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A Project Report

On

A STUDY ON THE RURAL BANKING BEHAVIOR AMONGSTRURAL HOUSEHOLDS IN KHUTAR. SHAHJHANAPUR

Submitted for partial fulfilment of the requirements for the

award of the degree

Of

BACHELOR O COMMERCE !HONORS"

BY

Mr. HAR#INDER SINGH !$%$&$&&&'$"

Un(er t)e *+,(-nce o

MR. T-r+n G+pt-

ASSISTANT PROESSOR

Dep-rt/ent o M-n-*e/ent

In0ert,1 Un,0er1,t23 B-re,442.

INVERTIS UNIVERSITY3 BAREILLY !U.P."

SESSION 5&$'6$7

CERTIICATE

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TO #HOM IT MAY CONCERN

This is to certify that Mr.HAWI!"# SI$H of %.&om 'H()*I semester in our institute has

successfully completed his pro+ect wor, entitled -A study on the rural ban,ing behaiour

amongst rural households in /hutar0Shah+ahanpur .1 for the partial fulfilment of degree of

bachelor of commerce 'honours( for the session 2345)46.

7rof. Arpan /hastgir !r.#achnaSe8enaMr. Tarun $upta

'!irector0 Management( 'HO! %%A9%.&om( 'Assistant 7rof.(

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AKNO#LEDGEMENT

The satiation and euphoric that accompany the successful completion of the tas, would not

be possible without the mention of the people who made it possible. After all0 success is the

epitome of hard wor,0 seerance0 undeterred missionary0 :eal0 steadfast0 determination and

most of all encouraging guidance. So immense gratitude0 I ac,nowledge all those guidance

and encouragement sered as a ;%eacon


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E8ECUTIVE SUMMARY

>inancial inclusion0 the purpose of this study is to understand the status of rural ban,ing

facilities among the rural household in /hutar

>rom a study we can summarise that around ?@ respondents are male haing there ban, account where only 22 female0 on the basis of economic status respondents are classified as

A7< 6B and %7< B?. Among religionwise CD Hindu0 BB Si,h and 4@ Muslims

respondents hae their own ban, account.

Most of the rural household go to the ban, as and when required0 In order to study the

impact of opening ban, account 6@ hae saed after opening of the ban, account and B2

respondent had not saed after ban, account.

In this sampling C@ respondents had said that there credit demand decrease where as 52

respondents had said that there is no impact on credit demand decrease after financialinclusion.

There 4@ respondents borrow credit for the income generation0 B for the business

e8pansion0 23 for the agriculture and allied0 23 for the repay the loan0 4C for the

education0 4? for the health0 B for the assets0 B for the death and other 2 for the

other specify.

In the random sampling CD respondents are between 3 to 50 4B respondents belong to 6 to

430 2B respondent between 44 to 45 and 45 are between4 6 to 23.

In the rural area ',hutar(B respondents are post graduate0 23 respondent are

illiterate042 respondents belongs to primary0 4@ respondents are basic0 2? respondents

are matric0 @ respondents are intermediate and 42 respondents are graduation.

Here 42 respondents sae their money to repay old loan0 43 for inest in business0 4@

respondents sae for education04B for the health05 for the marriage and 22 respondents

sae for the asset0 B for the ulnerability and other 4? for the other specify.

In this sampling C? respondents are farmer0 25 respondents are labourer0 @ respondents

are got. employee0 B respondents are priate emp and 4? respondents are in other

specify.

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TABLE O CONTENT

SERIAL

NO9

TITLE9 PAGE NO9

$ CERTIICATE &5

5 ACKNO#LEDGMENT &%

% E8CECUTIVE SUMMARY &:

:. LIST O TABLES &7

'. LIST O IGURES &;

7. CHAPTER $6 INTRODUCTION &


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LIST O TABLES

SERIAL

NO9

TITLE9 PAGE NO9

$. T-?4e. :.$ Gen(er 5:

5. T-?4e .:.5 A*e o -/,42 )e-( 5'

%. T-?4e .:.% M-r,t-4 1t-t+1 57

:. T-?4e .:.: E(+c-t,on o -/,42 )e-( 5;

'. T-?4e .:.' Occ+p-t,on 5<

7. T-?4e .:.7 No o -/,42 /e/?er 5=

;. T-?4e .:.; Econo/,c-4 1t-t+1 %&


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LIST O IGURES

SERIAL

NO9

TITLE PAGE

NO9

$. IG. :.$ G-n(er 5:

5. IG.:.5 A*e o -/,42 )e-( 5'

%. IG .:.% M-r,t-4 1t-t+1 57

:. IG.:.: E(+c-t,on o -/,42 )e-( 5;

'. IG .:.' Occ+p-t,on 5<

7. IG.:.7 No o -/,42 /e/?er 5=

;. IG .:.; Econo/,c-4 1t-t+1 %&


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portfolios0 throughout the day. The ban,ing system in India0 should not only be hassle free

but it should be able to meet the new challenges posed by the technology and any other

e8ternal and internal factors. >or the past three decades0 India=s ban,ing system has seeral

outstanding achieements to its credit. The %an,s are the main participants of the financial

system in India. The %an,ing sector offers seeral facilities and opportunities to their

customers. All the ban,s safeguards the money and aluables and proide loans0 credit0 and

payment serices0 such as chec,ing accounts0 money orders0 and cashier=s cheques. The

ban,s also offer inestment and insurance products. As a ariety of models for cooperation

and integration among finance industries hae emerged0 some of the traditional distinctions

between ban,s0 insurance companies0 and securities firms hae diminished. In spite of these

changes0 ban,s continue to maintain and perform their primary roleEaccepting deposits and

lending funds from these deposits.

The first ban, of limited liability managed by Indians was Oudh &ommercial %an, founded

in 4@@4. 7un+ab ational %an, was established in 4@DC. Swadeshi moement0 which began in

4D360 encouraged the formation of a number of commercial ban,s. %an,ing crisis during

4D4B )4D4? and failure of 5@@ ban,s in arious States during the decade ended 4DCD

underlined the need for regulating and controlling commercial ban,s. The %an,ing

&ompanies Act was passed in >ebruary4DCD0 which was subsequently amended to read as

%an,ing #egulation Act0 4DCD.This Act proided the legal framewor, for regulation of the

ban,ing system by #%I. The largest ban, ) Imperial %an, of India ) was ta,en oer by the

#%I in 4D55 and rechristened as State %an, of India0 followed by inclusion of its ? Associate

%an,s in4D5D. At present S%I has fie associate ban,s. With a iew to bring commercial

ban,s into the mainstream of economic deelopment with definite social obligations and

ob+ecties0 the $oernment issued an ordinance on 4D Fuly 4D6D acquiring ownership and

control of 4C ma+or ban,s in the country. Si8 more commercial ban,s were nationalised from

45 April 4D@3.

Meaning of %an, is a lawful organi:ation0 which accepts deposits that can be withdrawn on

demand. It also lends money to indiiduals and business houses that need it.

A ban, is a financial institution and a financial intermediary that accepts deposits and

channels those deposits into lending actiities0 either directly or through capital mar,ets. A

ban, connects customers that hae capital deficits to customers with capital surpluses. !ue to

their critical status within the financial system and the economy generally0 ban,s are highly

regulated in most countries. They are generally sub+ect to minimum capital requirements

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which are based on an international set of capital standards0 ,nown as the %asel Accords.

%an,ing in India originated in the last decades of the 4@th century. The first ban,s were The

$eneral %an, of India0 which started in 4?@60 and %an, of Hindustan0 which started in 4?D3G

both are now defunct. The oldest ban, in e8istence in India is the State %an, of India0 which

originated in the %an, of &alcutta in Fune 4@360 which almost immediately became the %an,

of %engal. This was one of the three presidency ban,s0 the other two being the %an, of

%ombay and the %an, of Madras0 all three of which were established under charters from the

%ritish "ast India &ompany. >or many years the 7residency ban,s acted as quasi)central

ban,s0 as did their successors. The three ban,s merged in 4D24 to form the Imperial %an, of

India0 which0 upon Indias independence0 became the State %an, of India in 4D55. Structure

of Indian %an,ing As per Section 5'b( of the %an,ing #egulation Act 4DCD ;%an,ing1 means

the accepting0 for the purpose of lending or inestment0 of deposits of money from the public0

repayable on demand or otherwise0 and withdral by cheque0 draft0 order or otherwise.1 All

ban,s which are included in the Second Schedule to the #esere %an, of India Act0 4DBC are

scheduled ban,s. These ban,s comprise Scheduled &ommercial %an,s and Scheduled

&ooperatie %an,s. Scheduled &ommercial %an,s in India are categori:ed into fie different

groups according to their ownership and J or nature of operation. These ban, groups are 'i(

State %an, of India and its Associates0 'ii( ationali:ed %an,s0 'iii( #egional #ural %an,s0

'i( >oreign %an,s and '( Other Indian Scheduled &ommercial %an,s 'in the priate sector(.

%esides the ationali:ed ban,s 'ma+ority equity holding is with the $oernment(0 the State

%an, of India 'S%I( 'ma+ority equity holding being with the #esere %an, of India( and the

associate ban,s of S%I 'ma+ority holding being with State %an, of India(0 the commercial

ban,s comprise foreign and Indian priate ban,s. While the State ban, of India and its

associates0 nationali:ed ban,s and #egional #ural %an,s are constituted under respectie

enactments of the 7arliament0 the priate sector ban,s are ban,ing companies as defined in

the %an,ing #egulation Act. These ban,s0 along with regional rural ban,s0 constitute the

public sector 'state owned( ban,ing system in India. The 7ublic Sector %an,s in India are

bac, bone of the Indian financial system. The cooperatie credit institutions are broadly

classified into urban credit cooperaties and rural credit cooperaties. Scheduled &o)

operatie %an,s consist of Scheduled State &o)operatie %an,s and Scheduled Krban &o)

operatie %an,s.

#egional #ural %an,s '##%=s( are state sponsored0 regionally based and rural oriented

commercial ban,s. The $oernment of India promulgated the #egional #ural %an,s

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Ordinance on 26th September 4D?50 which was later replaced by the #egional #ural %an,

Act 4D?6. The preamble to the Act states the ob+ectie to deelop rural economy by proiding

credit and facilities for the deelopment of agriculture0 trade0 commerce0 industry and other

productie actiities in the rural areas0 particularly to small and marginal farmers0 agricultural

laborers0 artisans and small entrepreneurs.

E1t-?4,1)/ent

The #esere %an, of India was established on April 40 4DB5 in accordance with the

proisions of the Re1er0e B-n o In(,- Act3 $=%:.

The &entral Office of the #esere %an, was initially established in &alcutta but was

permanently moed to Mumbai in 4DB?. The &entral Office is where the $oernor sits and

where policies are formulated.

Though originally priately owned0 since nationali:ation in 4DCD0 the #esere %an, is fully

owned by the $oernment of India.

Pre-/?4e

The 7reamble of the #esere %an, of India describes the basic functions of the #esere %an,

as

...to re*+4-te t)e ,11+e o B-n Note1 -n( eep,n* o re1er0e1 ,t) - 0,e to 1ec+r,n*

/onet-r2 1t-?,4,t2 ,n In(,- -n( *ener-442 to oper-te t)e c+rrenc2 -n( cre(,t 121te/ o

t)e co+ntr2 to ,t1 -(0-nt-*e.

M-,n +nct,on1

Monet-r2 A+t)or,t29

• >ormulates0 implements and monitors the monetary policy.

• Ob+ectie maintaining price stability and ensuring adequate flow of credit to

productie sectors.

Re*+4-tor -n( 1+per0,1or o t)e ,n-nc,-4 121te/9

10

https://www.rbi.org.in/Scripts/OccasionalPublications.aspx?head=Reserve%20Bank%20of%20India%20Acthttps://www.rbi.org.in/Scripts/OccasionalPublications.aspx?head=Reserve%20Bank%20of%20India%20Acthttps://www.rbi.org.in/Scripts/OccasionalPublications.aspx?head=Reserve%20Bank%20of%20India%20Act


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• 7rescribes broad parameters of ban,ing operations within which the countrys ban,ing

and financial system functions.

• Ob+ectie maintain public confidence in the system0 protect depositors interest and

proide cost)effectie ban,ing serices to the public.

M-n-*er o ore,*n Ec)-n*e

• Manages the >oreign "8change Management Act0 4DDD.

• Ob+ectie to facilitate e8ternal trade and payment and promote orderly deelopment

and maintenance of foreign e8change mar,et in India.

I11+er o c+rrenc29

• Issues and e8changes or destroys currency and coins not fit for circulation.

• Ob+ectie to gie the public adequate quantity of supplies of currency notes and coins

and in good quality.

De0e4op/ent-4 ro4e

• 7erforms a wide range of promotional functions to support national ob+ecties.

Re4-te( +nct,on1

• %an,er to the $oernment performs merchant ban,ing function for the central and

the state goernmentsG also acts as their ban,er.

• %an,er to ban,s maintains ban,ing accounts of all scheduled ban,s.

#egional #ural %an,s

#egional #ural %an,s hae been in e8istence for around B2 years in the Indian financial

scene. Inception of #egional #ural %an,s may be seen as a unique e8periment as well as

e8perience in improing the efficacy of rural credit deliery mechanism in India. /eeping in

iew the local peculiarities0 an effort was made to integrate commercial ban,ing within the

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broad policy framewor, towards social ban,ing through +oint shareholding of &entral

$oernment0 the &oncerned State $oernments and the Sponsoring %an,. The institution of

#egional #ural %an,s '##%s( was created to meet the e8cess demand for institutional credit

in the rural areas0 particularly among the economically and socially marginali:ed sections.

Although the cooperatie ban,s and the commercial ban,s had reasonable records in terms of

geographical coerage and disbursement of credit0 in terms of population groups the

cooperatie ban,s were dominated by the rural rich0 while the commercial ban,s had a clear

urban bias. The %an,ing &ommission '4D?2( recommended establishing an alternatie

institution for rural credit and ultimately $oernment of India established #egional #ural

%an,s L a separate institution basically for rural credit on the basis of the recommendations

of the Wor,ing $roup under the &hairmanship of Sh. M. arashimham. In order to proide

access to low)cost ban,ing facilities to the poor0 the arashimham Wor,ing $roup '4D?5(

proposed the establishment of a new set of ban,s0 as institutions which ;combine the local

feel and the familiarity with rural problems which the cooperaties possess and the degree of

business organi:ation0 ability to mobili:e deposits0 access to central money mar,ets and

moderni:ed outloo, which the commercial ban,s hae1. Subsequently0 the #egional #ural

%an,s were setup through the promulgation of ##% Act of 4D?6. The ##%s Act0 4D?6

succinctly sums up this oerall ision to sub)sere both the deelopmental and the

redistributie ob+ecties. The ##%s were established ;with a iew to deeloping the rural

economy by proiding0 for the purpose of deelopment of agriculture0 trade0 commerce0

industry and other productie actiities in the rural areas0 credit and other facilities0

particularly to small and marginal farmers0 agricultural laborers0 artisans and small

entrepreneurs0 and for matters connected therewith and incidental thereto1.#egional #ural

%an,s were supposed to eole as speciali:ed rural financial institutions for deeloping the

rural economy by proiding credit to small and marginal farmers0 agricultural labourers0

artisans and small entrepreneurs. Their equity is held by the &entral $oernment0 &oncerned

State $oernment and the Sponsor %an, in the proportion of 5345B5 respectiely. The

mandates of these rural financial institutions were to 'a( ta,e ban,ing to the doorsteps of the

rural masses0 particularly in areas without ban,ing facilitiesG 'b( ma,e aailable cheaper

institutional credit to the wea,er sections of society0 who were to be the only clients of these

ban,sG 'c( mobili:e rural saings and canali:e them for supportingproductie actiities in the

rural areasG 'd( generate employment opportunities in the rural areas.

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CHAPTER II6 REVIE# O LITERATURE

INANCIAL INCLUSION AND DEVELOPMENT

This role encapsulates the essence of renewed national focus on >inancial Inclusion0

promoting financial education and literacy and ma,ing credit aailable to productie sectors

of the economy including the rural and MSM" sector.

The Indian economy has changed since priority sector lending guidelines were conceied.

There is a need to reorient guidelines towards today=s growth and inclusion agenda. As such0

an Internal Wor,ing $roup was constituted by the #esere %an, with the ob+ectie of

reisiting the e8isting priority sector lending guidelines and suggesting reised guidelines in

alignment with the national priorities as well as financial inclusion goals of the country. The

ob+ecties also included suggesting ways on how to achiee the priority sector targets in the

most effectie way as well as measures to be ta,en in case of under)achieement of the

priority sector targets.

The Wor,ing $roup has focused on channelling credit to segments that get crowded out in

the absence of specific targets. These include small and marginal farmers0 micro enterprises

and the wea,er sections while broadening the scope to include other undersered categories

of national priority0 such as agriculture infrastructure0 social infrastructure0 renewable energy0

e8ports and medium si:ed enterprises. The report is currently under e8amination of the

#esere %an,.

&redit flow to priority sectors Macro policy formulation to strengthen credit flow to the

priority sectors. "nsuring priority sector lending becomes a tool for ban,s for capturing

untapped business opportunities among the financially e8cluded sections of society.

>inancial inclusion and financial literacy Help e8pand 7rime Minister=s Fan !hano+ana

'7MF!( to become a sustainable and scalable financial inclusion initiatie.

&redit flow to MSM" Stepping up credit flow to micro0 small and medium enterprises

'MSM"( sector0 rehabilitation of sic, units through timely credit support.

Institutions Strengthening institutional arrangements0 such as0 State


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RBI Br-nc) A+t)or,@-t,on Po4,c2 In order to e8tend the ban,ing networ, in unban,ed

areas0 general permission has been granted by #esere %an, of India '#%I( to domestic

Scheduled &ommercial %an,s 'other than #egional #ural %an,s( to open branchesJ mobile

branchesJ Administratie OfficesJ&7&s 'Serice %ranches(0 'i( in Tier 2 to Tier 6 centres

'with population up to DD0DDD( and 'ii( in rural0 semi)urban and urban centres of the orth)

"astern States and Si,,im sub+ect to reporting. #%I has adised ban,s that while preparing

their Annual %ranch "8pansion 7lan 'A%"7(0 the ban,s should allocate at least 25 percent of

the total number of branches proposed to be opened during a year in unban,ed rural 'Tier 5

and Tier 6( centres.

Ep-n1,on o BCA Netor %an,s hae been adised by !>S to e8tend ban,ing serices

to the entire geography of the country based on the concept of Sub Serice Area 'SSA(

comprising of 4333)4533 households. In case of orth)"ast0 Hilly States and sparsely

populated regions of other States ban,s may decide the households to be coered by each

%usiness &orrespondent Agent '%&A( appropriately. In case of larger $ram 7anchayats more

than one %&A could be appointed. In case of smaller $ram 7anchayats more than one

contiguous $ram 7anchayat0 ta,ing into consideration the geographical area0 could be

assigned to each %&A.

S-?),/--n Sc)e/e "arlier0 under the Swabhimaan campaign0 the %an,s were adised to

proide appropriate ban,ing facilities to habitations haing a population in e8cess of 2333 'as

per 2334 census( by March 2342. The ban,s identified appro8imately ?C333 habitations

across the country haing a population of oer 2333 for proiding ban,ing facilities. As per

reports receied from %an,s0 ?CB54 illages with population of aboe 2333 hae been

coered with ban,ing facilities either by branchesG %usiness &orrespondents0 mobile ban,ing

etc. by March B40 2342.

!irect %enefit Transfer '!%T( and !irect %enefit Transfer for


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'iii( Knderta,ing funds transfer using the ational Automated &learing House ) Aadhaar

7ayment %ridge System 'A&H)A7%S(.

'i( Strengthening of ban,ing infrastructure to enable beneficiary to withdraw money.

'i( !irect %enefit Transfer '!%T( The scheme was launched in the country from Fanuary0

234B and was rolled out in a phased manner0 starting with 25 welfare schemes0 in CB districts

and e8tended to additional ?@ districts and additional B schemes from 4st Fuly0 234B.

7resently !%T in B5 schemes hae been e8panded across the entire country.

!,," D,rect Bene,t Tr-n1er or LPG !DBTL" The !irect %enefit Transfer for


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affordable costs to the Indian ban,s so that dependency on international card scheme is

minimi:ed. This is in line with many of the large emerging nations li,e &hina which hae

their own domestic card payment system. $oernment of India has directed ban,s to issue

!ebit cards to all /&& and !%T beneficiaries and that eery new account holder should be

issued a debit card. A low cost option such as RuPaywill help in achieing this ob+ectie and

consequently help in fulfilling the ob+ectie of financial inclusion. The RuPay&ard wor,s on

ATM0 7oint of Sale terminals0 9 online purchases and is therefore not only at par with any

other card scheme in the world but also proides the customers with the fle8ibility of

payment options.

USSD B-1e( Mo?,4e B-n,n* 9 The !epartment through ational 7ayments &orporation of

India '7&I( wor,ed upon a ;&ommon KSS! 7latform1 for all %an,s and Telcos who wish

to offer the facility of Mobile %an,ing using Knstructured Supplementary Serice !ata

'KSS!( based Mobile %an,ing. The !epartment helped 7&I to get a common KSS! &ode

NDD for all Telcos. KSS! based Mobile %an,ing offers basic %an,ing facilities li,e Money

Transfer0 %ill 7ayments0 %alance "nquiries0 Merchant payments etc. on a simple $SM

'$lobal System for Mobile &ommunications( based Mobile phone0 without the need to

download application on a 7hone as required at present in the IM7S 'Immediate 7ayment

Serice( based Mobile %an,ing.

Transactions can be performed on basic phone handsets. The user needs to approach his ban,

and get his mobile number registered. The ban, will issue an M7I 'Mobile 7I( to the user.

The user thereafter needs to dial NDD and the menu for using KSS! opens. Thereafter

customer has to follow selections on the menu to complete the transaction.

Pr-()-n M-ntr, J-n6D)-nYoj-n- !PMJDY"

7radhan Mantri Fan)!hano+ana '7MF!( was formally launched on 2@th August0 234C. The

o+ana enisages uniersal access to ban,ing facilities with at least one basic ban,ing

account for eery household0 financial literacy0 access to credit0 insurance and pension. The

beneficiaries would get a #u7ay !ebit &ard haing inbuilt accident insurance coer of

#s.4.33 la,h. In addition there is a life insurance coer of #s.B3333J) to those people who

opened their ban, accounts for the first time between [email protected] to 26.34.2345 and meet

other eligibility conditions of the o+ana.

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7MF! is different from the earlier financial inclusion programme 'Swabhimaan( as it0 inter)

alia0 see,s to proide uniersal access to ban,ing serices across the country and focuses on

coerage of all households 'both rural and urban( while the earlier >inancial Inclusion

7rogramme was limited to proide access point to illages with population greater than 2333.

>urther0 7MF! focuses on interoperability of accounts which was not there earlierG has

simplified /& guidelines and inoles the !istricts and States for monitoring and follow)

up.

It has been clarified that e8isting account)holders need not open a new account to aail the

benefits under 7MF!. They can get the benefit of accident insurance by getting a #u7ay

debit card issued and Oerdraft limit by applying in the e8isting account. >urther0 it has also

been clarified that benefits of #s.B30 333J) life insurance coer are aailable only to those

whose accounts are opened for the first time between [email protected] to 26.34.2345.

Knder 7MF!0 ban,s were gien target to carry out sureys in allocated Sub Serice Areas

'SSAs( and Wards and to open accounts of all uncoered households by 26.34.2345. All the

StatesJKnion Territories in the country hae been mapped into 202604D? Sub)Serice Areas

'in rural areas( and Wards 'in urban areas( and out of total number of 24.22 crore sureyed

households0 ban, accounts hae been opened for DD.DD households.

7MF! has been implemented by ban,s successfully. As against the estimated target of

opening 43 crore accounts0 as on [email protected] 4D.32 crore accounts hae been opened out of

which 44.5@ crore accounts are in rural areas and ?.CC crore in urban areas. !eposits of #s.

25D4B.55 crore hae been mobili:ed. 46.B? &rore#epay !ebit cards hae been issued and

Aadhaar seeding has been done in @.33 crore accounts.

Oerdraft 'O!( in 7MF! accounts As on B3.43.23450 22.CB lac accounts hae been

sanctioned O! facility of which @.B? lac account)holders hae aailed this facility inoling

an amount of #s. [email protected]? la,h.

In1+r-nce C4-,/1 1ett4e(9

'a( As on B3.43.23450 out of 66D claims lodged0 63? hae been disposed off under accidental

insurance coer of #s. 4 la,h under #u7ay debit card.

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gone beyond the confines of arious financial regulators and assumed the character of a

broader national deelopment policy goal.

NABARD9

Gene1,1

At the instance of $oernment of India #esere %an, of India '#%I(0 constituted a committee

to reiew the arrangements for institutional credit for agriculture and rural deelopment

'A>I&A#!( on B3 March 4D?D0 under the &hairmanship of Shri %.Siaraman0 former

member of 7lanning &ommission0 $oernment of India to reiew the arrangements for

institutional credit for agriculture and rural deelopment. The &ommittee0 in its interim

report0 submitted on 2@ oember 4D?D0 felt the need for a new organi:ational deice for

proiding undiided attention0 forceful direction and pointed focus to the credit problems

arising out of integrated rural deelopment and recommended the formation of ational %an,

for Agriculture and #ural !eelopment'A%A#!(. The 7arliament0 through Act064 of 4D@40

approed the setting up of A%A#!. The ban, came into e8istence on 42 Fuly 4D@2 by

transferring the agricultural credit functions of #%I and refinance functions of the thenAgricultural #efinance and !eelopment &orporation 'A#!&(. A%A#! was dedicated to

the serice of the nation by the late 7rime Minister Smt. Indira $andhi on 35 oember

4D@2.

A%A#! was set up with an initial capital of 433 crore. &onsequent to the reision in the

composition of share capital between $oernment of India and #%I0 the paid up capital as on

B4 March 23450 stood at 5333 crore with $oernment of India holding C0D@3 crore

'DD.63( and #esere %an, of India 23.33 crore '3.C3(.

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CHAPTER III6 RESEARCH OBJECTIVES AND RESEARCH

METHDOLOGY

>ollowing are the main ob+ecties of the research study.

4( To study the rural ban,ing 'Saing(behaiour pattern amongst rural households in

/hutar0Shah+ahanpur.

2( To study the rural ban,ing '&redit(behaiour pattern amongst rural households in

/hutar0Shah+ahanpurJ.

HYPOTHESIS $.

4. KTIO WITH #K#A< %A/I$ >A&I


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RESEARCH METHODOLOGY

• D-t- So+rce19 In dealing with any real life problem0 it is often found that data at hand

are inadequate0 and hence0 it becomes necessary to collect data that are appropriate. We

hae chosen following methods

-" Pr,/-r2 (-t-9 These are those data0 which are collected afresh and for the first time0 and

thus happen to be original in character. We hae used the structured questioners.

?" Secon(-r2 (-t- These are those which hae already been collected by someone else and

which hae already been passed through the statistical process. We collect the data from the

sources li,e internet0 published data etc.

• Pop+4-t,on o t)e 1t+(29 This Study was conducted at /hutarshah+anapur.

• S-/p4,n* S,@e9 It is the total number of respondents targeted for collecting the data for

the research. We hae ta,en sample si:e of 63 respondents for our research.

• S-/p4,n* Tec)n,F+e9 #andom sampling technique is used in this research pro+ect.

RESEARCH PROCESS

#esearch is concerned with fact finding0 analysis and ealuation which are a part of research

process which consist of the following steps)

or/+4-t,on o re1e-rc) pro?4e/9 the first step is the formulation of research

problem. 7roblems are selected on priority basis according to their

Importance0 researcher=s interest and according to the feasibility of the research.

After the problem has been selected0 it is defined operationally.

L,ter-t+re 1+r0e2 the researcher must hae full literature literate ,nowledge on

the sub+ect on the sub+ect of his choice. Kpdated ,nowledge on the researcher topic

definitely helps what data and other materials are to be collected to properly define

the research problem

D-t- co44ect,on9 at the third step0 one has to decide about the method of data

collection. %y this we mean0 the techniques through which eidence or factual

information can be collected to test the hypothesis. The data can be collected from

primary and secondary sources.

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C4-11,,c-t,on -n( t-?+4-t,on9 classification is the way of arranging the data

in different classes in order to gie a define form and structure to the data collected.

The classified data may be arranged in tabular form in columns and rows.

An-421,1 -n( ,nterpret-t,on9 diagrammatic presentation0 graphs0 charts0

mathematical0 statistical tools etc. are used for analysis the collected data. 7roper

analysis helps in deeloping0 findings0 suggestions and conclusion.

Interpret-t,on o re1+4t19 results may be interpreted into action

recommendations must be communicated to proper authority.

Conc4+1,on -n( reco//en(-t,on9 the recommendation is made on the basisof conclusions are drawn on the basis of interpretation.

Report r,t,n* it is ery important for both researcher and reader. It should be

in simple language.

CONCLUSION9Hence it is proed that Presearch is must concerned with proper fact find0 analysis and ealuation.P

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CHAPTER IV9 DATA PRESENTATION AND

INTERPRETATION

A. $"!"#

GENDER NO.o re1pon(ent

MALE C?

EMALE 4B

Table. C.4 $ender

78%

22%

Gen(er o -/,42 )e-(

MALE FEMALE

>ig C.4 ) $"!"#

24


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ANALYSIS9 According to the aboe pie chart0 ?@ respondent of family head is male0 22

family head are female%. Age of family head

A*e o -/,42 )e-( No. re1pon(ent

:$ to 7& @

7$ to


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&.Marital status of family head

M-r,t-4 1t-t+1 o -/,42 )e-( NO.o re1pon(ent

M-rr,e( 53

Un/-rr,e( 5

Ot)er 1pec,2 5Table. C.B Marital status

83%

8%

8%

M-r,t-4 1t-t+1

Married Unmarried Other se!i"#

>ig C.B Marital status

ANALYSIS9 According to the aboe pie chart0 @B respondents are married0 D

respondents are unmarried and @ respondents are in other specify..

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!. "ducation of family head

E(+c-t,on o -/,42 )e-( NO.o re1pon(ent

I44,ter-te 42

Pr,/-r2 ?

B-1,c 44Metr,c 46

Inter/e(,-te 5

Gr-(+-t,on ?

Po1t *r-(+-t,on 2

Table C.C"ducation of family head

20%

12%

18%27%

8%

12%3%

Education of family head

$iterate &rimer# 'asi! Metri!

$ntermediate (rad)ation &ost *rad)tion

>ig C.C"ducation of family head

AA


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". Occupation

Occ+p-t,on NO.o re1pon(ent

-r/er 2@

L-?o+rer 45

Go0t e/p. 5

Pr,0-te e/p. 2

Ot)er 1pec,2 43

Table. C.5 Occupation

47%

25%

8%

3%

17%

Occ+p-t,on

Farmer La+o)rer (o,t em &ri,ate em Other se!i"#

>ig. C.5Occupation

AA


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>. O.of family member

NO.o -/,42 /e/?er NO.o re1pon(ent& to ' 2

7 to $& CD

$$ to $' D

Table. C.6umber of family member

3%

82%

15%

N+/?er o -/,42 /e/?er

0 to 5 6 to 10 11 to 15

>ig.C.6umber of family member

According to surey0 @2 respondents are between 6 to 43 family member0 B are between

3) 50 45 are between 44)45.

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$. "conomic status

Econo/,c 1t-t+1

NO.o re1pon(ent

APL B@BPL 22

Table .C.? "conomic status

63%

37%

Econo/,c-4 1t-t+1

A&L '&L

>ig. C.?"conomic status

AA


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H. #eligion

Re4,*,on NO. o re1pon(ent1

H,n(+ 2D

M+14,/ 44

S,) 23Table. C.@-ei*ion

48%

18%

33%

Re4,*,on

.$/U MUL$M $.

>ig.C.@-ei*ion

AA


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I. &ategory

C-te*or2 NO.o re1pon(ent

GEN 4B

OBC CC

SC 2

ST 4

Table. C.D &ategory

22%

73%

3%2%

C-te*or2

(E/ O'

>ig. C.D.&ategory

AA


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F.


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4.4)!o you hae ban, AQ&R If yes then reason.

Re-1on1 or open,n* ?-n -cco+nt NO.o re1pon(ent

B-n pro/ot,on B

S-0,n* 26

Soc,-4 pre1t,*e 3

Lo-n 42

Peer pre11+re 6

Go0t re/,t 4B

Table. C.44#eason for opening of ban, account

5%

43%

20%

10%

22%

#eason for opening of ban, account

'an romotion a,in* so!ia resti*e

oan &eer ress)re (o,t remittan!es

>I$ .C.44#eason for opening of ban, account

34


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AAig. C.42isits to ban,

35


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AA


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AA


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>ig.C.4CSaed after opening of ban, account

AAig. C.45Saing option

38


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AA


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AA


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?. Has your credit demand decreased from informal ban,ing after financial

inclusionR J

Cre(,t (e/-n( ,n-nce ,nc4+1,on NO. o re1pon(ent

YES 2D

NO B4

Table.C.4? &redit demand after finance inclusion

48%52%

Credit demand after nance inclusion

:E /O

>ig.C.4?&redit demand after finance inclusion

ANANLYSIS According to the research there C@ respondents as,ing that there credit

demand decreased from informal ban,ing after financial inclusion0 52 as,ing credit demand

not decreased from informal ban,ing after financial inclusion.

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@. Hae you eer too, a loan after opening a ban, account J

Lo-n -ter open,n* o ?-n -cco+nt NO. o re1pon(ent

YES C2

NO 4@

[email protected]@loan after opening of bank account

ANANLYSIS According to the research ?3 respondents hae too, a loan after opening a

ban, account 0 B3 respondents hae not too, a loan after opening a ban, account .

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D. >rom where do you borrow creditR

Borro opt,on1 NO. o re1pon(ent

On42 or/-4 4?

On42 ,nor/-4 6

H,*) or/-4 44H,*) ,nor/-4 @

Bot) eF+-4 4@

Table.C.4D %orrow options

28%

10%

18%

13%

30%

Borro opt,on1

on# "orma on# in"orma hi*h "orma hi*h in"orma +oth e)a

>ig.C.4D %orrow options

ANANLYSIS According to the research 2@ respondents are borrowing from only formal0

43 from only informal0 4@ from high formal0 4C from high informal and other B3

respondents borrow from both.

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43. !o you hae credit cardR If es 4( /&& 2( $&& B( o

Cre(,t c-r( NO. o re1pon(ent

KCC B3

GCC 3

NO B3Table. C.23 &redit card

50%50%

Credit card

( /O

>ig. C.23 &redit card

AA


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44. !o you eer participate in 4( Insurances 2( 7ension scheme B( Mutual

fundC( o

P-rt,c,p-t,on ,n ot)er

NO.o re1pon(ent

In1+r-nce1 25

Pen1,on 1c)e/e 45

M+t+-4 +n( C

NO 46

Table. C.247articipation in other

42%

25%

7%

27%

P-rt,c,p-t,on ,n ot)er

$ns)ran!es &ension s!heme M)t)a /o

>ig.C.247articipation in other

AA


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42. Are you satisfied with rural ban,ing facilitiesR J.

S-t,1-ct,on NO.o re1pon(ent

YES C?NO 4B

Table.C.22Satisfaction

78%

22%

S-t,1-ct,on.

:E /O

>ig. C.22 Satisfaction

AA


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CHAPTER V9 RESEARCH INDINGS

4. According to research 5 respondents opening their account ban, promotion0 CB for

saing0 23 for loan0 43 for peer pressure and 22 for their got. remittances .

2.According to the research 5 respondent=s isits to ban, daily0 23 respondents isit to

ban, wee,ly and 4? monthly and other 5@ as and when required

B.According to the research 42 respondents sae their money to repay old loan0 43 for

inest in business0 4@ respondents sae for education04B for the health05 for the

marriage and 22 respondents sae for the asset0 B for the ulnerability and other 4?

for the other specify.

C.According to the research that 6@ respondents hae saed after opening of the ban,

account and other B2 not saed after ban, account.

5.According to the research BD respondents sae their money in only formal0 4B in only

informal0 4B respondents sae their money in high formal0 45 in high informal and other

23 respondents sae their money in both.

6.According to the research 4@ respondents borrow credit for the income generation0 B

for the business e8pansion0 23 for the agriculture and allied0 23 for the repay the loan0

4C for the education0 4? for the health0 B for the assets0 B for the death and other

2 for the other specify.

?.According to the research C@ respondents as,ing that there credit demand decreased from

informal ban,ing after financial inclusion0 52 as,ing credit demand not decreased from

informal ban,ing after financial inclusion.

@.According to the research ?3 respondents hae too, a loan after opening a ban, account

0 B3 respondents hae not too, a loan after opening a ban, account .

D.According to the research 2@ respondents are borrowing from only formal0 43 from

only informal0 4@ from high formal0 4C from high informal and other B3 respondents

borrow from both.

43.According to the research 53 respondents hae /&& and 53 hae not any credit card.

44.According to the research C4 respondents hae participate in insurances0 25 pension

scheme0 ? in mutual fund and 2? respondents neer participate.

42.According to the research ?@ respondents are satisfied with rural ban,ing facilities and

other 22 are not satisfied with rural ban,ing facilities

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HYPOTHESIS $.

OBSERVED REUENCY

religion only

formal

only

informal

high

formal

high

informal

both

equal

Row

total

Hindu 10 4 5 1 9 29

Muslim 3 1 3 4 0 11

Sikh 4 1 3 3 9 20

Column

total

17 6 11 8 18 60

Table no.5.4.4 O%S"#*"! >#"K"&

E8PECTED REUENCY

Religion only

formal

only

informal

high

formal

high

informal

both

equal

Row

total

Hindu 8 3 5 4 9 29

Muslim 3 1 2 1 3 11

Sikh 6 2 4 3 6 20

Column

total

17 6 11 8 18 60

a+e.5.1.2"7"&T"! >#"K"&

Since the 7)alue '0.09( is biger than the significance leel '3.35(0 we are accepting the null

hypothesis. Thus we conclude that there isno relationship between religion and source of

borrow

48


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HYPOTHESIS 5

OBSERVED REUENCY

Economic

status

Yes no Row total

!" 28 10 38#!" 19 3 22Column total 47 13 60

Table .5.2.4O%S"#*"! >#"K"&

E8PECTED REUENCY

a+e.5.2.2"7"&T"! >#"K"&

Since the 7)alue '0.3( is biger than the significance leel '3.35(0 we are accepting the null

hypothesis. Thus we conclude that there isno relationship between economic status and

satisfaction with rural ban,ing serices

49

Economic

Status

Yes no Row total

pl 30 8 38

#pl 17 5 22

Column total 47 13 60


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CONCLUSION

#ural ban,ing plays a ery impotant role in tranforming rural india. %y proiding ban,ing

faciltities to rural households especially saing and credit hae enchanced their life. %ut still

a lot has to done on the side of rural ban,ing so that eery indiidual rural households can be

benefitted. #ecently the 7MF! 0 MK!#A and 7M% initaties ta,en up by the goernment

of india 0 #%I and A%A#! for the betterment of their financial and social security needs. In

order to aail the benefits of rural ban,ing resere ban, of india had ta,en seeral initaties

such as %& J %> model 0 KS% branch 0 SH$ funding and many more. The ma+or factors

which are creating obstacles to the rural ban,ing from rural households are too much

documentation0 time consuming process 0 collateral issue and the lac, of awareness regarding

the financial products. Hence in order to aail the benefits of financial inclusion goernment

should ma,e seeral changes such as customi:ed products 0 arrangement of funds

RESEARCH SCOPE

Since the current study is limited to data collected from illage areas only0 %ut the study can

be e8tended to rural areas also. The further scope of the study is that a comparison between

the Indian ban,s and ban,s of foreign countries can also be done using same conceptual

model. The time period of collecting secondary data can be e8tended from B years to 5 years

or more.

LIMITATIONS

There can be many interpretations and e8planations to the data collected. This is an empiricalstudy and the research proides the e8planation as understood by the researcher only.

The secondary data is collected for the period 2346 therefore more eidence• may be needed

to generali:e the results.

here is i;!)ties in eosit Mo+iisation

&ro!ed)ra -i*idities

50


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BIBLIOGRAPHY

1) www.rbi.org.in- Reserve bank of India

2) Www. finmin.nic.in- Ministry of finance

3) www.nabard.org.

4) www.pmdy.gov.in

5< Ahmed= -. >19982011


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APPENDICES

A STK! O TH" #K#A< %A/I$ %"HA*IO# AMO$ST

#K#A< HOKS"HO

ame code

*illage name %loc,

!istrict

• $ender of family head )4Male02>emale

• Age of family head

• Marital status of family head)4Married02Knmarried0BOther specify• "ducation of family head)4Illiterate027rimary0B%asic 0

CMetric05Intermediate06$raduation0?7ostgraduation

• Occupation)4>armer02


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5 Marriage0 6 Assets 7urchase0 ? *ulnerability0 @ Other Specify

If o #eason 4 Kse AJ& only for got. remittances0 2 Insufficient income0 B %ranch is far

away C %an, employee beh. 5!on=t ,now ban,ing operation0 6 Time consuming0 ? other

specify

Saving-Post financial inclusion status:

C. Hae you saed after opening of ban, accountJR

If no0 why specify reason

5. Where do you sae moreR

4. Only formal 2.Only informal

B. High formal C High informal

5 %oth equal

6. !O you borrow creditR esJO

If es)7ropose. 4Income generation0 2 %usiness e8pansion0 BAgriculture And Allied 0

C#epay old loans0 5"ducation0 6Health0 ?marriage0 @Assets 7urchases0 D!eath0 43Other

specify

If o)#eason .4 o need for a loan0 2 need a loan but worried about repayment capacity0 B

eed a loan but interest rate are high.

Post financial inclusion status:

?. Has your credit demand decreased from informal ban,ing after financial inclusionR J

@. Hae you eer too, a loan after opening a ban, account J

If "S

53


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'4( o. of credit ta,en ))))))

'2( 7urpose of credit U..

D. >rom where do you borrow creditR

'4(. only formal '2(.Only informal

'B(.High formal 'C(.High informal

'5(. both equal

43. !o you hae credit cardR If es 4( /&& 2( $&& B( o

If yes0 write down the purpose of using &redit card

If o0 why don=t you hae credit card.

44. !o you eer participate in 4 ( Insurances 2 ( 7ension scheme B ( Mutual fund. J

If o0 why.

42. Are you satisfied with rural ban,ing facilitiesR J.

If o0 why

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