building to understanding of

financial products and services to achieve full financial inclusion. The survey will

analyse the level of awareness on financial products and services as follows:

Table: 5.51 Level of awareness of Banking Products and Services

Type of

Awareness


Total

Poorly aware 126

(48.46)

147

(56.53)

138

(53.07)

411

(52.69)

Fairly aware 78

(30.01)

89

(34.26)

65

(25.01)

232

(29.25)

Very aware 56

(21.53)

24

(9.23)

57

(21.92)

137

(17.56)

Total

260

(100)

260

(100)

260

(100)

780

(100)


52.69 per cent of the sample respondents have poorly aware on banking products and

services, while 17.56 per cent had very aware whereas 29.75 per cent of the sample

respondents have fairly ware on banking products and services. However, the

majority of the sample respondents do not have that much awareness on banking

financial products and services in the sample districts of Andhra Pradesh

Regarding Vijayanagarm district, out of 260 sample respondents the majority

53.07 per cent of the sample respondents have poorly aware on banking

products and services, while 21.92 per cent had very aware and 25.01 per cent of

respondents have fairly aware on the banking products and services in the

district of Vijayanagarm.

271


56.53 per cent of the sample respondents have poorly aware on banking

products and services , while only 9.23 per cent of the sample respondents had

very aware whereas 34.24 per cent of the sample respondents have fairly aware

on the banking products and services in the district of Srikakulam.

In Mahabubnagar district, out of 260 sample respondents the majority 48.46

per cent of the sample respondents have poorly aware on the banking products

and services while 21.53 per cent had very aware whereas 30.01 per cent of the

sample respondents have fairly aware on banking products and services in the

district.

Figure: 5.31 level of Awareness on Financial Products and services

Rural households need proper awareness on financial products and services

to promote effective financial inclusion. Ensuring their financial inclusion can unlock

the considerable economic potential of rural areas. The figure 5.31 presents the

overall scenario of awareness on financial products and services in the sample areas

of three districts in Andhra Pradesh. The majority of the sample household

respondents (on an average e 80 per cent) do not have awareness on financial products

and services in the sample areas of three districts. While only very few (an average 20

percent) have awareness on financial products. As the follows among three districts

Srikakulam is the very lowest awareness and Vijayanagarm is the second, the third

one is Mahabubnagar district. Therefore, these three district sample household

0

10

20

30

40

50

60


48.46

56.53 53.07

30

43.23

25 21.53

9.23

21.92

Level of Awareness on financial products & services

Poorly aware

Fairly aware

Very aware

272

respondents have very low awareness on financial products and services of Andhra

Pradesh.

22. Level of Awareness on Bank service charges

In the rural areas the households have little knowledge exists on the demand

for specific financial services other than credit, like savings, payment services and

remittance transfers, leasing or insurance, which makes it difficult for supply to meet

demand. There is transaction costs in rural areas, especially in remote areas, are high

due to low population density, lack of infrastructure (communications, electricity,

transportation) and small average loan amounts. This makes financial services

expensive. Prohibitive transaction costs also discourage people to deposit savings,

thereby depriving households of building financial assets. All these problems lead to

high cost of the financial products and services in rural areas. But on other side levels

of financial literacy are often low in rural areas. Due this situation does not s allow

people to understand financial services charges or any other charges? The survey will

analyse the level of awareness on banking financial products and services charges as

follows:

Table: 5.52 Awareness on services charges of banking financial services

Awareness Mahabubnagar Srikakulam Vijayanagarm Overall

Total

Don’t

know

53

(20.38)

77

(29.61)

63

(24.25)

193

(24.74)

Poorly

aware

104

(40.02)

99

(38.07)

54

(20.76)

257

(32.94)

Fairly

aware

71

(27.30)

65

(25.02)

108

(41.53)

244

(31.28)

Very

aware

32

(12.30)

19

(7.30)

35

(13.46)

86

(11.04)

Total

260

(100)

260

(100)

260

(100)

780

(100)

The table 5.52 showed overall scenario of awareness on banking services

charges. The majority 32.94 per cent of the sample respondents have poorly aware on

banking service charges while 11.04 per cent had very aware and 31.28 per cent of the

sample respondents have fairly aware whereas 24.74 per cent of the sample

respondents don’t have awareness on banking services charges in three districts.

273


respondents has fairly aware on banking service charges, while 13.46 per cent

had very aware and 24.25 per cent don’t have any awareness on banking

service charges whereas 20.76 per cent of the sample respondents have poorly

awareness on banking service charges in the district.


respondents have poorly aware on banking service charges while only 7.30 per

cent had very aware and 29.61 per cent don’t have any awareness whereas

25.02 per cent of the sample respondents have fairly aware on the banking

service charges in the district.


respondents have poorly aware on banking service charges while 12.30 per

cent had very aware and 27.30 per cent have fairly aware whereas 20.38 per

cent of the sample respondents does have any awareness on banking service

charges in the district.

Figure: 5.32 Level of Awareness on Banking Charges

The figure 5.33 presents the overall scenario of the level of awareness on

financial products and services charges among the rural household respondents in

three districts of Andhra Pradesh. The majority of the sample household respondents

are poorly aware on financial products and service charges, while only very few

0

5

10

15

20

25

30

35

40

45

Don’t know Poorly aware

Fairly aware

Very aware

Level of Awareness

Mahabubnagar

Srikakulam

Vijayanagarm

274

household members have fair aware on financial products and service charges and the

other majority of the don’t know any financial products and services charges among

three districts of Andhra Pradesh. Therefore, the research survey results revealed that

the majority of the rural sample household respondents do not have awareness on

financial products and services. Hence, the financial institutions need to capacity

building on financial products and services awareness training companies have to

conduct in rural areas.

23. Level of Awareness on Internet Banking

In the current trends all the banks over the world have been effectively

deploying information technology as an innovative resource to achieve speed,

efficiency, cost reduction, customer service, and competitive advantage. So the

technology enabled products and delivery channels offer value to customers providing

them with anywhere, anytime, anyway banking to customers. Even the Indian banks

have realized that in order to remain competitive and provide the best services to their

customers they need to have the latest technology in place. But the question is

“Whether the customers are also enabling and have that much high level attitude to

learn the past technology to use by offering banks? The survey will analyse the level

of awareness on internet bank among rural households as follows:

Table: 5.53 Level of awareness on Internet Banking

Type of Account Mahabubnagar Srikakulam Vijayanagarm Overall

Total

Don’t know

223

(85.76)

227

(87.30)

219

(84.23)

669

(85.7)

Poorly aware

25

(9.61)

27

(10.38)

25

(9.61)

77

(9.87)

Fairly aware

8

(3.07)

4

(1.53)

10

(3.84)

22

(2.90)

Very aware

4

(1.56)

2

(0.79)

6

(2.32)

12

(1.53)

Total

260

(100)

260

(100)

260

(100)

780

(100)

The table 5.53 indicates that out of 780 sample respondents, the majority 85.7

per cent of the sample respondents don’t know the internet banking, while only 1.53

per cent had very awareness on internet banking and 9.87 per cent have poorly aware

whereas 2.90 per cent of the sample respondents have fairly aware on internet banking

in three districts of Andhra Pradesh.

275

With regarding to Vijayanagarm district, out of 260 sample respondents the

majority 84.23 per cent of the sample respondents don’t know the level of

awareness on internet banking, while 2.32 per cent had very aware and 9.61

per cent have poorly aware whereas 0.51 per cent of the sample respondents

have fairly aware on the internet banking in the district.


87.30 percent of the sample respondents don’t know the internet banking in

the district, while 0nly 0.79 per cent had very aware and 10.38 per cent have

poorly aware whereas 1.53 per cent of the sample respondents have fairly

aware on internet banking in the district.


respondents don’t know the internet banking, while only 1.56 per cent had

very aware and 9.61 per cent have poorly aware whereas 3.07 per cent of the

respondent have the fairly aware on internet banking in the district. However,

the majority of the sample respondents do not have awareness on internet

banking.

Figure: 5.33 Level of awareness on Internet Banking

The figure 5.33 present the survey overall scenario the majority of the

sample household respondents given their results that they don’t know any internet

banking in three district of Andhra Pradesh. While only very few (even not more than

5 per cent) sample household respondents have poorly aware on internet banking,

0

10

20

30

40

50

60

70

80

90


Fairly aware

Very aware

Level Awareness on Internet Banking

Mahabubnagar

Srikakulam

Vijayanagarm

276

whereas others in the level at ‘0’ level only. The majority of the sample household

respondents do not have any knowledge on internet banking in sample areas of three

districts of Andhra Pradesh. Therefore there is a need to understand the usage

behavior of the bank consumers using multiple electronic banking channel services as

they tend to use various services of the different banking channels in a complimentary

manner.

24. Level of Awareness on Mobile banking

In technology trends in all of the banks have recognized that mobile banking

has come to occupy an important place in banking in a very short time and is expected

to provide much needed platform for taking banking to the unbanked masses. Now

Mobile banking certainly seems to be one of the biggest innovations to reach the

remote areas of the rural households in any in the world. Hence, the Technology

helped banks to reach the doorsteps of the customer by overcoming the limitations on

geographical/ physical reach in branch banking and easing the resource and volume

constraints posed by the brick and mortar model. Then the all the banks giving the

importance for mobile banking as an important technology tool to deliver better

customer service, expand product range, retain market-share, enhance revenue,

drastically reduce operating expenses and above all remain socially relevant without

sacrificing sustainability in ICT based financial inclusion plans. But the question that

what is the level of customers to receive mobile banking and what is the standard of

mobile bank usage from rural households in India?

Table: 5.54 Level of awareness on Mobile Banking

Type of

Account


Total

Don’t know

201

(77.30)

209

(80.38)

199

(76.53)

609

(78.07)

Poorly

aware

43

(16.53)

44

(16.92)

36

(13.84)

123

(15.76)

Fairly aware

10

(3.84)

5

(1.92)

17

(6.56)

32

(4.12)

Very aware

6

(2.33)

2

(0.78)

8

(3.07)

16

(2.05)

Total

260

(100)

260

(100)

260

(100)

780

(100)

277

Table 5.54 shows the level of scenario of awareness on mobile banking in three

district of Andhra Pradesh. The majority 78.07 per cent of the sample respondents

does not know the mobile banking and the level of awareness is zero level, while only

2.05 per cent had the very awareness and 15.76 per cent have poorly awareness

whereas 4.12 per cent of the sample respondents have fairly awareness on mobile

banking in three districts.

In Vijayanagarm district, the majority 76.53 per cent don’t have awareness

on mobile banking, while 3.07 per cent had the very aware and 13.84 per cent

of the sample respondents have poorly awareness whereas 6.56 per cent of the

sample respondents have fairly awareness on mobile banking in the district.


respondents does not have awareness on mobile banking while only 0.78 per

cent had the very awareness and 16.92 per cent of the sample respondents

have poorly awareness on mobile banking whereas 1.92 per cent of the sample

respondents have fairly awareness on mobile banking in the district.

In Mhabubnagar district, the majority 77.30 per cent of the sample

respondents does not have awareness on mobile banking in the district, while

only 2.33 per cent had very awareness and 16.53 per cent have poorly aware

whereas 3.84 per cent have fairly awareness on mobile banking in the district.

Figure: 5.34 Level of awareness on Mobile Banking

The figure 5.34 presents the survey results of the level of awareness on mobile

banking which added to the truly anytime banking. The majority of the sample

0

20

40

60

80

100


Fairly aware

Very aware

Level of Awareness on Mobile Banking

Mahabubnagar

Srikakulam

Vijayanagarm

278

household respondents did not have any knowledge on mobile banking in three

district of Andhra Pradesh. While only few household respondents have poorly

awareness, however, weaning the customer from physical banking and building

customer awareness and confidence in these non face-to-face modes of banking has

been an exceptional task for the banking industry to cover the rural households in

India.

25. Level of Awareness on Debit Card/Credit card

Financial inclusion could be a cost-effective business model, when it adopts an

appropriate low-cost technology by commercial banks and rural financial institutions.

Those technologies should be able to reduce transaction costs of providing banking

services in the rural, unbanked, and backward areas of the country. In this context, all

over the world increasingly adopting prepaid cards(debit/credit cards) as a preferred

mechanism for making benefits payments to consumers because it can be cheaper,

faster, and more secure to transfer funds to cards than it is to mail checks or provide

cash to all recipients. But the question is whether the customer has knowledge to use

those (debit/credit cards) technological changes? Or not? In Indian context

particularly rural consumer can able to adopt those technological changes? It they

adopt what is the level of usability? The survey results analyse the level of awareness

on usability of debit/credit card in the sample area of three districts of Andhra

Pradesh. See the table as follows:

Table: 5.55 Level of awareness on Debit/Credit Cards

Level of

Awareness


Total

Don’t know

66

(25.38)

85

(32.69)

76

(29.23)

227

(29.12)

Poorly aware

125

(48.07)

134

(51.53)

128

(49.23)

387

(49.61)

Fairly aware

54

(20.76)

25

(9.63)

36

(13.84)

115

(14.74)

Very aware

15

(5.79)

16

(6.15)

20

(7.70)

51

(6.53)

Total

260

(100)

260

(100)

260

(100)

780

(100)

The table 5.55 indicates the majority 49.61 per cent of the sample respondents

have poorly awareness on debit/credit cards utilization while 6.53 per cent had very

279

awareness and 29.12 per cent does not have any knowledge on debit/credit cards

whereas 14.74 per cent of the sample respondents have fairly awareness on debit

credit cards utilization of the respondents in three districts.

With Regarding to Vijayanagarm district, the majority 49.23 per cent of the

sample respondents have poorly awareness on debit/credit card utilization,

while 7.70 per cent had very awareness and 29.23 per cent don’t have any

awareness whereas 13.84 per cent of the sample respondents have fairly

awareness on debit/credit cards utilization in the district.


have poorly awareness on debit/credit cards utilization in the district, while

6.15 per cent had very awareness and 32.69 per cent don’t have any awareness

on debit/credit card utilization whereas 9.63 per cent of the sample

respondents have fairly awareness in the district.

Regarding Mahabubnagar district, the majority 48.07 per cent of the sample

respondents have poor awareness on debit /credit cards utilization, while only

5.79 per cent had very awareness and 25.38 per cent don’t have any awareness

on debit/credit cards utilization whereas 20.76 per cent have fairly awareness

on debit/credit cards utilization in the district.

Figure: 5.35 Level of awareness on Debit/Credit Cards utilization

The figure5.25 indicates the majority of the sample household respondents

have poorly aware on debit /credit cards utilization in three districts of Andhra

Pradesh. The survey results yield that high few members of household had awareness

and the other majority of the household even does not know about the credit/debit

0

10

20

30

40

50

60

Don’t know Poorly aware Fairly aware Very aware

Level of Awareness on Debit/Credit Cards Utilization

Mahabubnagar

Srikakulam

Vijayanagarm

280

cards in the sample areas. Although, Indian banks provide all types of prepaid cards

for urban and rural consumers, the majority of the customers are not efficient in the

use of those technological facilities. In this context the majority of the sample area

from three districts are poorly aware of debit/credit card utilization.

26. Level of Awareness on Online Banking Utilization

The majority of the banks have online Banking platforms existence for more

than a decade and offering online banking is now as good as a commodity. But the

present focus is not on getting the customers to adopt online banking, due to lack of

knowledge on online banking and also banks are not able to provide awareness on

online banking, under this, the banks are under constant pressure to provide

distinctive and unique features catering to niche segments. Technology is an enabler

that banks cannot afford to neglect.

Table: 5.56 Awareness on online banking

Level of

Awareness


Total

Don’t know

135

(51.92)

142

(55.76)

143

(55.05)

420

(53.84)

Poorly aware

67

(25.76)

76

(29.23)

75

(28.84)

218

(27.46)

Fairly aware

43

(16.56)

26

(8.86)

28

(10.76)

97

(12.94)

High aware

15

(5.76)

16

(6.15)

14

(5.38)

45

(5.76)

Total

260

(100)

260

(100)

260

(100)

780

(100)

The table 5.56 clearly showed that the majority 53.84 per cent don’t have

any awareness on online banking, while only 5.76 per cent had high awareness and

27.46 per cent have poorly aware whereas 12.94 per cent fairly awareness in three

districts. However, the majority of the sample respondents did not have awareness on

online banking services.


respondents did not have any awareness on online banking, while 5.38 per

cent had high aware and 28.84 per cent have poorly aware whereas 10.76 per

cent have fairly aware on online banking sector in the district.

281


did not have any level of awareness on banking sector, while 6.15 per cent had

high aware and 29.23 per cent have poorly awareness whereas 8.86 per cent of

the sample respondents have fairly aware. However, the majority of the

sample respondents did not have that much awareness online banking.


respondents did not have any awareness on online banking, while 5.76 per

cent had high level awareness and 25.76 per cent of the sample respondents

and 25.76 per cent poorly whereas 16.56 per cent have fairly aware on online

banking in the district.

Figure: 5.36 Level of awareness on Online Banking

The figure 5.36 indicates that the technological resources are plenty and how to

know the level of optimum utilization of those resources. The majority of the sample

household respondents did not know the online banking and they did not use any only

banking services up to know, while only few members of the household respondents

have fairly aware and other have poorly aware on online banking in three district of

Andhra Pradesh. However, the sample household respondents’ need is various and the

banks have to identify the relevant technologies and put them to use. Banks are also

expected to understand the “unstated needs” of customers and offer relevant solutions

that would lead to customer delight and not just customer satisfaction.

0

10

20

30

40

50

60


Fairly aware Very aware

Level of Awareness on Online Banking

Mahabubnagar

Srikakulam

Vijayanagarm

282

27. Level of Awareness on Bank Mortgage

The majority of the rural household loan applications are rejected during a

given recall period for the loan distribution, due to lack of awareness on mortgage and

not being able to provide any asset as mortgage for the banks. First of all in rural areas

particularly among social group or sector groups did not have any marketable assets

to keep in bank as mortgage, therefore, the majority of the social and sectoral groups

depend on only informal credit such as money lenders. For the money lenders never

ask for any assets, but they will ask ever day for the borrowers. They use complex

strategies to increase their productive capacity, share risk, and smooth consumption

over their life cycles. The survey results analyse the level of awareness on bank

mortgage as follows:

Table: 5.57 Level of awareness on Bank Mortgage

Level of

Awareness


Total

Don’t

know

66

(25.38)

85

(32.69)

76

(29.23)

227

(29.12)

Poorly

aware

125

(48.07)

134

(51.53)

128

(49.23)

387

(49.61)

Fairly

aware

54

(20.76)

25

(9.61)

36

(13.85)

115

(14.74)

High

aware

15

(5.79)

16

(6.17)

20

(7.69)

51

(6.53)

Total

260

(100)

260

(100)

260

(100)

780

(100)

The table 5.57 showed the scenario of the awareness on bank mortgage in

the sample areas. The majority 49.61 per cent of the sample respondents have poorly

awareness on banking mortgage in three districts, while only 6.53 per cent had the

high level awareness and 29.12 per cent did not have any awareness whereas 14.74

per cent of the sample respondents have fairly awareness on banking mortgage in the

districts.

With regarding to Vijayanagarm district, the majority 49.23 per cent of the

sample respondents have poorly awareness on banking mortgage, while 7.69

per cent had high aware on the level of awareness and 29.23 per cent did not

283

have any awareness on banking mortgage whereas 13.85 per cent of the

sample respondents have fairly awareness on banking mortgage in the district.


have poorly awareness on banking mortgage, while 6.17 per cent had high

level of awareness and 32.69 per cent did not have any level of awareness

whereas 9.61 per cent of the sample respondents have fairly awareness of the

sample respondents have fairly awareness on banking mortgage in the district.


respondents have poorly awareness on banking mortgage while only 5.79 per

cent had high aware and 25.38 per cent of the sample respondents did not have

any awareness on banking mortgage whereas 20.76 per cent of the sample

respondents have fairly awareness. However, the majority of the sample

respondents have poorly awareness on banking mortgage in the district.

Figure: 5.37 Level of awareness on Banking Mortgage

The figure 5.37 presents overall scenario of awareness on bank mortgage in

the sample areas of three districts of Andhra Pradesh. The majority of the sample

household respondents have the poorly aware on bank mortgage, while few members

of the sample respondents have high aware and other majority did not have any

awareness on bank mortgage to get the bank credit from the bank. Surveys results

yield that the credit limit to assess the extent of households’ access to credit and the

0

10

20

30

40

50

60

Don’t know

Poorly aware

Fairly aware

Very aware

Level of Awareness on Banking Mortgage

Mahabubnagar

Srikakulam

Vijayanagarm

284

binding of their credit constraints. Because of lack of awareness and lack of available

collateral and also the changes in household behavioral and welfare outcomes in

response to changes in its credit represent the effects of access to credit (or

improvement in access) on those household outcomes.

28. Sources of new formal and informal loans

The rural household borrowers may be simultaneously active in both

markets, either because they are unable to get the credit they need and also it is high

difficult because of lack of available collateral. Therefore, there is by now a

considerable literature that examines the interaction of the informal and formal credit

sectors. In general, richer borrowers are able to have access to formal loans more

easily than relatively poor borrowers, whose borrowing might be constrained.

Because the richer have available collateral and are aware of various financial

products & services and have well knowledge on bank mortgage. The survey analyse

the real situation of the sample area on formal and informal sources of credit for the

sample households as follows:

Table: 5.62 Sources of new formal and informal loans

Source of

loans


Total

Formal

Credit

56

(21.53)

63

(24.23)

55

(21.15)

174

(22.30)

Microcredit

23

(8.84)

18

(6.92)

25

(9.61)

66

(8.46)

Shgs

61

(23.46)

43

(16.53)

59

(22.69)

163

(20.89)

Money

Lenders

30

(11.53)

37

(14.23)

30

(11.58)

97

(12.43)

Credit Union

12

(4.61)

9

(3.46)

8

(3.07)

29

(3.71)

Retailers

5

(1.92)

3

(1.19)

5

(1.92)

13

(1.66)

Friends

11

(4.28)

14

(5.38)

8

(3.07)

33

(4.23)

Family

15

(5.76)

17

(6.53)

10

(3.84)

42

(5.38)

Relatives

10

(3.84)

11

(4.23)

11

(4.23)

32

(4.15)

Informal

37

(14.23)

45

(17.30)

49

(18,84)

131

(16.79)

Total

260

(100)

260

(100)

260

(100)

780

(100)

285

The table 5.58 indicates that the source of finance of respondents in the

sample districts, out of 780 sample respondents the majority 22.30 per cent of the

sample respondents have the source from formal sources, while only 1.66 per cent

from retailer sources and 20.89 per cent of the sample respondents have sources from

SHGs, 12.43 per cent from money lenders, 8.46 per cent from microcredit sources and

16.79 per cent of the sample respondents have informal sources to get loans, 5.38 per

cent family sources whereas 4.23 per cent of the sample respondents have loan from

friends in the ample districts.

With regarding to Vijayanagarm district, the majority 22.69 per cent of the

sample respondents have the sources from SHG linkage while only 1.92 per

cent have the sources from retailers and 21.15 per cent have formal source of

loans, 18.84 per cent of the sample respondents have informal sources of

finance , 9.61 per cent have the source from microcredit and 11.58 per cent of

the sample respondents dependent on money lenders, whereas only 3.07 per

cent have source from credit unions, 3.07 per cent from friends and 3.84 per

cent from family sources of the loans in the district.


have formal sources to getting loans, while only 1.19 per cent have the

sources from retailers and 17.30 per cent of the sample respondents have

informal sources, 16.53 per cent have SHGs and 14.23 per cent dependent on

money lenders, 6.53 per cent have the source from family, 5.38 per cent have

the sources from friends whereas 6.92 per cent of the sample respondents have

the source from microcredit, 3.46 per cent have credit union sources 4.23 per

cent have sources from relatives in the district.

In Mhabubnagar district, the majority 23.46 per cent of the sample

respondents have the sources from SHGs, while only 1.92 per cent have

sources from retailers and 21.53 per cent have formal sources, 14.23 per cent

have informal sources and 11.53 per cent of the sample respondents have the

sources from money lenders, 8.84 per cent have the sources from microcredit

and 4.61 per cent from credit union, 4.28 per cent from friends whereas 3.84

per cent of the respondents have the source from relatives in the district.

286

However, the majority of the sample respondents have the sources from SHGs

and other informal sources to get loans in Andhra Pradesh

Figure: 5.38 Source of Finance

The figure 5.38 indicates the source of finance in the selected sample

household respondents in the three districts of Andhra Pradesh. The majority of the

sample household respondents have the main source only from SHGs within three

districts, while high few household respondents have the source from retailers and the

other majority source from formal credit and following from informal sources of

credit for the sample household respondents in the sample areas of three districts. The

social and economic factors that explain the rural household respondents credit

constraint and influence household’s decisions to switch from formal to informal

credit markets. However, the sample household respondents given the clear insight

that if the SHG promote in an efficient way, the rural household may get more benefit

then they may not dependent on informal credit.

29. Overall perception of Banking quality services for Rural Households

Now a day’s rural people have less knowledge about the banking products

and services but they have enough knowledge in micro finance. The rural customers

are important for the banks and need to convenience and efficiency way by overall

satisfaction of rural customers. All the banks should concentrate more on

responsiveness particularly for public sector banks to make them efficient and strong,

to compete with the local private and other financial institutions such as microfinance

institutions, NGOs etc... On the other hand, the financial services market is highly

over-leveraged in India. Therefore, banks should consider in their efforts to improve

0 5

10 15 20 25 30

Source of Finance

Mahabubnagar

Srikakulam

Vijayanagarm

287

and maintain the service quality level. The survey will analyse the overall satisfaction

of banking services in the sample areas of three districts.

5.59 Overall Perception of Bank Quality Service

Source of loans Mahabubnagar Srikakulam Vijayanagarm Overall

Total

Normal Service 157

(60.39)

152

(58.46) 152

(58.46)

461

(59.13)

Poor quality

services

68

(26.15)

79

(30.38) 62

(23.84)

209

(26.79)

Good quality

services

24

(9.23)

20

(7.69)

32

(12.32)

76

(9.74)

Better quality

services

11

(4.23)

9

(3.47)

14

(5.38)

34

(4.35)

Total 260

(100)

260

(100)

260

(100)

780

(100)

Table 5.59 shows the overall scenario of the banking products and services

to their customers the majority 59.13 per cent sample respondents give their opinion

that all the banks and other financial institutions provide normal quality services while

only 4.35 per cent have given that the banks and other financial institutions provide

better quality services and 26.79 per cent have given that they provide poor quality

services whereas 9.74 per cent have given their opinion that good quality services are

provided by the banks and other financial institutions.

With regarding to Vijayanagarm district, the majority 58.46 per cent said

that existing banks and other financial institutions providing normal quality

services, while 5.38 per cent have given that banks are providing better quality

services and 23.84 per cent given that as poor quality services whereas 12.32

per cent have given that good quality services provided by the existed banks

and other financial institutions.


given their opinion that banks are providing normal quality services, while

only 3.47 per cent said that better quality services and 30.38 per cent given as

poor quality series whereas 7.69 per cent of the sample respondents given their

opinion as the good quality services in the district.

288

Regarding Mhabubnagar district, the majority 60.39 per cent of the sample

respondents have given their opinion that normal quality services provided by

the banks while only 4.23 per cent have given their opinion that the better

quality services and 26.15 per cent given as poor quality services whereas 9.23

per cent of the sample respondents have given as the good quality services

provided by the existed banks in the district.

Figure: 5.39 Overall opinions on Banking Services

The figure 5.39 indicates that the majority of the sample household

respondents told that the banks are providing normal quality services but not that

much satisfying, while high few household respondents told bank are providing better

quality services and the majority told they are providing that poor quality services.

The banking operations performance in rural areas leads to customer satisfaction, but

in rural market the banking performance is different compared to urban market. In the

current situation rural market is a high fast growing market in India. All the banks

must know the updated knowledge about the market and the customer. Present day

rural populations have enough knowledge to know update information in the society.

The demographic factors like age group, qualification, and income levels of rural

customers are always disturbing their purchasing decision but it will not influence

their perception and satisfaction towards getting banking services.

0

10

20

30

40

50

60

70

Normal Quality Service

Poor quality services

good quality services

Better quality services

Opinion about Banking Services

Mahabubnagar

Srikakulam

Vijayanagarm

289

30. Access to Insurance of Rural Households

Access to insurance services for rural communities is high difficult, and also

to convey the insurance products among the rural households. The rural household

families in the informal economy lack access to social and health security and their

income is often at risk by health shocks that force families towards emergency loans

and debt. The SHGs under micro insurance help them build an insurance link between

the communities and the insurers. The survey analyse the status on access to insurance

in the sample areas of three districts of Andhra Pradesh.

Table: 5.60 Percentage of household have types of insurance

Type of

Insurance


Total

Life

Insurance

57

(21.92)

46

(17.69)

52

(20.01)

155

(19.90)

Health

Insurance

23

(8.84)

17

(6.53)

20

(7.69)

60

(7.69)

Livestock

Insurance

5

(1.94)

8

(3.07)

10

(3.84)

23

(2.94)

Accidental

insurance

12

(4.61)

7

(2.69)

9

(3.46)

28

(3.58)

Don't have

any

Insurance

163

(62.69)

182

(70.02)

169

(65.00)

514

(65.89)

Total 260

(100)

260

(100)

260

(100)

780

(100)

The table 5.60 indicates the overall scenario of access to insurance in three

districts. Out of 780 sample respondents, the majority 65.89 per cent of the sample

respondents did not have any insurance in the three districts of Andhra Pradesh, while

only 2.94 per cent have livestock insurance and 19.90 per cent have life insurance,

7.69 per cent have health insurance whereas 3.58 per cent of the sample respondents

have accidental insurance in three districts.

With regarding Vijayanagarm district, the majority 65.00 per cent did not have

any type of insurance in the district, while only 3.46 per cent have accidental

insurance and 20.01 per cent have life insurance, 7.69 per cent have health

290

insurance whereas 3.84 per cent have livestock insurance in the district.

However, the majority of the sample respondents did not have the insurance.


did not have any type of insurance in the district, while only 2.69 per cent

have accidental insurance and 17.69 per cent have life insurance, 6.53 per cent

have health insurance whereas 3.07 per cent have livestock insurance in the

district.

In Mahabubnagar district, the majority 62.69 per cent did not have any

insurance among the sample respondents; while only 1.94 per cent has

livestock insurance and 21.92 per cent have life insurance 8.84 per cent have

health insurance whereas 4.62 per cent have accidental insurance in the

district. However, the majority of the sample respondents did not have any

insurance in the district.

Figure: 5.40 Type of Insurance

The figure 5.40 presents the overall scenario on the status of insurance in

the sample areas of three districts of Andhra Pradesh. The majority of the sample

household respondents do not have any type of insurance, while least of the household

respondents have livestock insurance and other majority in life insurance, health

insurance, and following accidental insurance. However, the majority of the sample

household respondents do not have any insurance in the sample areas. The survey

results insights for insurance companies and policy makers for the implementation of

0

10

20

30

40

50

60

70

80

Life Insurance

Health Insurance

Livestock Insurance

Accidental insurance

Don't have any

Insurance

Type of Insurance

Mahabubnagar

Srikakulam

Vijayanagarm

291

micro insurance among the social group and sectoral groups by providing more

awareness and then covering under any insurance policy. So that rural household may

get benefit and they rescue from unexpected shocks.

5.14 Model specifications with Regression Results:

Financial inclusion in an economy is determined by multiple factors like

infrastructural development, economic development, type of financial products,

financial literacy etc. Financial inclusion can be measured both from saving as well as

credit aspects of financial inclusion. However, the present study attempts to measure

the financial inclusion from credit widening and credit deepening aspects of financial

inclusion. It also intends to study the role of various determinants of financial

inclusion for three districts of Andhra Pradesh for the period 2010-11.Secondary data

for the study have been collected from various sources like National Sample Survey

organisation(NSSO) reports,, Centre for Monitoring Indian Economy(CMIE), reports,

mainly from three districts lead banks, district credit and statistical reports and

Census of India, Economic survey, Lead Bank from Andhra Pradesh, Andhra Pradesh

Economic Statistical survey, and also various report published by RBI, NABARD

including from the internet web sources, book, journals . In the regression analysis,

two sets of regression equation have been fitted.

There are four independent variables in the model. The selected independent

variables are being taken based upon the various literatures on financial inclusion.

Number of credit accounts and amount of credit/loan disbursed per 1000 adult

populations has been taken as two dependent variables in the model. On the other

hand level of economic development, financial literacy, branch density, percentage of

credit linked SHG house hold is taken as independent variables. Per capita income,

literacy rate are proxy variables of level of development and financial literacy

respectively.

Model: Cw =α1+α2x2+α3x3+α4x4+α5x5+u1........(1)

Cd= β1+β2x2+β3x3+β4x4+β5x5+u2. ........(2)

Where X2=Per capita income

X3=Primary literacy

292

X4=Branch density

X5=No. of SHG groups have access to credit

α1, β1 are intercepts.

α2, α3, α4, α5, β2, β3, β4, β5 coefficients.

U1 andU2 are disturbances terms

Table:5.67 Variables for the Study

Sl.

No

Variables Notation

Used

1 No. Of credit accounts per 1000 adults Cd

2 Amount of loan disbursed per thousand adults Cw

3 Per capita income X2

4 No. Of per cons have primary education per

1000 adult population

X3

5 Population per branch ( Branch density) X4

6 No. Of SHG have access to credit through Self

help group bank linkage programme X5

293

Table: 5.68 Correlation Matrix Results:

Correlation matrix: a. Credit Widening

CW X2 X3 X4 X5

CW 1

X2 .5224 1

X3 .4490 .1628 1

X4 -.5779 -.8726 -.2714 1

X5 .6098 .0379 .2489 -.1578 1

Correlation Matrix : b. Credit Deepening

Cd X2 X3 X4 X5

Cd 1

X2 .7938 1

X3 .2878 .1628 1

X4 .7851 -.8726 -.2714 1

X5 .4066 .0379 .2489 -.1578 1

Table-4 presents the zero order correlation matrixes to test the problem of multi

Collinearity problem in the model. The correlation matrix shows absence of

correlation among selected exogenous variables.

Empirical Results

The objective of the study is to examine the status of financial inclusion in the sample

areas of three districts in Andhra Pradesh. A cross sectional regression analysis was

adopted to study the impact of selected independent variables on financial inclusion.

The empirical results of two regression equation have been mentioned in the

294

methodology. As depicted in the table, the R2 for equation (1) is 67.75%.There exists

a positive relationship between Credit Widening (Cw) with all the independent

variables except for variable x4. The significant level at 1%, influencing X5 variable.

This clearly describes that higher economic development, higher financial literacy and

an effective SHG bank linkage programme facilitates higher financial inclusion across

the areas. The inverse relationship between Cw and X4 (Population per branch)

describes larger expansion of branches lead to larger financial inclusion.

In case of equation (2),R2 is 78.38%.This explains that 78.83% of variation in

financial inclusion in terms of financial deepening can be explained by the selected

exogenous variables. The amount of loan disbursed per 1000 adult persons was taken

as the measure of financial deepening. There exists a positive relationship between

Financial Deepening with Per Capita Income, Financial Literacy, and an effective

SHG bank linkage programme. At a 5%level of significance, both per capita income

(X2) and SHG variables(X5) are found to be significantly affecting the amount of

Financial Inclusion in terms of Financial Deepening.

Table: 5.69 Regression Results

Dependent

Variables

No of credit

account per 1000

Adult population

Amount of loan

disbursed per

1000 adult

population

X2 .0023124

(1.01)

.0000985

(2.08)**

X3 .3470009

(1.25)

.0020767

(0.36)

X4 -.0018425

(-0.31)

-.0000733

(-0.59)

X5 .0004133

(2.89)*

6.90e-06

(2.31)**

Intercepts .5343454

(0.00)

.7809542

(0.23)

R2 0.6775 0.7838

Note: Significance at *1%, ** 5%

5.15 Chapter Summary:

The data analysis results shows that out of 23 districts of Andhra Pradesh

for which a 3-dimensional Index of Financial Inclusion has been estimated for

districts , mandals/blocks and households by using data on 3 dimensions of financial

inclusion. Hyderabad district has nearer to complete financial inclusion, the Index

295

value for Krishna district is 0.65, and the Index value for Ranga Reddy is 0.59

belonging to the high Index of Financial Inclusion group with IFI values were near to

one. The medium level of financial inclusion, the other ten districts under medium

financial inclusion and remain all other district had low financial inclusion. But in

Andhra Pradesh there is no significant achievement has taken place in financial

inclusion in the State since 2010-12 (period of commencement of the initiatives in

the country). According to the Index of Financial Inclusion values the least three

districts such as Srikakulam, Vijayanagarm and Mahbubnagar districts have

considered for the research study areas. The survey has revealed that still there is a

gap in implementations of all the government development programmes and in the

villages moneylenders are still a dominant source of rural finance despite wide

presence of banks in rural areas exorbitantly high rate of interest

In case of all three districts, having a sizeable SC, ST population, loans

floated by commercial banks and co-operative banks are very less due to the fact that

the families do not have any meaningful income and lack of direction in business

plans. It is observed that although various measures have been undertaken for

financial inclusion, the success is not found to be noteworthy. However, only supply

side factor is not responsible for the financial exclusion. Demand side factors are also

equally responsible.

Thus there is a need to solve both these problems with the help of appropriate

policies. These results points out the strategic action required to increased inclusion

among rural household of Andhra Pradesh. Credit being the ultimate panacea for

income smoothening in rural SC,ST , BC and minorities , financial inclusion would

required formal financial service providers to design financial products that suit the

needs of the poor. However risk adverse lending policies of institutional agencies

continue to restrict landing towards the poor. This is reflected in the model, and banks

should look at financial inclusion both as a business opportunity and as a social

responsibility, then they can serve the poor. However, the banking institutions and the

role of the self-help group movement, micro-finance institutions (MFIs) is important

to improve financial inclusion. Some regulatory procedures for MFIs may have to be

evolved in consultations with MFIs, consumers and the government. Political

interference in the financial system should be avoided in order to maintain the

viability of the formal financial institutions.

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