A Project Reoprt on Financial Literacy and Banking operation

K.B.P.I.M.S.R., SATARA MBA PROJECT
SHIVAJI UNIVERSITY, KOLHAPUR 1
CHAPTER I:
INTRODUCTION TO THE STUDY
1.1 Introduction
1.2 Management Problem
1.3 Research Problem
1.4 Objectives of the Study
1.5 Scope of the Study
1.6 Importance of the Study
1.7 Research Methodology
1.8 Chapterisation
1.9 Limitation

CHAPTER I:
INTRODUCTION TO THE STUDY
1.1 Introduction:
Financial literacy is the major challenge faced by all countries globally. Financial
literacy helps to make informed decisions and well-being of an individual. India
which has high young population, the Government is in a position to increase the
level of financial literacy. Financial literacy has gained the attention of a wide range
of major banking sector in India. Banking sector plays an actively role in nation’s
economy. Banking sector has spread every rural and urban area through its branches.
Banking operations are becoming increasingly customer dictated. The main reason
of provide banking services are to increase saving habit of people specially who are
lower income. It provides various banking to the rural and urban society. Financial
literacy deficiency can affect an individual’s or family’s day-to-day money
management and ability to save for long term goals like buying a home, shopping,
higher education or retirement, purchasing vehicle and so on. Financial Literacy
gives an individual understanding of how to manage their finances in the economy to
avoid uncertain and risks. Banking operations are compromised when customers do
not have the skills to manage their finances. Financial literacy is the ability to know
how to effectively use financial resources to enhance the well-being and economic
security of an individual, his family and his business.
1.2 Management Problem:
Customer service has become vital and significant to consider in bank. The Karad
Urban Co-operative Bank faces the challenge of deficient infrastructure while
delivering the high level of customer service. The bank needs to increase in number
of new customers, maintenance of existing customer and increase in profitability.
The bank needs to improve and formalize its customer services and public relation
program. The main challenges in customer service are poor data base management of
customers, illiteracy level of majority of customers lack of adequate infrastructure
and technology. The bank continues to provide increase number of services and
products but number of customers availing these is much less.

1.3 Research Problem:
It has been found that the level of financial literacy of customers is poor and
frequency of the banking operation is inadequate. This research focuses on financial
literacy among businessmen, service men, housewives and students to examine how
well-equipped they are to make financial decisions and to increase the level of
financial literacy. The research concentrates on their sources, their knowledge in
financial matters and also research on preferences of the customers about banking
services provided.
Hence, it is titled as ‘A Study of Financial Literacy and Banking Operations’ with
reference to the Karad Urban Co-operative Bank Ltd., Satara City Branch.
1.4 Objectives of the Study:
Following are the objectives of the study-
1) To measure the level of financial literacy of customers.
2) To study the frequency of banking operations of customers.
3) To find the preference of customers towards banking services offered.
4) To evaluate the influence of financial literacy on banking.
1.5 Scope of the Study:
Following are the scope of the research study-
1) Geographical Scope:
The study is limited to the Karad Urban Co-operative Bank Ltd., Satara City Branch.
2) Conceptual Scope:
The study is limited to the concept of financial literacy, banking operations and
various banking services.
3) Analytical Scope:
Analytical scope is confined to use of simple statistical tools frequency, weighted
average and percentage.

1.6 Importance of the Study:
The outcome of study would throw light on preferences of customers for various
banking services. It would also highlight financial literacy of customers and their
frequency of banking operations. The study would suggest steps to be taken to
improve or update the existing level of financial literacy of customers.
1.7 Research Methodology:
1.7.1 Type of Research:
Types of research are descriptive and inferential approach has been used.
1.7.2 Data Required:
A. Primary Data:
Primary data required for the study is information about socio demographic factors
of individual customers, their knowledge about banking operations and their
preferences for various banking services provided.
B. Secondary Data:
Secondary data required the concept of the financial literacy parameter and banking
operation and its various services.
1.7.3 Data Sources:
A. Primary Data Source:
Customers of the Karad Urban Co-operative Bank Ltd., Satara city Branch.
B. Secondary Data Sources:
Secondary data source which includes articles, annual report, documents and
websites.
1.7.4 Instrument:
Structured Schedule is used to collect data from the respondents.

1.7.5 Sampling:
The sample size to 121 respondents stratified in four groups as follows:
Table No. 1.1 Sample Size
Following Table indicates the sample size of the customers-
Sr. No. Sample Unit Sample Size
1 Businessmen 31
2 Service 30
3 Housewives 30
4 Students 30
Total 121
(Source: Compiled by Researcher)
Samples were approached conveniently.
1.7.6 Data Analysis:
Data is analyzed using simple statistical tools frequency, weighted average and
percentage.

1.8 Chapterisation:
Following chapters are indicating the presentation scheme-
Chapter I: Introduction to the Study
This chapter includes introduction to the study of financial literacy and banking
operation, management problem and research problem, objectives of study, scope of
the study, importance of the study, research methodology.
Chapter II: Introduction to the Organization and Bank Profile
This chapter includes the bank profile, promoters, products and services,
performance of the bank, organizational structure, financial scenario, future plans
and achievements.
Chapter III: The Conceptual Framework
This chapter introduces concept of the financial literacy, definition, nature and
others.
Chapter IV: Data Analysis and Interpretation
This chapter includes study and analysis of the schedule, interpret the collect data,
some importance and findings.
Chapter V: Findings and Suggestions
This chapter involves findings and suggestions of the study.
The study would be appended by Annexure and Bibliography.
1.9 Limitation:
Respondents may be biased while answering the schedule.

CHAPTER II:
INTRODUCTION TO THE ORGANIZATION AND BANK
PROFILE
2.1 Introduction to the Bank
2.2 Bank Profile
2.3 History of the Bank
2.4 SWOT Analysis of the Bank
2.5 Products and Services
2.6 Activity of the Bank
2.7 Major Customers
2.8 Financial Position
2.9 Human Resource Scenario of the Bank
2.10 Organization Chart
2.11 Future Plans
2.12 Achievement

CHAPTER II:
INTRODUCTION TO THE ORGANIZATION AND BANK
PROFILE
2.1 Introduction to the Bank:
Karad is one of the Tehsil’s of Satara district in Western Maharashtra and is a
leading Tehsil in respect of urban banking business. The city is considered as an
important commercial center as well as agriculture center of the region. The first
Urban Credit Co-operative Society in Karad Tehsil was registered on 24th
January,
1917 and converted into the Karad Urban Co-operative Bank Ltd., Karad. The bank
has been managed by a forward thinking Board of Directors consisting of young
professionals from various fields like Industries, Lawyers, Finance and Agriculturist.
Since 2000 late Dr. Dattatraya Shivram Erram is a well-known Doctor with an
attractive and smiling personality, comprehensive mind and of sweet tongue. He was
a pragmatic banker and had acumen of social work for common people. He had a
dynamic personality, sporting spirit and commitment to cause. As a result he was
respected as the Head of the bank. In April, 1998 Shri Ramchandtra Keru Awalekar
joined the bank as CEO; he had a wide and varied experience in the field of banking.
The bank had a network of 39 branches in urban/semi urban and rural area located in
important places in Satara, Sangli, Pune, Solapur, Kolhapur, Ratnagiri, Raigad
districts and a branch at Mumbai.
2.2 Bank Profile:
Name: The Karad Urban Co-operative Bank Ltd., Karad. (Scheduled
Bank)
Head Office: 516/2, Shaniwar Peth, Shahu Chowk, Karad, Dist. Satara PIN-
415110
Registration
Date: 24-01-1917
Reserve Bank
License No.: UDB/MH/885P, Dated. 15-10-1987
Area of
Operation:
Urban/Semi Urban centers including rural area within the
periphery of 10 K.M. from those centers from Satara, Sangli,

Pune, Solapur, Kolhapur, Ratnagiri, Raigad district and new
Mumbai, Greater Mumbai and its suburbs.
2.3 History of the Bank:
The Karad Urban Co-operative Bank Ltd., Karad is now a prominent name in Urban
BankingSector. This Bank was established first as a Co-operative Urban Credit
Society in the year 1917 and was subsequently converted into a bank. The promoters
of this bank who were from different walks of life, working in various fields but
having future outlook recognizing the need, established this bank way back, 90 years
ago. The late Dr. D. S. Erram who had vision and who along with dedicated co-
operation from Shri. Subhashrao Joshi and other Board members were able to
achieve all round progress. Till 1993 the bank had only 8 branches spread over
Satara district only. Since then it has expanded its wings in other prominent districts
of Maharashtra viz. Sangli, Kolhapur, Solapur, Ratnagiri, Pune and Mumbai. The
bank has made tremendous progress in all these districts and considering the need
and demand has amended its bye-laws to cover other districts of Maharashtra viz.
Raigad, Ahamadnagar and also planning to go multi-state by opening branches in
Ahmedabad and Belgaum in Gujarat and Karnataka state respectively.
2.4 SWOT Analysis of the Bank
SWOT Analysis of the bank is as follows:
2.4.1 Strengths:
1. Strong scheduled status.
2. Good discipline and good implementation of others.
3. Strong Board of Director.
4. All staff is working very efficiently through bottom of the heart to achieve
their desired objectives.
5. Bank is having their own CBS data center at Karad MIDC.
2.4.2 Weaknesses:
Bank is not spread in other parts of Maharashtra.

2.4.3 Opportunities:
1. Aim of multistate banking.
2. The bank has an opportunity to take over or acquire various Co-Operative
Societies.
2.4.4 Threats:
1. Stiff Competition
2. Competition from Private Banks, Foreign Banks and Non-banking Financial
institution.
2.5 Products and Services:
Following are the products and services of the bank:
A. Products :-
ƒ Deposits
-Savings Account
-Current Account
-Fixed Deposit
-Reinvestment Deposit
-Pension
-Recurring Deposit
-Pigmy
ƒ Loans
-Home Loan (Home repairing, land and building)
-Cash Credit
-Vehicle Loan for consumer durable
-Education Loan
-Gold Loan on N.S.C. and L.I.C. Policy
-Surety Loans for Business man/Service man
-Agricultural Advances
-Advances for Allied Activities
-Working Capital Limits Term Loan

B. Services:-
ƒ RTGS
ƒ Trustee and Executor
ƒ ATM Banking
ƒ RuPay Debit Card
ƒ SMS/Email Alerts and Email Statement
ƒ Aadhar Linkage Bank Account
ƒ National Pension Scheme
2.6 Activity of the Bank:
1. Scheduled Status:-
Due to its professional Management dynamic leadership of Late Dr. Erram and Shri
Subhashrao Joshi, the bank made the tremendous progress in last 10 years and
during the year 1991-2000 it was conferred with the “Scheduled Status” as mark of
its financial health and confidence of the public.
2. Computerization :-
In keeping with the technology developments in banking sector, the bank had
computerized all the branches providing quick and delightful service to its valued
customers. Computerization was initiated in 1989, in phase we did all the branches
computerized. We provide small collection and receipt print device to their Pigmy
Agents, so agents can collect small deposit from customer/borrowers door step. We
have vision for centralized data storage for Any Where Any Time Banking through
Core Banking Solutions.
3. Social Obligation:-
Bank besides making all round progress in its activities, has not forgotten its social
obligation. Bank has established a public trust viz. Karad Urban Samajik
Krutadnyata Nyas”. Through this trust, timely financial help is provided to members
suffering from chronic diseases and serious ailments like heart-attacks, kidney
failures, neurological disorders and persons who suffer due to Accidents etc.
Members are also given financial aid for their higher studies in Foreign Countries.
Members who make major achievement in special fields are also provided financial
help needed by them. The trust has planned to establish a Diagnosis Center in

association with other Social Institution and in near future CT scan, Cardin logical
helps, Pathology Lab and allied services to the Members at affordable rates.
ƒ MukhBadhir School :-
All Directors comes from different works of life, and each one of them is very keen
in offering his guidance in his/her personal capacity to above school, which nurtures
the most, neglected and cursed group of boys and girls, due to their inbuilt
deficiency.
ƒ Urban Krutadnyata Nyas :-
It is the group of all directors, which stands as a helping hand and driving force
behind the above Nyas, which comes to the rescue of members of the bank during
emergency situation. It is the endeavor of each of Directors in his personal capacity
to encourage and motivate the young generation and also the children of all
employees.
ƒ Urban Bazar :-
The socio-economic activity of the said Bazar (viz. sale of the duely needed articles
and commodities to common man at a reasonable price), all Directors in their
personal capacity, offer their all-out help and guidance to the said bazar.
2.7 Major Customers:
Industrialist and Businessmen.
2.8 Financial Position:
The performance of the Karad Urban Co-operative Bank Ltd. Since its inception is
reviewed briefly as under-
1. Capital:
The bank 53176 members with share capital of Rs. 4729.69 lakhs, Deposits
amounting to Rs. 166697.86 lakh and Advances of Rs. 107342.27 lakhs with Rs.
2061.56 lakhs Net Profit in the year 2013. Shri Parshwanath Co-op Bank Ltd. Sangli
was merged in the bank resulted into a strong scheduled co-operative bank. With
increase in staff strength from 363 in 1997-1998 to 694 in 2013.

2. Growth and Profitability:
The bank started its business in 1917 and recorded a very steady growth up to 2013.
Total advances of Rs. 166697.86 lakh and Rs. 107342.27 lakh respectively as on 31st
March, 2013. The ratio of Non-performing Assets to advances was 1.79% at the end
of 2012 which reached up to 2.43% at the end of 2013.
3. Dividend:
Bank has paid 10% dividend from 2011 to 2013.
4. Customer Service:
The bank has provided ‘Tele Banking and Mobile Banking’ services and ATM
facility at its Head Office, and has actively implemented the computerized services.
Table No. 2.1
Progress Chart of the last 3 years
(Rs. in lakh except row marked as*)
Particular 2010-2011 2011-2012 2012-2013
Members* 43739 48909 53176
Branches + HO + Ext. Counter* 48+1+1 48+1+1 48+1+1
Staff* 588 589 694
Audit Class* A A A
Dividend* 9% 9% 9%
Share Capital 3286.80 3962.89 4729.69
Reserve and Other Funds 5127.47 5980.37 7290.56
Own Funds 8414.27 9943.25 12020.75
Deposits 116326.92 140734.13 166697.86
Growth rate of Deposits* 9.12% 20.98% 18.45%
Loans and Advances 76505.04 92602.30 107342.27
Growth rate of Loans and Advances* 15.70% 21.04% 15.92%
Priority Sector Advances 46718.02 50721.83 51375.38
% of Priority Sector Advances* 61.92% 54.75% 47.86%
Investment 30165.47 37117.67 49001.93
Working Capital 131420.59 156129.32 188289.03
Net Profit 1029.72 1716.74 2061.56

Overdue 2302.80 3132.50 3693.30
% of Overdue to Loans and
Advances*
3.01% 3.38% 3.44%
CRAR%* 10.60% 11.39% 11.60%
Net NPA%* 2.98% 1.79% 2.43%
Doubtful and Loss Advances 73.08 172.10 165.72
(Source: Annual report 2013)
2.9 Human Resource Scenario of the Bank
In Satara City Branch 25 employees are working. Following table shows the human
resource scenario of the Karad Urban Co-Op. Bank Ltd., Satara City Branch.
Table No. 2.9 Human Resource Scenario of the Satara City Branch
Sr. No. Designation No. Employees
1 Branch Manager 01
2 Assistant Branch Manager 02
3 Passing Officers 03
4 Clerks 13
5 Peons 03
6 Watchmen 03
Total 25
(Source: Employees Record of the Bank)

2.10 Organization Chart:
Following is the organizational chart of ‘The Karad Urban Co-Op. Bank Ltd., Satara
City Branch.
The Karad Urban Co-operative Bank Ltd., Satara City Branch
Chairman
Vice- Chairman
Board of Director
Chief Executive Officer
Deputy C.E.O’s
Assistant Branch Manager
Branch Manager
Passing Officers
Cash Dept. Loan Dept. F.D. and Misc. Exp.
Dept.
Clerks
Peons
Watchmen

2.11 Future Plans:
The bank has decided following future plans in year 2013-2014:-
ƒIntroducing and implementing ‘Vision 2017’.
ƒBank has a vision of becoming a multi-state scheduled co-operative bank
and has targeted to achieve Rs. 3150 Cr of mix business.
ƒTuning with competitive banking scenario, bank has plan for introducing
Core Banking Solution and A.T.M. centers to offer integrated service to its
Customers.
ƒThe bank has made tremendous progress in all these districts and considering
the need and demand has amended its bye-laws to cover other districts of
Maharashtra and also planning to go multi-state by opening branches in
Ahmedabad and Belgaum in Gujarat and Karnataka state respectively.
ƒSpreading banking services by Banking Correspondent and Banking
Facilitators (BS-BF).
2.12 Achievement:
The bank is awarded with, “Padmbhushan Vasantdada Patil Award 2006-2007” for
Best Urban Co-operative Bank on Western Maharashtra by The Maharashtra State
Co-operative Bank Association, Mumbai.

CHAPTER III:
THE CONCEPTUAL FRAMEWORK
3.1 Introduction
3.2 Basic Concepts
3.3 Definitions
3.4 Importance of Financial Literacy
3.5 Relationship among Financial Literacy, Knowledge,
Education, Behavior and Well-Being
3.6 Need of financial literacy
3.7 Financial Literacy in India
3.8 Inferences from the Reviews collected
3.9 Financial Literacy: An Indian Scenario
3.10 Changes Prompting Increased Attention to Financial
Literacy
3.11 Technological Changes and Market Innovation

CHAPTER III:
THE CONCEPTUAL FRAMEWORK
3.1 Introduction:
Financial literacy is the ability to use knowledge and skills to manage one’s financial
resources effectively for lifetime financial security.
Financial literacy refers to the ability to make informed judgements and to take
effective decisions regarding the use and management of money. Financial literacy is
regarded as an important requirement for functioning effectively in modern society
and trends in retirement income policies, work patterns and demography suggest its
importance can only increase in the years ahead. Raising financial literacy supports
social inclusion and enhances the wellbeing of the community.Financial Literacy can
broadly be defined as the capacity to have familiarity with and understanding of
financial market products, especially rewards and risks in order to make informed
choices. Financial literacy primarily relates to personal financial literacy to enable
individuals to take effective actions to improve overall well-being and avoid distress
in matters that are financial.
3.2 Basic Concept:
Financial literacy is primarily on the individual, who usually has limited resources
and skills to appreciate the complexities of financial dealings with financial
intermediaries on matters relating to personal finance on a day-to-day basis. The
process of economic reforms, which includes deregulation and marketization, should
have educating and empowering the common person to participate in the financial
marketplace with knowledge and confidence, as a critical component of public
policy.
The need for financial literacy is felt in the developed and the developing countries
alike. In the developed countries, the increasing number and complexity of financial
products, the continuing shift in responsibility for providing social security from
governments and financial institutions to individuals and the growing importance of
individual retirement planning make it imperative that financial literacy be provided
to all.
In the developing countries also, the increasing participation of a growing number of
consumers in newly developing financial markets will necessitate the provision of

financial literacy – if these markets are to expand operate efficiently. The substantial
growth of international transactions during the last decade, resulting from new
technologies and the growing international mobility of individuals, makes the
improvement in financial literacy, increasingly, an international concern.
Financial literacy can make a difference not only in the quality of life that
individuals can afford, but also the integrity and quality of markets. It can provide
individuals with basic tools for budgeting, help them to acquire the discipline to save
and thus, ensure that they can enjoy a dignified life after retirement. Financially
educated consumers, in turn, can benefit the economy by encouraging genuine
competition, forcing the service providers to innovate and improve their levels of
efficiency. Financial literacy is the process by which investors improve their
understanding of financial markets, products, concepts and risks. Through
information and objective advice, they develop the skills and confidence to become
more aware of financial risks and opportunities and make informed choices to
improve their financial position.
3.3 Definitions:
The possession of knowledge and understanding of financial matters. Financial
literacy is mainly used in connection with personal finance matters. Financial
literacy often entails the knowledge of properly making decisions pertaining to
certain personal finance areas like real estate, insurance, investing, saving (especially
for college), tax planning and retirement. It also involves intimate knowledge of
financial concepts like compound interest, financial planning, the mechanics of a
credit card, advantageous savings methods, consumer rights, time value of money
etc.1
Financial literacy is the ability to understand how money works in the world: how
someone manages to earn or make it, how that person manages it, how he/she invests
it and how that person donates it to help others. It refers to the set of skills and
knowledge that allows an individual to make informed and effective decisions with
all of their financial resources.2
3.4 Importance of Financial Literacy

1
http://en.wikipedia.org/wiki/Financial_literacy#cite_note‐1
2
http://en.wikipedia.org/wiki/Financial_literacy#cite_note‐1; Investopedia explains ‘Financial
literacy’.

Making thoughtful and informed decisions about personal finances is more
important than ever. Several trends are converging that demonstrate the importance
of financial literacy:
1. More and more, the burden of making sound financial decisions is coming to rest on
the shoulders of consumers. Many companies have shifted their retirement plans
from traditional pension plans to those requiring, participating in, paying part of the
cost for and making investment decisions about.
2. Social security used to be seen as a major source, if not the major source, of
retirement income. Now it serves more like a safety net that will provide enough
only for survival, not enjoyment.
3. We are living longer. This means that we must have accumulated more funds before
retirement to cover living expenses over a longer time. Otherwise, we could become
a burden for our families.
4. The financial environment seems like it is changing faster. Bull markets bear
markets, rising interest rates, falling interest rates and the increased number of
finance-related articles with conflicting views in the press can make creating and
following a financial path difficult.
5. There are more financial options. Hundreds of credit card options, several types of
mortgages, different types of IRAs and the ever-growing number investment options
further complicate financial decision making.
6. There are more choices of financial services companies. Banks, credit unions,
brokerage firms, insurance firms, credit card companies, mortgage companies,
financial planners and others are all trying to get your business.
7. The numbers themselves seem to have gotten larger. Costs and wages have generally
continued to rise to the point where having an income or retirement nest egg that
several years ago would have seemed luxurious, now just seems barely adequate.
8. Taken together, many people today are feeling a high level of financial anxiety and
are looking for answers. Unfortunately, there are no guarantees or easy answers.
However, there are several things you can consider to help relieve your financial
anxiety.

3.5 Relations among Financial Literacy, Knowledge, Education,
Behavior and Well-Being
Financial literacy is a component of human capital that can be used in financial
activities to increase expected lifetime utility from consumption (i.e., behaviors that
enhance financial well-being). Other influences (such as behavioral/cognitive biases,
self-control problems, family, peer, economic, community and institutional) can
affect financial behaviors and financial well-being. A person who is financially
literate (i.e., has the knowledge and the ability to apply the knowledge) may not
exhibit predicted behaviors or increases in financial well-being because of these
other influences.
Financial education is an input intended to increase a person’s human capital,
specifically financial knowledge and/or application (i.e., financial literacy). A well-
designed financial literacy instrument that adequately captures personal finance
knowledge and application can provide insight into how well financial education
improves the human capital needed to behave appropriately to enhance financial
well-being.
3.6 Need of financial literacy
As per a comprehensive survey of over 63000 Indian households to understand how
Indian earns, spends and saves:
A rural household’s total annual expenditure, including both routine and unusual
expenditure, amounts to Rs. 41000, resulting in a surplus income of roughly about
Rs. 11000. An urban household in contrast has a surplus income of Rs. 25000. The
survey also highlights disparities in saving habits. Levels of income, expenditure and
saving related behavior are linked to the age, education levels and type of
engagement of chief earner.
Salary and wage earners account for a low share of the total households (18.4%) but
highest share of the total earnings (30.8%) with an annual income of Rs. 109000.
After taking care of total expenses of Rs. 76000, these households have surplus
income of about 30% of their income.
By contrast, a third of households earn their income from labour, but this group’s
share in the total earnings is only 16% and has surplus income just about 7.7% of
their income. Similarly, households with chief earner in late middle age (46-55

years) accounting for 21% of all other age groups which is about 24% of total
income.
The findings of this survey clearly brought about a need for financial literacy in
Indian households. An astounding 96% of Indians across rural and urban India felt
they would not survivefor more than a year in case of loss of their major source of
income. However, when asked how confident they were about their financial
stability, an overwhelming 54% answered in the affirmative. This misplaced
financial optimism in most cases stemmed from knowing they had the support of a
joint family system. However, this is and will not hold true in a fast-changing social
fabric amongst Indian households.
More than half of the Indian households prefer to save by keeping their surplus
income in commercial banks. However, more than a third of Indians simply prefer to
keep their surplus money at home. Households opting for post-office deposits
account for just 5%.
While top 20% of income earners save up to 44% of their income, the bottom 20%
borrows up to 33%. Although financial institutions (a bank or cooperative) constitute
the main source of borrowing, a significant proportion of Indian households rely on
informal sources- principally the money-lender in rural India- to make ends meet.
Almost 40% of rural Indian households and a fourth of urban Indian households
borrow from the money-lender to meet expenditures such as health, medical
treatment and routine household expenditure.
Findings broadly confirm the fact that Indian households are in the habit of saving
out of household income, and also that they are fundamentally optimistic about their
financial future. Yet, for almost a quarter of households across the income spectrum,
current income is insufficient for their routine and unusual expenditure, creating a
need for a reserve of financial assets for them to fall back upon.
At the same time their awareness of strategic financial planning is relatively
primitive. While governments have a role to play for the poorest households, in
general, financial security is the responsibility of each household, and both the needs
and the options available are more complex today than before. The survey points to a
tremendous need for enhancement of financial literacy and education of households
to do better in achieving lasting financial security.

3.7 Financial Literacy in India
Various surveys show that the level of financial literacy of Indians is low. India
stands in the 23rd
position out of 27 countries in the recent survey conducted by Visa.
Our Government and other agencies have taken various steps to overcome the gap.
The following are some of the initiatives taken:
• Inclusion of Financial literacy in School curriculum.
• 658 Financial literacy centres are operating all over India to spread financial literacy.
• SEBI initiated nationwide campaign to spread financial education to various target
segments such as students in schools and universities, working executives, home
makers, retired personnel, self-help groups etc.
• Seminars on various aspects like savings, investment, financial planning, banking,
insurance, retirement planning etc.
• More than 3500 workshops were conducted.
• Essentials of Investing: A set of 11 booklets
• ‘Markets in Motion: A weekly briefing on major development in economy and
finance.
• Many programs and competitions are conducted among the kids to develop the
awareness of financial literacy
Increased variety of products and the instability of the global economy in twenty first
century caused increasing complexity of financial decisions and also caused
consumers faced with the challenge in economic and financial activities. For this
reason, in the last decade, the importance of financial management skills in personal
and work life has increased and researches in this area has been done.
3.8 Inferences from the Reviews collected
An individual is said to be financially literate if he/she is able to perform the
following:
• Financial knowledge and understanding: The individual should be aware of the
products available in the market. Should possess adequate knowledge about the
basics of the products, the related concepts, consumer rights of such products and its
use.

• Choosing appropriate products: Should be able to compare similar products and
choose the product which suits their requirement. Financial knowledge about the
various products would enable this.
• Financial Planning: The intensity to save and plan for their retirement life should
be clear. Investing in proper avenues or saving through various investment plans
shows their attitude and behavior towards financial matters. The financial attitude
and behavior is highly influenced by financial knowledge possessed by an
individual.
• Day to day money management: Financial literacy helps an individual to have
control over his financial matters. It enables an individual to frame appropriate
budgets which in turn helps them to track his finances and meet the ends.
Financial literacy is a global concern. The level of financial literacy required
depends upon the financial needs and behavior of an individual. Financial literacy is
highly influenced by age, region or country in which the individual resides, the
financial environment which he experiences, the level of income, socio demographic
factors like his family, number of dependents, mother’s education, financial advice
etc. The need to know the level of financial literacy of various groups is inevitable.
3.9 Financial Literacy: An Indian Scenario
1. Financial literacy is nothing but knowledge about finance. The importance of
financial education has improved in recent years due to the developments in
financial markets as well as demographic, economic and policy changes. More and
more financial markets are becoming more sophisticated and new products are
continuously offered. The consumers have now greater access towards a variety of
credit and savings instruments provided by a range of entities from on line bank,
brokerage firms and community based groups. Moreover changes in retirement
benefit schemes and increase in life expectancy have increased the thoughts of
consumers towards better and efficient savings management.
2. This study is based on Indian conditions. According to a report by Financial Express,
India financial literacy has assumed greater significance in recent years due to the
complexity of financial markets. For the purpose of the study literature relating to
the topic was constantly reviewed and data’s examined.

3. Financial literacy is considered an important adjunct for the promotion of financial
inclusions and ultimately financial stability. In India the need for financial literacy is
getting greater because of the low level of literacy and large section of population
which remains out of the formal financial set up.
4. India which have large sections of people who are resource poor and who operates on
the margin. These groups are really vulnerable towards persistent downward
financial pressures. Moreover with no established banking relationship, the poor
sections are pushed towards expensive alternatives. Challenges in the areas of
household management, could be accentuated by the lack of skills or knowledge that
make well informed financial decisions. Financial literacy can help them prepare
ahead of time for life needs as well as to deal with unexpected contingencies without
assuming unnecessary debt.
Steps taken to increase financial literacy:
In India a variety of steps has been taken by various agencies in the area of
enhancing financial literacy, these steps includes:
1. Initiatives taken by the Reserve Bank of India: The Reserve Bank of India, which is
the central bank, has been actively participating in the field of eradicating financial
literacy in the country. In this context a project called “Project financial literacy” has
already been implemented. The main objective of this project is to disseminate
information regarding the central bank and general banking concepts to the various
target groups including school and college going children, women, rural folk, rural
and urban poor, defense personnel and senior citizens. Information is distributed to
the target audience through presentations, pamphlets, brochures, films, websites etc.
for doing this the Reserve Bank has actively engaged other agencies like commercial
banks, Government machinery, NGO’s, schools, colleges etc.
2. It has launched a financial education site from November 2007 commemorating
children’s day. The site was mainly created to teach the basics of banking, finance
and central banking to children in different age groups. The site also has other
valuable information to other target groups like women, rural and urban poor,
defense personnel and senior citizens. It contains films on security of currency notes
and also has a games section. This is to familiarize school children with India’s
various currency notes.

3. The Reserve bank has asked the lead banks in each district to draw a road map for
ensuring that all villages having a population of more than 2000 will have access
to the financial services through a banking outlet and this outlet need not be a
banking branch. Secondly all commercial banks inclusive of public sector banks,
private banks and foreign banks should come forward with their specific board
approved plans for financial literacy by 2010 with an intention to roll out these
plans during the next three years. In this context the reserve bank has refrained
itself from deliberately imposing a uniform model on the banks, the Reserve bank
wants each bank to build its own strategy in line with its business model and
comparative advantage. This would ensure better ownership. In this regard the
Reserve bank has also consulted the Indian banks association. The Reserve bank
is also insisting to include the criteria of financial education in performance
evaluation of all bank staff.
4. Moreover the Reserve bank’s outreach program aimed for Indian villages aims at
connecting senior staff of the Reserve bank to the villages in India. Give the state
that India has nearly six lakh villages; the Reserve bank staff has been able to
visit all these villages as part of imparting financial education. In another great
development, the Reserve bank has tied up with the Government of Karnataka to
include financial literacy in the syllabus for classes 5, 7, 8 and 9.
3.10 Changes Prompting Increased Attention to Financial Literacy
Numerous factors have led to a complex, specialized financial services marketplace
that requires consumers to be actively engaged if they are to manage their finances
effectively. The forces of technology and market innovation, driven by increased
competition, have resulted in a sophisticated industry in which consumers are
offered a broad spectrum of services by a wide array of providers. Compelling
consumer issues, such as the very visible issue of predatory lending, high levels of
consumer debt and low saving rates, have also added to the sense of urgency
surrounding financial literacy. Other important demographic and markets trends
contributing to concerns include increased diversity of the population, resulting in
households that may face language, cultural or other barriers to establishing a
banking relationship; expanded access to credit for younger populations; and
increased employee responsibility for directing their own investments in employer-
sponsored retirement and pension plans.

3.11 Technological Changes and Market Innovation
Over the past decade, technological advances have transformed nearly every aspect
of the marketing, delivery, and processing of financial products and services. The
expansion of the Internet as a means of communicating and delivering services has
also enabled financial services providers to market financial products and serve
customers more efficiently. Communication and delivery innovations increase the
amount of information available to consumers and allow them to shop for and
choose from a wide array of products and services without geographic limitation. To
benefit from the innovations, however, consumers need a base level of financial
knowledge, so that they can identify and access pertinent information as well as
evaluate the credibility of the source of the information. Technological advances
have also increased the capacity for targeted marketing to consumers, with robust
databases of consumer information making it possible to match household
characteristics and preferences with product offerings. This application of
technology can promote competition and improve customer service. However, its
misuse can increase consumer vulnerability to unscrupulous lenders. Marketing and
sales tactics may induce customers to acquire products that they do not need or that
are inappropriate for their circumstances. Market innovation and competition within
the financial services industry can also be seen in the increase in the variety of
products offered by depository institutions. For example, basic deposit and credit
products have multiplied and become highly specialized. In addition, there has been
a proliferation of nonbank providers of financial services, such as payday lenders
and check cashers. These developments have given consumers more options and
greater flexibility in creating financial arrangements that best suit their needs. Market
innovation has also prompted deregulation of the banking industry.

CHAPTER IV:
DATA ANAYSIS AND INTERPRETATION
4.1 Introduction
4.2 Data Analysis and Interpretation

CHAPTER IV:
DATA ANAYSIS AND INTERPRETATION
4.1 Introduction:
This chapter contains analysis and interpretation of data. The required data is
collected from primary source. Following section shows tabulation and interpretation
of data.
4.2 Data Analysis and Interpretation:
Data analysis involves interpretation of data collected by researcher with the help of
various statistical tools i.e. Frequency, Weighted Average, Percentage, Rank etc.
Data analysis is presented in three parts:
Part A: Demographic Profile of Customers
Part B: Financial Literacy of the Customers
Part C: Banking operations with Customers

Part A: Demographic Profile of Respondents
Table No. 4.2 Demographic Analysis
Following are the demographic information of respondents:
(n=121)
Sr.
No.
Profile
Particular
No. of
Customers
Percentage
1 Gender:
Male 78 64.46%
Female 43 35.54%
Total 121 100%
2 Occupation:
Business 31 25.63%
Service 30 24.79%
Housewives 30 24.79%
Students 30 24.79%
Total 121 100%
3 Age:
20-29 34 28.10%
30-39 23 19.01%
40-49 38 31.40%
50-59 20 16.53%
Above 60 06 4.96%
Total 121 100%
4 Education:
Higher Secondary 26 21.49%
Graduate 56 46.28%
Post Graduate 36 29.75%
Secondary School 03 2.48%
Total 121 100%
(Source: Primary Data)
1. Table No. 4.2 shows the number of male respondents are more that is about
64.46% and the next position is female respondents they are about 35.54% of the
sample.
2. According to the survey the respondents were of different occupations. Most of
respondents are business sector is about 25.63% of the sample. Respondents
from the service, housewives and students are occupied 24.79%.
3. The respondents were of different age groups. The respondents of age 20-29 are
34 in number with 28.10%. The respondents of age 30-39 are 23 with 19.01%,

40-49 there are 38 respondents with 31.40% and in between 50-59 there are 20
respondents with 16.53% and above 60 there are 06 respondents with 4.96%.
4. The Higher Secondary respondents are 26 with 21.49%. The graduate
respondents are 56 with 46.28%, post graduates are 36 with 29.75% and
respondents of secondary school are 03 with 2.48%.
Part B: Financial Literacy of the Respondents
Table No. 4.2.1 Financial literacy of the respondents
Following are the financial literacy score of the respondents:
Sr. No. Financial Literacy Score Frequency Percentage
1 0-10 02 1.65%
2 11-20 18 14.88%
3 21-30 68 56.20%
4 31-40 33 27.27%
5 41-50 00 00%
Total 121 100%
Table No. 4.2.1 shows that the financial literacy scores of the respondents. The
financial literacy score of respondents from 0-10 are 02 with 1.65%. The
respondents from 11-20 are 18 with 14.88%, from 21-30 there are 68 with 56.20%
and in between 31-40 there are 33 respondents with 27.27%. There are no
respondents in between 41-50.
It has been observed that the financial literacy of the respondents is more in between
21-30 financial literacy score.

Part C: Banking Operation with Respondents
Table No. 4.2.2 Attribute of the bank by respondents
Following are attributes of the bank by respondents:
Attributes I II III IV V Weighted
Average
Rank
Quality Service 56 46 15 1 3 34.27 1
Technology Used 23 39 36 21 2 28.20 2
Trust 19 14 47 27 14 27.60 3
Location 10 14 14 48 35 18.60 4
Type of Bank 13 8 7 25 67 15.67 5
Table No. 4.2.2 shows that respondents are given Quality Service value the most
with weighted average 34.27 with rank 1st
. Followed by Technology used with
weighted average 28.20 with 2nd
rank. Respondents are given low value the type of
bank with weighted average 15.67 with rank 5th
.
It has been observed that respondents are preferred the low value about the type of
bank.
Table No. 4.2.3 Type of account maintained by Respondents
Following are the type of account maintained by respondents:
Sr.
No.
Accounts Frequency Percentage
1 Current Account 80 66.12%
2 Savings Account 96 79.34%
3 Loan 60 49.59%
4 Demat 00 0%
5 Aadhar savings bank
account
24 19.83%
Table No. 4.2.3 shows that respondents have maintained savings account with
Percentage 79.34% with rank 1st
in this bank and Current account maintained in this
bank with Percentage 66.12% with rank 2nd
. Demat has lower with Percentage 0%
with 4th
rank.
It has been observed that respondents have maintained savings account as compared
to Demat account which is preferred less.

Table No. 4.2.4 Banking services availed by respondents
Following are the banking services availed by respondents:
Sr.
No.
FL
Score Frequency No. of Banking Services
2 3 4 5 6 7 8 9 10 11 12
1 0-10 02 _ _ _ 01 01 _ _ _ _ _ _
2 11-20 18 02 02 06 04 01 02 _ 01 _ _ _
3 21-30 68 _ 04 07 10 20 13 05 05 04 _ _
4 31-40 33 _ _ _ 03 01 06 08 06 03 03 03
Total 121 02 06 13 18 23 21 13 12 07 03 03
Table No. 4.2.4 indicate that banking services availed by the respondent classified
according to financial literacy score. Majority of respondents have availed 4 to 9
Banking services offered. Highest number of respondents i.e. 20 have availed 6
banking services who are having financial literacy score 21-30. Frequency of
availing 5 or more services is more in financial literacy score category of 21-30 and
31-40. It can be said that respondents having higher Financial Literacy score more
than 21 are availing more number of Banking services.

CHAPTER V:
FINDINGS AND SUGGESTIONS
5.1 Introduction
5.2 Findings
5.3 Suggestions
5.4 Conclusion

CHAPTER V:
FINDINGS AND SUGGESTIONS
5.1 Introduction:
In order to derive meaningful results researcher has analyzed the tables. The
researcher has drawn some findings and they are based on analysis of the data.
5.2 Findings:
Findings are presented as General Findings and Specific Findings-
5.2.1 General Findings
Following finding are drawn by researcher on the basis of general observation during
the cause of study:
- It has been observed that the Bank is spreading information banking services by
Banking Correspondent and Banking Facilitators (BS-BF).
5.2.2 Specific Findings:
Following are the specific findings:
1. The numbers of male customers are more that is about 78 with 64.46% and the
next position is female customers they are about 43 with 35.54% of the sample.
Majority of customers are business sector is about 25.63% of the sample.The
respondents of age 40-49 are 38 in number with 31.40%. The graduate respondents
are 56 with 46.28%. (Table No. 4.2)
2. The financial literacy score of the respondents in between 21-30 there are 68 with
56.20%. The respondents from 0-10 there are 02 with 1.65%. (Table No.4.2.1)
3. Respondents have given Quality Service value the most with weighted average
34.27 with 1st
rank. Customers are given low value the type of bank with weighted
average 15.67 with rank 5th
. (Table No. 4.2.2)
4. Respondents have maintained savings account with Percentage 79.34% in the
bank with rank 1st
. Customers are maintained current account with Percentage with
66.12% with 2nd
. Demat account preferred low. (Table No. 4.2.3)
5. Major of respondents have availed 4 to 9 Banking services offered. Highest
number of respondents i.e. 20 have availed 6 banking services who are having
financial literacy score 21-30. (Table No. 4.2.4)

5.3 Suggestions:
Following are the suggestions:
1. The Bank has to make effort to increase financial literacy to appreciate that
financial inclusion for a continuous process.
2. The Bank should be give information about Demat account to customers for safety
and security of their money.
5.4 Conclusion:
Financial literacy is resource that low-income people need to exit poverty.The study
concentrates on the customers’ sources and their financial literacy of the banking
operation. The study is help to know the need or steps to be taken to improve or
update the level of financial literacy. Financial literacy is encouraging to customers’
for using different types of banking services. A process of credit counselling is
being encouraged to help all borrowers, particularly those in distress to overcome
current financial problems and gain access to the structured financial system.

ANNEXURE

Annexure
Schedule
A. Demographic Profile:
Name:
Address:
Contact: Age:
Email Id:
Gender: Male / Female Occupation:
Annual Income:
Education:
Higher Secondary Graduate
Post Graduate Secondary School
B. Financial Literacy:
1. What are different ways in which you can save money with bank?
__________________________________________________________________
__________________________________________________________________
2. What are the different documents required for opening bank account?
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
3. In your bank minimum amount required to opening saving account with
cheque book?
a. Yes
b. No
4. What amount you have deposit to open an account?
a. 1000
b. 2000
c. 500
d. 4000
e. 5000 and above
5. Do you currently earn interest on your bank deposit account?
a. Yes
b. No
If yes then specify interest rate _________%

6. How many times you can withdraw the money from savings account in a
week?
a. One time
b. Two times
c. Three times
d. Four times
e. Five times
f. Can’t say
7. What are the features of Bank account?
a. Easy payment facility
b. High interest rate on saving account
c. Add security alerts to be notified when account information
changes
d. Speed of issuing cheque
e. Professionalism handling transaction
f. Personalized service and financial guidance available
g. Can’t say
8. Which loan product you have taken?
a. Home loan
b. Vehicle loan
c. Gold loan
d. Education loan
e. Loan on L.I.C.
f. Loan for Consumer durable
g. Surety loans (for business/ service man)
h. Not applicable
9. What are the documents required for availing loans?
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
10. What is the interest rate on loan?
a. 13.50% - 14.50%
b. 14.75% - 15.00%
c. 15.25% - 15.50%
d. 16.00% - 18.50%
e. Can’t say
11. Does your bank have core banking facility for the customers?
a. Yes
b. No

12. Do you use RTGS and NEFT facilities?
a. Yes
b. No
13. What is the difference between RTGS and NEFT?
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
14. Do you use ATM card?
a. Yes
b. No
15. How often do you use an ATM?
a. Once in a week
b. Twice in a month
c. Several times in a week
d. Can’t say
16. Do you currently use internet banking?
a. Yes
b. No
17. What banking services do you use which your Internet bank offers?
a. Seeking product and rate information
b. Calculate loan payment information
c. Download loan applications
d. Check balances On-line
e. Apply for consumer loans
f. Inter-account transfers
g. On-line bill payments
h. Not Applicable
18. Does your bank have trustee and executor facility? If yes then what
features you know of trustee and executor cell?
a. Yes
b. No
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

19. Do you know about standing orders are available in your banking system?
a. Yes
b. No
20. Is your bank availed suggestion or complaint box?
a. Yes
b. No
C. Banking Operations:
1. Which attribute of the bank do you value the most?
a. Quality service
b. Technology used
c. Trust
d. Location
e. Type of the bank
2. What kind of account do you have maintain in this bank?
a. Current
b. Saving
c. Loan
d. Demat
e. Aadhar savings bank account
3. Frequency of the Banking Operations:
(Frequency: Once in a week-1; Twice in a week-2; Once in a month-3;
Twice in a month-4; Not at all-5)
Services Availed Frequency of Banking
Operations
1 2 3 4 5
1 RTGS / NEFT
2 Trustee and Executor
3 ATM Banking
4 RuPay Debit Card
5 SMS/Email alerts and email
statement
6 Aadhar linkage bank A/c
7 Bill Payment
8 Savings account
9 Current account
10 Fixed deposit
11 Reinvestment deposit
12 Pension deposit
13 Recurring deposit
14 Pigmy deposit

15 NRE/NRI deposit
16 Home loan
17 Vehicle loan
18 Gold loan
19 Ware housing loan
20 Education loan
21 Loan on L.I.C.
22 Cash credit
23 Cheque, Hundi discounting
24 Loan for consumer durable
25 Surety Loans (for business man/
service man)
26 Complaint desk
D. Preference:
(Preference: High Prefer-1; Prefer-2;Neutral Prefer-3; Low Prefer-4; Not
at all Prefer-5)
Services Aware Availed 1 2 3 4 5
1 RTGS / NEFT
2 Trustee and Executor
3 ATM Banking
4 RuPay Debit Card
5 SMS/Email alerts and email
statement
6 Aadhar linkage bank A/c
7 Bill Payment
8 Savings account
9 Current account
10 Fixed deposit
11 Reinvestment deposit
12 Pension deposit
13 Recurring deposit
14 Pigmy deposit
15 NRE/NRI deposit
16 Home loan
17 Vehicle loan
18 Gold loan
19 Ware housing loan
20 Education loan
21 Loan on L.I.C.
22 Cash credit

23 Cheque, Hundi discounting
24 Loan for consumer durable
25 Surety Loans (for business
man/ service man)
26 Complaint desk

BIBLIOGRAPHY

Bibliography
1.'Financial Literacy: An Overview of Practice, Research and Policy', Sandra
Braunstein and Carolyn Welch, of the Board's Division of Consumer and Community
Affairs, prepared this article, Fedral Reserve Bulletin November . (2002).

2.'A Study on Financial Literacy among Young Employees in Coimbatore City' M.
Gowri, Assistant Professor, GRG School of Management Studies, Peelamedu,
Coimbatore. Peelamedu, Coimbatore.

3. Asian Journal of Research in Banking and Finance Vol.2 Issue 4, April 2012, ISSN
2249 7323 .'Financial Literacy: An Indian Scenario Dean Roy Nash* *Research
Associate in Commerce, Saint Albert's College, Ernakulam, Kerala, India.

4. Financial literacy-Concept and its Important in India; Bhushan Bhatia (Sr.
Faculty) Punjab National Bank, Regional Staff College, Panchkula. Panchkula.

5. http://alison.com/free-training/Fiinancial-Literacy/Introduction. Retrieved from
http://alison.com/free-training/Fiinancial-Literacy/Introduction

6. http://en.wikipedia.org/wiki/Financial_literacy#cite_note-1.Retrieved from
http://en.wikipedia.org/wiki/Financial_literacy#cite_note-1:

7. http://en.wikipedia.org/wiki/Financial_literacy#cite_note-1 ; Investopedia explains
'Financial Literacy'.. Retrieved from
http://en.wikipedia.org/wiki/Financial_literacy#cite_note-1 ; Investopedia explains
'Financial Literacy'

8. http://onlinelibrary.wiley.com/doi/10.1111/j.1745-6606.2010.01170.x/full..
Retrieved from http://onlinelibrary.wiley.com/doi/10.1111/j.1745-
6606.2010.01170.x/full:

9.http://www.bbt.com/bbtdotcom/financial-education/planning/financial-
literacy.page.. Retrieved from http://www.bbt.com/bbtdotcom/financial-
education/planning/financial-literacy.page
10. www.googlescholar.com. Retrieved from www.googlescholar.com.

11. www.karadurbanbank.com. Retrieved from www.karadurbanbank.com.

12. www.rbi.org.in. Retrieved from www.rbi.org.in.

13. www.wikipedia.com. Retrieved from www.wikipedia.com.

ABBREVIATIONS

Abbreviations
RTGS Real Time Gross Settlement
NEFT National Electronics Funds Transfer
N.S.C. National Savings Certificate
CRAR Capital to Risk Assets Ratio
NPA Non-Performing Assets
A.T.M. Automated Teller Machine

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