challenges and innovations in cbcs

1 Indian Journal of Commerce and management (IJOCAM) volume 3 issue 5 , May-2016 , ISSN- 2348-4934(P), 2348-6325(O)

Challenges and Innovations in CBCS

Dr.P.Suchitra Asst.Prof

Dept of Management Rayalaseema University

Kurnool-518218 9848747421

Abstract The Indian Higher Education Institutions have been moving from the conventional annual system to semester system and one sea change is introduction of the choice based credit system. CBCS is a process of evolution of educational reforms that would yield the result in subsequent years and after a few cycles of its implementation which provides flexibility in designing curriculum and assigning credits based on the course content and hours of teaching. It is desirable that the HEIs move to CBCS and implement the grading system. The basic idea is to look into the needs of the students so as to keep up-to-date with development of higher education in India and abroad. CBCS aims to redefine the curriculum keeping pace with the liberalisation and globalisation in education. CBCS allows students an easy mode of mobility to various educational institutions spread across the world along with the facility of transfer of credits earned by students. The way forward then would be monitoring carefully and regularly the implementation of the CBCS by the institution covered by the UGC. Offering a reasonable range of choice of subjects to students of a programme by all institutions should be the first priority. Rather than a one-size-fits-all approach, a calibrated approach to take all institutions forward on a step-by-step basis should be followed, eventually ensuring that the institutions reach the desired level of quality and recognition. The academicians often talk about university and the industry collaborations. Why not a few credits earned in a related industry be considered within the curriculum? As creative and performing arts are becoming popular in campuses, credits can be thought of for such activities too. Though the students will choose courses of inter-disciplinary nature, the required courses for majoring in a subject will ensure depth. Professionalism and quality consciousness are the basis for every change. With faculty advising, CBCS can offer a very flexible and open system for a quality upgradation of higher education. Though a few institutions claim to have introduced this system, in reality not much of freedom is given to the students. Everyone agrees that intellectual depth and breadth characterise higher education. But, in allowing the students to choose their favourite courses, certain questions arise. This conceptual paper looks into the advantages of CBCS and the challenges it poses for the systems success. Key words : Choice based credit system, education system, UGC, letter grading system INTRODUCTION

HIGHER EDUCATION has undergone quite a lot of transformation over the years. After the Kothari Commission report in 1966, discussions on college autonomy started and a few colleges became autonomous since 1978 and a few of them have completed 25 years of such a freedom. Academic freedom, under autonomy, helped many colleges to innovate new curricula, design relevant courses, frame new syllabi and introduce new evaluation methods. But the required flexibility for the students to have a greater choice of courses appropriate to their interests, needs and long-term goals is not available even in autonomous colleges; rather a rigid and compartmentalised system is perpetuated.

Choice based credit system (CBCS), or a cafeteria like system is the solution for this type of transformation from the traditional teacher oriented education to a student-centred education.


Taking responsibility for their own education in this way, students can benefit the most from all the available resources. Academic commissions and committees such as UGC, TANSCHE and NAAC recommend CBCS for higher education.

Though a few institutions claim to have introduced this system, in reality not much of freedom is given to the students. Everyone agrees that intellectual depth and breadth characterise higher education. But, in allowing the students to choose their favourite courses, certain questions arise. The rules regarding the number of students in each class and the number of hours per week for the students or for the teachers have not changed from the old affiliated system.

There is a strong resistance to change from every quarter of the academic world. Students are compelled to take two years of language course of their mother tongue. They are not encouraged to take courses according to their abilities and pace and there is no freedom for the first year student to take an advanced course or a third year student to take an introductory course. Students are compelled to be inside the classroom for the entire five hours a day schedule leaving no scope for independent study. HRD Ministry and CBCS Ministry of Human Resource Development (HRD), Govt. of India, has already initiated the process for developing New Education Policy (NEP) in our country to bring out reforms in Indian education system. University Grants Commission (UGC) participates more actively in developing National Education Policy, its execution and promotion of higher education in our country. The UGC has already initiated several steps to bring equity, efficiency and academic excellence in National Higher Education System. The important ones include innovation and improvement in course- curricula, introduction of paradigm shift in learning and teaching Pedagogy, examination and education system. The education plays enormously significant role in building of a nation. There are quite a large number of educational institutions, engaged in imparting education in our country. Majority of them have entered recently into semester system to match with international educational pattern. However, our present education system produces young minds lacking knowledge, confidence, values and skills. It could be because of complete lack of relationship between education, employment and skill development in conventional education system. The present alarming situation necessitates transformation and/or redesigning of education system, not only by introducing innovations but developing “learner-centric approach in the entire education delivery mechanism and globally followed evaluation system as well. Majority of Indian higher education institutions have been following marks or percentage based evaluation system, which obstructs the flexibility for the students to study the subjects/courses of their choice and their mobility to different institutions. There is need to allow the flexibility in education system, so that students depending upon their interests and aims can choose interdisciplinary, intra-disciplinary and skill-based courses. This can only be possible when choice based credit system (CBCS), an internationally acknowledged system, is adopted. Recommendation of National Knowledge Commission To ensure quality, NKC has called for reform of existing universities to ensure frequent curricula revisions, introduction of course credit system, enhancing reliance on internal assessment, encouraging research, and reforming governance of institutions. Choice Based Credit System University Grants Commission has come up with the Choice Based Credit System (CBCS) programme in which the students have a choice to choose from the prescribed courses, which are referred as core, elective or minor or soft skill courses and they can learn at their own pace and the entire assessment is graded-based on a credit system. The basic idea is to look into the needs of the students so as to keep up-to-date with development of higher education in India and abroad. CBCS aims to redefine the curriculum keeping pace with the liberalisation and globalisation in education. CBCS allows students an easy mode of mobility to various


educational institutions spread across the world along with the facility of transfer of credits earned by students. Features of CBCS

Uniform for all central, state and other recognised universities. There are three Min course viz., Core, Elective and foundation There are also non-credit courses available which will be assessed as “Satisfactory

“or Unsatisfactory” It is not included in the computation of SGPA/CGPA. All three main courses will be evaluated and accessed for an effective and balanced

result. Semester System Vs Choice Based Credit System The Indian Higher Education Institutions have been moving from the conventional annual system to semester system. Currently many of the institutions have already introduced the choice based credit system. The semester system accelerates the teaching-learning process and enables vertical and horizontal mobility in learning. The credit based semester system provides flexibility in designing curriculum and assigning credits based on the course content and hours of teaching. The choice based credit system provides a ‘cafeteria’ type approach in which the students can take courses of their choice, learn at their own pace, undergo additional courses and acquire more than the required credits, and adopt an interdisciplinary approach to learning, It is desirable that the HEIs move to CBCS and implement the grading system. Components of CBCS

1. Semesterisation : The assessment is done semester wise. A student progresses on the basis of the courses taken rather than time like three years for science, arts, commerce or four years for engineering etc. Each semester will have 15–18 weeks of academic work which is equal to 90 teaching days. There is flexibility in creating the curriculum and assigning credits based on the course content and hours of teaching.

2. Credit System: Each course is assigned a certain credit. When the student passes that course, he earns the credits which are based on that course. If a student passes a single course in a semester, he does not have to repeat that course later. The students can earn credits according to his pace.

3. Credit Transfer: If for some reasons, he cannot cope with the study load or if he falls sick, he has the freedom to study fewer courses and earn fewer credits and he can compensate this in the next semester.

4. Comprehensive continuous assessment: There is a continuous evaluation of the student not only by the teachers but also by the student himself.

5. Grading: : UGC has introduced a 10-point grading system One credit per semester is equal to one hour of teaching, which includes both lecture (L) or tutorial (T) or two hours of practical work/field work (P) per week. A study course can have only L component or only T or P component or combination of any two or all the three components. The total credits earned by a student for each semester is L+T+P.

Outline of Choice Based Credit System: 1. Core Course: A course, which should compulsorily be studied by a candidate as a core Requirement is termed as a Core course. 2. Elective Course: Generally a course which can be chosen from a pool of courses and Which may be very specific or specialized or advanced or supportive to the discipline/ subject of study or which provides an extended scope or which enables an exposure to some other discipline/subject/domain or nurtures the candidate’s proficiency/skill is called an Elective Course. 2.1 Discipline Specific Elective (DSE) Course: Elective courses may be offered by the main discipline/subject of study is referred to as Discipline Specific Elective. The


University/Institute may also offer discipline related Elective courses of interdisciplinary nature (to be offered by main discipline/subject of study). 2.2 Dissertation/Project: An elective course designed to acquire special/advanced knowledge, such as supplement study/support study to a project work, and a candidate studies such a course on his own with an advisory support by a teacher/faculty member is called dissertation/project. 2.3 Generic Elective (GE) Course: An elective course chosen generally from an unrelated discipline/subject, with an intention to seek exposure is called a Generic Elective. 3. Ability Enhancement Courses (AEC): The Ability Enhancement (AE) Courses may be of two kinds: Ability Enhancement Compulsory Courses (AECC) and Skill Enhancement Courses (SEC). “AECC” courses are the courses based upon the content that leads to Knowledge enhancement ; i. Environmental Science and ii. English/MIL Communication. These are mandatory for all disciplines. SEC courses are value-based and/or skill-based and are aimed at providing hands-on-training, competencies, skills, etc. 3.1 Ability Enhancement Compulsory Courses (AECC): Environmental Science, English Communication/MIL Communication. 3.2 Skill Enhancement Courses (SEC): These courses may be chosen from a pool of courses designed to provide value-based and/or skill-based knowledge. NEED FOR CBCS Report by the Times of India on Challenges of Higher Education (2010) regarding the challenges of Globalization. The conclusions made a note on: • Making the curriculum interdisciplinary. • All cutting edge development in technologies occur at the interface of two or more disciplines. • Interdisciplinary approach enables integration of concepts, theories, techniques, and perspectives from two or more disciplines to advance fundamental understanding or to solve problems whose solutions are beyond the scope of a single discipline. Advantages of CBCS

Shift in focus from the teacher-centric to student-centric education. Student may undertake as many credits as they can cope with (without repeating all

courses in a given semester if they fail in one/more courses). CBCS allows students to choose inter-disciplinary, intra-disciplinary courses, skill

oriented papers (even from other disciplines according to their learning needs, interests and aptitude) and more flexibility for students).

CBCS makes education broad-based and at par with global standards. One can take credits by combining unique combinations. For example, Physics with Economics, Microbiology with Chemistry or Environment Science etc.

CBCS offers flexibility for students to study at different times and at different institutions to complete one course (ease mobility of students). Credits earned at one institution can be transferred.

The CBCS offers a ‘cafeteria’ approach in which the students can choose courses of their own choice.

The credit system allows a student to study what he prefers in his own sequence as per his interests.

Students can learn at their own pace. They can opt for additional courses and can achieve more than the required credits. They can also opt for an interdisciplinary approach to learning. Inter college/university migration within the country and outside becomes easy with

the transfer of Credits. This means that it will be easier for foreign universities to come and offer courses in India.

Can opt for one part of the course in one institute and the other part in another institute. This will help in making a clear choice between good and bad colleges/ institutes.

The students have more scope to enhance their skills and more scope of taking up projects and assignments,vocationaltraining and includingentrepreneurship.

The system improves the job opportunities of students.


The system will help in enabling potential employers assess the performance of students on a scientific scale.

THE TASK OF INTRODUCING CBCS • Preparation of guidelines • Preparations of Regulations and Course Structure for different levels by respective deans • Formulation of subject wise working groups (to be constituted by the chairperson board of studies of different subjects) • Sensitization of working group members and BOS members about the guide lines • Drafting of list of courses and their classification by subject wise working groups as per respective regulation. • Drafting of list of courses and their classification across faculties to be coordinated by the deans of faculties with Chairperson BOS of the subject working groups to avoid any confusion • Working groups prepare draft syllabus with volume of the content as per the credits requirement along with notes for paper setter etc. • The drafting of the syllabus/ curricula is to be carried out in terms of – Current knowledge – National and international developments – Relevance of new ideas, concepts and knowledge to the concerned discipline – Internet search eangines, latest books, journals and open course wares available across the net. – Development of topical courses as per the requirements of employability of the learners, academic interests of the faculty and thurst of the programme. - Volume of the content as per credits. • Subject wise workshops to discuss draft syllabi for different levels and make changes as per recommendations emerging from the discussion in workshops • BOS meets to discuss draft syllabus along with regulations, make changes if required. Finalize and approve these. • Role of Working Groups/ Board of Studies of a subject – Focus on the structure of the programme as per the requirement of the award of degree with in a minimum period of three years & regulations – Identify courses as per the table on course wise distribution of credits and classification (Hard core, soft core, electives, open electives etc.) visà- vis total credit requirement. – Design each course content to provide for stipulated instruction hours as is envisaged by the credits assigned to the course – Design each course content to be spread evenly over the semester making necessary allowance for minor tests, assignments, seminars etc. – Design course content so that it gets divided into four units with two to three sub units mentioning credits for each sub unit. – In the syllabus list recommended text books, list of supplementary reading and list of internet resources should be clearly mentioned. CHALLENGES TO CBCS The way forward then would be monitoring carefully and regularly the implementation of the CBCS by the institution covered by the UGC. Offering a reasonable range of choice of subjects to students of a programme by all institutions should be the first priority. Rather than a one-size-fits-all approach, a calibrated approach to take all institutions forward on a step-by-step basis should be followed, eventually ensuring that the institutions reach the desired level of quality and recognition. The primary focus should be on enabling the institutions to wholeheartedly provide diversity in subjects offered. In spite of its success, though limited, CBCS poses a arena of challenges to the academicians’ and the policy makers in the areas of

Freedom to student to choose any course of study/subject running in different departments of study in the HEI where he or she is studying or HEI outside his institute


Framing a Typical Course Structure Indicating Course performance process Indicating Semester Performance process Which course earns credits Role of ICT in the new scenario. Incorporate Distance Education Learner Incorporate Private students under the ambit of CCA and CBCS

CONCLUSION CBCS is the mother of student centric educational reforms. A student is provided with an academically rich, highly flexible learning system blended with abundant provision for skill practice and activity orientation that he/she could learn in depth without sacrificing his/her creativity. A student can exercise the option to decide his/her own pace of learning- slow, normal or accelerated plan and sequence his/her choice of paper, learn to face challenges through term work/ project work/ and may venture out to acquire extra knowledge/ proficiency through add- on facilities. A student enjoys an extra ordinary benefit that his/her evaluation would be in terms of grades, computed through a more scientific and a logical process of normalization which imbibes the advantages of relative weighing of the performances against evaluating in an absolute way. The great advantage is that the learning process is made continuous and the evaluation process is not only made continuous but also made learner-centric and is designed to recognize the capability and talent of a student. CBCS is a process of evolution of educational reforms that would yield the result in subsequent years and after a few cycles of its implementation. References

1. http://www.bdu.ac.in/regulations/cbcsugreg.pdf 2. D.O. No..F.1-2/2008(XI Plan) From Chairman UGC on Examination Reforms dated

Jan 31, 2008: Annexure-II, Action Plan for Academic and Administrative Reforms. 3. D.O. No..F.1-2/2008(XI Plan) From Chairman UGC on Examination Reforms dated

March 2009 4. Draft Rashtriya Uchatar Shiksha Abhiyan (RUSA)-UGC published on the web on

21.1.2013: http://www.ugc.ac.in/pdfnews/5867549_rusa.pdf 5. R.K. Wanchoo, Implementation of Choice Based Credit and Grading System for

UG/PG Programs: Salient Featyres A ppt, UCIET, Panjab University Chandigarh 6. http://www.nith.ac.in/UG_RP_new.pdf 7. http://www.uni-mysore.ac.in/assets/Downloads- 20012/January/CBCS-HANDBOOK-

2012-13-Batch.pdf 8. Handbook 2009, Distance Education Council Regulations, DEC New Delhi 9. Moving Towards Choice Based Credit System (CBCS) in UG and PG Programs: A

Road Map. 10. http://hpuniv.nic.in/pdf/CBCS_IQAC13.pdf. 11. R.K. Wanchoo, Implementation of Choice Based Credit and Grading System for

UG/PG Programs: Salient Featyres A ppt, UCIET, Panjab University Chandigarh. 12. Roy,N.R., Khanam, U.K. & Devi, T. (2013). Attitude Towards Choice Based Credit

System of PG levein Higher Education: A Study on Assam University. Scholarly Research Journal for Interdiscipilinary Studies,Vol. 1, pp. 11.98-1208.

13. U.G.C. Guidelines on Adaptation of Choice Based Credit System. University Grants Commission Bahadurshah Zafar Marg New Delhi. 110 002.

14. UGC (2008). From Chairman on Examination Reforms. D.O. No. F.1-2/2008(XI Plan), dated Jan 31, 2008:Annexure-II, Action Plan for Academic and Administrative Reforms.UGC (2008) From Chairman, D.O. No.F.1-2/2008 (XI Plan). On Examination Reforms dated March 2009.


Progression of E-Banking in Banking Sector

CMA Dr. Kinnarry thakkar Principal sies college sion east Ica membership no – mh 546

CS Lalita Mutreja i/c principal sahyadrishikshanseva mandal’s

arts and commerce college, palghar ica membership no – mh921,

[email protected]

Abstract The banking industry is expected to be a leading player in e-business. While the banks in developed countries are working primarily via internet as non-branch banks, banks in the developing countries use the Internet as an information delivery tool to improve relationship with customers. Banks have traditionally been in the forefront for utilizing technology to improve their services and efficiency. They have, over a longer period of time, been using electronic and telecommunication networks for delivering a wide range of value added products and services. This research paper tries to find out the growth of e-banking in India. The data is collected through secondary method of data collection. The same is being analysed through SPSS software with the help of multiple regression analysis and ANOVA. Keywords: banking, ATM, POS, Multiple regression analysis, ANOVA

1. INTRODUCTION Revolution in technology has been instrumental in bringing major changes in the delivery of banking services. E-banking also known as internet banking has enabled the banks in leveraging plethora of services and products offered by theme-banking has ameliorated the satisfaction level of customers as recipient of services. The ubiquitous reach of internet has eased the delivery of banking products and enhanced the process of providing services to its customers. Banks are facing tough competition from other banks as well as from financial institutions. E-banking is often considered a benchmark in comparing the services offered by banks to its customers. Internet banking is an aid to customers and banks as the transaction costs of the customers is mitigated to a considerable extent simultaneously reducing the operation costs of the banks. One of the most important contributions is breaking the time barriers, i.e. travelling time as well as waiting time. Customers are free to perform certain banking transactions at their convenience. This paper is an attempt to study the growth of E-banking in India.

2. REVIEW OF LITERATURE: Singh et.al. [2011] clearly maps out various aspects on Indian banking sector and various pre & post reforms and innovations in detail. This research paper evaluates the usage pattern of various banking tools and also proposes his views on preventive measures the respondent to take against different frauds undergoing in relation with the technology. Researcher has collected the data from 50 respondents, users of a variety of banking IT tools, services, for which questionnaire has been framed. With the help of collected data researcher analyses that among all the e-channels ATM is the most reasonable and popular tool catching on most of the customers. He also analyses that among all the technology threats 64% of customers are aware of spamming. The researcher also suggested some measures regarding ATM frauds and use of credit cards, which this paper aims for. Sharma et.al. [2012] focuses on adoption of mobile banking services and its influence on usage pattern in India. The data is collected through questionnaire, from users and non-users of mobile banking. Researchers emphasize that mobile banking will lead to convenient banking with low cost. But there is lack of awareness among people rather than SMS banking transactions. According to survey conducted by researcher, access problem, dissatisfaction


and inability to provide knowledge are the challenges in adoption of e-banking. But the measures to overcome such challenges are not being suggested. Sawant [2011]emphasizes on payment and e-payment system in Indian banking. According to Researcher Debit card and Electronic Fund Transfer are the two most popular methods adopted by the customers. Most of the businessman respondents are using RTGS & INFINET and ECS as a mode of payment, with Mobile Banking and DMAT card. The study concludes with the expansion of banking activities not only with e-deposits but also with e-payment systems to delight the customer, which would lead to change in the traditional banking to recent relationship banking. Sudhakar A. M., Suryanarayana, (2011),With broadband communication technological developments and mobile phones penetration(481 million by June 2009) into common man's life have triggered major thrust in the Banking service sector of India. With Mobile Banking- a revolutionary approach to banking transactions has created a strong connectivity between customers and the banks as both will transact with minimum cost and in minimum time. It is timely and its cost effective services can deliver mobile money to non-banked poor people and will induce economic growth of the country. This article discusses the status of Mobile Banking in India and other countries with emphasis on data security and standards and its implication on banking sector.

3. OBJECTIVES: 1. To study the growth of e-banking in India. 2. To study the relationship between number of credit cards users and transactions done. 3. To study the relationship between number of debit card users and transaction done.

4. HYPOTHESIS: H1: There has been an exponential rise in the growth rate of e banking in India. H2: The rise in number of credit card users is highly disproportionate with the rise in ATM and Point of Sales (POS). H3: The rise in number of debit card users is highly disproportionate with the rise in ATM and Point of Sales (POS) 5. RESEARCH METHODOLOGY The study is based on secondary data collected from websites of Reserve Bank of India. The analysis is done using SPSS software. CAGR is used to calculate the growth of e-banking in India. The variables considered for determining the growth of e-banking in India are number of transactions with credit card, number of transactions with debit card, volume and value of NEFT transactions and, volume and value of RTGS transactions. Multiple regression analysis and ANOVA is used to find the co-relationship between increase in the number of credit card users and increase in the number of credit ATMs and POS as well as increase in the number of debit card users and increase in the number of debit ATMs and POS. The study is conducted for the period of 5 years from 2009-10 to 2013-14. 6. ANALYSIS AND INTERPRETATION OF DATA:

TABLE 1 :GROWTH IN NUMBER OF CREDIT CARD TRANSACTIONS Credit Card

No. of Transactions (Actuals) Credit Card

Year ATM(mn) POS(mn) Volume(mn) Value (Bn)

2009-10 1.636 215.652 234.200 629.500

2010-11 2.024 253.650 265.100 755.200

2011-12 2.191 318.230 320.000 966.100

2012-13 2.513 396.717 396.000 1229.500


2013-14 13.277 2204.391 426.000 1524.000

CAGR 0.520 0.592 0.127 0.193

TABLE 2:GROWTH IN NUMBER OF CREDIT CARD TRANSACTIONS OVER DEBIT

CARDS Debit Card

No. of Transactions (Actuals) Debit Card

Year ATM(mn) POS(mn) Volume(mn) Value (Bn)

2009-10 3429.007 205.495 170.170 265.660

2010-11 4284.686 267.826 237.100 386.900

2011-12 5081.917 327.534 327.500 534.300

2012-13 5311.487 466.863 469.100 743.400

2013-14 26697.926 2653.413 523.000 925.500

CAGR 0.508 0.668 0.252 0.284

Multiple Regression Credit card with credit ATM and POS

TABLE3: SUMMARY OUTPUT

Regression Statistics Multiple R 0.9037 R Square 0.8167

Adjusted R Square 0.6334 Standard Error 49.7885 Observations 5.0000

TABLE 5: WORKING ON ATMs AND POS

TABLE 4 : ANNOVA df SS MS F Significance F Regression 2 22088.7284 11044.3642 4.4554 0.1833 Residual 2 4957.7836 2478.8918 Total 4 27046.5120

Coefficients

Standard Error t Stat

P-value

Lower 95%

Upper 95%

Lower 95.0%

Upper 95.0%

Intercept 410.8491

78.1128

5.2597

0.0343 74.7570

746.9412 74.7570

746.9412

ATM 358.2795 199.6869

1.7942

0.2146

1217.4629

500.9040

1217.4629

500.9040

POS 2.1662 1.1690 1.8530

0.2051 -2.8637 7.1960 -2.8637 7.1960


7. FINDINGS FROM DATA: In the above Regression Statistics Table 3: - R Square is 81.67% This means ATM and POS explain about 93.01% of the variation in dependent variable

i.e. This model is not Significant aswe can see in ANOVA Table 4 Significant F 0.1833. In table 5. We can see the P value of ATM and POS are not statistically significant at

95% confidence level. The Intercept Coefficients is 410.8491. Here ATM and Debit and Credit Card user are

showing positive co-relationship. This means that every 1 unit increase in Debit and Credit user, the transactions increase by 358.2795.

Here POS and Debit and Credit Card has a Positive Coefficient, that means every 1 unit increase in Debit and Credit user, the transactions increase by 2.1662.

The analysis shows that there is tremendous growth in e-banking transactions. 8. CONCLUSION: Due to Security measures taken by Banks the usage of Internet for conducting Financial Transaction is more. The usage of ATM/Debit Cards is more due to efficient services provided by all the Banks. The Online Services like E-payments, E-demand drafts, E-ticketing provided by banks are given more preference by customers. Customers are using more E-banking services due to inconvenient bank timings. Internet banking is an aid to customers and banks as the transaction costs of the customers is mitigated to a considerable extent simultaneously reducing the operation costs of the banks. One of the most important contributions is breaking the time barriers, i.e. travelling time as well as waiting time. 9. SCOPE FOR FURTHER RESEARCH: Further researcher will try to find out impact and usage pattern of e-banking services area wise i.e. Urban India and Rural India. REFERENCES:

1. S. K. Pandey and P.Gupta “Technological Innovation In Indian Banking Sector – use of IT products” International Journal of Management & Strategy, Vol.II, Issue II, Jan-June, 2011, ISSN : 2231-0703

2. A.Sharma andV. Kansal, “Mobile banking as Technology Adoption and challenges : A

case of M-banking in India”, International Journal of Scientific Research Publication , Volume 2(2), February, 2012, ISSN (2250 – 3153)

3. B.S Sawant. “Technological Developments in Indian banking sector”, Indian streams

Research Journal, Vol.1, Issue IX / September; 2011, ISSN 2230 – 7850pp.1-4

4. A. M Sudhakar and Suryanarayana, “Emerging mobile banking scenario and its adoption in India: a study”, SRELS Journal of Information Management, Vol. 48 (1), 2011 pp. 41 - 50.

5. A Wungwanitchakorn “Adoption intention of bank’s customers on Internet Banking Service”, ABAC Journal, 2002, Vol.22(3), pp 63-80.

6. P. K. Gupta “Internet Banking in India – Consumer Concerns and Bank Strategies”, Global Journal of Business Research, Vol. 2 (1) 2008, pp. 43 - 51.


A prospective study on the Challenges and Problems of MSME in North Eastern Region of India

Dr. K.C.Biswal, Associate Professor,

Department of Management, North-Eastern Hill University,

Tura Campus, Meghalaya-794002 [email protected]

Abstract.

The Micro, Small and Medium Enterprises (MSMEs) sector is a key component of India’s economy and industrial sector. MSMEs including khadi and village/rural enterprises add extensively to India’s GDP and export earnings besides meeting the social objectives of providing employment opportunities to millions of people across the country. Hence MSME occupied and important role in the process of growth and development but the NER as a whole faced various challenges and several problems amidst the opportunities for inclusive growth. The present paper has made humble attempt to overview the challenges and problems of MSME in North Eastern region of India based on the secondary data as an attempt to assemble from various journals, papers, e-magazines, annual reports, websites etc. The proposed study covers from 2006-07 to 2014-15 with the intention for the status of MSME in India with reference to North Eastern region of India. The analysis of the study is made specifically on the covering states of NER in comparison to rest of India. Further investigation reveals that NER has a share of only 1.14% from India’s total farm credit flow during 2010-11 and stands at 2% of India’s total enterprises and Assam top among NER states in terms of number of working enterprises and employment under MSME sector.

Keywords: Micro Small and Medium Enterprises, Challenges and Problems, Inadequate Finance etc.

Introduction

The Micro, Small and Medium Enterprises (MSMEs) sector is a key component of India’s economy and industrial sector. MSMEs including khadi and village/rural enterprises add extensively to India’s GDP and export earnings besides meeting the social objectives of providing employment opportunities to millions of people across the country. After independence in 1947, India adopts mixed economic planning as a method to achieve economic development. Along with the Large Scale sector the Small Scale sector because of its small size, employment strength, proximity to natural resources and its fittingness for rural area with limited but flexible techno-economic structure was also entrusted. The Government of India established the Ministry of Small Scale Industries and Agro & Rural Industries (SSI & ARI) in the year 1999, to promote SSIs through various incentives related to financial, fiscal and infrastructure measure; along with a heavy industrial base and to act as the nodal Ministry for formulation of policies and Central sector programmes/schemes, their implementation and related coordination and for supplementing the efforts of the State, Union Territories for promotion and development of small scale, agro and rural industries in the country. Consequently, in the year 2001 the Ministry of SSI and ARI as bifurcated into two separate Ministries, namely, Ministry of Small Scale Industries and Ministry of Agro and Rural Industries. In the year 2006, "Micro, Small and Medium Enterprises


Development Act (MSMED) 2006" was enacted by the parliament. Pursuant to this enactment, the Ministry of Agro and Rural Industries and the Ministry of Small Scale Industries were merged into a single Ministry, namely, "Ministry of Micro, Small and Medium Enterprises." Post liberalization economic conditions have created immense growth prospect for the small scale industries. The Micro, Small and Medium Enterprises in India are acting as power and spirit of economic growth in the 21st century.

MSME today occupies an important role in the process of growth and development of an economy and the region as a whole and even regarded as “Engine of Economic Growth”. It is the most dynamic and vital organs of an economy. It contributes to Export revenue, capital formation in fixed assets as well as GDP to a reasonable extent and employment at the most, thus underlining the significant contribution of MSME to the economy with over 1114 lakh person in employment and over 488 lakh enterprises contributing 45% of manufacturing output and 40% of total exports of the country. The major advantage of the sector is its employment potential at low capital cost thus provides for both self-employment and wage employment. The labour intensity of the MSME sector is much higher than that of the large enterprises. The MSMEs constitute over 90% of total enterprises in most of the economies and are credited with generating the highest rates of employment growth and account for a major share of industrial production and exports. SME play an significant role in alleviating poverty and contribute significantly towards the growth of developing economies ( Agbeibor, 2006).

The NER features with hilly region and insurgency in collaboration with poor communication facilities and critical developmental challenges had also been regarded as “a late comer to development” (as defined by Sukla Commission, 1997) is industrially backward and has been declared as category “A” (Industrially backward region) which clearly signifies the poor performances of MSME in the region which on further analysis found that even the share from All Financial Institutions towards the NER was exceedingly small less than 1% of all India level (Sundaram, 2013).

Consequent to the enactment of Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, the small and medium sector has been defined as micro, small and medium enterprises with effect from October 2, 2006 ( the Act defined the medium enterprises for the first time). Further, separate investment limits have been prescribed for manufacturing and service enterprises. The new definition is as follows:

A: Manufacturing Enterprises:

[1]. A micro enterprise, where the investment in plant and machinery does not exceed Rs. 25 lakh;

[2]. A small enterprise, where the investment in plant and machinery is more than Rs. 25 lakh but does not exceed Rs. 5 crore; and

[3]. A medium enterprise, where the investment in plant and machinery is more than Rs. 5 crores but does not exceed Rs. 10 crores.

B: Service Enterprises a. A micro enterprise, where the investment in equipment does not exceed Rs.

10 lakh; b. A small enterprise, where the investment in equipment is more than Rs, 10

lakh but does not exceed Rs. 2 crores; and


c. A medium enterprise, where the investment in equipment is more than Rs. 2 crores but does not exceed Rs. 5 crores.

This paper has made an attempt to investigate the overall MSME status in NER and its performance towards economic development and to draw out some of the vital aspects of the growth and development that hampers and to termed it as the challenges and problems of MSME in NER. Background of the study

The North East region blessed with biodiversity, huge hydro-energy potential, oil and gas, coal, limestone, forest wealth, fruits and vegetables, flowers, herbs and aromatic plants, rare and rich flora and fauna lies deep in the easternmost of Himalayan region of India. The NER connected to rest of India by merely 20 km of wide land at Siliguri, West Bengal), and India shares over 2,000 km of border with Bhutan, China, Myanmar and Bangladesh. It also offers huge opportunities in sectors of strategic importance like energy and infrastructure; oil, natural gas and hydrocarbons; agro, food processing and horticulture; floriculture; cement etc. Tourism is another potential high growth industry. NER constitutes 8% of total Indian geographical size, only 3% of the Indian total population, houses over 220 ethnic groups, abodes over 160 scheduled tribes and 400 other tribal and sub tribal communities and groups (Arora and Madhuresh, 2014). The North East region characterized by hilly in nature, insurgency, lack of developed transport, poor economic and infrastructure overheads, productive investment deficiencies, lack of basic infrastructure facilities, prevalence of unskilled labour force, sluggish agricultural performance and high degree of financial exclusion. As a result, the region as a whole found depended on the flow of central government financial resources under the provisions of Special Category States with 90% grants. Further such a lion’s share outlay are utilized in paying for unproductive purposes such as salaries which are directly used to meet consumption needs of the employees rather than for productive investment, infrastructure etc. essential for economic growth and overall development.

Moreover, financially the scenario of the NER remains poor. As on end-March 2003, the total number of bank branches of SCBs (excluding RRBs) in the NER accounted for only 2.4% of the all India level. The Outstanding deposits of SCBs in the NER as on end-March 2003 formed only 1.5% of all-India level. The share of bank credit to SSI also declined gradually in most States in the NER. The share of bank credit to agriculture declined in all States except Manipur. Strikingly, the C-D ratios of SCBs (excluding RRBs) in the NER varied between 14% (Arunachal Pradesh) and 29% (Meghalaya), much lower than the all-India level of around 60% as on end-March 2003 (Sundaram, 2013). The share of each State in the NER in total sanctions and disbursements by AFIs is less than 1% of all-India level. The system of co-operative credit dispensation remains limited in the NE with only 27 offices of urban co-operative banks (as against 7,479 at the all-India level) and 18 branches of district central co-operative banks (as against 12,580 at the all-India level) as on end-March 2001. Even though the NER has the largest network (215 branches) of State co-operative banks next only to the Northern Region, in terms of deposits mobilized by these banks, NER’s share stood at a scanty 3.5% of all India outstanding in 2001.


Table 1: Economic and Social Indices for the North Eastern Region

State Area (Sq. KM) 2011

Population (Lac Persons) 2011

Rural Population (%) 2011

Sex Ratio 2011

Literacy Rate (%) 2011

Literacy Rate (%) 2011 Males

Literacy Rate (%) 2011 Females

Infant Mortality Rate (per '000) 2010

% of Population Below Poverty Line - 2011-12

GSDP (Rs. crore) (Constant Base: 2004-05) 2012-13*

Per Capita Electricity Consumption (KWH) 2009-10

Per Capita GSDP 2012-13

Surface Road Length (KM) 2011

Surface Road Length / Area (Sq. KM) 2011

Arunachal Pradesh

83743

13.83

77 920

66.95

73.69

59.57

31 34.67

5934 470 42065

14336

0.17

Assam

78438

311.69

86 954

73.18

78.81

67.27

58 31.98

85690

204.8 26953

37816

0.48

Manipur

22327

27.22

70 987

79.85

86.49

73.17

14 36.89

8073 240.22 29077

8140

0.36

Meghalaya

22429

29.64

80 986

75.48

77.17

73.78

55 11.87

12072

675.19 39930

7072

0.32

Mizoram

21081

10.91

48 975

91.58

93.72

89.4 37 20.4

5017

376.99 45084

7001

0.33

Nagaland

16579

19.81

71 931

80.11

83.29

76.69

23 18.88

9871 218.03 48851

15470

0.93

Sikkim

7096

6.08 75 889

82.2

87.29

76.43

30 8.19

5491

850 88542

4119

0.58

Tripura

10486

36.71

74 961

87.75

92.18

83.15

27 14.05

16993

335.47 45382

14203

1.35

NER states

262179

455.89

82 944

79.64

84.08

74.93

34 22.11

149141

257.98 32073

108157

0.41

India 328726

3

12101.9

69 940

71.04

82.14

65.46

47 21.92

5505433

778.71 44600

234147

9

0.71

Source: http://mospi.nic.in/mospi_new/upload/SYB2013/ch2.html http://dbie.rbi.org.in/DBIE/dbie.rbi?site=statistics http://planningcommission.nic.in/news/pre_pov2307.pdf SIDBI as Nodal Agency for Government Schemes:

In addition to its direct and indirect operations, SIDBI also plays a pivotal role in implementation of various schemes for MSME sector undertaken by the Government of India (GoI). SIDBI continued to play an important role as a nodal agency in the implementation of GoI schemes, viz. Credit Linked Capital Subsidy Scheme (CLCSS) [Ministry of MSME], Technology Upgradation Fund Scheme for Textile Industry (TUFS) [Ministry of Textiles], Integrated Development of Leather Sector Scheme (IDLSS) [Ministry of Commerce & Industry] and Scheme of Technology Upgradation / Setting up / Modernisation / Expansion of Food Processing Industries (FPTUFS) [Ministry of Food Processing Industries].


SIDBI extends financial assistance to MSMEs in North Eastern Region in the following ways : 1.1 Refinance / Indirect Finance: The indirect financial assistance is extended in form of refinance support to more than 900 primary lending institutions (PLIs) comprising banks, SFIs etc having a combined network over 82,000 branches. SIDBI also provides financial assistance to Micro Finance Institutions (MFIs) for onward lending Micro Finance services to the poor, especially women, the refinance support is extended for:

(i) Setting up of new projects and for technology up gradation / modernization, diversification, expansion, rehabilitation, energy efficiency, adoption of clean production technologies etc of existing MSMEs.

(ii) Service sector entities. (iii) Infrastructure Development and Up gradation.

1.2 Direct Finance: Direct finance is provided to fill the credit gaps by way of supplementing and complementing the efforts of the banks / SFCs / MFIs to meet adequate credit needs of MSMEs at affordable rates. Direct finance is channelized through its present network of 103 branches of all over the country covering more than 600 MSMEs clusters.

SIDBI extended financial assistances to MSME in the following way: i) Term loan. ii) Working capital finance. iii) MSME receivable finance. iv) Non based facility.

1.3 Micro Finance: SIDBI provides Micro finance service to the millions of poor people in our country through a network of strong and vibrant financial intermediaries. 1.4 Micro Enterprise Loan (MEL): A new scheme i.e. Micro Enterprise Loan Scheme was introduced to meet the problem faced by graduated borrowers under Micro finance dispensation. Other incentives taken by SIDBI for North Eastern States:

SIDBI has been laying emphases on promotional and development requirements of micro small and medium enterprises (MSMEs) in North Eastern Region of India for development of the region. The committee on financial sector plan for NER under Smt. Usha Thorat, Dy. Governer, RBI has made some recommendation for SIDBI to implement its development programs i.e. cluster development programs and rural industries development programs in all states of North East. The Bank had set up a Micro and Small Enterprise fund for North Eastern Region and Sikkim with an initial corpus of Rs. 10 crores.

The Small Industries Development Bank of India (SIDBI) introduced a “Small loan scheme for North Eastern Region” on pilot basis in Aizawl to solve the problem of MSMEs in North Eastern Region.

A new scheme i.e. Micro Enterprise Loan Scheme was introduced to meet the problem faced by graduated borrowers under Micro finance dispensation. The assistance extended under this scheme, assistance ranging between Rs. 0.5 Lakh to Rs. 5 lakh is expended.

Credit Guarantee Trust for Micro Small Enterprises (CGTMSE) has risen to credit guarantee cover from 75% to 80% loan sanctioned in North Eastern Region. Further, it has reduced the upfront guarantee Fee of 50% from 1.5% to 75% for all loans in North Eastern Region.

A memorandum of understanding (MOU) was executed with NEDFI in March 2012 for providing various financial and development services including MSME


finance, Micro finance and also undertaking various P&D activities in NER. Under this arrangement, credit counseling centers were opened. There are five centres in NER which includes – Shillong (Meghalaya), Silchar (Assam), Aizawl (Mizoram), Gangtok (Sikkim) and Agartala (Tripura).

A Micro Enterprise Business Information Counselors (MEBIC) centre has been set up by SIDBI at Guwahati for fostering entrepreneurship by providing counseling initial handholding and development of Micro enterprise in NER. Rastriya Gramin Vikash Nidhi (RGVN) has been supported for operating this centre. Till 31st March the centre has rendered services to more than 1400 existing and prospective Micro entrepreneurs.

The Bank has supported 39 cluster development Programmes (CDPs) in different states in NER covering activities like bamboo mat weaving, carpet waving handicraft, handloom weaving etc. These cluster development initiatives would benefit about 6000 artisans. Out of the above, skill entrepreneurship training progmammes are presently being conducted in 9 different cluster in NER.

Under the Bank Flagship P&D Programme vie. MEPP (Micro Enterprise Promotion Programme), 22 districts in NER have so far been covered, out of which 10 are currently under implementation. These MEPPs have cumulatively resulted in promotion of 2500 units including 223 units during financial year 2011-12. Objectives of the study

i) To understand the performance and growth status of MSME in India and NER

ii) To analyze and understand the challenges and problems of MSME in NER

Review of related Literature

General Aspect Literature

Tambunan (2011) in the study found that lack of capital, business information, technology, and skilled workforce, difficulties in procuring raw materials, marketing and distribution challenges, and Government policy and regulations are the main constraints’ faced by SMEs. These constraints may differ from region to region, between sectors, or between individual enterprises within a sector where as Shiralashetti (2012) found that absence of adequate and timely supply of bank finance, limited capital and knowledge, lack of power, low quality inputs, low return, non-availability of suitable technology, low production capacity, ineffective marketing strategies are the main problems of MSMEs in India.

Financial Aspect Literature

Naidu & Chand (2011) suggest that financial problems faced by MSEs could be classified into 3 broad categories. Financing problems, operational problems and administrative problems, sales and debtors problems but according to Fumo & Jabbour (2011) financial and competitive barriers are the main barriers faced by MSEs. These barriers vary according to the field of activity of enterprise and Tambunan (2011) states that even though there are various government sponsored credit schemes, the majority of SMEs especially located in rural areas never receive credit from such schemes. Whereas Mishra and Brahme, 2011 in their studies revealed that the major reason for not seeking credit was lack of information about credit and lack of required security and Rao & Ganesh (2011) in their findings showed


that inadequate credit from banks is the major reasons for finance problems of Micro Enterprises. Reluctance by banks to extend credit to women, inability to provide adequate security and margin money, tight repayment schedule are the main problems being faced by these enterprises.

Research Methodology

The present study is analytical in nature and made a humble attempt based on secondary data by collecting from various papers, journals, e-magazines, reports, websites specifically on the relevant topic and area of study and further develop the analysis by comparison and cross checking based on the collected papers and journals. The relevant secondary data is also collected from the publication of Ministry of Micro, Small and Medium Enterprises, Government of India published by Reserve Bank of India, Handbook of Statistics on Indian Economy, NEDFi and others co-related websites such as Directorate of Industries etc. The proposed study covers from 2006-07 to 2014-15 with the intention for the status of MSME in India with reference to North Eastern region of India. The analysis of the study is made specifically on the covering states of NER in comparison to rest of India.

Analysis The following details exhibits the performance and the status of NER under MSME sector.

Table 2: Growth and Performance of MSME in India / NER KVI Output

Production Value in Lakh Sales Value in Lakh Employment Value in Lakh

State 2011-12

2012-13

2013-14

2014-

15*

2011-12

2012-13

2013-14

2014-15*

2011-12

2012-13

2013-14

2014-15*

Arunachal Pradesh

0.13

0.09

0.15

0.12

6581.12

6833.51

7661.19

6320.48

4714.43

5188.6

5642.5

4485.79

Assam 4.13

2.89

4.54

3.54

78224.43

81234.51

91033.33

75102.5

58500.34

64350.74

69940.57

55602.75

Manipur

0.77

0.53

0.85

0.66

14197.58

14742.53

16526.29

13634.19

10135.33

11152.66

12121.76

9636.8

Meghalaya

0.48

0.33

0.52

0.4 15565.07

16161.12

18122.04

14950.68

11987.66

13194.08

14352.91

11410.56

Mizoram

0.95

0.66

1.05

0.82

33282.98

34557.37

38751.23

31969.76

22884.2

25187.43

27391.38

21776.15

Nagaland

0.62

0.43

0.68

0.53

16040.81

16656.67

18671.38

15403.89

12577.19

13761.33

15043.2

11959.34

Sikkim 0.26

0.18

0.26

0.19

5393.61

5600.29

6279.26

5180.39

4120.14

4534.83

4931.67

3920.68

Tripura 0.71

0.49

0.79

0.62

13967.26

14503.07

16259.07

13413.73

10818.93

11907.82

12949.94

10295.2

Total 7.87

5.6 8.84

6.88

183252.9

190289.1

213303.8

175975.6

135738.2

149277.5

162373.9

129087.3

Source: MSME report, 2008-09 *upto December 2014

Table 3: Primary Industries in NER State Key MSME Industry

Arunachal Pradesh Arts and Craft; Weaving; Cane and Bamboo

Assam Tea; Tourism; Traditional Cottage Industry


Manipur Handloom Handicrafts; Sericulture; Food Processing

Meghalaya Food Processing; Horticulture; Mining

Nagaland Bamboo; Food Processing; Horticulture

Mizoram Bamboo; Energy; Sericulture

Tripura Food Processing; Bamboo; Handloom Handicrafts

Source: Ministry of MSME Annual Report 2013

GOI Policy NEIIPP (North East Industrial and Investment Promotion Policy) 2007 Policy:

The Government of India has laid down the following packages of incentives which has encouraged and promote the enterprises in North East Region of India.

1. 100% excise exemption on finished products. 2. 100% income tax exemption 3. 30% capital investment subsidy on the investment of P & M, 4. 90% transport subsidy 5. 3% interest subsidy on working capital loan and comprehensive insurance

etc. Analysis: The below tables analyze the status and growth of the MSME sectors in the region.

Table 4: North East and the MSMEs (2006-11) Projected

Year Sikkim

Arunachal

Pradesh

Nagaland

Manipur

Mizoram

Tripura

Meghalaya

Assam NER India

% of NER to India

% AV of NER to India

Number of

working

enterprises

2006-07 123 451 1331 4507 3714

1253 3063

18671

33113

36176000

0.09

0.11

2007-08 138 514 2109 4549 3940

1409 3469

20425

36553

37736000

0.10

2008-09 209 621 4630 4689 4418

1621 3879

22056

42123

39370000

0.11

2009-10 252 706 6280 4778 4770

1805 4287

23749

46627

41080000

0.11

2010-11 279 829 9315 4881 5403

2180 5497

26887

55271

42873000

0.13

Fixed Investment (Rs.

Crore)

2006-07

27.34

584.04

719.12

92.34

279.88

382.5 132.08

5249.82

7467.12

868543.79

0.86

1.09

2007-08

30.68

665.63

1139.49

93.25

297.08

430.17 149.51

5743.51

8549.32

920459.84

0.93

2008-09

46.46 804.2

2501.59

96.12

333.12

494.89 167.18

6202.15

10645.7

977114.72

1.09

2009-10

55.91

914.27

3392.81

97.95

359.66

551.07 184.77

6678.08

12234.5

1038546.1

1.18

2010-11

63.62

1081.04

5023.46

105.14

431.88

530.1 245.7

7941.84

15422.8

1105934.1

1.39

Employment

(Person)

2006-07

1151 5893

16149

16738

26015

18807 12896

133561

231210

80523000

0.29 0.3

8 2007-08

1292 6718

25582

16877

27580

21149 14604

146039

259841

84200000

0.31


2008-09

1956 8116

56162

17396

30926

24331 16331

157700

312918

88084000

0.36

2009-10

2354 9227

76170

17726

33390

27093 18048

169802

353810

92179000

0.38

2010-11

2651 10757

113857

21689

37860

37604 23193

284933

532544

96515000

0.55

Source: for 2006 -2010 MSME Annual Report 2010-11[11] Source: MSME Annual Report 2011-12

Table 5: Finance to MSME sector, SLBC NE report

Year Nagaland Mizoram Meghalaya Manipur Assam Arunachal

Units

Amount in

Lacs Unit

s

Amount in Lacs

Units

Amount in Lacs

Units

Amount in

Lacs Units Amount in Lacs

Units

Amount in

Lacs 2012-

13 100 2042.2 690 4941.

98 100 2042.

2 5769

21151.11

69749

267131.26 29

1657.46

2013-14 579

11064.44 999

7289.49 432

5024.39

6537

16297.3

107410

483716.96 28 469.94

2014-15 164 903.32

1654

9818.49 679

2289.85 81 650.2

109061

469977.7

2480

11285.13

Total 843 3343

1211

12387

286220

2537

Source: Author’s compile from www.onlineslbene.nic.in

Table 6: Farm Credit Flow, 2010-11 (Rs in Cr)

South 184046 North 115636 Western 62804 Eastern 38261 NER 4620

Source: ASSOCHAM, Capital Market-Live News, Nov 8 2013.

Challenges and Problems:

1. As per the MSME, 2013 report, one of the key constraints for MSME sector growth in India is Inadequate Finance which is 28% and which is highly reflected by the report of the ASSOCHAM (2013) and Indian Chamber of Commerce (2013) that strongly support for the case of North Eastern Region that clearly indicates the share of only 1.14% at 4620 crores from India’s total Farm credit flow of 405367 crores in 2010-11 fiscal year.

2. Inadequate Market Linkages: This constraints (problems) secured the highest share for hampering the growth of MSME sector in India with 32% (MSME report,2013). All types of business enterprises face marketing problems, but these problems are more severe in case of small scale units because of lack of knowledge, adequate funds and lack of experience. Some of the marketing problems commonly faced by the small scale entrepreneurs are: i) Competition from large scale sector: ii) Lack of marketing knowledge: iii) Lack of sales promotion: iv) Weak bargaining power: v) Product quality: vi) Credit sales: The small scale enterprise is invariably called upon to sell

on credit. However, when it comes to purchasing inputs, they are denied


liberal credit facilities. As a result, they have to borrow excessive working capital than actually needed. This increases the general cost of production and prices, making it noncompetitive.

3. Lack of Infrastructure: The MSME in its report, 2013 has pointed it with 29%. The constraint has highly and significantly contributes in impeding the growth of MSME sector in the North Eastern region. The NER as a region been regarded as “a late comer to development” (as defined by Sukla Commission, 1997) is industrially backward and has been declared as category “A” (Industrially backward region) characterized by insurgency, communication bottleneck and geographical isolation which directly as well as indirectly favour for inadequate exploitation of the natural and human resources. The rich natural and human resources available in the region could not be utilized to the full extent mainly due to the geo-political condition, including ever-deteriorating law and order, which has a lot of implication on the development of must needed infrastructure. The negligence of the central government in the past and due to the problems of insurgency at present resulted into the gross paucity of infrastructure in the region. This has crippled the free flow of factors as well as products. In such a situation, it would be hard for the region to accrue the benefits of globalization. It is also not surprising to find the lack of FDI inflow in the region. During January 2000 to Mach 2006 the region received only 9 million US dollar i.e. 0.04 per cent of the total FDI inflow in the country.

4. Insurgency: The problem of insurgency in the region has elongated history. Insurgency is the key problem inflicting the region. The problem of insurgency has become the stumbling block in the course of development. It hindered every development strategy and obstructed all the developmental works. Kidnapping, extortion, killing, bandhs, strikes and curfews have become the order of the day. At the same time, the numbers and activities of the plain criminals masquerading as insurgents have also increased alarmingly. Today, the region has become the killing field and specialized in the export to death bodies, if not the manufacturing products. In short, the region has reached the pinnacle of the industrialization of insurgency and criminalization process.

5. Governance: The state is responsible for the creation of conducive political, legal and economic environment for building individual capabilities and encouraging private initiatives.” It would, however, depend on the quality of the governance–mechanism, processes, systems, structures and institutions that guide the social, economic and political relationship. As per Sundaram (2013), none of these states of NER has been able to breed adequate funds to meet the budgetary requirements, hence to a great extent, depends on the flow of financial resources from the central government under the provisions of Special Category States in which out of total central assistance to the state 90 percent accounts for grants and remaining 10 percent are loans. Howsoever, with such pact of lion’s shares of states, outlays are used in paying salaries and maintaining the huge army of unproductive government employees. Naturally financial resources of the states including central transfers are directly used to meet consumption needs of the employees that otherwise could have been used for productive investment, escalation of assets, infrastructure, etc., which are so essential for industrial as well as economic growth and overall economic development.

6. eaihgitephg


Findings of the study 1. As per ASSOCHAM report, North Eastern region has a share of Farm credit

flow with 1.14% only in the year 2010-11 from India’s total share. 2. As per MSME, 2013 report, the contribution of NER in terms of manufacturing

enterprises to India’s total enterprises stands at 2% only. 3. In terms of number of working enterprises (Table 4), NER has a share of 0.11%

at an average to India’s total working enterprises. Assam stands top by 26887, followed by Meghalaya (5497) and Mizoram (5403) in the North eastern region.

4. In terms of number of Employment (Table 4), NER has a share of 0.38% at an average to India’s total employment in the sector. Assam stands top by 284933, followed by Mizoram (37860) and Tripura (37604) in the North eastern region.

5. The state of Meghalaya and Tripura (Table 3) has Food processing as the key MSME industry, whereas Nagaland, Mizoram and some Tripura has Bamboo as the Key MSME industry, while Assam with Tea and Tourism and Arunachal Pradesh with Arts and Craft and Weaving as the Key MSME industry.

Limitations The study is based on the secondary data collected, analytical in nature and assembled from the various volumes of journals, paper, e-magazines, websites etc. Thus the study possesses all the inherent limitations. Non-availability of required financial data for the whole period of the study is restricted in the analysis of the study. Therefore, limitation of the small sample and study period is also very much prevalent in this study. In spite of limitations, the secondary remain to be the main sources of data for an in-depth study of performance, trends and growth in the region. Conclusion With reference to the ASSOCHAM report, 2013 in the context, “The share of agriculture fell below 14% to India’s GDP at Rs 5,75,000 cr during 2012-13 fiscal despite more than 50% of population depend on the sector”, and since natural resources are not optimally utilized in the NER, if the collective responsibility between the farmers and the Department in collaboration with the Headman and other stakeholders could be set up at the village level – by providing all the inputs like finances, ways and means of agricultural inputs, regular supply of HYV seed and fertilizers etc and at the same time creation of marketing channels with storage facilities for the agricultural products would definitely lessen the dependence on import of the agricultural products for living and this process would provide self-sustainability at the village level at state level as a whole which would again contribute to the GSDP and country’s GDP.

As per the reports, taking the key MSME sector of the region state wise like Food processing for Meghalaya & Tripura, Bamboo for Nagaland and Mizoram, Tea for Assam and the major agricultural productions of the regions such as ginger, jackfruits, betel nut etc, under the potentialities of North Eastern region for India’s Look East policy, the appropriate and specific policies by the respective authorities would definitely uplift and develop the MSME sector of the region.

References Annual Report (2010-2011), Ministry of Micro, Small and Medium Enterprises, Government of India. Annual Report (2011-2012), Ministry of Micro, Small and Medium Enterprises, Government of India. Annual Report (2013-2014), Ministry of Micro, Small and Medium Enterprises, Government of India.


Annual Reports of various years of Reserve Bank of India/Ministry of MSME, SIDBI/State Financial Corporations/Non-Banking Financial Companies, etc. Chandrika, M., and Vani, R., (2014), “The Prospects and Problems of MSMEs sector in India an Analytical study”, International Journal of Business and Management Invention, 3 (8) 27-40 Crisil, (2014), “Analyses the Growth Performance of 393 MSMEs, Business Nonstop Desk. http://www.businessnonstop.in/ Duhan, K., (2014), “Challenges and Opportunities for Micro, Small and Medium Enterprises (MSMEs) Sector in India”, Journal of International Academic Research for Multidisciplinary, 2 (4) 142 -152. Final Report- Interim Study to Assess and Evaluate the Impact of NEIIPP 2007 Handbook of Industrial Policy and Statistics, 2008-09. Indian Chamber of Commerce, (2013), “Empowering MSMEs through financing and linkages”. International Finance Corporation, World Bank Group. (2012). Micro, Small and Medium Enterprise Finance in India. New Delhi: IFC Kannan, A,S., and Sudalaimuthu, S., (2014), Indian MSMEs: Initiatives and Financing trends, International Journal of Management, 5 (10) 58 -70. Kumar, A., Batra, V., and Sharma, S,K., (2009), Micro, Small and Medium Enterprises (MSMEs) in India: Challenges and Issues in the Current Scenario”, Management Insight, 5 (2) 75-87. Kumar, N,B,K., and Gugloth, S., (2012), “ Micro, Small and Medium Enterprises in the 21st Century”, International Journal of Business Economics and Management Research, 2 (5) 23 - 38 Kumar, S., Prasad, K,V,S., and Rao, S,P., (2013), “ Sustainable Trends and Policies of MSME in Economic Development in India: An Empirical study”, International Journal of Management and Business Studies, 3 (2) 106 – 111. Krishna, M.J.(2004), “World Trade Organization and its Implications on Small scale Industries in Karnataka, SEDME, 31 (2) 91-102 Maisnam, C., (2015), “MSMEs have faced a number of critical development challenges 79 small business units are turning financially unviable every day or 3 units falling sick every hour”, 16th Annual Conference Proceedings, 569 – 577. Mathe,, P,M., (2009), “The SME Sector-A Golden Chance in the Waiting”, the HinduSurvey of Indian Industry, pp: 57-64. Mehta, A,K., and Shah, A., (2003), “ Chronic Poverty in India: Incidence, Causes and Policies”, World Developent, 3 (3) 491-511. Miguel, E., Satyanath, S., and Sergenti, E., (2004), “Economic Shocks and Civil Conflict: An Instrumental Variables Approach, Journal of Political Economy, 112 (4) 725 – 753. Naidu, S., and Chand, A. (2012). “A comparative study of the financial problems faced by micro, small and medium enterprises in the manufacturing sector of Figi and Tonga”. International Journal of Emerging Markets, 7 (3), 245 - 262. Nishanth, P., and Zakkariya, K,A., (2014), Barriers faced by Micro, Small and Medium Enterprises in Raising Finance,”, Abhinav National Monthly Refereed Journal of Research in Commerce and Management, 3 (5) 39 – 46. Pulse, (2014), “ An inclusive growth of North Eastern Region: Need for an enhanced role of SMEs. Rajeevan, N., and Sulphey, M. M. (2012). “A Study on the position of Small and Medium Enterprises in Kerala Vis a Vis the national scenario”. International Journal of Research in Commerce, Economics and Management, 2 (3), 57 - 60. Ramachandran, S., and Devi, M,P., (2012), MSME Training: Performance and Acheivement”, Middle-East Journal of Scientific Research, 12 (12) 1638 – 1643. Report of the Task Force on Connectivity and Promotion of Trade and Investment in NE States, Planning Commission, GOI, 2006. Report on Trends and Progress of Banking in India of various years, Reserve Bank of India Result Framework Document for Ministry of MSME, (2013-14)


Shiralashetti, A. S. (2012). “Prospects and Problems of MSMEs in India”. International Journal of Multidisciplinary and Accademic Research , 1 (2). Singh, G., and Belwal, R. (2008).” Entrepreneurship and SMEs in Ethiopia Evaluating the role, prospects and problems faced by women in this sector”. Gender in Management : An International Journal , 23 (2), 120 - 136. Subrahmanya, B., (2011), “Small-Scale Industry Development for Export Promotion: India‟s Experience Under Liberalisation” in “Micro and Small Enterprises in India: Era of Reforms” Keshab Da(Ed) pp. 46-66. Sarma, N., and Talukdar, P,H., (2013), “ Trend Analysis of Micro and Small Enterprises in North East India: with reference to Entrepreneur Deevelopment Programme under KVIC, Assam”, International Journal of Emerging Technology and Advanced Engineering” 3 (8) 134 – 141. Sundaram, A., (2013), “ Problems, Prospects, Opportunities and Challenges in North East India”, Research Journal of Economics and Business Studies, 2(5) 50-57. Tambunan, T. T. (2011). “Development of Small and Medium Enterprises in a developing country : The Indonesian Case”. Journal of Enterprising Communities: People and Places in the Global Economy, 5 (1), 68 - 82. Websites:

www.msme.gov.in http://clustersner.in/index.html http://www.mdoner.gov.in/content/2009-10# file:///I:/%C2%A0/Juny%20MSME/Agriculture%20in%20North%20East%20India%20-

%20Article_files/Agriculture%20in%20North%20East%20India%20-%20Article.html www.onlineslbene.nic.in

http://ijellh.com/


Islamic Microfinance: An Assessment of Perception among People of India on Sharia Compliant Solution

Kamrunnisha

Research Scholar, University School of Applied management

Punjabi University, Patiala [email protected]

Dr. Manjit Singh Professor, University School of Applied

management Punjabi University, Patiala

Abstract Islamic microfinance comes up as another financial alternative for the people having low-income and wants product based on Shariah principles. This programme would enable financial access of poor people. But the programme can be successful only if people know about it. So, the paper aims to assess the level of awareness about Islamic microfinance as financial alternative among people of India and also evaluated the sources of fund for Islamic microfinance and its role towards society. The study is based on primary data has been collected by carrying on exploratory survey of sample places from 100 respondents through framed questionnaire. Statistical tools were used to analyse the data so gathered such as Analysis of variance (ANOVA), Mean value, standard deviation and F-ratio. The study suggests that people know about Islamic microfinance but still lacking awareness in various aspects like profit and sharing principles etc. Keywords: Islamic microfinance, Shariah, Analysis of variance. Introduction Poverty prevalent in our country since ages to the existence of human beings and out broke as an epidemic throughout the world with the passage of time. It has become challenge to combat poverty since the restoration of Independence in 1947. Microfinance came as a boon to have-nots but still it could not help them due to high rate of interest and incompatible to the people of certain community. Therefore, Islamic microfinance as the name suggests an ‘Islamic’ model of microfinance comprises of two growing industries such as microfinance and Islamic finance which refers to interest-free small capital micro investment finance based on profit and loss sharing (PLS) provided to the people having low income and wants financial product conforming Shariah principles for generating employment and increasing income by meeting their agricultural needs. The main objective of this programme is to eradicate poverty by providing welfare, ethical and moral services to the poor people. The concept of Islamic microfinance emerged when people living in Muslim-majority countries not using financial services available to them because they considered conventional product as inappropriate according to Islamic principles. The rise of Islamic finance around the world leads to the rise of Islamic microfinance. This programme empowers less fortunate people financially by making them able to build up their own assets by encouraging entrepreneurship among them. It could be the key for providing financial access to the millions of poor Muslim who do not take part in the conventional finance because of non-compliance to the Shariah principles (Chowdhury, 2010). Islamic microfinance has the capability to meet the not fulfilled demand of poor people by providing financial access to them. Within the short period of time, Islamic microfinance has showed a remarkable performance for instance countries like Indonesia and Bangladesh can be viewed as success stories in this. Islamic microfinance has prospered in Iraq due to the increasing demand of Shariah compliant products. As a consequence, the growth rate of Islamic microfinance clients reached to 79% during 2008-09 and 68% in 2009-10 as compared to conventional clients 42% and 32% respectively (Louis Berger Group, Inc., 2010). Islami Bank Bangladesh limited provides Islamic microfinance service in Bangladesh through its rural development scheme which has endeavoured to design a Shariah model for easing poverty and uplift the overall socioeconomic standards of poor by Islamic microfinance


programme. It has been observed that the programme of Islamic microfinance increased women’s income and assets led to the boost in their economic independence and sense of self-confidence which helped them to break the web of poverty and have more control over their lives and economic decisions (Aseanty and Hassan, 2013). Effendi et al. (2013) through their study suggested that Islamic microfinance institutions have a significant impact in combating poverty irrespective of regional differences. The present study tried to find out the feasibility of Islamic microfinance in the country by examining the level of awareness about Islamic microfinance among people, what could be the main sources of fund for Islamic microfinance to sustain and the role of Islamic micro finance programme? Review of literature Islamic microfinance as discussed above is the Islamic version of microfinance in order to alleviate poverty by providing Shariah compliant financial solutions to those who rejects conventional transactions. This section endeavoured to throw light on the practice of Islamic microfinance programme by taking into account the literature of various researchers all over the world. Khan and Usman (2009), examined the impact of microfinance programs of Islamic Relief-Pakistan and Sungi Development Foundation (SDF) on the standard of life of poor marginalized masses. The study was based on both primary and secondary data. The secondary data of years 2002 to 2008 had been taken from the annual reports of Islamic Relief-Pakistan and Sungi Development Foundation (SDF), respectively. Various financial ratios were used in order to assess efficiency and performance of the financial programs. ANOVA and Binary logit models were applied to measure socio-economic impact of the programs on poor marginalised groups. It was found out that Islamic microfinance organisation has a potential and greater chance of growth in Pakistan. Bhuiyan et al. (2011), reviewed existing literature on Islamic Bank microcredit performance on the borrower’s poverty alleviation in Bangladesh. The findings of the study revealed that the socioeconomic status of Islami Bank microcredit borrowers was improved and also reduce poverty as well as their vulnerability after getting access to credit. The study also suggested for the future scope of study in the field of Islamic microfinance in Bangladesh by identifying the literature gap. Parveen (2009), assessed the sustainability issues of interest-free Micro-finance Institutions and formulated micro finance model- Rural Development Scheme (RDS) for Islamic Bank Bangladesh Limited (IBBL). The study showed the remarkable growth of RDS program of IBBL within a short span of time and also proved as a highly sustainable in the rural development and poverty alleviation of Bangladesh. Ahmed (2002), corroborated the view of establishing Islamic microfinance institutions by providing theoretical and empirical basis. The theoretical ground demonstrated great potentiality of Islamic MFI’s to cater the needs of poor and empirical analysis also supports some of its affirmations. But Islamic MFI’s had not tapped some of the external sources fund and not uses variety of financial instruments in their operation as discovered by the study. Akhter et al. (2009), examined Akhuwat, an Islamic microfinance organisation operating in Pakistan which shows that it renders services to all living people below poverty line. The study suggested that interest free loan could be used as a powerful tool against poverty and also recommended to integrate Islamic microfinance with NGO’s, NPO’s, Zakah and Awqaf as well as with Takaful which would raise its financial stability. Saefullah (2010), analysed the extent to which cultural factor affect the Islamic microfinance development in Indonesia. It was discovered that research participants fail to recognise the importance of culture in Islamic microfinance which refrain them to provide culture specific products. The banking regulation and Islamic normative traditional discourses were considered as two factors behind the refusal of cultural aspects. Rahman (2010), studied the impact of Islamic microfinance programme on rural poverty alleviation in Bangladesh. It was found out that Islamic microfinance programme stimulate more ethical and economically desirable behaviour among beneficiaries leading to poverty alleviation. The work of researchers enlightened us with the myriad aspects of Islamic microfinance programme practising around the world but the most important what people perceive about this programme and level of awareness among them have not enough literature. Therefore, the dearth of research urged me to assess the level of awareness among


people of India, the sources of fund for its sustenance and the probable role could play by this programme towards the society. Objective of the study: 1. To examine the level of awareness about Islamic microfinance among people. 2. To evaluate the sources of fund for Islamic microfinance. 3. To study the role of Islamic micro finance programme Research methodology An empirical study was conducted in order to get the answer of questions posed for research. Primary data was collected by carrying on exploratory survey of sample places from 100 respondents through framed questionnaire to examine the level of awareness of Islamic microfinance among people, sources of fund and its role towards society. Statistical tools were used to analyse the data so gathered such as Analysis of variance (ANOVA), Mean value, standard deviation and F-ratio. Results This section tries to explore the possibility of Islamic microfinance as a financial alternative by knowing awareness level of the people. So, various dimensions on this regard were assessed to arrive at the conclusions. The findings of the study are presented in the tables below. Awareness of Islamic Microfinance In this an effort was made to know that whether people heard about Islamic microfinance or not, the result so obtained has been laid down in the Table 1.

Table.1 Extent of awareness on Islamic Microfinance

Q_1

Heard Somewhat heard

Not sure

Somewhat not heard

Never heard

Mean SD

Have you heard about Islamic microfinance?

28.00 (28%)

64.00

(64%)

2.00 (2%)

-

6.00 (6%)

4.08

0.92

Table 1 explains that the 64% people were somewhat heard about Islamic

microfinance while 28% people were responded ‘heard’ on extent of awareness on Islamic microfinance. The study revealed that 6% per cent of people never heard and 2% per cent were not sure about Islamic microfinance. There was no one to respond as somewhat not heard of this system. The overall mean score (4.08) indicates that people were aware about Islamic microfinance which can be proving as alternative to conventional system to ameliorate the economic condition of poor. Sources of fund for Islamic Micro-finance

An Islamic microfinance based on Shariah (Islamic) principles is different from conventional microfinance in many ways so as the case of sources of funds. It generates funds from external sources such as religious institutions and other forms of charities. In Islam it is mandatory for every Muslim to pay Zakah (as an obligation on the wealth) a primary source of funds for Islamic microfinance. An attempt has been made to examine the views of people on extent of significance shown for the sources of fund for Islamic microfinance. The result is shown in the Table below.

Table 2 Extent of significance shown for the sources of fund for Islamic Micro-finance

Sources Mean SD Extent Overall Status

Religious institutions 4.05 1.09 Significant II

Charities 4.09 1.12 Significant I


Gifts 3.00 0.97 No opinion V

Deposits 3.83 1.07 Significant III

Saving of clients. 3.82 1.15 Significant IV

Table 2 (a)

ANOVA Table of extent of significance shown for the sources of fund for Islamic Micro-finance

Sum of Squares Df Mean Square F Sig.

Between Groups 77.908 4 19.477 16.514 *0.00

Within Groups 583.810 495 1.179

Total 661.718 499

*p-value is significant at 0.05 level The results given in the Table 3 suggests that the people considered charity (4.09) as a significant source of fund for Islamic microfinance because it occupies important position in the scheme of alleviating poverty. It is also known as Zakah which is obligation on an eligible Muslim. Religious institutions (4.05), deposits made by clients (3.83) and saving of clients (3.82) are also significant sources of funds for Islamic microfinance as agreed by the people. But the people were of no opinion regarding gifts as a source of funds for Islamic microfinance. Thus, it can be concluded that charity and religious institutions are the main source of funds for Islamic microfinance. The extent of significance shown for the sources of fund for Islamic microfinance was found significant at five per cent level as showed by F-ratio (16.51). Role of Islamic Micro-finance programme Poverty is a biggest challenge for the country as widespread in India, with the nation figured to have a third of the world’s poor. According to the data of World Bank in 2011 as stated 32.7% of the total Indian people falls below the international poverty line of US$ 1.25 per day (PPP) while 68.7% live on less than US$ 2 per day (Wikipedia). Islamic approach to poverty alleviation could be proving as a solution for this problem. Islam governs the various aspects of human’s life, considers poverty as a curse and collective obligation for every Muslims to lend hand in eradicating this through productive efforts An Islamic microfinance services (based on Islamic principles) has been experimented by the Muslim and non-Muslim country like Bangladesh etc. and also succeeded in bring them out of poverty to some extent. Therefore, an attempt has been made to know the opinion of people about the role of Islamic micro-finance programme and their extent of agreement given on that as shown in the Table below.

Table 3 Extent of agreement on the role of Islamic Micro-finance programme

Role Mean SD Extent Overall Status

Helps in alleviating poverty 4.54 0.64 Strongly agree

I

Provides opportunity for the poor to access a borrowing and saving facility

4.47 0.59 Agree II

Enhances women’s status in the household and in society 4.15 0.80 Agree V

Raises awareness of reproductive health services 3.35 0.95 Not sure X


Contribute towards economic growth 4.17 0.72 Agree IV

Provides employment opportunities 4.18 0.65 Agree III

Develop saving habit among the member 4.01 1.01 Agree VII

Contributes in rural development 3.83 0.82 Agree IX

Direct involvement of the programme in capacity building to generate income

4.02 0.76 Agree VI

Helps to improve the education 3.98 0.86 Agree VIII

Other 3.07 0.40 Not sure XI

Table 3 (a)

ANOVA Table of extent of agreement on the role of Islamic Micro-finance programme

Sum of Squares Df Mean Square F Sig.

Between Groups 190.869 10 19.087 32.293 *0.00

Within Groups 643.650 1089 .591

Total 834.519 1099

*p-value is significant at 0.05 level The analysis given in Table 3 depicts that the most important and primary role of

Islamic micro-finance programme as opined by the people came to be helps in alleviating poverty (4.54) because rooting out poverty is always remains a cherished goal of Islam which drives this programme to achieve this goal. People expressed their agreement on role of providing opportunity for the poor to access a borrowing and saving facility (4.47) becoming as a financial intermediary followed by providing employment opportunities (4.18) and contributes toward economic growth (4.17) by making poor economically empowered that are not in a position to generate income and wealth. It was reported that people agreed with the role of enhancing women’s status in the household and in society (4.15) by Islamic microfinance programme as the holy book Quran exhorts the men and women to perform their job for well-being of the family life. Direct involvement of the programme in capacity building to generate income (4.02) accompanied by developing saving habit among the member (4.01), helps to improve the education (3.98) and contributes in rural development (3.83) were the role of Islamic microfinance as agreed by the people although given minimum responses by them. People were not sure that Islamic microfinance programme raises awareness of reproductive health services (3.35) and any idea about other role of Islamic microfinance (3.07). Hence, the study suggests that the primary role of Islamic microfinance programme is to help in alleviating poverty which seems like it could facilitate in achieving the Millennium Development Goal. The results so obtained showed statistically significant difference in the opinion of people on extent of agreement for the role of Islamic microfinance programme pointed by the F-ratio (32.29) at five per cent level.

Summary and conclusions Islamic microfinance is an innovation in the financial world which can be helpful for the millions of poor people who can’t access formal financial institution because of incompatibility to Shariah principles. From the above discussion, it is observed that people somewhat heard about Islamic microfinance which could prove as an alternative to the conventional system to ameliorate the economic condition of poor but they don’t have full knowledge on this. People


believed that if Islamic microfinance programme comes into existence then the primary role of this programme would be to help in alleviating poverty which seems like it could facilitate in achieving the Millennium development Goals. It is also agreed by the people that this programme would enable the poor to access a borrowing and saving facility and generates employment opportunities which would contributes toward economic growth. People considered charity and religious institutions could be the main source of funds for its sustenance. There is still a major part of the Indian population ignorant about this terminology. They don’t know what this term means rather they relate it something to do with Islam. Consequently, it is important to correct this misconception that it is nothing to do with the religion but another financial alternative which could bring changes in the lives of the people leads to full financial inclusion in the country. So, if we want to make this dream to reality then it is necessary to make people fully aware about this financial instrument and its practices which would be a boon to the marginalised section of our society leads to development of the country. References

Ahmed, Habib (2002), “Financing microenterprises: An analytical study of Islamic microfinance Institutions”, Islamic Economics Studies, Vol.9, No.2, pp. 28-64.

Akhter, Dr. Waheed; Akhtar, Dr. Nadeem and Jaffri, Syed Khurram Ali (2009), “Islamic micro-finance and poverty alleviation: A case of Pakistan”, Proceedigs 2nd CBRC, Lahore, Pakistan, pp.1-8.

Aseanty, Deasy and Hassan, Abul (2013), “Islamic microfinance, Socio-economic wellbeing of women and their families in Bangladesh”, Proceedings of Shariah Economics Conference, Hannover, Germany, February 9, pp. 87-99.

Bhuiyan, Abul Bashar; Siwar, Chamhuri; Ismail, Abdul Ghafar and Talib, Basri (2011), “Islamic microcredit is the way of alternative approach for eradicating poverty in Bangladesh: A review of Islamic Bank microcredit scheme”, Australian Journal of Basic and Applied Sciences, Vol.5 (5), pp. 212-230.

Chowdhury, Shabbir Ahmed (2010), “Islamic Microfinance: A new path of Inclusiveness- The experience of BRAC”, Paper presented in the 5th Islamic development bank global forum held during June 20-24, in Baku, Ajerbaizan.

Khan, Zahoor and Usman, Muhammad (2009), “Financing non-bankable masses: An analystical study of conventional verses Islamic microfinance programs”, pp.1-25.

Parveen, Jannat Ara (2009), “Sustainability issues of interest-free micro-finance Institutions in rural development and poverty alleviation- The Bangladesh perspective”, Theoretical and empirical researches in urban management, No. 2(11), pp. 112-133.

Rahman, M.Mizanur (2010), “Islamic micro-finance programme and its impact on rural poverty alleviation”, The International Journal of banking and finance, Vol.7, Iss.1, pp. 119-138.

Saefullah, Kurniawan (2010), “Cultural aspects on the Islamic microfinance: an early observation on the case of Islamic microfinance institution in Bandung, Indonesia”, Submitted to the committee of the second workshop on Islamic Finance: What Islamic finances does (not) change at the EM Strasbourg Business School, March 17. Webliography

www.ruralfinance.org/fileadmin/.../rflc/.../Islamic__Microfinance_pdf.pd... http://www.cgap.org/topics/islamic-products http://en.wikipedia.org/wiki/Poverty_in_India http://www.academia.edu/251362/Microfinance_in_Bangladesh_Context_and_Experiences https://www.google.co.in/search?q=success+story+of+islamic+microfinance+in+indonesia http://www.cgap.org/blog/taking-islamic-microfinance-scale http://www.microworld.org/en/news-from-the-field/article/what-future-microfinance-islamic-

countries-yemen http://www.academia.edu/1905693/Islamic_Microfinance_System_and_Poverty_Alleviation_in

_Somaliland


Women Entrepreneurship Development in Ananthapuramu – A Case Study

* Dr. (Mrs.) M. Kalpana Krishnaiah *Research Associate, Women’s Studies Centre, Sri Krishnadevaraya University,

Ananthapuramu – 515003, Email:[email protected]

** Prof. A. Krishna Kumari ** Director i/C, Women’s Studies Centre,

Sri Krishnadevaraya University, Ananthapuramu – 515003, A.P., India

Abstract Women entrepreneurship development is an essential part of human resource

development. The development of women entrepreneurship is very low in India, especially in the rural areas. Entrepreneurship amongst women has been a recent concern. Women have become aware of their existence their rights and their work situation. However, women of middle class are not too eager to alter their role in fear of social backlash. The progress is more visible among upper class families in urban cities. It is estimated that women entrepreneurs presently comprise about 10% of the total number of entrepreneurs in India, with the percentage growing every year. If the prevailing trends continue, it is likely that in another five years women will comprise 20 % of the entrepreneurial force. Even though women own around 10% of the total enterprises in the small sector, the gross output of these units is just 3.5% of the total output of the SSI sector. In contrast, in developed countries such as United States, women own nearly 91 lakh small businesses and the number of women-owned start-ups is going at nearly twice the rate of their male counterparts.

This paper focuses on women entrepreneur. Any understanding of Indian women, of their identity, and especially of their role taking and breaking new paths, will be incomplete without a walk down the corridors of Indian history where women have lived and internalized various role models. Keywords: Entrepreneurship Development, Human Resource, Aware, Existence, Social Blacklash.

INTRODUCTION

The Indian economy has been witnessing a drastic change since mid -1991, with new policies of economic liberalization, globalization and privatization initiated by the Indian government. India has great entrepreneurial potential. At present, women involvement in economic activities is marked by a low work participation rate, excessive concentration in the unorganized sector and employment in less skilled jobs.

Any strategy aimed at economic development will be lop-sided without involving women who constitute half of the world population. Evidence has unequivocally established that entrepreneurial spirit is not a male prerogative. Women entrepreneurship has gained momentum in the last three decades with the increase in the number of women enterprises and their substantive contribution to economic growth. The industrial performance of Asia-Pacific region propelled by Foreign Direct Investment, technological innovations and manufactured exports has brought a wide range of economic and social opportunities to women entrepreneurs.

In this dynamic world, women entrepreneurs are an important part of the global quest for sustained economic development and social progress. In India, though women have played a key role in the society, their entrepreneurial ability has not been properly tapped due to the lower status of women in the society. It is only from the Fifth Five Year Plan (1974-78) onwards that their role has been explicitly recognized with a marked shift in the approach from women welfare to women development and empowerment. The development of women entrepreneurship has become an important aspect of our plan priorities. Several policies and programmes are being implemented for the development of women entrepreneurship in India.


There is a need for changing the mindset towards women so as to give equal rights as enshrined in the constitution. The progress towards gender equality is slow and is partly due to the failure to attach money to policy commitments. In the words of president APJ Abdul Kalam "empowering women is a prerequisite for creating a good nation, when women are empowered, society with stability is assured. Empowerment of women is essential as their thoughts and their value systems lead to the development of a good family, good society and ultimately a good nation."

When a woman is empowered it does not mean that another individual becomes powerless or is having less power. On the contrary, if a women is empowered her competencies towards decision- making will surely influence her family's behavior.

In advanced countries, there is a phenomenon of increase in the number of self employed Women after the World War 1. In USA, women own 25% of all business, even though their sales on an average are less than two-fifths of those of other small business. In Canada, women own one-third of small business and in France it is one fifth.

Most of the women- owned enterprises in India are found to be concentrated in few states of Kerala, Tamil Naidu, Karnataka, West Bengal and Uttar Pradesh. As high as 13% of the total women owned enterprises are concentrated in the state of Kerala. The state of Kerala where literacy among women is the highest in India provides a good example of women entrepreneurship. As on March 31, 2004, there were 1782 women-run industrial units in Kerala. Of these 1592 were proprietary concerns, 42 charitable institutions, 43 partnership concerns, 3 joint stock companies and 102 cooperatives societies. These industries were of food production and processing, matches, candle making, chemical items, handicrafts, electronic radio assembling, rubber items, handloom textiles etc. The emergence of women industrial units in Kerala was facilitated mainly by the State Government by way of financial assistance, marketing assistance and establishment of training centers. Thus state administration plays the key role in development of women entrepreneurship from the grass root level. Although other states have high level of women employments say in N.E. States (hill), 34.4% to 48.8% (Registrar General and Census Commissioner, 1993), women do not own industrial units.

It is estimated that women entrepreneurs presently comprise about 10% of the total number of entrepreneurs in India, with the percentage growing every year. If the prevailing trends continue, it is likely that in another five years women will comprise 20 % of the entrepreneurial force. Even though women own around 10% of the total enterprises in the small sector, the gross output of these units is just 3.5% of the total output of the SSI sector. In contrast, in developed countries such as United States, women own nearly 91 lakh small businesses and the number of women-owned start-ups is going at nearly twice the rate of their male counterparts.

51% OF INDIAN WORK FORCE SELF - EMPLOYED : SURVEY Thu, 20 Jun 2013-11:35pm , Bangalore , IANS

Around 51% of Indian workers are self-employed, mostly in rural areas, while 33.5%

of them are casual labour (33.5%) and only 15.6% have salaried employment, an official survey revealed on Thursday.

"Among workers in rural areas, 54.2% are self-employed as against 41.1% in urban areas and 38.6% work as casual labour as against 17.5% in urban areas," India's chief statistician T.C.A. Anant told reporters here.

Releasing the latest socio-economic study conducted by the National Sample Survey Office (NSSO) of the ministry of statistics and programme implementation from July 2011 to June 2012, Anant said salaried employees or workers with regular wages were nearly six times more in urban areas (41.4 percent) than 7.3 percent in rural areas, showing the wide disparity in the employment comfort level of the workforce across the country.

"The survey on employment and unemployment is meant to estimate the labour force participation rate, worker population ration and unemployment rate and assess their activity to


identify the pattern of household expenditure and consumption," Anant, who is also secretary of the ministry, said on the occasion.

The survey was carried in 7,469 villages and 5,268 urban blocks spanning districts and states across the country, covering about 101,724 households, including 59,700 in rural and 42,024 in urban areas.

"The survey also indicated a three percent employment growth from January 2010 to January 2012, with 13.9 million (1.39 crore) people joining the workforce across the country, resulting in 472.9 million (47.29 crore) people employed in 2011-12 as against 459 million (45.9 crore) in 2009-10," NSSO additional director-general Samiran Malik said. Of the total (472.9 million) employed in 2011-12, 234.6 million were men and 101.8 million women in rural areas and 109.2 million men and 27.3 million women in urban areas.

In contrast, of the total 459 million in 2009-10, 231.9 million men and 104.5 million women were in rural areas and 99.8 million men and 22.8 million women were in urban areas. Though the national sample survey (NSS) is conducted every five years (quinquennially) with the previous survey from July 2009 to June 2010, the ministry has decided to do it midway to assess the impact of global recession and financial crisis in 2008-2010 on the Indian economy, employment and incomes.

"The survey has been a regular exercise every five years to collect data for the Planning Commission and other user agencies to formulate plan periods and socio-economic programmes for inclusive growth and improve the quality of life in rural and urban areas," Anant said. The study also revealed that the average wage or salary in urban areas at Rs.365 per day is higher than in rural areas at Rs.232, with men paid Rs.377 and women Rs.309 in urban areas, while it is Rs. 249 for men and Rs.156 for women in rural areas.

"The latest survey shows that the male-female wage ratio is 0.82 in urban areas and 0.63 in rural areas," Anant pointed out. Similarly, daily wages for casual labour in urban areas for non-public works is Rs.122 as against Rs.93 in rural areas. The pattern repeats in average wage per day for urban men and women (Rs.132 & Rs.77)and their rural counterparts (Rs.102 & Rs.69). "About 40 percent of population constitutes labour force, with 41 percent of them in rural areas and 37 percent in urban areas. The labour force participation rate is 56 percent for men and 23 percent for women," NSSO director-general and chief executive Vijay Kumar said.

Of the 1.21-billion people in the country, the worker population ratio is 39 percent at the national level, with 40 percent in rural areas and 36 percent in urban areas. In the worker population ratio, 54 percent are men and 22 percent women in urban and rural areas. OBJECTIVES

(a) To study the present scenario of women entrepreneurship in India with special reference to rural women entrepreneurship

(b) To highlight the problems faced by the rural women entrepreneurs (c) To review government steps undertaken for the development of women

entrepreneurship. METHODOLOGY

The study is mainly based on secondary data. We consulted with various published research paper in leading journal like “The Southern Economist”. General information was collected from different libraries. We also consulted some teachers teaching the subject and noted their views on the topic. A few rural women entrepreneur were interacted for their views on women entrepreneurship.

In analyzing the information so collected we have tried to establish the validity through logic. A good number of information has been collected by adopting observation method without asking question to the respondents. CONCEPT OF ENTREPRENEUR

An entrepreneur is a person who combines capital and labor for production. According to Cantillion "entrepreneur is the agent who buys means of production at certain prices in order to sell at prices that are certain at the moment at which he commits himself to his cost".


According to P.F Drucker " he is one who always (1) searches for change (2) responds to it (3) exploits it as an opportunity." Concept of Women Entrepreneur A woman entrepreneur is a woman who starts and owns and enterprise by investing at least 51% in an enterprise. Categories of Women Entrepreneurs • Women in organized & unorganized sector • Women in traditional & modern industries • Women in urban & rural areas • Women in large scale and small scale industries. • Single women and joint venture. Categories of Women Entrepreneurs in Practice in India • First Category • Established in big cities • Having higher level technical & professional qualifications • Nontraditional Items • Sound financial positions • Second Category • Established in cities and towns • Having sufficient education • Both traditional and nontraditional items • Undertaking women services-kindergarten, crèches, beauty parlors, health clinic etc Third Category • Illiterate women • Financially week • Involved in family business such as Agriculture, Horticulture, Animal Husbandry, Dairy, Fisheries, Agro Forestry, Handloom, Power loom etc. Supportive Measures for Women”S Economic Activities and Entrepreneurship • Direct & indirect financial support • Technological training and awards • Federations and associations Direct & Indirect Financial Support • Nationalized banks • State finance corporation • State industrial development corporation • District industries centers • Differential rate schemes • Mahila Udyog Nidhi scheme • Small Industries Development Bank of India (SIDBI) • State Small Industrial Development Corporations (SSIDCs) Technological Training and Awards • Stree Shakti Package by SBI • Entrepreneurship Development Institute of India • Trade Related Entrepreneurship Assistance and Development (TREAD) • National Institute of Small Business Extension Training (NSIBET) • Women's University of Mumbai Federations and Associations • National Alliance of Young Entrepreneurs (NAYE) • India Council of Women Entrepreneurs, New Delhi • Self Employed Women's Association (SEWA) • Association of Women Entrepreneurs of Karnataka (AWEK) • World Association of Women Entrepreneurs (WAWE) • Associated Country Women of the World (ACWW) WOMEN’S WORK PARTICIPATION IN INDIA


SOME EXAMPLES Mahila Grah Udyog – 7 ladies started in 1959 Lizzat Pappad, Lakme – Simon Tata Shipping corporation – Mrs. Sumati Morarji Herbal Heritage– Ms. Shahnaz Hussain Balaji films- Ekta Kapoor Kiran Mazumdar - Bio-technology

WOMEN’S WORK PARTICIPATION Country Census Percentage India 1970-71 14.2 India 1980-81 19.7 India 1990-91 22.3 India 2000-01 31.6 USA 45 UK 43 Indonesia 440 Sri Lanka 35 Brazil 35

PROBLEMS OF WOMEN ENTREPRENEURS IN INDIA Women in India are faced many problems to get ahead their life in business. A few problems can be detailed as; 1. The greatest deterrent to women entrepreneurs is that they are women. A kind of patriarchal – male dominant social order is the building block to them in their way towards business success. Male members think it a big risk financing the ventures run by women. 2. The financial institutions are skeptical about the entrepreneurial abilities of women. The bankers consider women loonies as higher risk than men loonies. 3. The women entrepreneurs are suffering from inadequate financial resources and working capital. The women entrepreneurs lack access to external funds due to their inability to provide tangible security. Very few women have the tangible property in hand. 4. Women's family obligations also bar them from becoming successful entrepreneurs in both developed and developing nations. "Having primary responsibility for children, home and older dependent family members, few women can devote all their time and energies to their business" (Starche ) 5. The business success is depends on the support the family members. The interest of the family members is a determinant factor in the realization of women folk business aspirations. WAYS TO DEVELOP WOMEN ENTREPRENEURS 1. Consider women as specific target group for all developmental programmers. 2. Better educational facilities and schemes should be extended to women folk from government part. 3. Adequate training program on management skills to be provided to women community. 4. Encourage women's participation in decision-making. 5. Vocational training to be extended to women community that enables them to understand the production process and production management.


Structure of Rural Women Entrepreneurship in India Rural India (72%)

Rural Women (50%) ↓-----------------------------------------------------------------------------------------↓

Unemployed (64.6%) Employed (35.4%) ↓ ↓------------------------------↓--------------------------------------------↓ Self Employed (2.3%) Working in Family Business (17.4%) Employed in someone else Business (15.7%) Actual Rural Entrepreneurs Potential Rural Women Entrepreneurs BOTTLENECKS TO GROWTH ↓-----------------------------↓--------------------------------↓--------------------------------------↓ Small investment Limited market Lack of entrepreneurial Business not in area of interest Development training

Remedies for proper growth ↓

Schemes of Financial Institution ↓

Active Role of NGO’s & SHG’s ↓

Proper utilizations of schemes by Rural Women ↓

Growth of potential Rural Women Entrepreneurs. PROBLEMS Lack of female role models- Beginners follow and observe successful persons to

start with. Female entrepreneurship in India is of recent concept and thus has produced very less successful women entrepreneurs. Therefore new entrepreneurs afraid to take risk and begin with entrepreneurship.

Inefficient marketing arrangements - Heavy competition in the market and their lack of mobility makes the women entrepreneurs dependent on middlemen. Rural women lack information on the changing demand and thus fail to update their business with the current trend.

Socio-cultural barriers – A women has to perform her family duties irrespective of her career as a working woman or an entrepreneur. In our society more importance is given to educating the male child as compared to the female child. This result in lack of schooling and vocational training of women, their lack of attaining technical skills and thereby lack of awareness of opportunities available.

Lack of confidence – Women generally lack confidence in their own capabilities. Having accepted a subordinate status for long, even at home, member of their family do not appear to have total confidence in their abilities and on their decision-making.

Problem of finance /difficulty in obtaining credit – Women might not have a business track record, credit history, or banking relationship and are less likely to own their own home or an asset. They are subject to myths that women are not good at managing money and are viewed as hobbyists instead of serious business operators.

Negative self-perceptions – Women view themselves as having personal characteristics that negatively affect their business activities. There is some indication that women may be more affected by their perceived personal deficiencies in the population as a whole.

FINDINGS After observing and interacting few rural women entrepreneurs it was found that they

are mainly engaged in retail business. They are married women and started business at 30’s and has children. They are engaged in grocery, parlor and tailoring business. In grocery business they do not have salesman whereas in parlor and tailoring area they do employ


women employees. The tailoring business has the highest revenue and profit. Women doing business have total support of their family mainly the husband.

From the study it reveals that the government does not have special training Programmes for women entrepreneurs and no special financial assistance in the rural areas, Though some NGOs are engaged in Training of rural women entrepreneurs with different training programmes but no sufficient financial assistance is provided to them. Women, who have started business, find various marketing and technical problems. The competitive business environment is also a challenge to them. It has also been discovered that societal attitudes has changed a lot and support women’s participation in economic activities including entrepreneurship. Networking of women entrepreneurs is crucial for the success of women entrepreneurs. SUGGESTIONS (A) Direct Role of the Government ( central/ state)

Reservation for women in the Industrial Estates and commercial government markets should be introduced. Industrial Estates Exclusively for women can also be set up.

If there are girls colleges and schools, why not commercial banks exclusively for women. As on experimental basis government should do it in collaboration with the Regional Rural Banks. This will boost inclusive banking also.

Licensing and other official works to start a unit must be made secondary and the start- up process primary. So concerned authorities should implement some relaxation procedure for women entrepreneurship development.

Government should specially design EDP’s for women and course design must include mainly technical, accounting and marketing aspects. Field work can also be conducted. Stipend must be paid to the trainees (as in Kerala). Training centres should conduct trainings with experienced women /men entrepreneurs.

Indirect tax should be fully exempted by the government. (Not for a specific period)

(B) Role of Self Help Groups (SHG’s) SHG’s can play a major role in developing women entrepreneurship as SHG’s members are women and they operate specially in the rural areas. It has been found that many SHG’s only collect money and distribute the savings with interest among the members in cash or kind. The Government by providing additional funds must put pressure on the SHG’s to start business units. Funds to result-.oriented SHG’s must be increased. (C) Recognition, Awarding and Publicity Successful women entrepreneurs are awarded at the national level. At state and mainly in district level, the government or private bodies should recognize successful / growing rural women entrepreneurs and award them. Special schemes should be provided to such entrepreneurs. Such events must be well covered by media groups. (D)Family Support and Self interest Our studies show that women entrepreneurs are married women and unmarried women entrepreneur require good support from her family members. Women interested in entering business should also remember that unless they take the first initiative and are courageous enough to face the ups and downs; their cherished ambition cannot be achieved. (E)Networking Centre Government& non-government agencies should establish Networking Centers for women entrepreneurs. It is an effective tool for capacity building and entrepreneurship development. (F)Initiative At School Levels Each and every secondary and high school should establish counseling and career guidance cells for promotion and development of women entrepreneurship. Vocational training can be conducted at the Higher Secondary levels. (G)Workshops and Seminars Workshops and seminars should be frequently organized for the officials and supporting agencies and for women entrepreneurs to make their relations more cordial.


CONCLUSION Self-employment is better suited to women. If she is her own master of any of her work

schedule, she can adjust her work. At present women have broken the monopoly of men and proved that they are not inferior to men. Over the past few decades the women has been breaking traditional role of a mother or a house wife. But the rural women entrepreneurs’ movement in India is still in transitory stage and has a long way to go. The movement requires pre and post-follow-up support to utilize women power in the country’s economic development. A coordinated role of government and voluntary agencies with an integrated approach will help to develop women entrepreneurship. Only joint efforts of both men and women entrepreneurs can change an underdeveloped India into a developed country.

Entrepreneurship among women, no doubt improves the wealth of the nation in general and of the family in particular. Women today are more willing to take up activities that were once considered the preserve of men, and have proved that they are second to no one with respect to contribution to the growth of the economy. Women entrepreneurship must be moulded properly with entrepreneurial traits and skills to meet the changes in trends, challenges global markets and also be competent enough to sustain and strive for excellence in the entrepreneurial arena. References [1] Dhameja S K (2002), Women Entrepreneurs: Opportunities, performance, problems, Deep publications (p) Ltd, New Delhi, p 11 376 Priyanka Sharma [2] Rajendran N (2003), "Problems and prospects of women Entrepreneurs" SEDME, Vol. 30 no.4 Dec. [3] Rao Padala Shanmukha (2007) "Entrepreneurship Development among Women : A case study of self help Groups in Srikakulam District, Andhra Pradesh" The Icfai Journal of Entrepreneurship Development Vol.1V No. 1 [4] Sharma Sheetal (2006) “Educated Women, powered, women" Yojana Vol.50, No.12 [5] Shiralashetti A S and Hugar S S " Problem and Prospects of Women Entrepreneurs In North Karnataka District: A case study" The Icfai Journal of Entrepreneurship Development Vol.1v No. 2 [6] Web Sites- www. Googlee.co. in, www. Wikipedia.com [7] Manickavasagam.V, Kasturi and Jayanti.P, “Women Entrepreneurs: An Analysis” Southern Economist, May1, 2007, p43 [8] Laxmana.P, “Evaluation of EDP in Karnataka: A Study” Southern Economist, May1, 2007, p59 [9] Ganapati .R and Sannasi.S, “Women Entrepreneurs- The Road Ahead” Southern Economist, Jan15, 2008, p36 [10] Angayarkanni, “Problems of Women Entrepreneurs in India” Southern Economist, Feb.1, 2010, p44 [11] Rajeswari. R, “Socio- economic Status of Women” Southern Economist, Feb1, 2010, p51 [12] Bavle.Sushama, “Reflection of Self-reliance of Rural Women in the Entrepreneurial World” Southern Economist, Oct.2010, 2009, p12 [13] Topandasani. Rajkumar.S “Effectiveness of Women EDP” Southern Economist, Nov.1, 2008p17 [14] Meera Bai M. “Networking among Women Entrepreneurs in Kerala” Southern Economist, Feb.1, 2008, p25 [14] Singh B.S. “Development of Women Entrepreneurs in India: The Role of Universities” University News, 43(24), June 13-19, 2005 [15] Ramasamy.T. “Strategic Entrepreneurial Dimensions of Self-employed Women: A Micro Study” Southern Economist, Nov.15, 2009, p39 [16] Premavaty.N, Doss Arokiamary Geetha, “Leadership qualities of Successful Women Entrepreneurs” Southern Economist, Oct.1, 2010, p17 [17] Verma.S.B, Tukaram.P.Y, KhetanS.D, “Rural Entrepreneurial and Employment” Indus Valley Publications, 2005 [18] Mohan.s, Elangovan.R, “Current Trends in Entrepreneurship” Deep and Deep Publications Pvt. Ltd.2006.


Performance Analysis of Indian Banks – A Comparative Study Of Select Banking Groups

Dr. MOHMED ALI

Head, Department of Commerce and Business Management, Chaitanya Post Graduate College (Autonomous),

Kishanpura, Hanamkonda, Warangal, A.P. E-mail:[email protected],[email protected]

ABSTRACT: The year 1991 has made a remarkable change in the scenario of Indian banking sector. The financial reforms made in that year paved the way for private and foreign groups to set up banks in various parts of the country. Gradually, the competition between the banks increased to a greater extent, however, in the last decade the performance of Indian banks was fairly well and it was in line with the challenges in the banking sector. There was an accelerated pace of change in the technology used by the banks resulting in implementation of new measures to increase their business and also the total business. New and variety of services are offered by banks which are non-conventional and customized as per the customer requirements. Banks began to diversify their services as part of their corporate strategy to cater to various customer segments. This study is an attempt to analyse the financial performance of Indian banking sector and covers the performance of different banking groups viz. nationalized, SBI & its associates, Private and Foreign Banks. INTRODUCTION:

Banks play a vital role in the economic development of a country. Banks mostly engage in the money transactions including accepting deposits from the customers and lending them to the needy ones in the form of loans. The last decade witnessed many positive developments in the Indian banking sector. Some banks established an outstanding track record of innovation, growth and value creation. This is reflected in their market valuation.

The performance of banking sector will have impact on the performance of the economy. The performance of banks mainly depends on its conventional business services like deposits and loans. The expenditure made by the banks either in borrowing funds or acquiring assets should be cautiously done. The variables like growth, profitability and non-performing assets (NPAs) are used to compare the performance of the banks. The Non-performing assets are another criterion which measures the performance of the banks.

In the past, various studies relating to the financial performance of banks have been conducted by researchers. Most of the studies compared the performance of public, private and foreign banks by using measures of profitability, productivity and financial management. Biresh K Sahoo and Anandadeep Mandal1 examined the Performance of Banks in India in Post Transition Period and concluded that the positive trend of the reform process is visible through the increase in technical efficiency over the years of the post transition period. Dr Ashok Khurana, Kanika Goyal2 analyzed the Performance of Public Sector Banks and concluded that there is a need for increased absorption of enhanced technological capability by several banks to further argument yield of the banking sector. B. Sathish Kumar3 evaluated the Financial Performance of Private Sector Banks in India and said that the new generation private sector bank has best used the technology; utilize the manpower in an effective manner. They are professionally managed which made them to attract more customers and made them to grower faster and stronger. Milind Sathye4 studied the efficiency of Indian banks and found that partially privatized banks have performed better as compared to the fully public sector banks in respect of certain financial performance and efficiency parameters. In this paper an attempt is made to study the performance of Indian banking sector by comparing the performance of different group of banks viz. nationalized, SBI & its associates, Private and Foreign Banks.


OBJECTIVE: The main objective of this paper is to make a comparative analysis of the financial performance of various banking groups in the Indian commercial banking sector. METHODOLOGY:

To evaluate the performance of Indian banking industry, the commercial banks were divided into four groups viz., Nationalized as first group, SBI and its associates as second group, Private and Foreign banks as third and fourth groups respectively. The aspects like Number of Banks, Number of Offices, Number of Employees, Business per Employee, Profit per Employee, Capital and Reserves & Surplus, Deposits, Investments, Advances, Interest Income, Non-Interest Income, Interest Expenditure, Operating Expenses, Cost of Funds, Wages as per cent to total expenses, Return on Assets, Net NPA Ratio are used to evaluate the performance of different banking groups for the period 2009-10 to 2013-14. Annual Growth Rate (AGR) and Compounded Annual Growth Rates (CAGR) were calculated to analyze the said aspects. RESULTS AND DISCUSSION:

TABLE -1 Number of Banks in banking sector

Year Nationalized Banks Group

Aggregate

SBI & Its associates Aggregate

Private Banks Aggregate

Foreign Banks Aggregate

All Banks Aggregate

2009-10

20 (24.39) (III)

8 (9.76) (IV)

25 (30.49) (II)

29 (35.37) (I) 82

2010-11

20 (25.32) (III)

8 (10.13) (IV)

23 (29.11) (II)

28 (35.44) (I) 79

2011-12

20 (25.00) (III)

7 (8.75) (IV)

22 (27.50) (II)

31 (38.75) (I) 80

2012-13

20 (24.69) (III)

7 (8.64) (IV)

22 (27.16) (II)

32 (39.51) (I) 81

2013-14

20 (25.00) (III)

6 (7.50) (IV)

21 (26.25) (II)

33 (41.25) (I) 80

Source: www.rbi.org Note: The roman numbers in parenthesis indicates the rank.

Table 1 depicts that in all the years under observation there are more number of banks in the foreign group followed by private sector, nationalized and SBI & its associates. Private sector banks decreased from 25 to 21, in contrast the number of foreign banks increased from 29 to 33. During the study period it is observed that there is no variation to a large extent in the total number of banks of all groups put together.

TABLE- 2 Number of Offices held by Different Groups of Banks in India

Year

Nationalized Banks Group

Aggregate

Rank

SBI and Its

Associates Aggregate

Rank Private Banks

Aggregate Rank

Foreign Banks

Aggregate Rank All Banks

Aggregate

2009-10

37435 (62.70) I 14673

(24.58) II 7322 (12.26) III 272

(0.46) IV 59702

2010-11

39255 (61.62) I 15848

(24.88) II 8325 (13.07) III 277

(0.43) IV 63705

2011-12

40956 (60.78) I 16894

(25.07) II 9241 (13.71) III 295

(0.44) IV 67386

2012-13

43452 (60.02) I 18178

(25.11) II 10452 (14.44) III 308

(0.43) IV 72390

2013-14

45640 (59.51) I 18772

(24.48) II 11968 (15.60) III 316

(0.41) IV 76696


Source: www.rbi.org Table 2 shows that nationalized banks have more offices followed by SBI group,

private sector, and foreign group banks. All banks maintained their ranks consistently over the period of study. The total number of offices increased from 59702 offices in 2009-10 to 76696 offices in 2013-14. In all the groups the number of offices increased but their share in total banks aggregate varied i.e., sometimes increased and sometimes decreased.

TABLE -3 Number of Employees in Different Groups of Banks in India

Year


Aggregate

Rank

SBI and Its


Rank Private Banks

Aggregate Rank

Foreign Banks


Aggregate

2009-10

473179 (52.79) I 255699

(28.53) II 139054 (15.51) III 28426

(3.17) IV 896358

2010-11

466400 (51.51) I 249008

(27.50) II 158823 (17.54) III 31301

(3.46) IV 905532

2011-12

462926 (49.38) I 268598

(28.65) II 176339 (18.81) III 29582

(3.16) IV 937445

2012-13

473041 (49.78) I 266605

928.06) II 182520 (19.21) III 28012

(2.95) IV 950178

2013-14

475082 (47.31) I 282453

(28.13) II 218679 (21.78) II 27968

(2.79) IV 1004182

Source: www.rbi.org From Table 3 it is clear that nationalized banks have more number of employees

followed by SBI group, private sector, and foreign group banks. All banks maintained their ranks consistently over the period of study. The total number of offices increased from 59702 offices in 2009-10 to 76696 offices in 2013-14. In nationalized groups and private sector the number of employees increased but in SBI and foreign group the number of employees decreased.

TABLE -4 Information about Business per Employee

(Amount in Rs. Lakhs)

Year

Nationalized Banks Group R

ank

SBI and Its

Associates Agg.

Ran

k Private Banks Agg. R

ank Foreign

Banks Agg. R

ank All

Banks Agg.

AGR

Aggregate 2009-

10 490.01 III 436.35 IV 695.23 II 974.77 I 521.91

2010-11 618.28 III 549.22 IV 751.42 II 1125.5 I 640.18 22.66

2011-12 783.16 III 650.22 IV 743.85 II 1282.74 I 753.44 17.69

2012-13 935.86 III 737.43 IV 797.31 II 1411.39 I 867.59 15.15

2013-14 1144.77 II 793.06 IV 823.26 III 1559.74 I 987.38 13.81

CAGR 18.50 I 12.69 II 3.44 IV 9.86 III 13.60 Source: www.rbi.org

From Table 4 it is observed that business per employee of all banks put together has increased year after year. The highest AGR was recorded in the year 2010-11 with 22.83per cent. The CAGR of nationalized banks is higher with 18.50 per cent followed by SBI & its associates with 12.69per cent, foreign banks with 9.86per cent and the least CAGR in the


study period was at private banks recording 3.44per cent. There was no variation in the rankings of groups over the period of the study

TABLE- 5 Bank wise Profit per Employee

(Amount in Rs. Lakhs)

Year Nationalize

d Banks Group Agg. R

ank

SBI and Its

Associates

Aggregate

Ran

k

Private Banks

Aggregate

Ran

k

Foreign Banks

Aggregate

Ran

k

All Banks

Aggregate

AGR

2009-10 2.87 III 2.57 IV 4.65 II 16.13 I 3.48 2010-11 3.77 III 3.62 IV 6 II 21.12 I 4.72 35.63

2011-12 4.86 III 4.43 IV 6.16 II 25.39 I 5.63 19.28

2012-13 5.67 III 4.66 IV 7.18 II 16.92 I 6.01 6.75 2013-14 6.95 III 4.2 IV 8.1 II 27.59 I 7.00 16.47 CAGR 19.35 I 10.32 IV 11.74 II 11.33 III 15.00

Source: www.rbi.org Table 5 depicts that profit per employee of all banks put together has increased year

after year. The highest AGR was recorded in the year 2010-11 with 22.83per cent. The CAGR of nationalized banks is higher with 19.35 per cent followed by private banks with 11.74 per cent, foreign banks with 11.33 per cent and the least CAGR in the study period was at SBI & its associates with 10.32 per cent. There was no variation in the rankings of groups over the period of the study

TABLE- 6

Bank wise Capital and Reserves & Surplus (Amount in Rs. Crores)

Year


Aggregate

Ran

k

SBI and Its


Ran

k Private Banks

Aggregate Ran

k Foreign Banks

Aggregate Ran

k All Banks Aggregate AGR

2009-10 92689 (42.29) I 42941

(19.59) III 50473 (23.03) II 33075

(15.09) IV 219178 -

2010-11 113079 (35.84) I 61706

(19.56) III 91371 (28.96) II 49332

(15.64) IV 315488 43.94

2011-12 135920 (36.94) I 72422

(19.68) III 99669 (27.09) II 59937

(16.29) IV 367948 16.63

2012-13 157276 (36.56) I 83726

(19.46) III 119984 (27.89) II 69176

(16.08) IV 430162 16.97

2013-14 205857 (40.38) I 84394

(16.55) III 138589 (27.18) II 80972

(15.88) IV 509812 18.52

CAGR 17.30 III 14.47 IV 22.39 I 19.61 II 18.39 Source: www.rbi.org

From Table 6 it is observed that Capital and Reserves & Surplus of all banks put together has increased year after year. The highest AGR was recorded in the year 2007-08 with 43.94 per cent. The CAGR of private banks is higher with 22.39 per cent followed by foreign banks with 19.61 per cent, nationalized banks with 17.3 per cent and the least CAGR in the study period was at SBI & its associate banks recording 14.47 per cent. There was no variation in the rankings of groups over the period of the study

TABLE-7 Deposits made by all banks (Amount in Rs. Crores)


Year


Aggregate

Ran

k

SBI and Its


Ran

k Private Banks

Aggregate Ran

k Foreign Banks

Aggregate Ran


2009-10

1360724 (50.45) I 633476

(23.49) II 551987 (20.47) III 150750

(5.59) IV 2696937

2010-11

1679993 (50.60) I 773875

(23.31) II 675033 (20.33) III 191161

(5.76) IV 3320062 23.10

2011-12

2105706 (51.82) I 1007041

(24.78) II 736378 (18.12) III 214076

(5.27) IV 4063201 22.38

2012-13

2583934 (54.43) I 1108086

(23.34) II 822801 (17.33) III 232099

(4.89) IV 4746920 16.83

2013-14

3127122 (55.68) I 1245862

(22.18) II 1002759 (17.85) III 240689

(4.29) IV 5616432 18.32

CAGR 18.11 I 14.49 II 12.68 III 9.81 IV 15.80 Source: www.rbi.org

Table 7 depicts that deposits made in all banks put together has increased year after year. The highest AGR was recorded in the year 2010-11 with 23.10 per cent. The CAGR of nationalized banks is higher with 18.11 per cent followed by SBI & its associates with 14.49per cent, private banks with12.68per cent and the least CAGR in the study period was at foreign banks recording 9.81per cent. There was no variation in the rankings of groups over the period of the study

TABLE- 8 Investments made by All Branches

(Amount in Rs. Crores)

Year


Aggregate

Ran

k

SBI and Its


Ran

k Private Banks

Aggregate Ran

k Foreign Banks

Aggregate Ran


2009-10

452981 (47.63) I 211875

(22.28) III 214655 (22.57) II 71471

(7.52) IV 950982

2010-11

536018 (45.53) I 263823

(22.41) III 278578 (23.66) II 98910

(8.40) IV 1177329 23.80

2011-12

655042 (45.19) I 357624

(24.67) II 306531 (21.15) III 130354

(8.99) IV 1449551 23.12

2012-13

828125 (47.98) I 387473

(22.41) II 354117 (20.48) III 159291

(9.21) IV 1729006 19.28

2013-14

942837 (49.21) I 385697

(20.13) III 422020 (22.03) II 165499

(8.64) IV 1916053 10.82

CAGR 15.79 II 12.73 IV 14.48 III 18.23 I 15.04 Source: www.rbi.org

From Table 8 it is observed that Investments of all banks put together has increased year after year. The highest AGR was recorded in the year 2010-11 with 23.80per cent. The CAGR of foreign banks is higher with 18.23 per cent followed by nationalized banks with 15.79 per cent, private banks with 14.48 per cent and the least CAGR in the study period was at SBI & its associate banks recording 12.73per cent. There was no variation in the rankings of groups over the period of the study


TABLE- 9 Advances of All Branches (Amount in Rs. Crores)

Year

Nationalized Banks

Group Aggregate

Ran

k

SBI and Its

Associates

Aggregate

Ran

k

Private Banks

Aggregate

Ran

k

Foreign Banks

Aggregate

Ran

k All Banks Aggregat

e

AGR

2009-10

957877 (48.35) I 482270

(24.34) II 414751 (20.93) III 126339

(6.38) IV 1981237

2010-11

1203678 (48.60) I 593722

(23.97) II 518402 (20.93) III 161133

(6.51) IV 2476935 25.02

2011-12

1519762 (50.66) I 739450

(24.65) II 575328 (19.18) III 165385

(5.51) IV 2999925 21.11

2012-13

1843082 (52.71) I 857937

(24.54) II 632441 (18.09) III 163260

(4.67) IV 3496720 16.56

2013-14

2311478 (53.77) I 994154

(23.13) II 797534 (18.55) III 195539

(4.55) IV 4298705 22.94

CAGR 19.27 I 15.57 II 13.97 III 9.13 IV 16.77

Source: www.rbi.org Table 9 depicts that advances made by all banks put together has increased year after

year. The highest AGR was recorded in the year 2010-11 with 25.02per cent. The CAGR of nationalized banks is higher with 19.27 per cent followed by SBI & its associates with 15.57 per cent, private banks with13.97 per cent and the least CAGR in the study period was at foreign banks recording 9.13 per cent. There was no variation in the rankings of groups over the period of the study

Interest Income is the income which a bank earns by lending money to the public. Table 10 shows that the highest AGR was recorded in the year 2010-11 with 33.15 per cent. The CAGR of nationalized banks is higher with 18.3 per cent followed by SBI & its associates with 15.49 per cent, private banks with14.33 per cent and the least CAGR in the study period was at foreign banks recording 9.73 per cent. Nationalized and foreign banks consistently maintained their ranks i.e., I and IV respectively where as SBI group and Private banks rankings where fluctuated between II and III. Nearly 50 per cent of aggregate interest income is earned by Nationalized Banks. Foreign banks interest income’s share is very low with nearly 7 to 8 per cent of the total income earned. TABLE -10

Interest Income of all branches(Amount in Rs. Crores)

Year


Aggregate

Ran

k

SBI and Its


Ran

k Private Banks

Aggregate Ran

k Foreign Banks

Aggregate Ran


2009-10

110720 (47.79) I 53465

(23.08) II 49567 (21.39) III 17924

(7.74) IV 231676

2010-11

142647 (46.24) I 70428

(22.83) III 70991 (23.01) II 24417

(7.92) IV 308483 33.15

2011-12

183892 (47.34) I 89196

(22.96) II 85071 (21.90) III 30322

(7.81) IV 388481 25.93

2012-13

208029 (50.11) I 97954

(23.59) II 82806 (19.94) III 26390

(6.36) IV 415179 06.87

2013-14

256490 (52.17) I 109828

(22.34) II 96827 (19.69) III 28520

(5.80) IV 491665 18.42

CAGR 18.3 I 15.49 II 14.33 III 9.73 IV 16.24 Source: www.rbi.org


TABLE -11 Non-Interest Income of all branches


Year


Aggregate R

ank SBI and

Its Associates Aggregate

Ran

k Private Banks

Aggregate Ran

k Foreign Banks

Aggregate Ran


2009-10

14264 (33.14) I 9420

(21.89) III 12313 (28.61) II 7044

(16.37) IV 43041

2010-11

20979 (34.74) I 11818

(19.57) III 17006 (28.16) II 10588

(17.53) IV 60391 40.31

2011-12

26394 (35.09) I 16073

(21.37) III 17860 (23.74) II 14894

(19.80) IV 75221 24.56

2012-13

30500 (38.48) I 18394

(23.20) III 20423 (25.76) II 9951

(12.55) IV 79268 5.38

2013-14

28625 (35.98) I 19240

(24.18) III 20726 (26.05) II 10972

(13.79) IV 79563 0.37

CAGR 14.95 II 15.35 I 10.98 III 9.26 IV 13.07 Source: www.rbi.org

Non-Interest Income represents a bank earning which is earned by the sources other than lending money to the public. The highest AGR was recorded in the year 2010-11 with 40.31 per cent and the least AGR was recorded in the year 2013-14 with just 0.37 per cent. The CAGR of SBI & its associate’s banks is higher with 15.35 per cent followed by nationalized banks with 14.95 per cent, private banks with10.98 per cent and the least CAGR in the study period was at foreign banks recording 9.26 per cent.

TABLE -12 Interest Expenditure of all branches


Year


Aggregate

Ran

k

SBI and Its


Ran

k Private Banks

Aggregate Ran

k Foreign Banks

Aggregate Ran

k All Banks Aggregate

2009-10 69353 (48.70) IV 32607

(22.90) II 32856 (23.07) III 7603

(5.34) I 142419

2010-11 101093 (48.60) IV 47809

(22.98) II 48495 (23.31) III 10604

(5.10) I 208001

2011-12 131676 (50.02) IV 61770

(23.47) III 56957 (21.64) II 12819

(4.87) I 263222

2012-13 145712 (53.55) IV 66229

(24.34) III 51206 (18.82) II 8938

(3.29) I 272085

2013-14 164135 (54.91) IV 67018

(22.42) IIII 57115 (19.11) II 10622

(3.55) I 298890

AVERAGE 122393.8 IV 55086.6 III 49325.8 II 10117.2 I 236923.4 Source: www.rbi.org

Interest expenditure is the expenditure incurred by a bank in borrowing funds i.e., interest paid to the deposit holders. Table 12 shows that the aggregate interest expenditure incurred by all the banks have been doubled from Rs. 142419 crores to Rs. 298890 crores during the study period. The average expenditure incurred per year is least in foreign banks


amounting Rs.10117.2 crores followed by private banks with Rs. 49325.8 crores, SBI & its associates account for Rs. 55086.6 crores and the expenditure is highest in Nationalized banks with Rs. 122393.8 crores. Nearly 50 per cent of aggregate interest expenditure is incurred by Nationalized Banks. Foreign banks interest expenditure is very low with less than 6 per cent of the total expenditure incurred.

TABLE -13 Operating Expenses of all branches


Year


Aggregate

Ran

k SBI and

Its Associates Aggregate

Ran

k Private Banks

Aggregate Ran

k Foreign Banks

Aggregate Ran

k All Banks Aggregate

2009-10 27268 (41.12) IV 15987

(24.11) III 15320 (23.10) II 7745

(11.68) I 66320

2010-11 29670 (38.39) IV 16993

(21.99) II 20267 (26.22) III 10353

(13.40) I 77283

2011-12 35416 (39.54) IV 20088

(22.42) II 21779 (24.31) III 12298

(13.73) I 89581

2012-13 40792 (40.78) IV 25283

(25.28) III 22851 (22.84) II 11102

(11.10) I 100028

2013-14 53819 (43.71) IV 29146

(23.67) III 27606 (22.42) II 12557

(10.20) I 123128

AVERAGE 37393 IV 21499.4 II 21564.6 III 10811 I 91268 Source: www.rbi.org

The Operating expenses includes the expenditure incurred by a bank in establishing, for manpower and other related expenses. Table 13 shows that the average expenditure incurred per year is least in foreign banks amounting Rs.10811 crores followed by SBI & its associates with Rs.21499.4 crores, private banks with Rs. 21564.6 crores and expenditure is highest in Nationalized banks with Rs. 37393 crores.

TABLE -14 Cost of Funds of all branches

Year


Aggregate

Rank

SBI and Its

Associates Agg.

Rank Private Banks Agg.

Rank Foreign Banks Agg.

Rank All

Banks Agg.

2009-10 4.80 III 4.75 II 5.18 IV 4.03 I 4.82 2010-11 5.82 II 5.90 III 6.13 IV 4.33 I 5.80 2011-12 6.09 III 5.94 II 6.18 IV 4.46 I 5.96 2012-13 5.37 III 5.32 II 4.83 IV 2.83 I 5.10 2013-14 4.93 IV 4.80 III 4.56 II 3.11 I 4.73

AVG 5.4 IV 5.34 II 5.38 III 3.75 I 5.28 Source: www.rbi.org

Table 14 shows that the Average Cost of Funds is least in foreign banks with 3.75 followed by SBI & its associates with 5.34, private banks with 5.37 and it is highest in nationalized banks with 5.4.


TABLE -15 Wages as per cent to total expenses

Year


Aggregate

Rank

SBI and Its


Rank Private Banks

Aggregate Rank

Foreign Banks


Aggregate

2009-10 17.94 II 21.55 IV 10.93 I 20.08 III 17.32 2010-11 14.05 II 15.89 III 10.35 I 19.95 IV 14.01 2011-12 13.31 II 15.06 III 10.83 I 19.44 IV 13.60 2012-13 13.65 II 17.10 III 12.73 I 23.48 IV 14.85 2013-14 16.41 II 19.21 III 14.454 I 23.31 IV 17.05

Source: www.rbi.org Table 15 shows that private banks wages share in total expenditure were less when

compared to other banks. All banks consistently maintained their rankings from the year 2009-10 to 2013-14.

TABLE- 16 Return on Assets made by four groups of banks

Year


Aggregate

Rank

SBI and Its


Rank Private Banks

Aggregate Rank

Foreign Banks


Aggregate

2009-10 0.94 III 0.86 IV 1.02 II 2.28 I 1.05 2010-11 1.01 III 0.97 IV 1.13 II 2.09 I 1.12 2011-12 1.03 III 1.02 IV 1.13 II 1.99 I 1.13 2012-13 1.00 III 0.91 IV 1.28 II 1.26 I 1.05 2013-14 1.03 III 0.79 IV 1.43 II 1.74 I 1.10

Source: www.rbi.org Table 16 depicts that foreign banks return is highest followed by private, nationalized and SBI group banks. All banks consistently maintained their rankings over the period of the study. All banks aggregate was consistently at 1.17

TABLE -17 Net NPA Ratio of four groups of banks

Year


Aggregate

Rank

SBI and Its


Rank Private Banks

Aggregate Rank

Foreign Banks


Aggregate

2009-10 0.94 II 1.32 IV 0.97 III 0.73 I 1.02 2010-11 0.77 I 1.43 IV 1.09 III 0.77 I 1.00 2011-12 0.68 I 1.47 III 1.29 II 1.81 IV 1.05 2012-13 0.91 I 1.50 III 1.03 II 1.82 IV 1.12 2013-14 0.92 III 1.49 IV 0.56 I 0.67 II 0.97

Source: www.rbi.org From table 17 it is clear that all banks showed fluctuation in their rankings over the

period of the study. In the year 2007-08 both nationalized and foreign banks ranked I. All banks aggregate NPA ratio performance was best in the year 2013-14 with 0.97 CONCLUSION:

The major competition was between nationalized and foreign banks only. Nationalized banks had more number of employees but their business per employee and profit per employees was less than the industry average. Nationalized banks have more capital compared to other groups whereas the compounded annual growth rate in terms of capital was high for private banks. People believed in nationalized and SBI & its associate banks while making their deposits. Even the CAGR of nationalized and SBI & its associates banks was high when compared to other group banks. Investments were more at nationalized banks when compared to other groups. Foreign group banks witnessed more growth rate in terms of


investments. The total income earned and expenditure incurred was more by the nationalized banks and even the growth rate of them was higher. The cost of funds incurred by the foreign group banks was low when compared to other banking groups. Wages share out of the total expenditure incurred was more for foreign group banks. Nationalized and SBI group banks performance was not good in case of return on assets according to the industry average. Foreign group banks performance was good as per the returns made by it. In the year 2013-14 the Net NPA ratio was least for all the banks except SBI & its associates group. Over the period of the study all the banks annual growth rate was considerable in all aspects.

All the banks are equally good at some aspects and bad at some other aspects. The banks have to take necessary measures to overcome this problem to withstand the stiff competition in Indian Banking Industry. Nationalized banks have to improve their business per employee and profit per employees to withstand the competition from other banks. Nationalized and SBI & its associates banks have to keep their existing customers to increase their business. The nationalized banks have to control their operating expenses and have to increase their return on assets. REFERENCES: Books:

1. Gordon & Natarajan, “Financial Markets & Services” Himalaya Publishing House. 2. Khan and Jain, “Financial Management”, Himalaya Publishing House. 3. Kothari. C. R “Research Methodology Methods & Techniques” New Age International

Publishers. New Delhi Journals:

1. 1Biresh K Sahoo and Anandadeep Mandal - Examining the Performance of Banks in India: Post Transition Period, The IUP Journal of Bank Management, 2011, vol. X, issue 2, pages 7-31

2. 2Dr. Ashok Khurana, Kanika Goyal - Performance of Public Sector Banks: An Analysis IJBEMR Volume 2, Issue 2 (February2011)

3. 3Sathish Kumar B -Financial Performance of Private Sector Banks in India – An Evaluation.

4. Milind Sathye - Efficiency: A Study of Indian Banks VIKALPA • VOLUME 30 • NO 1 • JANUARY - MARCH 2005 pp- 7-16.

5. Ganesan. P. (2001), “Determinants of Profits and Profitability of Public Sector Banks in India: A Profit Approach”, Journal of Financial Management and Analysis, Vol. 14, No.1, January-June, pp. 27-37.

6. Chowdari Prasad and K. S. Srinivasa Rao (2004), “Private Sector Banks in India - A SWOT Analysis”, Banker Profession, pp 28-33.

7. Sanjay J Bhayani (2006), “Performance of the New Indian Private Banks: A Comparative Study”, Banking Review, pp 55-59.

8. Dr. N. Bharathi (2010), “Profitability Performance of New Private Sector Banks-An Empirical Study”, Indian Journal of Finance, Vol. 4, No.3, March, pp. 16-24.

9. Jyoti Saluja and Dr. Rajinder Kaur (2010), “Profitability Performance of Public Sector Banks In India”, Indian Journal of Finance, Vol. 4, No.4, April, pp. 17-25.


Meta-Analysis of Organizational Citizenship Behaviour (Ocb): A Review Of Dimensions, Antecedents And Consequences

Arun Aggarwal

Designation: Senior Research Fellow Department: University School of Applied

Management University: Punjabi University Patiala

E-mail ID: [email protected] Mobile: +91-9888432764

Dr. Ran Singh Designation: Professor and HOD

Department: Tourism, Hospitality and Management

University: Punjabi University Patiala E-Mail ID: [email protected]

ABSTRACT The present study is an utmost attempt to provide a comprehensive overview of the nomological network of OCB, with an emphasis on implications for future research. The purpose of this study is to provide a comprehensive framework to provide a parsimonious and conceptually meaningful framework incorporating distinct dimensions, antecedents and consequences of OCBs. Qualitative approach has been used to review the findings of work done by various authors regarding OCB dimensions, antecedents and consequences. The results of the previous research studies relating to organizational citizenship behavior helps in making a clear distinction between different constructs. Further, literature review helps in identifying seven common dimensions of OCB. Unlike previous studies which has only identified the brighter side of the OCB, this study emphasized on both positive and negative consequences of OCB by using content analysis. The proposed conceptual model in this study could be done empirically in future by researchers. Key Words: Organizational Citizenship Behaviour, Dimensions, Antecedents and Consequences INTRODUCTION

The modern era of competition is so high which was never been in the past, so the dynamic nature of competitive business environment necessitate employees to work under constantly challenging and changing business circumstances which has become an indispensable feature of today’s organizations. So organizations will likely to have those individuals, for the success of their organization, who are willing to go beyond delineated formal job obligations and perform extra role for their organization which is termed as (OCB) Organizational Citizenship Behavior (Somech & Drach-Zehavy, 2004). The majority of researchers contributed on OCB and their research has shown that these extra role behaviors facilitates in improving the performance of organization and individual performance (Podsakoff et al. 2000). There is unanimity in this peculiar field that OCB addresses silent behaviors for organizational enterprises (Barbuto et al., 2001). Organ (1977) extended the scope of job performance by distinguishing quantitative measures of work outcomes by qualitative aspects of work by re-evaluating the relationship between job performance and job satisfaction to incorporate behaviors which have positive effects on social, psychological and organizational context of work. Based on the conceptualization purposed by Organ (1977), the first ever empirical evidence supporting the relationship between job satisfaction and qualitative performance, later on this concept was known in published studies as (OCB) Organizational Citizenship Behavior (Bateman & Organ, 1983) and the first ever scale measuring OCB with helping and compliance as subscale was developed by Smith et al. (1983). Further elaborating the concept, Organ (1988) defined Organizational Citizenship Behaviors (OCB) as “individual behavior that is discretionary, not directly or explicitly recognized by the formal reward system, and that in the aggregate promotes the effective functioning of the organization. By discretionary, we mean that the behavior is not an enforceable requirement of the role or the


job description, that is, the clearly specifiable terms of the person’s employment contract with the organization; the behavior is rather a matter of personal choice, such that its omission is not generally understood as punishable.” However Organ (1997) modified this definition by saying that OCB is “performance that supports the social and psychological environment in which task performance takes place”. Afterwards (Organ et al. 2006) elaborated the definition by adding “in the aggregate promotes the efficient and effective functioning of the organization” within the framework of OCB. The efficiency of organization could be increased by linking OCB with customer satisfaction, growth in revenues, financial performance and operational efficiency (Organ, Podsakoff, & Mackenzie, 2006). According to Podsakoff et al. (2009) there are three advantages of this revised definition: a) It maintains the distinction between OCBs and task performance that has been empirically

shown to exist (MacKenzie, Podsakoff, & Fetter, 1991; Motowidlo & Van Scotter, 1994; Rotundo & Sackett, 2002).

b) It is more coherent with the definition of contextual performance given by Borman and Motowidlo’s (1993).

c) It avoids some of the difficulty with considering OCBs as discretionary behavior for which an individual might not receive formal rewards. In 1983 Bateman & Organ coined the term “Citizenship” as behaviors that lubricate the social machinery of the organization.

The number of published researches on OCBs and related constructs, such as organizational citizenship performance (Borman, 2004), pro-social organizational behavior (Brief & Motowidlo, 1986; George & Bettenhausen, 1990), extra role behavior (Van Dyne, Cummings, & Parks, 1995), organizational spontaneity (George & Brief, 1992; George & Jones, 1997), voice behavior (Van Dyne, Ang, &Botero, 2003), and contextual performance (Borman & Motowidlo, 1993,) augmented significantly from 13 research papers during 1983-1988 to over 650 research papers during the past quarter century. The interesting fact about these research papers is that vast majority of these research papers (66%) have been published during the period of 21st century (Podsakoff et al. 2009). This indicates that OCBs are unwaveringly embedded in the fabric of the arena of industrial–organizational psychology and organizational behavior. So due to the arousing interest in this field it becomes necessary to unveil the various aspects related with OCBs. The purpose of this study is to provide a comprehensive framework to provide a parsimonious and conceptually meaningful framework incorporating distinct dimensions, antecedents and consequences of OCBs. Such a framework will provide a wider scope of OCBs by analyzing various previous research findings made by numerous empirical studies. Majority of studies previously reviewed dispositional and attitudinal factors as antecedents of OCBs & individual and organizational performance as consequences of OCBs (LePine et al., 2002; Organ & Ryan, 1995; Podsakoff et al., 2000). Further, as interest in OCBs continues to expand to other fields like military psychology, community psychology, marketing, economics and hospital and health administration, it becomes more hard to keep track with the theoretical and empirical developments in this discipline, and to assimilate the literature into a coherent whole (Podsakoff et al., 2000). This study includes contextual and motivational antecedents in addition to attitudinal and dispositional antecedents. Likewise, the study incorporates positive and negative consequences in addition to individual and organizational performance as consequences. Therefore, in this study we tried to present a holistic picture of OCB in the light of existing literature to capture the widened scope of citizenship behavior. This extensive panorama on OCBs have various benefits. First, this study tried to make a clear taxonomy to categorize these overlapping citizenship behaviors. Second, in order to get a more effective understanding about the antecedents of OCBs, it is essential to consider the complex social environment in which these extra role behaviors play a vital role in motivating the employees to indulge in citizenship behaviors. Third, the managerial orientation of previous studies had been overlooked the consequences of OCBs are also taken into account for the study. Fourth, by considering positive implication of prosocial behavior on citizenship could also help in getting better insight about the consequences of OCBs.


DIMENSIONS OF ORAGANIZATIONAL CITIZENSHIP BEHAVIORS Since the inception of the concept “Organizational Citizenship Behavior” by Bateman

& Organ (1983), there has been a great deal of disagreement among the researchers regarding its dimensions. Different researchers have developed a variety of taxonomies which classify citizenship behaviors in to thirty different forms (Podasakoff et al., 2000). In 1983 Smith et al., conducted a semi-structured interview of 422 managers to identify instances of helpful, but not absolutely required job behaviors. Managers were then asked to think of an employee who had worked for them and to rate the characteristics of each employee behavior on a five point scale. Results of the factors analysis indicated two interpretable and distinct factors. The first factor, categorized as altruism, capture behavior that directly and intentionally intended to help specific person in face to face situation. In contrast the second factor, categorized as General Compliance, constitute impersonal form of conscientiousness which indirectly helps others involved in the system rather than directly helping any one specific individual (e.g., punctuality). In an attempt to conceptualize the taxonomy of OCB in a more systematic way Organ (1988) proposed a five factor model that include altruism (closer to altruism proposed by Smith et al., 1983), conscientiousness (narrower in scope of conscientiousness proposed by Smith et al., 1983), courtesy (specific behavior intended towards preventive measures to avoid work related problems), sportsmanship (avoids complaining and sacrificing one’s own personal benefits), and civic virtue (promoting the interests of the concern organization).In an attempt to conceptualize the OCB in different manners, most the researchers have used a different taxonomies which is a varying degree to five dimensions proposed by Organ (1988).The first ever operationalization of Organ’s (1988) five dimension was done by Podsakoff et al. (1990) by generating the items measuring citizenship behavior on the basis of definition given by Organ (1988). The items were subjected to confirmatory factor analysis and Q sort analysis. The resulting citizenship behavior scale had been the basis for measuring OCB in most of the empirical studies (LePine et al., 2000). Williams & Anderson (1991) proposed a two dimensional construct of OCB which includes behaviors that benefits the organization as a whole (OCBO) and behaviors that benefits to the co-workers and peers which indirectly benefits the organization (OCBI). The former category is similar to Organ’s (1988) civic virtue, sportsmanship and conscientiousness whereas latter category fits into altruism and courtesy dimensions. Lin (1991) suggested a six dimensional scale to measure OCB which includes assistance to colleagues, righteous, self-improvement, identification with the organization, harmony and discipline. Later, Van Dyne et al. (1994) proposed a three dimensional OCB framework which includes loyalty, which resembles sportsmanship and civic virtue; social participation which corresponds with altruism and courtesy; obedience, which is similar to civic virtue and conscientiousness; finally functional participation, which doesn’t resembles any of the Organ’s dimensions, but it overlaps job-task citizenship behavior specified by Coleman & Borman(2000). Moorman & Blakely (1995) suggested a three dimensional construct which includes personal industry, loyal boosterism and individual initiative. Van Scotter & Motowidlo (1996) narrower the construct of contextual performance by dividing it into two constructs namely, interpersonal facilitation and job dedication. Van Dyne et al (1997) proposed a five factor model to conceptualize the OCB framework which includes, identification with the company, altruism towards colleagues, conscientiousness, interpersonal harmony and protecting company resources dimensions. Due to this widened proliferation of OCB construct, most the empirical researches were unable to tap those behaviors that represent the broader fundamental constructs of OCB. To overcome these issues Coleman & Borman (2000) analyzed the data generated by content sorting of 27 OCBs using multidimensional scaling, exploratory factor analysis and cluster analysis. Results of the analysis suggested three different behavior categories, which varies with beneficiaries behaviors, consistent with the results of Williams & Anderson (1991). The first dimension, interpersonal citizenship performance, concerns towards helping other members of the organization which is quite similar to Organ’s (1988) courtesy and altruism dimensions, and also similar to Williams & Anderson (1991) OCBI dimension. The second dimension, organizational citizenship performance, concerns towards benefiting the organization as a whole which includes Organ’s (1988) civic virtue,


conscientiousness and sportsmanship dimensions, and also Williams & Anderson (1991) OCBO dimension. The third dimension, Job-task citizenship performance, include behaviors which require persistence, dedication and extra efforts on the job, and maximizing one’s own job performance. Although this dimension seems out of the scope of dimensions mentioned by Organ (1988) but it is similar to Van Scotter & Motowidlo (1996) job dedication dimension and, with Van Dyne et al. (1994) functional participation dimension. DiPaola & Tschannen-Moran (2001) proposed a bipolar construct on the bases of results of two different studies using factor analysis. Results of the studies depicted that there is one dimension that rather than five different dimensions for capturing the individual behaviors which were directed towards benefiting the individual (OCBI) and benefiting the organization (OCBO). Studies delineated above shows a lack of consensus amongst the researchers regarding the dimensions of OCB and related constructs. As suggested by Podsakoff et al. (2000) despite of exiting almost 30 different types of citizenship behaviors, it is quite evident that there exist a great amount of conceptual overlapping amongst these constructs which results into seven common citizenship behavior dimension which were identified by Podsakoff and his colleagues in 2000. To make a clear conceptualization of these seven common themes as suggested by Podsakoff and his colleagues in 2000, an attempt has been made to relate (make an association between) these seven dimensions with related constructs specified by different authors.

Table 1: SEVEN COMMON DIMENSIONS OF ORGANIZATIONAL CITIZENSHIP BEHAVIOR

DIMENSIONS DESCRIPTION

Helping Behavior

It refers to voluntarily helping others with or preventing the occurrence of work related problems (Podsakoff et al., 2000). This dimension is similar to Organ (1988, 1990b) altruism, cheerleading and peacemaking dimensions; Van Scotter & Motowidlo (1986) interpersonal facilitation dimension; Graham (1989) interpersonal helping dimension and Williams & Anderson (1991) OCBI dimension.

Sportsmanship

Podsakoff et al., (2000) defined it as individuals who are willing to tolerate the inevitable inconveniences and impositions of work without complaining. Individuals are willing to sacrifice their personal interest for the good of the work group, and do not take the rejection of their ideas personally.

Organizational Loyalty

It consist of behaviors that promotes organization to the outsiders, protect and defend the organization against external threats (Podsakoff et al., 2000). According to Graham (1991) employees who are loyal to their organization will follow the organizational rules and regulations even under adverse conditions.

Organizational Compliance

This dimension capture a person’s internalization and acceptance of the organization’s rules, regulations, and procedures, which results in a scrupulous adherence to them, even when no one observes or monitors compliance (Podsakoff et al., 2000). This dimension is similar to Smith et al. (1983) generalized compliance dimension; Graham (1991)organizational obedience dimension; Williams & Anderson (1991) OCB-O dimension; Borman & Motowidlo (1993) organizational rules and procedures; and Van Scotter & Motowidlo (1996) job dedication dimension.


Individual Initiative

It refers to engaging in task-related behaviors at a level that is so far beyond minimally required or generally expected levels that it takes on a voluntary flavor (Podsakoff et al., 2000). This dimension is quite similar to (Organ, 1988) conscientiousness dimension; (Graham, 1989; Moorman & Blakely,1995) personal industry and individual initiative dimension;(George & Brief, 1992; George & Jones, 1997) making constructive suggestions dimension, (Borman & Motowidlo, 1993, 1997) persisting with enthusiasm and volunteering to carry out task activities dimension; (Morrison & Phelps, 1999) taking charge at work dimension, and (Van Scotter & Motowidlo, 1996) job dedication dimension.

Civic Virtue

It is defined as willingness to participate actively in organization’s Governance; to monitor organization’s environment for threats and opportunities; and to look out for best interests of organization, even at great personal cost (Podsakoff et al., 2000). This dimension is similar to that of Organ (1988, 1990b) civic virtue dimension; Graham (1989) organizational participation dimension; and George and Brief (1992) protecting the organization construct.

Self-Development

It involves employee’s voluntary behavior to improve their skills, knowledge and abilities for better performance on the job (Podsakoff et al., 2000).

However, most of the dimensions of OCB specified by different authors were

conceptualized around the five factor model given by Organ (1988), as it is widely accepted model for framing the OCB. The scrutiny of above literature suggest that in most of the empirical research this five factor model by Organ (1988) was unanimously accepted. An attempt has been made to chronologically represent the development of OCB literature and its different constructs specified by different authors at different point of time. Table2: VARIOUS DIMENSION OF ORGANIZATIONAL CITIZENSHIP BEHAVIOR

AUTHOR(S) & YEAR DIMENSIONS

Katz (1964) Innovative

Spontaneous

Smith, Organ & Near (1983) Altruism

General Compliance

Williams & Anderson (1991) OCB directed towards specified individual (OCBI)

OCB directed towards organization (OCBO)

Lin (1991) Identification with the organization

Assistance to colleagues

Harmony

Righteous

Discipline


Self-Improvement

Van Dyne, Graham & Dienesh (1994)

Obedience

Loyalty

Social Participation

Functional Participation

Moorman & Blakely (1995) Personal Industry

Loyal Boosterism


Van Scotter & Motowidlo (1996) Interpersonal Facilitation

Job Dedication

Farth, Earley & Lin (1997) Identification with the company

Altruism towards colleagues

Conscientiousness

Interpersonal harmony

Protecting company resources

Podsakoff et al. (2000) Helping Behavior

Sportsmanship

Organizational Loyalty

Organizational Compliance


Civic Virtue

Self-development

Coleman & Borman (2000) Interpersonal Citizenship Performance

Organizational Citizenship Performance

Job-task Citizenship Performance

However, there has been a lot of criticism by various researcher for this proliferation of OCB constructs.

Firstly, the process used to drive the new OCB related dimensions have been criticized by most of the researchers (LePine et al., 2002). According to Spitzmuller et al. (2008) as most the researchers that proposed different constructs had used factor analysis and most of the researchers were unable to capture the overlapping of ensuing constructs except Van Dyne et al (1995), and LePine et al. (2002).

Second, the speculation of OCB related dimensions could not be carried out as there has not been any conclusive examination regarding discriminant and convergent validity of OCB constructs by researchers (Spitzmuller et al., 2008).There has been various attempts to resolve this issue by various researchers like LePine et al. (2002) used meta-analysis


technique, Coleman & Borman (2000) used cluster analysis, and multidimensional scaling techniques but a definitive conclusion could not be achieved due to the conflicting results. For example, Coleman & Borman (2000) had suggested a three factor model to conceptualize OCB constructs, whereas, LePine et al. (2002) proposed that the best way to conceptualize the OCB is by considering it as a latent construct. New empirical research findings confirms the multidimensionality of OCB by using meta-analyses. Results of Ilies et al. (2006a) and Ilies et al. (2007) meta-analyses proposed that diverse aspects of citizenship behavior varies in their relationship with common antecedents like leader-member exchange, positive effect, conscientiousness and agreeableness.

Third, most of the researchers had criticized for using a theoretical approach for deriving the construct relating to citizenship behavior. For example, Van Dyne et al. (1995) had criticized organizational citizenship behavior research for using first degree constructs which is derived from socially constructed meaning, instead of using second degree constructs which confirms the results with conceptually and empirically evidences. Even the foremost conceptualization of citizenship behavior given by Smith et al (1983) has been criticized for overusing of first degree construct approach. However, there are few exceptions in which researchers have given a clear theoretical base rationale to differentiate various types of OCB constructs but most of the researchers have continued to use first degree to conceptualize the OCB constructs. The exceptions include research by Van Dyne et al. (1994) in which they formulated a theoretically based approach based on political philosophy for generating different types of OCB. In another study, Van Dyne et al. (1995) suggested a conceptual framework that differentiated challenging versus affiliative and change oriented versus promotive behaviors. Lastly, Moon et al. (2004) suggested a circumplex conceptual framework of OCB.

Fourth, it is critically important to have a consensus amongst the researchers on construct definitions before proceeding on to substantive definitions which results in avoiding unnecessary and insufficient distinction conceptualization, construct deficiency and contamination (Schwab, 1980).But most of the research on OCB have ignored this. Which results in complex nomological network of OCB’s antecedents and consequences that make it more difficult to have a clear distinction of OCB constructs under the light of extensive empirical research related to OCB. Although there has been some enhancement of our understanding of OCB through meta-analytic research but it has not been able to resolve the argument over the nature and dimensionality of OCB (Spitzmuller et al. 2008). Empirical Studies Pertaining to Antecedents and Consequences of Organizational Citizenship Behavior

Recognizing these shortcomings, we now turn our attention towards antecedents and consequences of OCB which had received little attention in previous empirical research to capture a comprehensive framework of citizenship behavior. So it becomes more critical to throw some light in the presence of large number of substantive empirical research relating to OCB. Therefore, an attempt has been made in this study to summarize the previous research finding to have a well-defined conceptual model of OCB.

Table 3: Empirical Studies Pertaining to Antecedents and Consequences of Organizational Citizenship Behavior

Author (Year)

Variables Sample Size

Methodology & Technique

Findings & Conclusion

Organ & Ryan (1995)

Attitudinal measure (Job satisfaction, perceived fairness, Organizational commitment, leader supportiveness) and Dispositional measure (conscientiousness,

55 Studies Meta-analysis Results depicted that all the attitudinal measure were robust predictors of OCB whereas expect conscientiousness all other dispositional measure were not able to predict OCB.


agreeableness, positive affectivity, negative affectivity)

LePine& Van Dyne (2001)

Big five personality characteristics and cognitive ability

276 management students

Correlation, Post Hoc analysis and hierarchical regression

Conscientiousness and extraversion was more strongly related to cooperative and voice behavior than task performance whereas agreeableness depicted opposite relationship. Cognitive ability demonstrated contrasting relationship as it was more strongly related to task performance than voice or cooperative behavior.

Rioux & Penner (2001)

Prosocial value motives, Organizational concern motives and Impression management motives

141 municipal employees

Correlation and Hierarchical regression

Study depicted strong association between prosocial values motives and OCBI whereas there was strong association between organizational concern motives and OCBO.

Kuehn & Al-Busaidi (2002)

Job satisfaction, Organizational commitment, Job characteristics and age

153 employees from public & private sector organizations

Correlation, regression, t-test and Post-hoc analysis

Findings suggested that normative commitment, job satisfaction and age were the prominent predictors of OCB whereas job characteristics were not.

Lee et al. (2004)

Job embeddedness, OCB, job performance, voluntary turnover and volitional absences

Data was collected from 636 individuals

Ordinary least squares regression and logistic regression equations

Findings revealed that off-the job embeddedness significantly predicts voluntary turnover and volitional absences whereas on-the job embeddedness significantly predicts OCB and job performance. Further, job embeddedness had a moderating effects of performance, citizenship and absences on turnover.

Asgari et al. (2006)

(Antecedents) Organizational characteristics, Task characteristics, Cultural context (Mediators) Trust and Perceived organizational support

162 employees

Confirmatory factor analysis, Structural equational modelling, Zero-order correlation

Findings of the study demonstrated that perceived organizational support & trust mediates the relationship between organizational characteristics and OCB whereas task characteristics had only direct and positive relationship with OCB. Further, power-distance was the only one amongst three dimensions of cultural context which had a direct and positive effect on OCB.

Kamdar, McAllister& Turban (2006)

Procedural justice, reciprocation wariness, empathic concern, perspective taking

Sample comprises of 220 engineers and their

Hierarchical regression and confirmatory factor analysis

Results revealed direct and interactive effects of procedural justice, reciprocation wariness, empathic concern, perspective taking on OCB role definition


immediate supervisors of 500 fortune oil refinery companies operating in India.

which further act as a moderator on the relationship between justice and OCB.

Maner&Gailliot (2007)

Perceptions of oneness, Negative affect, Empathic concern and Relationship type

154 under-graduate psychology students

Structural Equational Modelling

It was found that relationship between helping and empathetic concern was more in context of kinship relationships than among strangers despite controlling for egoistic motivators (negative effect, oneness).

Pare & Tremblay (2007)

Human resource practices, organizational commitment, turnover intentions and procedural justice

394 IT professionals

Structural equational modelling

Results demonstrated that affective commitment, procedural justice, OCB and continuance commitment partially mediated the relationship between HR practices and turnover intensions for highly skilled IT professionals.

Asgari et al. (2008)

(Antecedents) Transformational Leadership, Organizational Justice, (Mediators) Leader-Member Exchange, Perceived Organizational Support, Trust.

162 employees

Confirmatory factor analysis, Structural equational modelling, Zero-order correlation

Study showed that transactional leadership, transformational leadership, trust and perceived organizational support had significant positive effect on OCB but LMX showed no effect on OCB. There was also mediating effect of LMX, trust and organizational support on the relationship between Organizational justice and transformational leadership on OCB.

Fassina (2008)

Procedural justice, Interactional justice and Distributive justice

34 independent studies

Meta-analysis approach proposed by Schmidt-Hunter

Results manifested that procedural & interactional justice are the most unique predictors of OCBO & OCBI respectively.

Ilies et al. (2009)

Agreeableness and conscientiousness

151 studies Meta-analytic path analysis and meta-analytic moderator analyses

Results revealed that agreeableness was closely associated to OCBI and had both direct and indirect effects on OCBI and only indirect effect on OCBO whereas Conscientiousness was closely associated to OCBO and had an opposite results than agreeableness.

Pezij (2010) Motives, role overload, stress, commitment, Impression management, co-

85 Dutch employees

Regression analysis

Relationship between citizenship behavior and stress was weaker for individuals with high levels of affective commitment whereas this relation was stronger for individuals with high continuance


operative norms and work-family conflict

commitment. In addition, results showed moderating effect of co-operative norms on the relationship between citizenship behavior and work-family conflict.

Wagner & Rush (2010)

Context-relevant attitudes (Trust in management & Peers, Organizational commitment, Pay satisfaction and Overall satisfaction), Dispositional variables (Moral judgement & Self-monitoring), Age and Altruistic behaviors.

96 U.S. nurses

Inter-Correlations and Hierarchical regression

Findings demonstrated that there was significant association between altruistic behaviors and contextual variables of organizational commitment, job satisfaction, and trust in management for younger individuals. Further, study showed significant positive relationship between altruistic OCB and dispositional variable of moral judgment among the older individuals.

Chaiburu& Oh (2011)

Extraversion, Emotional Stability, Conscientiousness, Openness, Agreeableness

87 independent studies

Schmidt-Hunter random-effects meta-analysis approach.

Results of the study demonstrated that Extraversion, Emotional Stability, and Openness had incremental validity for OCB over and above two well established five factor model predictors of OCB, that is, Agreeableness and Conscientiousness. Further, personality model predicts citizenship behavior over and above job satisfaction.

Ozer (2011) Job performance, Team-member exchange and task autonomy

364 jewelry designers, 310 coworkers, and 284 supervisors

Path analytic procedures proposed by Edwards &Lambert (2007)

Findings suggested TMX mediated the relationship between Job performance and OCBs. Study also showed that, task autonomy moderates the OCBI–TMX relationship but not the OCBO–TMX relationship.

Spence et al. (2011)

Daily variables (Upward and downward comparison, job satisfaction, positive affect, negative affect, daily OCB) and Trait variables (belief in a just world, agreeableness, conscientiousness, age, gender, frequency of interaction)

Data was collected from 1076 individuals by using interval-contingent experience sampling methodology

Hierarchical multivariate linear modeling

Results suggested that social comparisons were related to citizenship behaviors through positive affect and the direct (automatic-motivational)effects of social comparisons on citizenship behaviors were moderated by beliefs in just world.

Barnes, Ghumman& Scott (2013)

Sleep, Job satisfaction, Work attitudes and Helping behavior

Field study one comprises 87 employees

Field study one used Ordinary least squares multiple

Results of study one depicted that quantity of sleep had direct effect for OCBO but this relation does not hold for OCBI whereas sleep had indirect effect on both OCBO


from various organizations whereas field study two comprises 85 college student.

regression analyses, Correlation and field study second employed Hierarchical linear modeling and Correlation

& OCBI. Results of second study revealed that natural variation in sleep had an effect on both OCBO & OCBI and there was a mediating effect of job satisfaction on this relationship.

For better understanding of OCB a comprehensive conceptual model regarding

antecedents and consequences of OCB has been proposed based on the insights gained from review of literature done it this study. As majority of the previous research had focus only at the brighter side of OCB but in this study the darker side of the story has also been paid due attention along with the brighter side to have a model which captures each and every aspect of OCB.

CONCEPTUAL FRAMEWORK Figure 1: Proposed Model

RESEARCH DESIGN

One of the basic objective of the study was to summarize the various constructs of OCB given by different authors at different point of time for measuring the level of citizenship behavior among the individuals and to make a clear taxonomy of OCB construct. Another objective of the study was to give an empirically supported conceptual framework regarding various antecedents and consequences of OCB. To fulfill these delineated objectives, present study conducted comprehensive empirical literature review. We started our literature search by examining all the published papers included in literature review of citizenship literature done by Podsakoff et al. (2000) and Organ & Ryan (1995). We then took our search for articles one


step further by collecting the relevant OCB articles from PsycINFO and ERIC databases by making use of keywords organizational citizenship behavior, extra-role behavior, organizational citizenship performance, contextual performance, prosocial organizational behavior, organizational spontaneity, altruism, civic virtue, helping and voice. Third, we conducted a manual search of these keywords from 1983 to 2013 of different relevant journals(i.e., Journal of Organizational Behavior, Academy of Management Journal, Organizational Behavior and Human Decision Processes, Human Performance, Journal of Applied Psychology, Journal of Management, Administrative Science Quarterly, Journal of Vocational Behavior, Personnel Psychology and Journal of Occupational and Organizational Psychology etc.) to gather as many published research papers as possible that might contain relationships between OCB, various dimensions, antecedents and different consequences at individual and organizational level. This search helps in to collecting the relevant literature regarding various aspects of OCB. Table 3 above critically summarized the main contents such as author names, year, variables examined in the selected study, sample of the selected study, research methodology employed by the various researchers in order to arrive at the results and main findings of the study have been taken into account for the present study. Most of the selected studies used parametric test to empirically analyze the results. Some studies used meta-analysis techniques to capture the results. SIGNIFICANT FINDINGS AND CONCLUSSION:

The present study is an utmost attempt to provide a comprehensive overview of the nomological network of OCB. The results of the previous research studies relating to organizational citizenship behavior helps in making a clear distinction between different constructs and helps in identifying seven common dimensions of OCB based on the literature reviewed. A conceptual framework of OCB, based on literature review has also been proposed by summarizing previous research on antecedents such as attitudinal, dispositional, motivational, organizational commitment, task characteristics, role perceptions, fairness perceptions, organizational justice, relationship with supervisors & Co-workers, job embeddedness; consequences of citizenship behaviors at individuals, groups and organizational levels. Previous research on consequences of OCB has depicted that majority of the researchers had focused only at the positive aspects of OCB, thereby, neglecting the darker side of OCB. By considering the practical implication for researchers and practitioners, the present study is an attempt to fill this gap by giving due weightage not only to positive consequence but also to negative consequence to prove a holistic framework of OCB. This piece of study found some significant managerial implications as managers can adopt particular measures by knowing the brighter and darker sides of OCB. Managers can not only increase the organizational effectiveness, job satisfaction, employee retention, personal development, individual well-being, physical & mental health, self-evaluation but can also reduce the work-family conflicts, role overload, job stress & absenteeism by knowing and identifying the positive consequences of OCB. An effective manager should recognize the positive and negative consequences of citizenship behavior and should take necessary measures so that positive results of OCB can be enforced and negative results can be avoided in order to increase the overall organizational performance and effectiveness. The present study is a review of literature based on past studies however, proposed conceptual model could be done empirically in future by researchers. By doing that, it will ultimately leads to better understanding of the employee’s extra role behavior at individual, group and organizational level.

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Perception of students on purchasing and use of smart phones-A study in Bhimavaram town.

K. Narendra Kumar Assistant Professor,

Department of Management Studies, Vishnu Institution of Technology,

Bhimavaram. [email protected]

Mrs.G.V.Sravya Assistant Professor,

Department of Management Studies, Vishnu Institution of Technology,

Bhimavaram. [email protected]

Abstract: The innovation of smart mobile has completely changed the scenario of modern society. In one word it has redefined the telecom business with the technological advances. All this happen because of ease of use of various services within a single device. So therefore it is not an exceptional case for the student community to be attracted by the features of smart mobile offered by various companies with different modes of operations that makes the users to 0 in Bhimavaram town region.

Introduction: Asmart-phone is a mobile phone with an advanced mobile operating system. They typically combine the features of a cell phone with those of other popular electronic devices, such as personal digital assistant (PDA), media player, camera, internal memory ,wifi, blue tooth and GPS navigation unit. A smart-phone is a cellular telephone with an integrated computer and other features not originally associated with telephones, such as an operating system, Web browsing and the ability to run software applications. The preferred platform for a user’s everyday computing needs is shifting from traditional desktop and laptop computers towards mobile smart -phone and tablet devices. S m a r t - phones are becoming an increasingly important work tool for professionals who rely on them for telephone, text messaging, email, Web browsing, contact and calendar management, news, and location specific information.

These same functions as well as the ability to play music, movies, and games also make smart-phones a useful personal tool. In fact, hundreds of thousands of smart-phone applications are available for users to download and try through various online application stores. The ease of downloading new software imposes a risk on users as malicious software can easily ac-cess sensitive data with the risk of corrupting it or even leaking it to third parties. For this reason, smart-phones given to employees for work use are often locked down resulting in many users having to carry separate work and personal phones. Application developers also carry additional phones for development to avoid having a misbehaving applicat ion prototype corrupt their primary phone. Parents sometimes wish they had additional phones when their children use the parent’s smart-phone for entertainment and end up with unexpected charges due to accidental phone calls or unintended in-app purchases. Most smart- phones have a touch screen user interface, can run third-party apps and are camera phones. Most Smart-phones produced from 2012 onwards also have high-speed mobile broadband 4GLTE internet , motion sensors and mobile payment mechanisms . In 2014 , sales of smart-phones worldwide topped 1.2 billion , which was up 28% from 2013. The first smart-phone was IBM's Simon, which was presented as a concept device (rather than a consumer device) at the 1992 COMDEX computer industry trade show. The difference between a smart-phone and a cell phone:


When Simon debuted, the smart-phone's features clearly differentiated it from other cell phones, which at that time were just telephones that didn't need a landline connection. There is no standard definition that clearly delineates a smart-phone -- many devices marketed simply as cell phones offer similar features to those marketed as smart-phones. Common features of smart-phone:

Texting Digital cameras, typically with video capability Gaming Unified messaging Personal information management GPS (global positioning system) Remote control of computers Remote control of home or business electronic systems

Consumer smart-phones evolved out of personal digital assistants (PDAs), rather than cell phones around the turn of the 21st century, when devices such as the Palm Pilot began to include wireless connectivity. Objectives of the study: The objectives of the study are: 1) To find out the features that strive students to go for smart-phone. 2) To find out the market share of smart-phones in Bhimavaram town. 3) To know the features that attracts the customer to buy the smart-phone. 4) To know the level of satisfaction of Smart-phone users. Methodology of the study: Methodology is the systematic, theoretical analysis of the methods applied to a field of study. It comprises the theoretical analysis of the body of methods and principles associated with a branch of knowledge. Typically, it encompasses concepts such as theoretical model, phases and quantitative or qualitative techniques. The methodology depends on collection of data. The well defined questionnaire is distributed among the students in Bhimavaram region to collect the primary data. Scope of study: A Study is a complete operation, which requires some technical knowledge Survey methods are mostly personal in character. Surveys are best suited for getting primary data. The research obtains information from the respondents by interviewing them. Sampling Method: It is not always necessary to collect data from whole universe. A small representative sample may serve the purpose. A sample means a small group taken in a large lot. This selection process in called as sampling. We distributed the questionnaire among the students who are studying in various colleges in Bhimavaram town. A simple random sampling method is used to for the selection of sample so that each individual has an equal chance of known opportunity of being selected. So therefore the total number of students selected for this study in Bhimavaram town are 280.Among them, finally we successed in getting the responses from 250 students. Limitations of the study: 1) The study was limited only to the Bhimavaram town. 2) The result can’t be generalized to the whole market. 3) Time factor was the main limitation for the study as it was restricted to small period of time. 4) The sample taken for research was concerned only for 250 students . Historical perspectives of smartphone: The global smart-phone market has witnessed extraordinary growth in recent years, with shipments rising by 40 percent in 2013 to exceed the 1 billion unit threshold and $266 billion in value. CCS Insight forecasts smart-phone shipments of 1.89 billion units by 2018. However, explosive growth has been accompanied by significant disruption. Large Web


players are seeking to embrace the advantages that mobile delivers in the areas of engagement, context, connectivity and price compared with the PC-based gateways that have defined their businesses until now. At the same time, Apple has redefined the hardware business model; Samsung has built a substantial advantage thanks to the scale of its operations; and the barriers to entry have fallen thanks to factors such as the rise of the Android operating system and numerous reference design platforms that enable a thriving manufacturing community, most notably in Shenzhen, China. This report assesses the dynamics that are facilitating continued disruption in the global smart-phone landscape and the factors that will drive further change over the next three to five years. CCS Insight concludes that it is myopic to evaluate the mobile phone and smart-phone markets and their value creation in isolation. They must be considered alongside Web-based ecosystems, a new wave of content and services, and convergence with other established and emerging hardware segments. This has two consequences. Firstly, it means that the smart-phone market is as dynamic as ever and is far from the permanent "two-horse race" between Apple and Samsung that is depicted by some industry commentators. Furthermore, although a duopoly exists between Android and IOS at an operating system level, fragmentation caused by Chinese government regulation and ecosystem growth on top of Android means the competitive significance of this duopoly is declining. Secondly, success in the smart-phone market and the way in which value is extracted is fundamentally changing. This report outlines the three dominant profiles that CCS Insight believes will define success over the coming four years. These are as follows: A broader business model such as advertising or retail that mobile extends and enriches thanks to its advantages of reach, engagement, context, connectivity and increasing affordability. A parallel business that reinforces the profit margin made on hardware. Increasingly this is in the realm of content and services. Substantial advantages of scale, supply chain and costs that enable profitable competition using a margin-based hardware model. Global Smartphone Market Size and Value: Total mobile phone shipments (that is, sales from manufacturers to the distribution channel, also referred to as "sell in") in 2013 reached 1.83 billion units globally, a year-on-year increase of 6 percent from 1.73 billion units in 2012. Although plenty of growth remains in the smart-phone segment, growth as a whole is slowing. Total handset market growth of 6 percent in 2013 was down from 9 percent in 2012 and 13 percent in 2011.

Smart-phone shipments exceeded the 1 billion unit mark for the first time in 2013, reaching 1.03 billion units and accounting for 56 percent of total mobile phone shipments. This represented growth of 40 percent on 734 million units in 2012. Yet smart-phone shipment growth was down from 46 percent in 2012 and is forecast to slow to 21 percent in 2014. CCS Insight estimates the sell-in value of the mobile phone market in 2013 at $303 billion, up 15 percent from $265 billion in 2012. Of this the mobile phone businesses of Apple and Samsung accounted for 35 percent and 39 percent respectively. Although mature markets such as North America and some Western European markets are seeing fresh impetus from network operators' early upgrade programs, smart-phone growth in these markets is now heavily driven by replacement sales. CCS Insight estimates replacements rates in 2014 were 60 percent of the installed base in 2013 in North America, and 40 percent of the installed base in 2013 in Western Europe.

Smart-phone growth is now heavily dependent on emerging markets, notably China. China accounted for mobile phone shipments of 385 million units in 2013, or 21 percent of the global total. Smart-phone shipments in 2013 approached 300 million, or 29 percent of global smart-phone shipments.


Recent Scenario of Smart mobiles: Recent years have witnessed a fundamental shift in the structure and dynamic of the

global smart-phone landscape. Profit margins have followed a similar if not worse trajectory to those in the PC industry and the strategic importance of mobile technologies has seen the smart-phone market become incrementally more complex and competitive. Large Web players are seeking to embrace the advantages mobile devices offer in terms of engagement, context, connectivity and price compared with the PC -based gateways that have come to define their businesses. This is causing mass disruption as mobile becomes a subsidised channel for the extension of business models in advertising and retail beyond traditional hardware margin-based businesses.

Apple is a notable exception to this dynamic, but has nonetheless created an ecosystem in which its strength in content and services is helping to create industry-leading profit margins for its hardware.

In addition, barriers to entry have fallen dramatically, enabling a "long tail" of emerging manufacturers that are collectively becoming a significant force. They are steadily expanding beyond their heartland of Shenzhen, China, exploiting the advantages of low cost, the scale of their home market and their closeness to the supply chain. This has caused mass disruption. A host of established phone -makers, including Nokia, Motorola, BlackBerry, LG and HTC have been squeezed between the emergence of Chinese manufacturers, the ecosystem-based business models of Apple, Amazon, Google, Microsoft and others and the unrelenting advantage that Samsung derives from the scale of its operations. However, the smart-phone market is still experiencing healthy (but slowing) market growth. Shipments will reach 1.24 billion in 2014, an increase of 21 percent. The value of the smart-phone market will reach slightly less than $300 billion. CCS Insight believes the common assumption that the smart-phone landscape is now stable and will continue to be dominated by Apple and Samsung over the next four years is a gross mischaracterisation. DATA ANALYSIS AND INTERPRETATION

1. What is your Age? Age of the Respondent

No of Student

s

% of Student

s 12-15 years 35 14

15-18 years 55 22

18-21 years 64 25.6

21-30 years 96 38.4

Total 250 100%

Age of the Respondents

CONCLUSION: From the above table it is depicted that most of the students using the smart mobile are belonged to the age group of 21-30 years comprising of 38% of the total respondents followed by the age group students of 15-18years with 25% in the total sample.

2. Why did you purchase smart-phone?


Response No of

Students

% of Student

s Calls 20 8 Internet 87 34.8 Applications 93 37.2

Status 50 20 Total 250 100%

MOTIVATED FACTOR CONCLUSION: From the above it come to know that maximum number of students i.e 93% respondents purchase smart-phone for application use and 87% respondents purchase smart phone for easy access of internet. How much your smart mobile cost was?

Response

No of Student

s

% of Student

s Rs3000-5000 25 10

Rs6000-9000 80 32

Rs10000-15000 95 38

Rs15000 above 50 20

Total 250 100%

Cost of smart mobile CONCLUSION: From the it is evident that 38% respondents mobile price is between 10000-15000, and only 10% respondent’s mobile price is between 3000-5000.

3. Where do you usually use smart phone?

Response No of

Students

% of Student

s Home 68 27.2 College 65 26 Work Place 45 18 Transportation 72 28.8

Total 250 100%

PLACE OF USE CONCLUSION: Almost 28.8% students are using smart phones when they are transportation whereas only 18% students are using smart phones in their work place.

4. What is the cam resolution range of your smart mobile(backend)?


Response

No of Student

s

% of Student

s 2mp-4mp 40 16

5mp-8mp 95 38 9mp-12mp 45 18

More than 12mp 70 28

Total 250 100%

CAM RESOLUTION CONCLUSION: 38% respondents resolution range is 5mp-8mp whereas only 16% respondents resolution range is 2mp-4mp. Most of the students preferred the range 5mp-8mp camera quality.

5. How much time on an average your mobile device is plugged-in for charging?

Response

No of Student

s

% of Student

s <1hr 20 8 1-2hr 80 32 2-3hr 95 38 >3hr 55 22 Total 250 100%

CONCLUSION: It is clear that 38% respondents plug- in their mobile for less than 1hr whereas 22% respondents plug- in their mobile for more than 3hrs for charging.

6. How much is your mobile inbuilt storage capacity?

Response No of Students

% of Students

2 GB-4GB 55 22 4 GB-8GB 75 30 8GB-16GB 85 34 ABOVE 16GB 35 14

Total 250 100%

INBUILT STORAGE CAPACITY CONCLUSION: 22% respondents mobile inbuilt storage capacity is 2GB-4GB, 30%respondents are having 4 GB-8GB capacity,34% are having 8GB-16GB capacity,14%. Respondents are using above 16GB. From this we conclude that most of the respondents are having 4 GB-8GB storage capacity.

7. Do you like bigger output for playing games in your mobile?


Response

No of Studen

ts

% of Studen

ts

Yes 175 70

No 75 30

Total 250 100%

CONCLUSION: 70% respondents like bigger output for playing games and 30% respondents do not prefer bigger output for games.

8. What is the range of downloading speed of your mobile?

Response

No of Student

s

% of Student

s 10 mbps 20 8

12 mbps 38 15.2 More than 14 mbps

80 32

No idea 112 44.8

Total 250 100%

DOWNLOADING SPEED CONCLUSION: 8% respondents are using10 mbps downloading speed, 32% respondents are having more than 14mbps and 44.8% respondents don’t have idea about range of downloading speed of their device.

8. What do you download frequently?

Response No of

Students

% of Student

s Apps 120 48 Documents 55 22

Music & Videos 75 30

Total 250 100%

FREQUENT DOWNLOADS CONCLUSION: It is evident that 48% respondents downloaded apps frequently, 22% respondents downloaded documents and 30% respondents downloaded music & videos.

9. How many downloaded apps you have in your mobile? NO OF DOWNLOADED APPS


Response

No of Student

s

% of Student

s 3 to 8 45 18 9 to 14 114 45.6 15 to 20 75 30 20 above 16 6.4 Total 250 100%

CONCLUSION: 8% respondents are having 3-8 downloaded apps, 45.6% respondents are having 9-14 downloaded apps, 30% respondents are having 15-20 downloaded apps and 6.4% respondents are having above 20 downloaded apps. From this we conclude that most of the respondents are having 9-14 downloaded apps in their device.

10. Do you feel mobile applications are really dominating the other features of smart-phone?

Response

No of Student

s

% of Student

s Yes 182 72.8 No 68 27.2 Total 250 100%

CONCLUSION: From the above table it is clear that 72.8% respondents feels that mobile applications are really dominating the other features of smart-phones and 27.2% respondents do not feel so.

11. How much time you are engaging per day with your mobile applications?

Response

No of Student

s

% of Student

s 1-2Hrs 80 32 2-3Hrs 130 52 3-4Hrs 35 14 4-5Hrs 5 2 Total 250 100%

ENGAGGING TIME PER DAY CONCLUSION: It is illustrated that 32% respondents are engaging 1-2hr with their mobile applications, 52% respondents are engaging 3-4hr with their mobile applications, 14% respondents are engaging 5-6hr with their mobile applications and 2% respondents are engaging above 6hr with their mobile applications. Are you satisfied with the features of your smart- phone? SATISFACTION

Ye s No0

20

40

60

80

100

120

140

160

180

200 182

6872.8

27.2


Response

No. of Students

% of Students

Yes 210 84 No 40 16 Total 100 100%

CONCLUSION: 88% respondents are satisfied with the features of their smart-phone and 12% respondents are not satisfied.

12. Do you think smart-phones have redefined the phase of mobile generation? Response

No. of Students

% of Students

Yes 215 86 No 35 14 Total 250 100%

CONCLUSION: It is elucidated that 86% respondents think that smart phones have redefined the phase of mobile generation while 14% does not think so. 15. Finally, do you satisfy with overall functioning of your smart-phone?

Response No. of Students

% of Students

Yes 220 88

No 30 12

Total 250 100%

FUNCTIONING OF SMART MOBILE CONCLUSION: 88% respondents are satisfied with overall functioning of their smart- phone while 12% respondents are not satisfied. CONCLUSION

Analysing the data we came to know that modern and fairly new users of smart-phones are utilizing their functions effectively. This means phone usage other than calls and SMS. Also the newest and most user friendly phone user interfaces seemed to be the most popular. All companies are providing different types of mobile applications, updating the technology, also maintaining customer satisfaction with overall functioning of smart-phone and maintaining quality of the service which they are providing. Hence it is a welcoming approach if the students use smart mobile for the growth of their career.

*******


Organizational commitment in select Public and private hospitals: a comparative study

Dr. V Vijay Durga Prasad MBA Ph D

Professor and Head Department of Management Studies PSCMR College of Engineering and

Technology Kothapet

Vijayawada -520 001 AP Email:[email protected]

S Manikanta MBA PGDHRM (NET) (Ph D) Associate Professor and TPO

PSCMR College of Engineering and Technology

Kothapet Vijayawada -520 001 AP

Abstract Organisational Commitment is the degree in which an employee is willing to maintain membership due to interest and association with the organisations goals and values. It is the relative strength of an individual’s identification with and involvement in an organization. The primary aim of this paper is to assess the differences in organizational commitment among employees in public and private hospitals. The current research paper also tried to analyze the effects and importance of Affective, continuance and Normative commitments among doctors and nurses in public and private selected hospitals in Andhra Pradesh through descriptive research process. The second specific aim is to explore the concept by focusing on developing the process of organizational commitment. A variety of outcomes have been identified and the results are given after careful evaluation. The implications for organizational efforts to foster commitment in employees are discussed in the final. Key words: Commitment, affective, normative, continuance Introduction

Only one who devotes himself to a cause with his whole strength and soul can be a true master. For this reason mastery demands all of a person. Here are the great words given by Albert Einstein about commitment. The most important single factor in individual or organizations success is Commitment. To commit is to pledge you to a certain line of conduct. So, organizational commitment is employee’s commitment to the organization. It has two facets; one the organisations perspective and the other the employee’s perspective. Commitment can be in form of the nature of relationship between an employee and the organization or it’s a relationship to a variety of entities. Commitment can be observed as an attitude or mindset (attitudinal commitment) where it arises due to convergence of goals and values and develops prospectively. Commitment can be behavioral. It develops post membership in retrospect which facilitates rationalization of continuance in an organization.

According to O’Reilly the organizational Commitment can be defined as “An individual’s psychological bond to the organization, including a sense of job involvement, loyalty and belief in the values of the organization.” Organisational commitment has been defined as “a psychological state that characterizes an employee’s relationship with an organisation and has implications for the decision to continue membership of the organisation” (Meyer and Allen 1991). There are three components of organizational commitment.

1. Affective commitment refers to employee’s identification, or strong emotional attachment and involvement in the organisation. An employee who is affectively committed strongly identifies with the goals of the organization and desires to remain


a part of the organization. This employee commits to the organization because he/she "wants to".

2. Continuance commitment refers to an awareness of the costs associated with leaving the organisation. The individual commits to the organization because he/she perceives high costs of losing organizational membership (cf. Becker's 1960 "side bet theory"[citation needed]), including economic costs (such as pension accruals) and social costs (friendship ties with co-workers) that would be incurred. The employee remains a member of the organization because he/she "has to".

3. Normative commitment reflects an obligation to continue with the organisation. The individual commits to and remains with an organization because of feelings of obligation. These feelings may derive from many sources. For example, the organization may have invested resources in training an employee who then feels a 'moral' obligation to put forth effort on the job and stay with the organization to 'repay the debt.' It may also reflect an internalized norm, developed before the person joins the organization through family or other socialization processes, that one should be loyal to one's organization. The employee stays with the organization because he/she "ought to".

Earlier Studies on organizational commitment/Review of Literature A great deal of research has been devoted to studying the antecedents and outcomes

of commitment in the work setting. The conceptual and operational development of organizational commitment has affected the conceptualization and measurement of other commitment forms such as commitment to the occupation, the job, the workgroup, the union and the work itself (Cohen, 2003; Gordon, Philpot et al., 1980; Morrow, 1993).

Organisational commitment is an important job-related outcome at the individual level, which may have an impact on other job-related outcomes such as turnover, absenteeism, job effort, job role and performance or vice versa (Randall, 1990). The job role that is ambiguous may lead to lack of commitment to the organization and promotional opportunities can also enhance or diminish organisational commitment (Curry, Wakefield, Price & Mueller, 1996).

The existence of employment opportunities can affect organisational commitment (Curry et. al., 1996). Individuals who have a strong perception that they stand a chance of finding another job may become less committed to the organization as they ponder on such desirable alternatives. Where there is lack of other employment opportunities, there is a tendency of high level of organisational commitment (Vandenberghe, 1996). As a result, membership in the organization is based on continuance commitment, where employees are continuously calculating the risks of remaining and leaving (Meyer & Allen, 1997). Objectives The paper involves the study of the following objectives:

1. To study and measure the level of various types of commitments in selected hospitals. 2. To study the variance of employee commitment in government and private hospitals.

Methodology The research was undertaken in two teaching hospitals (hospitals attached with

medical colleges) namely Gandhi Medical College (GMC) and Deccan General Hospital (DGH) Hyderabad by using convenience sampling method. The research was carried out by using a group administered Questionnaire. The instrument was handed over to each person and asked to fill it while in the room. The responses were recorded and analyzed. Doctors and Nurses of selected hospitals are the sampling units. A total of 89 doctors and nurses have been studied based on their availability and willingness to participate in the survey. The data was analyzed using a technique called ANOVA and the results are simultaneously presented through occupation wise, age wise, gender wise, hospital wise etc., Area Selected: Gandhi Medical College and Deccan General Hospital Data Sources:

a) Primary Data: It was collected through a Questionnaire b) Secondary Date: Observed the details of employees in Hospital records

Sampling Technique: Convenience sampling method


Sample Size: 89 Statistical Techniques Used: Tables, Percentages, Anova. Data Presentation, Analysis and Interpretation Frequency wise details in hospitals considered

TABLE 1

Frequency Percent Valid Percent Cumulative

Percent

Valid PES 46 51.7 51.7 51.7

SVIMS 43 48.3 48.3 100.0 Total 89 100.0 100.0

From the above graph it can be interpreted that we received an average of 44 responses from the hospitals considered for the current research. Frequency wise details based on Occupation

TABLE 2

Frequency Percent Valid Percent Cumulative

Percent

Valid DOCTOR 28 31.5 31.5 31.5

STAFF NURSE 61 68.5 68.5 100.0 Total 89 100.0 100.0

In the responses taken for survey we received 28 responses from doctors and 61 responses from staff nurses. Doctors occupied 31.5% of the overall frequency where as the staff nurses occupied 68.5% of frequency. The responses from doctors are low compared to staff nurses.

0

50

100

150

PES SVIMS Total

Frequency

Percentage

0

20

40

60

80

100

120

DOCTOR STAFF NURSE Total

Frequency

Percentage


It happens because of the busy schedule of doctors and the data is gathered based on their availability. Frequency wise details based on Gender

TABLE 3

Frequency Percent Valid Percent Cumulative Percent

Valid MALE 25 28.1 28.1 28.1

FEMALE 64 71.9 71.9 100.0 Total 89 100.0 100.0

The male respondents are 25 in number and occupied 28.1% in providing details to our survey whereas the female respondents are 64 in number and occupied 71.9% of the frequency. As the male respondents are highly involved in administrative matters it became critical for us to contact them. Frequency wise details based on Experience

TABLE 4

Frequency Percent Valid Percent Cumulative Percent

Valid Zero-five 22 24.7 24.7 24.7

Six-ten 36 40.4 40.4 65.2 Eleven-fifteen 17 19.1 19.1 84.3

Sixteen-twenty 10 11.2 11.2 95.5

More than twenty one 4 4.5 4.5 100.0

89 100.0 100.0 Total

0

20

40

60

80

100

120

MALE FEMALE Total

Frequency

Percentage


The respondents with 6-10 years of experience are more in these hospitals followed by 0-5 and 11-15 years of experience. The people with more than 21 years of experience are less and occupied only a 4.5% of frequency. Testing of Hypothesis Null Hypothesis (H0): There will be no significant difference between GMC and DGH regarding the three types of commitment. DESCRIPTIVES VARIABLES=ConCommitment Normcommitment Affeccommitment STATISTICS=MEAN STDDEV MIN MAX. TABLE 5 ANOVA BY HOSPITAL Sum of

Squares df Mean Square F Sig. Affective commitment

Between Groups 10.099 1 10.099 .064 .801

Within Groups 13721.986 87 157.724 Total 13732.085 88

Normative commitment

Between Groups 5616.178 1 5616.178 35.290 .000


Continuous Commitment

Between Groups 2571.526 1 2571.526 24.868 .000


The Table 5 shows the results of one way ANOVA to know the significant difference between employee commitment and the type of hospital. i.e, public and private hospitals. Observations

1. Employee’s emotional bond to their organization has been considered as an important determinant of dedication and loyalty. It implies that the employees with affective commitment are seen as having a sense of belongingness and shows their desire to work with the organization.

2. From Table 5 we can understand the relationship between GMC and DGC with respect to affective commitment. It is observed that there is no significant difference between the two hospitals regarding affective commitment.

020406080

100120

Frequency

Percentage


3. It implies, the employees in both the hospitals are highly committed and psychologically attached to their work places. They are strongly identified with the goals of the organization and desire to remain as a part of the organization.

4. If we observe the values of Normative and Continuance commitments the relationship between the two hospitals are highly significant. It implies, the Normative and continuance commitments are showing a significant difference between the two hospitals.

5. It may happen because of the varying needs and obligations of employees and the costs like economic and social will be loosed.

Conclusion

The importance of employee commitment is quite evident if one considers prior research into the relationship between commitment and job satisfaction. The whole paper discusses the importance of affective normative and continuance commitments among the two hospitals undertaken for study. Among the three types of commitments the affective commitment will have a bearing effect on employee commitment towards his organization. In the current research paper the affective commitment between public and private hospitals considered are not significantly differed. References 1. Allen NJ, Meyer JP (1990). The measurement and antecedents of WeiBo et al. 019

affective, continuance and normative commitment to the organization. 2. J. Occup. Psychol. 63: 1−18. Alutto JA, Hrebiniak LG, Alonso RC (1973). On

operationalizing the concept of commitment. Social Forces 51: 448−454. Angle HL, Lawson MB (1993). Changes in affective and continuance commitment in times of relocation.

3. J. Bus. Res. 26: 3−16. Bass BM (1998). Transformational leadership: Industrial, military and educational impact. Mahwah, NJ: Lawrence Erlbaum and Associates.

4. Becker K, Wilson C (2000). Development of affective organizational commitment: A cross-sequential examination of change with tenure.

5. J. Vocat. Behav. 56: 114−136. Becker HS (1960). Notes on the concept of commitment. 6. Am. J. Sociol.66: 32−40. Becker TE, Billings RS, Eveleth DM, Gilbert NL (1996). Foci

and bases of employee commitment: Implications for job performance. Acad.Manage. J. 39(2): 464-482.

7. Becker TE, Kernan MC (2003). Matching commitment to supervisors and organizations to in-role and extra-role performance. Hum. Perf.16(4): 327-348.

8. Bishop JW, Scott KD, Burroughs SM (2000). Support, commitment and employee outcomes in a team environment. J. Manage. 26(6): 1113-1132.

9. Brown RB (1996). Organizational commitment: Clarifying the concept and simplifying the existing construct typology. J. Vocat. Behav. 49:230−251.


A Study On Patient Engagement In Eye Care Hospitals, Madurai

J.SHANMUGAPRIYA,

Assistant professor, school of management studies,

SANGAM UNIVERSITY, BHILWARA-RAJASTHAN EMAIL: [email protected]

ABSTRACT:

The purpose of this study is to find out the dimensions of patient engagement from practitioners in eye care, In order to identify the dimensions, the recent surveys on patient engagement, articles and reports were taken into consideration. Primary data of 62 samples were collected from senior ophthalmologists, medical officers, M.S. Ophthalmology residents & administrators practicing in Eye care hospitals. Secondary data- was collected from magazines; online journals & internet regarding practitioners’ research & other eye care researches. The tools used for this study were exploratory factor analysis, correlations and regressions

Key words: Patient engagement, dimensions, exploratory factor analysis

Introduction: In today’s highly dynamic and interactive business environment, the role of “customer engagement”, customer experience and value is receiving widespread attention from business practitioners and academics. It is suggested that customer engagement represents a strategic imperative for generating enhanced corporate performance, including sales growth, superior competitive advantage and profitability. The rationale underlying these assertions is that engaged customers play a key role in vital marketing activity. Service organizations only achieve customer loyalty by having very satisfied customers. This requires a strong emotional satisfaction and emotional attachment to the organization, which is also labeled as “engagement”. ,so the concept of customer engagement was tested in the hospital settings is popular now and the increasing number of emerging quantitative as well as qualitative studies on patient engagement proved it. The private hospital sector in India has grown passively over the years, it caters to a large segment of the population, yet it has received very little attention from scholars, policymakers, and others. As a result, very little is known about how the private hospital market is functioning and what could be done to improve its performance. Hospitals in competitive environments engage in certain “competitive strategies and tactics” in order to increase their market share. As a strategy, they may compete for “physician allegiance” as a means to patients, which is often considered more effective than direct competition for patients. As a part of their next strategy, hospitals may also compete for payers of care.(patients). These include price and non-price competitive tactics. The latter includes measures to convey quality of services and the diverse range of services they offer fewer than one setting, conveying a sense of “comprehensive service package” they can provide to the patients. This is supposed to create an impression on the patients that various forms of care could be obtained in the same hospital setting. For his purpose the private hospitals are now concentrating on the “patient centered care “Patients are becoming more and more a part of the equation that hospital administrators, physician practices and affiliated networks are going to have to take into account as a measure of how well they are doing, delivering healthcare. Ultimately if the hospitals have no patients, all the great physicians, hospitals, capabilities and plan design in a market and have no


business. Patient centeredness being able to attract, satisfy and communicate effectively with patients, better service to patients , making them more educated consumers, helping them to find services when needed, making those services more convenient and accessible.

Patient engagement-Why is it important to engage patients in their healthcare? Most importantly, it is vital to improving patients’ health outcomes. They are also better able to communicate important health information to their providers, which can assist providers with their diagnosis and care plans. Informed and educated patients and their families can take an active role in healthcare decision making;. They are also more likely to effectively manage their own care, as healthy behaviors and chronic care are ongoing, everyday activities. Patient engagement is nowadays more and more recognized as a crucial component of high-quality healthcare services. In the majority of the Western countries, patient engagement in health and social care policies is well established with the government commit to foster interventions and research projects and methodologies which prioritize the “patient’s voice” and the “patient’s active roles in their own healthcare” as it leads to more responsive services and better outcomes of care . In the last years, patient engagement has gained increasing prominence thus providing an impetus for research programs and initiatives encouraging individuals and communities to have a stronger voice in National Health Services, as it seems to contribute To gain better health outcomes, to enhance patient’s care and cure experience, to improve illness self-management and adherence to therapies, and to reduce care costs. Numerous articles are available which highlight the importance of patient engagement. However, few quantitative studies have been performed in developing nations. And also those studies are only around the primary care, cancer and prison patient’s engagement. Further, patient engagement has not been studied adequately especially in south India. One research study related to patient engagement from a primary care clinic in the northern Indian state of Punjab, was recently published(March 2013).(Patient engagement: an investigation at a primary care clinic, International Journal of General Medicine)Hardly we see the research articles on Indian hospitals patient engagements. Above said statements which directed me to take up this study particularly to test the dimensions of patient engagement specifically in one of the famous eye hospitals- Aravind eye hospital. so this paper is the step up to make the quantitative study on patient engagement to decide the dimensions of patient engagement. Research problem: Modern health care is complex, and many patients struggle to obtain, process, communicate, and understand even basic health information and services. Many patients lack health literacy, or a true understanding of their medical conditions. Many practitioners fail to provide the information that patients need to make the best decisions about their own care and treatment. And even when patients do receive detailed information, they can be overwhelmed or lack confidence in their own choices. Those with low levels of health literacy find it difficult to follow instructions on how to care for themselves or to adhere to treatment regimens, such as taking their medicines. By recognizing these problems, the objectives of this study have been set. Research Objectives:

1. To find out the dimensions of patient engagement. 2. To determine the dimensions of patient engagement in eye care 3. To identify the relationship between the factors of patient engagement.

REVIEW OF LITERATURE: Engagement as actions individuals perform in terms of adherence to drug prescription and a


Key component for high-quality healthcare services (Lehman et al.2002).Engagement as a factor which enables patient alliance with clinicians and enhance recovery experience (Simpson 2004) Engagement as a key component to foster patient-centered medical approach (Davis et al.2005) Engagement as a behavioral activation related to healthy behaviors and positive health Outcomes (Hibbard et al.2007) Engagement as a crucial elements in health policy making to deliver effective and high-quality healthcare interventions (Roy-Byrne andWagner2004) Engagement as behavioral activation that contributes to reduce resource abuse and improve health outcomes (Casale et al.2007) Engagement as a measurable marker of patients’ compliance to therapies and symptoms’ management(Trotti et al.2007).Engagement as a cognitive, behavioral ,emotional, and social construct which foster patient’s self-management (Franklin et al.2008).Engagement as a behavioral activation useful to better control and manage illness symptoms and emotional-related alterations(McCracken 2005).Engagement as a measurable marker of clinical results and organizational factor which contributes to reduce healthcare costs (Villagra 2004) Preetinder Singh Gill(2003) applied the concept of employee engagement to patients in health care settings 5 dimensions of employee engagement are used to postulate 5 dimensions of patient engagement. A scaled reliable survey instrument was developed to measured patient engagement. Better patient engagement is associated with better patient-perceived health outcomes. This study provides preliminary evidence that patient engagement has a causal relationship with patient-perceived health outcomes. Gemmel, Paul;Verleye, Katrien 2010 explored the extent of emotional attachment of patients and employees in hospital sector and the effect on patients and employee loyalty. Milton Viederman, M.D.* 2002 presents a case for the active, dynamic engagement of patients during consultations. Observations and hypotheses about the patient’s predominant conflicts are used to formulate interventions early in the consultation process that are designed to convey meanings that make the patient’s experience comprehensible to him. Liz Forbat a,*, Sandi Cayless a, Kate Knighting a, Jocelyn Cornwell b, Nora Kearney 2009 Identified the role of engaging people affected by cancer in service development in influencing healthcare professionals and service-users’ attitudes toward, and enactment of, engagement. Lourdes S. Martinez a,*, J. Sanford Schwartz b, Derek Freres a, Taressa Fraze a, Robert C. Hornika(2009) examined how patient–clinician information engagement (PCIE) may operate through feeling informed to influence patients’ treatment decision satisfaction ,Emily A. Wang, MD, MAS, Clemens S. Hong, MD, MPH, Shira Shavit, MD, Ronald Sanders, BS, Eric Kessell, PhD, and Margot B. Kushel, MD(2012) explored Individuals released from prison have high rates of chronic conditions but minimal engagement in primary care, compared 2 interventions designed to improve primary care engagement and reduce acute care utilization: Transitions Clinic, a primary care–based care management program with a community health worker, versus expedited primary care.Method used is a randomized controlled trial from 2007 to 2009 among 200 recently released prisoners who had a chronic medical condition or were older than 50 years and abstracted 12-month outcomes from an electronic repository available from the safety-net health care system. Main outcomes were (1) primary care utilization (2 or more visits to the assigned primary care clinic) and (2) emergency department (ED) utilization (the proportion of participants making any ED visit).The Results showed that both groups had similar rates of primary care utilization, Transitions Clinic participants had lower rates of ED utilization and the conclusion is Chronically ill patients leaving prison will engage in primary care if provided early access. Yvette L Roe1*, Christopher J Zeitz2 and Bronwyn Fredericks3 2012, Described patient-related factors, clinician-related factors and system factors that influence the patient clinician engagement for Indigenous and non-Indigenous patients diagnosed and treated for an acute cardiac event in South Australia; and explored the drivers to the disparity of care and health outcomes for Indigenous and non-Indigenous Australians who experience an acute cardiac admission. Marlys Staudt • Gayle Lodato • Christy R.


Hickman, 2012 get clearer understanding and conceptualization of engagement would enhance research and practice. RESEARCH DESIGN: In this study exploratory research design is used to identify the dimensions of patient engagement. The suitability of these dimensions to eye care hospitals is tested with the questionnaire issued to the doctors and administrative staff of major eye hospitals, Madurai. For the objective of finding out and determination of various dimensions of patient engagement, patient engagement surveys and literatures are analyzed. For this purpose 11 patient engagement survey reports were taken into consideration, which were published recently. The dimensions reported by the surveys were taken, and the synonymous dimensions were abandoned to reduce the overlapping and duplication of dimensions. After in-depth analysis and comparisons made on the surveys and articles, 15 dimensions were extracted. The comparison and extraction of dimensions on the basis of re- occurrences in various studies. So the occurrences decide the priority of dimensions and its classification. The questionnaire decided by the above said procedure and in order to get the acceptance and non acceptance of various dimensions, data collection made among the senior ophthalmologists, medical officers and MS ophthalmology residents, fellowships of Aravind Eye hospital, Madurai

Surveys and articles taken for the comparison Engagement behavior framework(EBF), Patient activation measure(PAM),Regional primary care coalition(RPCC),Picker’s questionnaire for-”what do you think about your DR?”,Kings fund- the quality of patient engagement,CMS published criteria,8 dimensions of patient centered care,Patient centeredness components,Picker’s “Engaging in health care”,NeHC stakeholder survey on patient engagement and Employee engagement dimensions Occurrence of dimensions in various surveys and articles Communication , Informed choice, Shared decision making ,Participation /involvement of the patient, Clinical empathy, Consideration of patient preferences, Patient Satisfaction, Self Management ,Promotion of health ,Prevention of disease, Organized health care ,Health literacy ,Partnering with patients, Patient centeredness, Engaging in community health. These dimensions are classified into Doctor related factors, Patient related factors and Hospital related factors. HYPOTHESIS FRAMED: H1a: Patient Engagement positively influenced by doctor related factors. H1b: Patient Engagement positively influenced by Patient related factors. H1c: Patient Engagement positively influenced by hospital related factors. H2a: Doctor related factor positively influenced by good communication with patient. H3a: Doctor related factor positively influenced by informed choice. H4a: Doctor related factor positively influenced by shared decision making. H5a: Doctor related factor positively influenced by active participation/involvement of the patient. H6a: Doctor related factor positively influenced by clinical empathy of doctors. H7a: Doctor related factor positively influenced by consideration of patient preferences. H2b: Patient related factor positively influenced by high patient satisfaction. H3b: Patient related factor positively influenced by health literacy of patients. H4b: Patient related factor positively influenced by self management of illness. H5b: Patient related factor positively influenced by promotion of health. H6b: Patient related factor positively influenced by prevention of disease. H7b: Patient related factor positively influenced by organize health care. H2c: Hospital related factor positively influenced by partnering with patients. H3c: Hospital related factor positively influenced by Patient centeredness. H4c: Hospital related factor positively influenced by engaged in community health. METHOD OF DATA COLLECTION: The primary data was collected from 48 persons comprising of senior doctors, medical officers, MS ophthalmology fellowships and administrative staff. They are requested to prioritize the factors of patient engagement through ranking method.


Secondary data- was collected from magazines; online journals & internet were used for collecting updated information about patient engagement. The universe of the study comprises the ophthalmologists and administrative staff of eye hospitals in Madurai. SAMPLE SIZE: The sample size is 62 collected from ophthalmologists and administrative staff Simple random sampling method is adopted for this study. Pilot study was conducted among 12 samples, prioritizing the factors by putting tick marks did not give any importance to the particular factors, so ranking method followed in the questionnaire. TOOLS FOR DATA ANALYSIS: (SPSS 19.0 used for analysis of the data.) I. Qualitative analysis of various patient engagement surveys and literatures to find out the dimensions of patient engagement. II. Factor analysis done to determine the dimensions of patient engagement in eye care. III. Descriptive statistics, Karlpearson’s bivariate correlation, multiple regressions used for analyzing patient engagement dimensions and its relationships. ANALYSIS AND INTERPRETATION: Exploratory Factor analysis: In order to find out the valid dimensions and redundancy, factor analysis made on the data collected.

TABLE 1:KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .737 Bartlett's Test of Sphericity Approx. Chi-Square 485.458

df 105 Sig. .000

Barlett's test of sphericity is significant, thus the hypothesis that the inter correlation matrix involving these 15 dimensions is an identity matrix is rejected. Thus from the perspective of Bartlett's test, factor analysis is feasible. As Bartlett's test is almost always significant, a more discriminating index of factor analyzability is the KMO. For this data set, it is.737, which is large, so the KMO also supports factor analysis.

TABLE 2: Frequencies Dimensions Valid Mean Std.dev variance

Communication 62 1.6290 1.13418 1.286

Informed choice 62 2.0161 1.24784 1.557

Shared DM 61 2.5902 1.38296 1.913

Participation, involvement 61 2.1148 1.06612 1.137

Empathy 61 2.4590 1.25928 1.586

Pt preference 61 2.4754 1.32422 1.754

Pt satisfaction 61 2.0328 1.52717 2.332

Health literacy 60 3.0000 1.52937 2.339

Self mgt 60 3.4667 1.58880 2.524

Promotion of health 61 2.5738 1.25776 1.582


Prevention of disease 61 2.4754 1.33674 1.787

Organize health care 61 2.6885 1.46675 2.151

Partnering with Pt 62 2.0968 1.05130 1.105

Patient centeredness 62 1.6452 0.85117 0.724

Community health 62 2.1452 0.92056 0.847

The descriptive information shows the means and standard deviations for all of the15 dimensions, are positive and significant as might be expected of these dimensions.

TABLE4: Eigen values

Kaiser's rule of retaining factors with Eigen values larger than 1.00 was used in this analysis as the default. As the Eigen values for the first four principal components (no distinction is made in deciding dimensionality by SPSS in the principal component and common factor analysis) with Eigen values of 6.509 and 1.029 were retained.

Table 5: Communalities

Initial Extraction Communication 1.000 .819

Component

Initial Eigenvalues Extraction Sums of Squared Loadings

Rotation Sums of Squared Loadings

Total

% of Variance

Cumulative %

Total

% of Variance

Cumulative %

Total

% of Variance

Cumulative %

1 6.509

43.391 43.391 6.509

43.391 43.391 3.036

20.242 20.242

2 1.569

10.463 53.854 1.569

10.463 53.854 2.995

19.969 40.212

3 1.375

9.166 63.020 1.375

9.166 63.020 2.498

16.654 56.865

4 1.029

6.859 69.879 1.029

6.859 69.879 1.952

13.014 69.879

5 .805 5.369 75.248 6 .701 4.672 79.920 7 .608 4.056 83.976 8 .567 3.781 87.757 9 .479 3.193 90.950 10 .424 2.823 93.774 11 .336 2.239 96.013 12 .258 1.721 97.734 13 .156 1.042 98.776 14 .110 .732 99.508 15 .074 .492 100.000


Informed Choice 1.000 .770

Decision Making 1.000 .591

Participation/Involvement 1.000 .662

Empathy 1.000 .702

Pt Preference 1.000 .729

Pt satisfaction 1.000 .794

Health literacy 1.000 .565

Self-Management 1.000 .648

Promotion of health 1.000 .799

Prevention of disease 1.000 .804

Organize health care 1.000 .641

Partnering with pt 1.000 .711

Pt centeredness 1.000 .539

Engaged community health 1.000 .708

Extraction Method: Principal Component Analysis.

The Principal Component communalities (Extraction, as the Initial are always 1.00) range from .539 to .819, thus most of the variance of these variables was accounted for by this four dimensional factor solution. Corresponding Extraction communalities for the Common Factor analysis were a bit smaller (as would be expected) but still show the majority of the variance of all variables represented in the four factor solution.

Diagram 1: Graphical representation of Scree plot

Also note the Scree Plot in the Principal Components output (the same thing is produced in the Common Factor Analysis). The Scree Plot is a graphic aid proposed by Cattell. It is simply a plot of the monotonically descending eigenvalues. It is intended to help in deciding where the "trivial" dimensions begin. Kaiser Rule opting for four dimensions is fairly well supported by the Scree Plot Table 6: Rotated component matrix

Components 1 2 3 4

Communication .804 Informed Choice .655


Decision Making .499 Participation/Involvement

.684

Empathy .660 Pt Preference .745 Pt satisfaction .854 Health literacy .679 Self Management .752 Promotion of health .800 Prevention of disease .692 Organize health care .585 Partnering with pt .793 Pt centeredness .556 Engaged community health

.825

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization.

The above table shows that component 1 indicating the priority factors as patient satisfaction, communication and informed choice when they are arranged in descending order. Component 2 indicating the priority factors as promotion of health, prevention of disease, participation and involvement, health literacy, and organize health care when they are arranged in descending order, component3 indicating the priority factors as self management, Patient preference, empathy and shared decision making when they are arranged in descending order. Component 4 indicating the priority factors as Engaged in community health, partnering with patients, and patient centeredness when they are arranged in descending order.

Table 7: Reduction of dimensions-Comparing correlations mean scores and extraction

Factor 1 Component matrix values

Mean scores

Options

1.Pt satisfaction .854 2.0328

Communication

2.communication .804 1.6290

3.Informed choice .655 2.0161

Factor 2

4.Promotion of health .800 2.5738 Prevention of disease

Participation in Treatment

Health literacy

Organize health care

5.Prevention of disease .692 2.4754

6.Participation/involvement

.684 2.1148

7.Health literacy .679 3.0000

8.Organize health care .585 2.6885

Factor 3


9.Self-management .752 3.4467 Self-management

Empathy 10.Pt preference .745 2.4754

11.empathy .660 2.4590

12.Shared DM .499 2.5902

Factor 4

13.Engaged in public health .825 2.1452 Engaged in public health

Partnering with patients

Patient centeredness

14.Partnering with pts .793 2.0968

15.Pt centeredness .556 1.6452

HC –Highly Correlated, LC –Low Correlated The reduction of dimensions are done by checking the inter correlations between the dimensions, highly correlated dimensions are taken and its mean values are compared. The highest mean value dimensions retained. (Here the highest mean value is near to 1 and the least priority indicates near to 6) Table 8: Extracted dimensions Factor 1(doctor related ) communication

Factor 2(patient initiatives)

Prevention of diseases, participation, health literacy,

organize health care

Factor 3(patient expectations

Self-management, empathy

Factor 4 (hospital related)

Engaged in public health,partnering with patients,

patient centeredness

Testing of Hypothesis: Hypothesis testing is done by Pearson’s correlation test, highly correlated dimensions are considered as having more positive influence on patient engagement. Table 9: Correlation between Patient engagement and Doctor, Patient and Hospital related factors Doctors

factor patient factor

patient factor

patient engagement

Doctors factor

Pearson Correlation

1 .828** .425** .937**

Sig. (2-tailed) .000 .001 .000 N 60 57 60 57

patient factor

Pearson Correlation

.828** 1 .466** .950**

Sig. (2-tailed) .000 .000 .000 N 57 59 59 57

Hospital factor Pearson Correlation

.425** .466** 1 .601**

Sig. (2-tailed) .001 .000 .000


N 60 59 62 57

patient engagement

Pearson Correlation

.937** .950** .601** 1

Sig. (2-tailed) .000 .000 .000 N 57 57 57 57

**. Correlation is significant at the 0.01 level (2-tailed).

The Above table shows that there is High positive correlation between Patient engagement and Doctor related factors, Patient engagement and patient related factors, and it shows medium positive correlation between patient engagement and hospital related factors. Hypothesis: H1a: Patient Engagement positively influenced by doctor related factors. – supported H1b: Patient Engagement positively influenced by Patient related factors-supported H1c: Patient Engagement positively influenced by hospital related factors-Not supported Table 10: Correlations between Doctors related factors Communic

ation Informed Choice

Decision Making

Participation/Involvement

Empathy

Pt Preference

Doctors factor

Communication

1 .746** .518** .350** .396** .380** .723*

* Informed Choice

.746** 1 .653** .508** .551** .503** .858*

* Decision Making

.518** .653** 1 .517** .521** .536** .821*

* Participation/Involvement

.350** .508** .517** 1 .458** .373** .675*

*

Empathy

.396** .551** .521** .458** 1 .647** .776*

*

Pt Preference .380**

.503** .536** .373** .647** 1 .754*

*

Doctors factor .723** .858** .821** .675** .776** .754** 1


H2a: Doctor related factor positively influenced by good communication with patient-supported H3a: Doctor related factor positively influenced by informed choice-supported H4a: Doctor related factor positively influenced by shared decision making-supported H5a: Doctor related factor positively influenced by active participation/involvement of the patient- not supported H6a: Doctor related factor positively influenced by clinical empathy of doctors-supported H7a: Doctor related factor positively influenced by consideration of patient preferences-supported

Table 11: Correlations between Patients related factors


Pt satisfacti

Health literacy

Self Managemen

Promotion of health

Prevention of disease

Organize health care

patient factor

Pt satisfaction

1 .260* .199 .415** .564** .377** .676**

Health literacy

.260* 1 .171 .496** .432** .379** .657**

Self Management

.199 .171 1 .275* .179 .288* .510**

Promotion of health

.415** .496** .275* 1 .767** .568** .815**

Prevention of disease

.564** .432** .179 .767** 1 .595** .819**

Organize health care Patient factor

.377** .379** .288* .568** .595** 1 .750**

.676** .657** .510** .815** .819** .750** 1

*. Correlation is significant at the 0.05 level (2-tailed). H2b: Patient related factor positively influenced by high patient satisfaction-Supported H3b: Patient related factor positively influenced by health literacy of patients-Not supported H4b: Patient related factor positively influenced by self-management of illness-Not supported H5b: Patient related factor positively influenced by promotion of health-Supported H6b: Patient related factor positively influenced by prevention of disease-Supported H7b: Patient related factor positively influenced by organize health care-Supported Table 12: Correlations between hospitals related factors Partnering with

pt Pt centeredness

Engaged community health

patient factor

Partnering with pt

1 .332** .460** .806**

Pt centeredness

.332** 1 .381** .711**

Engaged community health .460**

.381** 1 .792**

Hospital factor .806** .711** .792** 1


H2c: Hospital related factor positively influenced by partnering with patients-Supported H3c: Hospital related factor positively influenced by Patient centeredness-Supported H4c: Hospital related factor positively influenced by engaged in community health-Supported


Table 13: Regression Model Summary Model R R Square Adjusted R

Square Std. Error of the Estimate

1 .950a .902 .900 .26310 2 .987b .975 .974 .13515 3 1.000c 1.000 1.000 .00000 a. Predictors: (Constant), patient factor b. Predictors: (Constant), patient factor, Doctors factor c. Predictors: (Constant), patient factor, Doctors factor, hospital factor

The R2 value for regression model is 1 which indicated 98.7% of changes in Patient engagement are accounted by independent variables i.e., Patient factors and Doctor factors.

Table 19: Regression coefficients : Dependent Variable: patient engagement Coefficients Model Unstandardized

Coefficients Standardized Coefficients

t Sig.

B Std. Error Beta

1 (Constant) .267 .101 2.646 .011 patient factor .781 .035 .950 22.506 .000

2 (Constant) .205 .052 3.942 .000 patient factor .454 .032 .552 14.300 .000 Doctors factor .419 .034 .480 12.427 .000

3

(Constant) -1.004E-013 .000 .000 1.000

patient factor .400 .000 .487 166534342.063

.000

Doctors factor .400 .000 .458 160405568.173

.000

patient factor .200 .000 .180 99702796.979 000 Regression Equation: Patient engagement = 0.205+(0.454xPatient factors)+(0.419x Doctors factors) The above equation shows that Patient factors varies at 1 unit Patient engagement varies at 0.454 unit, and Doctors factors varies at 1 unit Patient engagement varies at 0.419 units Findings: The analysis of this study reveals that

77.4% of the respondents are male and 22.6% of respondents are female. 61.3% of respondents are clinicians, 8.1% of respondents are administrative staff,

3.2% of respondents are being as administrative staff as well as clinicians, and 27.4% of respondents are Ms Ophthalmology residents.

Cronbach Alpha test for reliability is 0.9 and it indicates high reliability for the questionnaire items.

Frequency table shows that communication is having highest priority and self management poses least priority in patient engagement.

The variables of patient engagement have high prominence on Patient satisfaction, communication, informed choice, promotion of health and empathy. This data analysis


shows that 13 dimensions had a statistically significant relationship with patient engagement at Madurai eye hospitals.

KMO and Bartlett’s test shows the KMO value for this data set is 0.737 and it is large,so it supports factor analysis.

The Eigen value table reveals that four principal components were retained from eigen values ranging from 6.509 to1.029.

Communalities extraction ranging from0.539 to 0.819,it shows the majority of the variables represented in 4 factor solution.

The graphical representation of Scree plot also supports the four factors. Rotated component matrix shows the correlation of each variable with the factors.

component 1 indicating the priority factors as patient satisfaction, communication and informed choice

component 2 indicating the priority factors as promotion of health, prevention of disease, participation and involvement, health literacy, and organize health care

component3 indicating the priority factors as self management, Patient preference, empathy and shared decision making

component 4 indicating the priority factors as Engaged in community health, partnering with patients, and patient centeredness

The table “reduction of dimensions” done through the comparison of correlations and mean values. The retained dimensions found are communication, prevention of diseases, patient participation, and health literacy; organize health care, self management, empathy, engaged in community health, partnering with patients and patient centeredness.

The correlation between patient engagement and its related factors reveals that high relationship found between patient engagement with Doctor related factors and patient related factors only.Correlation between Doctor related factors reveals that high relationship found between doctor related factor with communication, informed choice, shared decision making, empathy and patient preferences.

Correlation between patient related factors reveals that high relationship found between patient related factors with promotion of health, prevention of disease and organize health care.

Correlation between hospital related factors reveals that high relationship found between hospital related factors with all dimensions such as partnering with patient, patient centeredness and engaged in community health.

Regression table shows that 98.7% of changes in patient engagement are due to patient related factors and doctor related factors.From the regression coefficients table the regression equation found as patient engagement = 0.205+(0.454*patient factors)+0.419*doctors factors)

Finally the exploratory study reveals that among 15 dimensions, only 10 dimensions were retained. Exploratory factor analysis split these dimensions into 4 factors. After the redundancy of dimensions based on correlation and mean value, the set of dimensions are grouped under the constructs as Doctor related factors, Patient initiatives, Patient expectations and hospital related factors.

Suggestions:

The recent shift towards patient engagement in medical decision making has spawned much interest in ways to maximize overall patient attractions towards the health care system.

As the findings of the study states that patient engagement most concerned with doctors and patients only. As far as eye hospitals are giving minor importance to institutional measures of patient engagement such as community health improvement,


partnering of patients in policy making and patient centeredness. If it gives much priority to the above said dimensions the score of patient engagement will be high.

Most of the senior medical officers gave suggestion of cost factor considerations in engaging patients especially in Indian scenario, so it is suggested that along with other dimensions the cost of health care also considered towards getting high patient engagement.

While the importance of fulfilling the informational needs of patient has been proclaimed in many studies, none proposed what are the overall dimensions for engaging patients. Based on the findings presented here physicians and health care institutions may consider increasing patient engagement, as it may help patients feel more comfort where they are getting treatment.

In more specific context patient engagement carries many implications for improving health care delivery and aiding health care providers more effectively patient with eye problems.

Limitations and scope: Some respondents did not have time for answering the questionnaire due to their busy OP schedules, and they requested to fill the questionnaires later but forgot to fill them. This study will help the Eye Hospitals to know about the Patient engagement and its dimensions; it will help the hospital to improve the service in future. Also help in concentrating on Doctor related factors, patient related factors and hospital related factors towards Patient engagement. Conclusion and further research: Based on the empirical literature that is reviewed in previous studies in the context of Patient Engagement is investigated. This study examines the Patient Engagement dimensions extracted from various survey reports and research papers. Redundancy of dimensions made through exploratory factor analysis. Relationships among the factors are determined and the measurements of relationship found through correlations and regressions. It must be noted that the results of this study come from eye care hospitals in Madurai region. Hence it is necessary for this exercise be repeated in further research at other branded eye hospitals like Agarwal, Vasan Eye care scattered all over Tamilnadu in order to generalize and validate these findings. Nonetheless, it was the exploratory study the dimensions extracted are taken for consideration, and the available sample size was 62, but we can do confirmatory factor analysis in order to confirm these dimensions by large sample size. REFERENCES:

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8. Milton Viederman, M.D.,Active engagement in the consultation process, General Hospital Psychiatry 24 (2002) pg.93–100

9. Preetinder Singh Gill, Patient engagement: an investigation at a primary care clinic, International Journal of General Medicine, March 2013, pg.85-97

10. Serena Barello,1 Guendalina Graffigna,1 and Elena Vegni2 ,Patient Engagement as an Emerging Challenge for Healthcare Services: Mapping the Literature Nursing Research and Practice,Volume 2012, Article ID 905934, 7 pages ,23 September 2012

11. Yvette L Roe1*, Christopher J Zeitz2 and Bronwyn Fredericks3, Study Protocol: establishing good relationships between patients and health care providers while providing cardiac care. Exploring how patient-clinician engagement contributes to health disparities between indigenous and non-indigenous Australians in South Australia, BMC Health Services Research 2012, pg.e1-e10


A Study on the Impact of Decision Making Parameters on Behavioural Finance

Dr. MANOJ PILLAI M.COM. M.B.A., M.PHIL., PHD

Assistant professor

Department of commerce Avviyar Government College for women

Karaikal, puducherry administration (Pondicherry central university)

ABSTRACT The behavioral approach towards decision making emphasis the role and importance of human behavior in the decision making process. The common elements in all the important behavioral decision models are that they all rely on the rationality factor. The behavioral approach emphasizes that the decision makers are prone to varying degrees of rationality parameters while making decisions and that one cannot be rational at all times. Behavioral finance is related with the study of the psychological influence on the behavior of financial practitioners and its impact on the markets. The concept of Behavioral finance emphasizes on the belief that a sizable proportion of investor are biased in their financial decision making. It attempts to explain and increase understanding of the reasoning patterns of investors, including the emotional processes involved and the degree to which they influence the decision making process. Overconfidence, Conservatism, Representativeness, Availability bias, Frame dependence and Anchoring, Mental Accounting are some of the common behavioral characteristics which influences an investor to deviate from his rational and logical approach in decision making. This article delves into all the relevant aspects of behavioral decision making and its impact on Behavioral Finance. Key Words: Rationality, Behavioural Biases, Over Optimism and Over Confidence INTRODUCTION

Behavioral finance is related with the study of the psychological influence on the behavior of financial practitioners and its impact on the markets. The concept of Behavioral finance emphasizes on the belief that a sizable proportion of investor are biased in their financial decision making. Byrne (2008) mentions the following example of the Behavioral biases.

I. Over confidence and over optimism- where there is an over estimation of their ability. II. Representativeness - where the investors interpret the business environment on the

basis of superficial characteristics without giving much importance to the underlying probabilities.

III. Conservatism- where the investors and forecasters hold on to prior beliefs even if there is new information available.

IV. Availability bias- The investors overstate the probabilities of recent events. V. Frame dependence and anchoring- where the presentation of an information affects

the decision. VI. Mental Accounting- where the individual allocate wealth to separate mental

compartments and ignore fungibility and co-relation effects. VII. Regret aversion – where the individuals don’t feel any regret in the event of an

individual outcome. MODELS OF BEHAVIORAL DECISIONMAKING

The behavioral approach towards decision making emphasis the role and importance of human behavior in the decision making process. The common elements in all the important behavioral decision models are that they all rely on the rationality factor. The behavioral approach emphasizes that the decision makers are prone to varying degrees


of rationality parameters while making decisions and that one cannot be rational at all times. Some of three important behavioral decision making models are as follows:- 1. Economic Rationality Model- The genesis of this model can be linked to the classical

model of economics. This model is based on the assumption that the decision maker is rational in establishing a link between the means and the ends is fully aware of the alternatives available and has a consistent set of preferences which guides him to choose the best alternatives among the available alternatives. The emergence of rational techniques such as Activity Based Costing (ABC), Economic Value Added (EVA) and Market Value Added (MVA) in the process of decision making is linked to the economic rationality model.

2. Bounded Rationality Model – Noted management science expert Herbert Simon propounded the Bounded Rationality Model. The concept of bounded rationality emphasizes on the belief that managers tend to accept and gets satisfied with less than ideal solutions to the problem on hand. The decision makers end up “satisficing” rather than maximizing as they make their choices even before attempting to discover all possible alternatives to the problem.

3. Judgmental Heuristics and Biases Model- Kahneman and Tversky developed the Judgmental Heuristics and Biases Model of decision making. The model identifies itself with the cognitive biases of the decision maker that influence the decision he makes. As per this model, the managers tend to develop heuristics or rule of thumb to assess the present situation. The dependence on the heuristics sometimes becomes counterproductive and lead to relatively irrational decision making process. The three main biases are as follows:-

(a) The availability heuristic- where the decision made by the decision maker is influenced by the readily available information.

(b) The representative heuristic- where the decision is being made on the probability of an outcome based on their previous experiences in similar decision making situations.

(c) The anchoring and Adjustment Heuristic- where the decision is being made by anchoring the process to an initial value and then goes on adjusting this value to finally come to a conclusion.

SURVEY OF LITERATURE The decision making process relates to the selection of all particular course of action from all the available alternatives. Kreitner (1996) defines it as a process of identifying and choosing alternate courses of action in a manner appropriate to the demand of the situation where in, these alternatives are weighted and weeded out. Simon views decision making process in three phases which are:-

a) Intelligence Activity. b) Design Activity. c) Choice Activity.

Simon related the Intelligence Activity to the identification phase where an opportunity in recognized and diagnosed upon. The Design Activity involves the identification, development, analysis and comparison of the various options. The Choice Activity is the final phase of the decision making process which relate to choosing of a particular decision. De Bont (1985) discovered that people systematically over reacted to sudden and dramatic news events which result in weak- form inefficiencies in the stock market. Samuelson and Zechkauser (1988) find the presence of status quo bias from a series of decision making of experiments. Banerjee (1992) writes about the herd behavior where a large group of people are following a particular trend. Tversky and Kahneman (1991) high light the presence of a reference- dependent model relating to riskless choice with the central assumption of the theory resting on loss aversion, where losses and disadvantages have greater impact on preferences than gains and advantages.


OBJECTIVES OF THE STUDY Rationality in decision making refers to the appropriateness of the chosen means towards the accomplishment of the end objectives. The decision made by the investors may be programmed or non-programmed in nature depending upon the frequency of occurrence of the decision making situation. The programmed decision is made on the basis of adequate information where as non-programmed decisions are made in situations where there is a lack of clear information and the decision has to be made on the basis of various alternatives. Rational decision making in financial domain is a complex phenomenon as it includes the cognitive component of how people think and decide in a highly dynamic financial market environment where there can be informational asymmetries. The main objectives of my research paper are as follows:

(1) To study the important decision making models relating to human psychology. (2) To understand the behavioral pattern of the investors. (3) To analyze the rationality component in decision making. (4) To study the influence of biasness and intuitive behavior in financial decision making.

RESEARCH METHODOLOGY To achieve the objectives listed above, I have proceeded in the following manner.

A) DATA COLLECTION The proposed research work is based on primary as well as secondary data. B) RESEARCH APPROACH

Survey method is adopted to collect information relating to primary data. C) RESEARCH INSTRUMENT A detailed questionnaire is prepared after an extensive study of the literature keeping in mind the objectives of the study. D) SAMPLING The research work is based on a sample of 35 investors selected through a convenient sampling method. All the respondents are regular investors in stock market. A detailed questionnaire is used to collect relevant information relating to their behavioral characteristics and its impact on behavioral finance. E) DATA ANALYSIS The data collected is tabulated and codified. Appropriate statistical measures like percentage, correlation, frequencies, and cross tribulations etc. has been used for the analysis of data. The help of statistical package for social science research (SPSS) software version 13.0 for windows is also taken to analyze the data.

DATA ANALYSIS AND INTERPRETATION The respondents were asked questions based on rationality in decision making, intuitive decision making, personal preferences and longitivity of investment pattern. The responses were designed on a five point Likert Scale of 1 to 5 with 1 as Strongly Disagree, 2 as Disagree, 3 as Somewhat Agree, 4 as Agree and 5 as Strongly Agree.


Table 1. Descriptive Statistics

N Minimum Maximum Mean Std.

Deviation I monitor the stock markets developments regularly 35 4.00 5.00 4.8286 .38239

Financial database of the organizations are of great help in decision making 35 4.00 5.00 4.5143 .50709

The accuracy in assessing stock price movements increases with experience 35 2.00 5.00 4.4571 .74134

I regularly read articles, newspaper and magazines which enhances my professional expertise

35 3.00 5.00 4.1143 .63113

I have specific preferences towards shares of certain sectors 35 3.00 5.00 4.1714 .61767

I take a biased approach in favor of the preference shares 35 1.00 3.00 2.0286 .45282

I ignore logical financial fundamentals to favor these shares 35 1.00 3.00 1.8857 .47101

Banking on the favorite shares are always profitable 35 1.00 3.00 2.0571 .48159

Intuitive judgments is an important component of decision making 35 1.00 3.00 2.1714 .51368

Intuitive judgments are a regular feature of decision making 35 1.00 3.00 1.8286 .56806

Intuitive judgments are always profitable 35 1.00 3.00 1.9429 .48159 I don’t mind the risk involved in taking an occasional intuitive decision 35 2.00 4.00 3.0571 .68354

Intuitions are based on economic and political environmental changes 35 3.00 5.00 4.4000 .55307

Long term market average is the safest method of making investment decisions 35 3.00 5.00 4.4000 .55307

I prefer decision making based on long term market average when compared to decisions made on the basis of recent experiences

35 4.00 5.00 4.2571 .44344

Valid N (list wise) 35 Table 1 highlights the measures of central tendencies of the responses using arithmetic mean along with measures of dispersion using standard deviation. The analysis of the data gave some important insights to the behavioral characteristics of the investors regarding their financial decision making. The descriptive statistics highlights that the investors are highly rational in their decision making relating to their investment preferences. All the respondents regularly monitor the stock market development, they refer to financial databases of the companies, and they regularly read important magazines and newspaper to enhance their knowledge and expertise. The descriptive statistics indicates that the investors do have specific preferences towards certain sectors of their liking. The results further show that even though individual preferences are there in selecting shares or certain sectors, the investors neither ignore basic investment fundamentals nor they take a biased decision in favour of their preferred companies or sectors. The descriptive statistics results throw light on the intuitive elements in decision making. The results reveal that sudden economic and political changes results in sudden changes in the


stock prices which motivates them to make occasional intuitive decision making. This intuitive decision making is not a regular phenomenon. A very high proportion of the respondents believes that long term market average is the safest method of investment and well preferred over the decisions made on the basis of recent experiences. Kruskal Wallis test is employed by me to statistically check whether the responses relating to long term market average principle is similar to all respondents. The respondents were divided into two groups (Young Investors who are > 45 years of age and Senior Investors above 45 years of age). The following two hypotheses were formulated: H0 – The median age of respondents is same regarding safety of long term market average principle of investment. H1 – The responses on the long term market average is different in two groups.

Ranks Gender N Mean Rank Long term market average is the safest method of making investment decisions

Young 13 17.80 Seniors 22 19.20 Total 35

Test Statisticsa,b

Long term market average is the safest method of making investment decisions

Chi-Square .105 df 1 Asymp. Sig. .746

a. Kruskal Wallis Test b. Grouping Variable: Gender

The significance level is so high (.746) that we do not reject the null hypothesis. In other words it can be said that there is no reason to believe that the responses of the two groups on the impact of quality circle on efficiency differ significantly. A two tailed correlation test is employed by me to test whether there is any correlation between the specific preferences of the investors and profitability of these investments. The following two hypotheses were formulated: H0 – Trading on shares of specific preferences are always profitable, H1 – Trading on shares of specific preferences are not always profitable. The correlation test result is -.133 which indicates that there is a low level of negative correlation between two variables. This is an indication of the fact that even though there are specific preferences of investment, these shares are not profitable always. The correlation test results reject the null hypothesis and accept the alternative hypothesis.


Correlations I have specific preferences

towards shares of certain sectors

Trading on the favorite shares are always profitable

I have specific preferences towards scrips of certain sectors

Pearson Correlation 1 -.133

Sig. (2-tailed) .447 N 35 35

Banking on the favorite scrips are always profitable

Pearson Correlation -.133 1

Sig. (2-tailed) .447 N 35 35

MAJOR FINDINGS OF THE STUDY A detailed analysis of the primary and secondary data reveals the following results-

(1) Cognitive Psychology which refers to how people think and limits to arbitrage forces where the effectiveness of the arbitrage forces is predicted are the two building blocks of behavioral finance.

(2) Behavioral finance is based on alternative notion that a small portion of investors possess behavioral biases. In other words it means that some of the financial decisions are not fully rational

(3) The investors do have certain preferences and biases towards certain sectors or companies.

(4) Investors do indulge in speculation based on their intuitive decision making particularly when there are changes in the economic and political environments.

(5) The study finds limited traces of biasness and intuitive behavior among the respondents. The respondents never ignore the basic fundamentals or take a totally blind take for their preferred shares.

(6) Respondents regularly monitor the stock market development, and similarly they collect information from financial databases of their preferred companies.

(7) They regularly update their knowledge through newspaper, books and magazines. (8) Cognitive biases like overconfidence, over optimism and conservative thinking can be

seen but overall the respondents are rational in their approach as they are risk averse and logically oriented in their decision making.

CONCLUSION Cognitive human behavior is a vast and complex concept which influences the human decision making. My study is brief in nature as it touches few components of cognitive human behavior like rationality, personal preferences and biases, intuition in decision making, overconfidence, over optimism and conservatism. It is clear from the study that cognitive decision making components do have specific influence on the decision making of the investors. On one hand overconfidence, over optimism, biases towards certain companies and sectors influence the decision making of the investors but on the other hand the investors are also risk averse as they rational and logical in their decision making. REFERENCES

1. Banerjee, Abhijith, 1992. A Simple Model of Herd Behavior. The Quarterly Journal of Economics, 107 (3), 797-817.

2. Basu, Sudipta, 1997. The Conservatism Principle and the Asymmetric Timeliness of Earnings. Journal of Accounting and Economics, 24(1), 3-27.


3. Byrne, Alistair, 2008. Behavioral Finance: Theories and Finance. Research Foundation of CFA Institute Literature Review.1.

4. De Bondt, Werner F.M. and Richard H. Thaler, 1987. Further Evidence on Investor Overreaction and Stock Market Seasonality. The journal of Finance, 42(3), 557 – 581.

5. Plous, Scot, 1993. The Psychology of Judgment and Decision Making. New York: McGraw – Hill.

6. Samuelson, William, and Richard Zechkauser, 1998. Status Quo Bias in Decision Making. Journal of Risk and Uncertainty, 1(1), 7- 59

7. Tversky, Amos, and Danial Kahneman, 1991. Loss Aversion in riskless choice: A Reference Dependent Model. The Quarterly Journal of Economics, 106 (4), 1039 - 1061


Market research on Imitation Jewellery: A Survey in Machilipatnam, Krishna District

P.Kalpana, Asst.Professor

MBA department Vishnu Institute of Technology

Bhimavaram, West Godavari District. A.P [email protected]

D.Leela kalyani, Asst.Professor

MBA department Vishnu Institute of Technology

Bhimavaram, West Godavari District. A.P [email protected]

ABSTRACT: Indian jewellery business has undergone a drastic transformation over the years. Original diamond and gold jewellery has now made a way forward for artificial jewellery. The sky-rocketing prices of the traditional jewellery(gold, silver or diamonds), theft and crimes has encouraged people to opt for affordable imitation jewellery. Indian Imitation jewellery market has witnessed tremendous growth in the past few years. Low cost, innovative designs and rise in fashion among the rural and urban folk compared to original jewellery have made the business particularly popular throughout the country. The mindset of the people has changed from jewellery as an investment to an accessory for multiple occasions in urban India. The `one gram gold' craze has smitten people in high-income group as well. These gorgeous pieces are even being used for gifting purposes. Imitation jewellery market say that due to this, sales have increased considerably. The Imitation jewellery market in India with special reference to machilipatnam, main hub for imitation jewellery, eventually goes to several cities in India. North and South of India are two biggest markets for High end Imitation Jewellery. The main objective of the study is to find out what pricing strategy is being used by the machilipatnam Imitation jewellery market industry and to know the consumer responses towards the imitation jewellery. It is suggested that the imitation jewellery manufacturers have to tie up with designers for better designs in order to obtain the customer satisfaction and attention. Key Words: Imitation Jewellery ,crime, sky-rocketing prices, one gram gold, safety, tremendous, smitten. INTRODUCTION: India’s women are known for adorning themselves in jewellery from head to toe. The different kinds and styles of their jewellery not only signify their status of wealth within India, but also define their resident homeland within the country. Wearing jewellery is a trademark that has been passed down through the ages, and is still a fixation among India’s women, even when they migrate to other countries. It has always been a craze amongst Indians that any dress on an occasion is incomplete without gold jewellery. But now a days as the prices of gold is piercing the ceiling it is going out of the hands of common man. Imitation Jewellery is the latest market trend and is the call of the market. Though the traditional gold and diamond jewellery has not lost its significance, Imitation jewellery is the choice of the hour. Imitation jewellery ranging in different segments of prices provides a wide range of variety to choose from.


The Opportunities for the imitation jewellery market are availability from online , Market Low penetration, Exports, Product Diversification and Franchising . The challenges faced by imitation jewellery market are Cheap imports from china, accessibility, Highly Unorganized, Lack of customer awareness, costly labour, Low quality etc. Inspite of the challenges the future of Indian imitation jewellery market seems quite bright. About Machilipatnam Imitation Jewellery Industry Most popular imitation( gold covering) jewellery manufacturing industry is in Machilipatnam. Nearly 500 units are engaged in the industry. This industry is giving employment to nearly 50,000 artisans and other people. This jewellery is commonly known as “CHILAKALAPUDI BANGARAM”. The industry produces bangles ,chains ,necklaces ,earrings, hangings, anklets, Belly rings, Toe rings, finger rings, dance sets and also ornaments with stone work. Today the pioneering Machilipatnam imitation jewellery cluster market has an history of 175 years. Appala Chari a Vishwa Brahmin, who migrated to nearby village Chilakalapoodi, is the first person who crafted the imitation jewellery for women who could not afford to buy Gold jewellery and started marketing commercially in late 1800s. In the beginning the artisans used silver base for imitation jewellery, popularly known as KATTU NAGALU. Later copper was used as base material and gold has been platted on it. Machilipatnam jewellery industry has the potential to be the Market leader in the country with the estimated revenue of 1500 Cores. So Machilipatnam Jewellery Park should initiate to come out with new ideas in jewellery manufacturing methods, automated production and plating processes. Need for the Study: Customers preference is changing from fine jewellery to relatively inexpensive but equally flashy costume jewellery because of continuous rise in prices of gold these days. Imitation jewellery market in machilipatnam is highly fragmented with large number of local manufacturers and retailers. The report provides a thorough analysis of the current status and expected position of imitation jewellery in machilipatnam market .The study is done to know the pricing strategy of the manufacturers and to know the opportunities and challenges of the imitation jewellery industry. Objectives of the study: 1)To analyze the market of imitation jewellery in Machilipatnam.

2) To know about the pricing strategy of imitation jewellery marketers. 3) To find out customers responses about imitation jewellery products. 4) To know about the issues being faced by the industry. Methodology: The study is based on primary and secondary data. Primary data has been collected from 25 respondents (manufacturers), with the help of a well structured questionnaire. The secondary data has been collected from books, magazines and internet. Sample size: From the population size of 200 manufacturers, a sample of 25 were targeted for the study. The sample consisted of imitation jewellery manufactures who were interviewed with the help of a well structured questionnaire. Sampling method:


Convenience sampling method was used. Scope of study: The geographical scope of the study was confined to Machilipatnam, one of the famous town in Krishna District, Andhra Pradesh. Data Analysis And Interpretation:- 1. What kind of imitation jewellery products do your customers prefer?

Interpretation: From the table it is clear that 44 percentage of the respondents are using die gold

on their products and 28 percent of the respondents are making their products by

using micro gold. 2. During what time the imitation jewellery products have more demand?

Interpretation: It is evident from the table that 60 percentage of the respondents expressed that their

products have much demand during festival season and the remaining respondents have

expressed that their products have much demand during some special occasions like

marriages, functions etc. 3. Mostly who show interest to wear imitation jewellery?

Options No. of Respondents

Percentage (%)

1gram gold 3 12

Micro gold 7 28

High gold 4 16

Die gold 11 44

Total 25 100


Percentage (%)

Occasions 10 40

Festivals 15 60

Total 25 100


Percentage (%)

0204060

Percentage of respondents

Percentage ofrespondents

0

50

100

OccasionsFestivals




Interpretation: 40 percentage of the respondents said that adults show interest towards imitation

jewellery and 28 percent of the respondents said that married people prefer imitation

jewellery products.

4. Which particular imitation jewellery item has more demand in the market?

Interpretation: From the above observation 44 percent of the respondents revealed that their

customers show much interest on buying neck wears and 32 percent of the

respondents expressed that their customers are much interested in earrings. 5. What kind of pricing strategy do you adopt?

Adults 10 40

Children 5 20

Married

people

7 28

Old agers 3 12

Total 25 100


Percentage (%)

Finger rings2 8

Neck wears11 44

Ear rings 8 32

Bangles

4 16

Total 25 100


Percentage (%)

Cost 3 12

Competition 12 48

Profit based 7 28

Demand 3 12

Total 25 100

010203040

Adults Children Marriedpeople

Oldagers



0

10

20

30

40

50

Finger ringsNeck wearsEar rings Bangles



01020304050




Interpretation: From the table it is clear that 48 percent of the respondents are fixing the

price based on competition and 28 percent of the respondents are fixing the price

of the imitation jewellery by using profit based strategy. 6. Who are your target customers?

Interpretation: From the above table it is clear that 48 per cent of the respondents

said that their customers are from middle income group and 36 per cent of the

respondents said that their target customers are low income group people.

7. What kind of services do you offer to your customers?

Interpretation: 68% of the respondents are offering warranty to their customers

and the remaining respondents are offering guarantee to their products.

Options (Groups)

No. of Respondents

Percentage (%)

High Income 4 16

Middle

Income

12 48

Low income 9 36

Total 25 100

Options

No. of Respondents

Percentage (%)

Warranty 17 68

Guarantee 8 32

Total 25 100

01020304050

HighIncome

MiddleIncome

Lowincome



0

20

40

60

80

Warranty Guarantee




8. How do customers feel about your product?

Interpretation: 64 percent of the respondents expressed that their customers are happy and whereas

36 percent of the respondents conveyed that their customers are delight with their

products and services. 9. What are the sources of collection of wide variety of designs?

Interpretation: From the above table it is observed that 48 per cent of the

respondents are imitating gold designs to design imitation jewellery and 32 per cent of

the respondents are making designs based on consumer specification 10. What according to you are the major challenges faced by the industry?

Options

No. of Respondents

Percentage (%)

Happy 16 64

Unhappy 0 0

Delight 9 36

Don’t Know 0 0

Total 25 100

Options

No. of Respondents

Percentage (%)

gold designs 12 48

designers 5 20

consumer

specifications

8 32

Internet 0 0

Total 25 100

Options

No. of Respondents

Percentage (%)

Technology 11 44

Labour 7 28

010203040506070



01020304050




Interpretation: 44 percentage of the respondents are clear that they are facing main

hurdle regarding lack of appropriate technology and 28 percent of the respondents

are facing labour shortage problem.

11. What strategies are you following to overcome the challenges?

Interpretation: 44 percentage of the respondents are importing new technology for production activities

to overcome the technology problem and 28 per cent of the respondents said that they are

giving training to labour. 12. Which market place do you prefer?

Raw

material

4 16

Quality 3 12

Total 25 100

Options

No. of

Respondents

Percentage (%)

Importing technology

11 44

Training the labour 7 28

relation with suppliers

4 16

Production &quality control

3 12

Total 25 100

Options

No. of Respondents

Percentage (%)

Hyderabad 7 28

Chennai 12 48

Mumbai 3 12

Tirupathi 3 12

Total 25 100

0204060



05

1015202530354045



01020304050




Interpretation: From the above table it is observed that 48 per cent of the respondents

preferred Chennai for marketing activities and 28 per cent of the respondents

preferred Hyderabad. 13. Do you find any difficulty in procuring the raw materials?

Interpretation: 64 percent of the respondents said that they are facing problem with regard to the

procurement of raw materials and 32 percent of the respondents had no problem with

procuring raw materials. 14. What kind of marketing strategy do you prefer to sell these products?

Interpretation: 80 percentage of the respondents are using outlets for marketing their products and

20 per cent of the respondents are directly selling their products through door to door

marketing.

FINDINGS 1. From the study it is observed that 60% of the imitation jewellery products have demand during festivals. 2. It is found that adults and married people are much interested to wear imitation jewellery.68% of the market is dependent upon the adults and married people.

Options

No. of Respondents

Percentage (%)

Yes 16 64

No 8 32

Never 1 4

Total 25 100

Options

No. of Respondents

Percentage (%)

Door to door

marketing

5 20

Outlet marketing

20 80

Online marketing

0 0

Total 25 100

0

20

40

60

80

Yes No Never



0

20

40

60

80

Door todoor

marketing

Outletmarketing

Onlinemarketing




3. 76% of manufacturers are fixing the price based on competition and profit based strategy.

4. It is found that 48% of the target customers for imitation jewellery are middle class people. 36% of the customers are poor people. 5. 68% of the respondents are offering after sales service to their customers by recoating the items. 6. 64% of the manufacturers said that their customers are satisfied and happy with their products. 7. According to majority of the respondents, lack of technology and difficulty in procuring the raw materials are the main hurdles faced by the industry. 8. It is observed that 48% of the respondents are preferring Chennai for marketing activities. 9. It is observed that 80% of the respondents are using outlet marketing for marketing their products. Suggestions:

1. The manufacturers should provide wide variety of qualitative products at

cheapest prices.

2. It is observed from the study that the respondents are using imported

technology in production. So training should be given to the employees

regarding new technology to increase their operating efficiency.

3. From the study it is observed that procurement of raw materials is the major

hurdle for the growth of imitation jewellery market. So the manufacturers should

have thorough knowledge of alternative sources of qualitative raw materials.

4. The manufacturers of imitation jewellery should concentrate on online

marketing in order to expand their market across the globe.

5. The imitation jewellery manufacturers have to introduce new designs and

increase their product range to catch the attention of the customers.

6. The Imitation jewelry manufacturers have to maintain cordial relationships with

the designers for better designs. Conclusion: Imitation Jewellery popularly known as 'One gram gold' has evoked much interest among people, especially the middle income group, as the cost is 4-5% compared to real gold and diamond jewels. A lot of innovative designs in Bangles, necklaces, studs, pendants are available in the market now. The 'one gram gold' craze has smitten people in high-income group as well. These gorgeous pieces are even being used for gifting purposes. Kundan jewellery and traditional jewellery are also made available in one gram gold. India is the second largest manufacturer of imitation jewellery after China. Indian imitation jewellery has a huge demand in the US, Europe, Canada, Australia and many other Asian countries.


References: 1) Retail management -A.J.Lamba."The Art of Retailing",Tata Mc Graw Hill

Education Pvt. Ltd New Delhi.2011.

2) Marketing management - Global Perspective Indian Context,4th edition, VS

Ramaswamy, S Namakumari

3) Marketing management - Phillip Kotler."Marketing Management"Pearson

Publishers,New Delhi,2013.

4) Tapan K Pand: " Marketing Management", Excel Books, New Delhi, 2012

Websites: http://www.rncos.com/Press_Releases/RNCOS-White-Paper-Booming-

Imitation-Jewellery-Market-in-India.htm http://www.reuters.com/article/2014/08/13/research-and-markets-

idUSnBw135355a+100+BSW20140813 http://www.mynewsdesk.com/in/pressreleases/advent-of-branded-artificial-

jewellery-to-intensify-market-growth-1038644 https://plus.google.com/109588025758167280942/about?gl=in&hl=en


Remedial measures to overcome and recovery of non-performing assets

from the SHGs.

J.V.Jayanthi Kumari, Principal

D.R.Goenka Women's Degree College,

Tadepalli Gudem - 534101,

West Godavari District

[email protected]

Mobile:9848012815

Abstract:

The objectives of the present study is to study the increasing trend of the amount of loans

outstanding, amount of Non Performing Assets against Self Help Groups and to suggest remedial

measures and some suggestions to recover them. For this purpose the data has been gathered from

the annual reports of NABARD for the financial years 2013-14 and 2014-15 as well. From this study

we could came to know that that high amount of loans were contributed by the Commercial Banks

followed by the Cooperative Banks. This is because of the failure of attaining the expected profits and

managerial issues of SHGs in their respective areas of business activity. On the other hand, it is also

evident that lack of skill and proficiency in carrying out the business activities up to the mark, made their

loans as bad depts. In recent times the stage is set to avail the government programs to assist the SHGs

in developing the employability skills to ensure the expected level of productivity and see that the

repayment of loans should be done in accordance with the terms and conditions of loan availment. The

present study focuses on the increasing trend line of NPAs of different banks, and provides valuable

suggestions to take necessary steps to recover loans from SHGs.

Keywords: self help groups, NABARD Annual Reports, Non-performing assets,

commercial banks.

INTRODUCTION

The journey of the Self Help Group - Bank Linkage Programme - from linking a pilot o1500 SHGs of

rural poor two decades ago, it now boasts of the world's largest microfinance initiatives with over 7.4

million SHGs representing 97 million rural households directly becoming part of this great movement.

The movement which started as a link between the "unbankable" rural poor and the formal banking

system to cater to the microcredit needs of the poor, now boasts of a group savings of a whopping

33000 crores (70 per cent of which goes for internal lending and the balance in the SB accounts of the

groups), from a very miniscule proportion of total bank credit to a credit outstanding of 43000 crores

(excluding nearly 23000 crores lent to members from groups' own savings). With over 84 per cent of

these being all women groups, the poor rural women in India now controls a financial business with

turnover of nearly 1,00,000 crore (deposits + credit) much more than most of the MNCs in India. There

have been numerous success stories of the poor SHG members showing exemplary entrepreneurial

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qualities to come out of the /vicious circle of poverty and indebtedness with the help of SHGs. The

tremendous impact on the social status of the poor rural women becoming bread earners of their

households through the instrument of SHGs has been highly commended by many independent

researchers. This incredible success story of SHG-BLP has shaken the age old perception that poof

are not bankable". In fact, many developmental efforts of Government and non-governmental agencies

now rely on SHG-BLP for their effective delivery. Even internationally, Indian experience of SHG-BLP

has been recognised as the largest and most successful microcredit initiative in the world.

Review of Literature

Khandkar and Pitt (1996) said that microfinance programme provide the members the means to

build up provide assets over time generating income of their own. Coleman, Brett (1999) studied the

impact of microfinance lending of village banking programme in Thailand and there was no evidence

of increase in the productive activity as the access to bank loans increase.Gurumoorthy (2000)

reveals that SHGs are an available alternative to achieve the objective of rural development and to

get community participation in all rural development programme. Puhahendhi and satysai (2001)

observed that the economic impact of SHGs was relatively more pronounce on the social aspects

than the economic aspects.

Mckernan (2002) Micro credit programs increase self employment productivity .James Brau

& Gary Woller (2004) said that Microfinance offers the finance discipline a possible avenue to make

a significant difference in the lives of millions of poor people.Sobha, et al (2004) explored that The

DWCRA programme has been envisaged as one which would not only provide an income generative

activity but also create awareness among women on several issues .Puran Singh (2004) identified

that the SHG approach is new and absolutely different from all the earlier approaches . It is useful to

enhancing their incomes but also building their confidence and capacity to handle their problems on

their own. The process of social mobilization is gaining momentum.

Chowdhury (2005) opined that Micro credit is a grass roots development policy that provides

small amount of loan to the poor people in developing countries.Khandelwal Anil (2007) expressed

that in banking and policy making field, microfinance has become one of the most debated and

documented but still much confused buzzword. Sudersana Reddy and Paduranga Patti. (2008)

explained that micro finance innovations are yielding results and giving hope to the rural poor through

providing credit. There is a need to evolve an informal credit system with assistance from formal

financial institutions. Manas Pandey (2008) opined that there is need to evolve an informal credit

system with assistance from formal financial institutions .

Tejrnani Singh (2009) opined that micro finance can indeed be sustained in the long run in a

profitable manner; going by the increasing number of commercial banks that have evinced interest in

this area, the future does seem bright.Hari Prasad and Chalapathi (2009) considered that perception

women is that learning to manage money and rotate funds builds women's capacities and confidence

to intervene in local governance beyond the limited goals of ensuring access to credit.


Munian (2009) opined that The SHG-Bank linkage approach is found to be an effective

instrument by which very poor people can access hassle free formal credit without any collateral

security and simultaneously improve their thrift habits. Trivedi and Deepti Bhargana (2009) concluded

that large number of poor is still beyond the reach of SHGs and formal fmancial institution. Manas

Pandey (2009) proposed that there is need to evolve an informal credit system with assistance from

formal financial institutions. Karmkar (2009) The SHG - Bank linkage programme needs up scaling

and structured financing(Co micro finance institution is required if they are to get wide access to funds

for a better approach that will enable them to deliver on their potential to reduce poverty. Nikhil

Chandra Shil (2009) micro finance program an institutional modality that will ultimately ensure long-

term existence.

Rajesh Kumar Shastri (2009) recognized that there is a need of designing financially

sustainable models and also suggested that banks should convert and build up professional system

into social banking system for poor. Pandi Selvi and Karuppasamy (2010) examined that, it is time to

address regulatory issues to enable the microfinance sector to contribute more effectively to the goal

of financial inclusion, and to provide an environment in which all stakeholders can participate with

confidence of zero?based poverty level. Hitesh Vyas (2010) concludes that there is a need to develop

more customer friendliness in MFIs regular by the population under the study. Jagapathi Rao (2010)

recognized that Micro Finance through SHGs has reached the un- reached rural poor women and

suggested to better take up micro entrepreneurship.

Atoyebi, Ijaiya, andljaiya (2010) opined that generating resources for the security of

participants, government is encouraged to provide group collateral for the informal microfinance

members to enable them access credit. Gautham Patikar and Komol Singha (2010) attempted that

The SHG-Bank Linkage and financing through MFIs approaches is no doubt an effective instrument

by which very poor people can access hassle free formal credit without any collateral security and

simultaneously improve their thrift habits. Selvakumar et al (2010) found that Growth of SHGs are

essential for the members as they ensure better standards of livening and their by their individual,

family and social empowerment. Sadyojathappa (2011) concluded that the Reserve Bank of India and

NABARD have tried to promote relationship banking, i.e., "Improving the existing relationship between

the poor and the bankers with the social intermediation of the NGOs.

Neetu Andotra et al (2011) addressed that Special initiative may be taken for marketing of

products of SHGs and efforts may be made to graduate SHGs from .micro credit to micro

entrepreneurs. Megha, et al (2011) Concluded that with significant growth in SHGs activities, the

effective benefit would spread to various aspects such as literacy, empowerment, entrepreneurship,

employment, improvement in living standards, development of rural economy and finally poverty

reduction, and would help bring down the numbers below the poverty line. Mahesh and Akash (2011)

opined that it is evident that Self help groups have become a viable organizational set up to disburse

micro credit to women and encourage them to enter into entrepreneurial activity. SHGs contributed

significantly to the development of women entrepreneurs and also for overall development of the

economy.


Staffan Lindberg et al (2011) mentioned that The Self help groups also provide a platform for

women's for women's active participation in local politics. SHGS cater to the need of many household

for short-term smaller loans at rates lower than those charged by traditional moneylenders. Reji (2011)

revealed that SHGs were instrumental in bringing desired social change among the members. Jana

Madan Mohan (2011) concluded that the main reason for financial exclusion is lack of regular income

and educational backwardness. Joshy Samel , Kunnal Ashala (2011) tested that the SHGS have been

reduced the incidence of poverty through increase in income and helped the poor to build assets and

thereby reduce their economic vulnerability. Zohra Bi et al (2011) presented that Microfinance has

been an important tool in poverty alleviation, empowerment of women and in bringing about financial

inclusion.Amarender Reddy and Dharm Pal Malik (2011) Self Help Groups (SHGs) have become the

common vehicle of development process including microfinance, Badar Alam Iqbal (2012) noted that

micro-finance is a promising alternative which offers funds at the doorstep of the poor and weaker

section of the population in rural areas.

Ambiga Devi et al. (2012) concluded that Micro finance proves to be an effective mechanism

in poverty reduction and in the empowerment of women. Vanishree (2012) reported that SHG bank

linkage programme can be made sustainable with sincere interventions by banks in the areas of

awareness building, skill development, training and continuous counseling. Sanjay Kanti Das (2012)

found that the SHGs are also facing the problems of marketing, basic infrastructure, training and skill

development avenues, lack of administrative experience in managing the affairs of the groups.

After going through the review of literature the following Objectives are set up to recommend the

measures to overcome NPAs.

1. To evaluate the loans outstanding against the Self Help Groups.

2. To find the amount of nonperforming assets of Self Help Groups with the help of NABARD

Reports.

3. To give valuable suggestions to recover the Non Performing Assets from the Self Help Groups.

Research Methodology: The data has been collected from the website of NABARD making use of

Annual reports of the financial years 2013-14 and 2014-15 as well.

This issue of Non-performing assets (NPA) is likely to get worse due to the overall economic slowdown

impacting most customer segments across banks’ portfolio like MSMEs (micro small and medium

enterprises), large corporate, and agriculture to name a few.

Although we believe there are a number of gaps in the current credit capabilities of Indian, Continental

European and Latin American banks, the matter needs to be approached in a phased manner by

focusing on a select few capabilities initially.

Some of the capabilities that should be prioritized include:

External data acquisition for credit assessment models


Early warning framework and collateral management for credit monitoring

Soft landing and care programs for default management

Centralized recovery and collection.

Through multiple engagements across large global banks, Accenture believes that implementing an

early warning solution (EWS) can help substantially reduce banks’ NPAs.

Accenture’s five step approach combines a bank’s existing and new data sources within a strong

analytical framework, and helps banks develop a custom approach that is specific to their portfolio

needs.

Although we believe there are a number of gaps in the current credit capabilities of Indian, Continental

European and Latin American banks, the matter needs to be approached in a phased manner by

focusing on a select few capabilities initially.

Some of the capabilities that should be prioritized include:

External data acquisition for credit assessment models

Early warning framework

Collateral management for credit monitoring, soft landing

Care programs for default management and centralized recovery and collection.

Through multiple engagements across large global banks, Accenture believes that implementing an

early warning solution (EWS) can help substantially reduce banks’ NPAs.

A comprehensive early warning framework that included identifying the right customer segment,

understanding the data landscape, formulating early warning triggers and creating a risk mitigation plan,

resulted in 15-20 percent reductions in NPAs among some of the large global banks we have worked

with.

The number of self-help groups (SHGs) linked to banks has, for the first time, recorded a decline. And,

non-performing assets (NPAs) in the SHG-bank linkage programme touched an ‘alarming’ level of

seven per cent, according to a National Bank for Agriculture and Rural Development (NABARD) report

on microfinance for 2012-13.

The SHG-bank linkage programme was started in 1989; it had resulted from a NABARD initiative in

1987.

Now, after a decade of unprecedented growth, the SHG sector is facing various challenges. The

reasons for this, NABARD says, are aggressive targets, little attention to asset quality and the

government’s policy of projecting SHGs as a tool for poverty alleviation.

“More painful is the fact that loans to SHGs in the most resource-poor regions in the country reported

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NPAs of over 10 per cent. Further, as indicated, this potent and effective financial inclusion measure

has not received the attention with bankers currently focused on opening individual accounts through

banking facilitators/banking correspondents,” the report said.

As was the case with microfinance institutions (MFIs) a few years ago, multiple borrowings

in select cases were observed in the case of SHGs, NABARD said.

Overall NPAs in the case of loans to SHGs rose 26 per cent to Rs 2,787 crore in March 2013, against

Rs 2,213 crore a year earlier. In percentage terms, gross NPAs increased from 6.09 per cent last year

to 7.08 per cent this year. “The financing banks were ill-prepared for the sudden spurt in SHG loans

and their monitoring and supervision of such loans became less regular NABARD said.

The NABARD report also pointed to the high NPAs in the MFI sector. “It appears the MFI sector in

general has not been insulated from the general trends in NPA expansion in banks’ portfolios. A

comparison of the NPA figures in respect of SHG-bank linkage programme and MFIs suggests both the

segments of microfinance have seen a rise in NPAs,” the report said.

However, Micro Finance Institutions Network (MFIN), a representative body of MFIs, has said NPAs in

the MFI sector have declined. “NPAs in the MFI sector have come

down significantly,” said Samit Ghosh, president of MFIN.

“According to our data, NPAs are strictly under control. In the SHG sector, the NPA situation is clearly

alarming, which shows the model itself is flawed,” said Alok Prasad, chief executive, MFIN.

In absolute terms, both the segments —SHGs and MFIs — recorded a rise of about Rs 3,000 crore in

dues last financial year. NPAs, with regard to bank loans to MFIs, rose by Rs 630 crore, while those in

the SHG-bank linked programme increased by Rs 575 crore.

TABLE; AGENCY WISE NPAS TO SHGS

NABARD RAISES CONCERN OVER RISING NPAS IN SHG LENDING:

http://www.business-standard.com/search?type=news&q=Npa

http://www.business-standard.com/search?type=news&q=Finance


On the one hand, the number of self-help groups (SHGs) obtaining a loan from banks has been coming

down over the years, indicating weakening of the movement in India. On the other, increasing bad loans

from SHG portfolios are keeping commercial banks from lending to them.

The National Bank for Agriculture and Rural Development (NABARD) has already raised an alarm over

rising non-performing assets (NPAs) in SHG lending, in its recent report called Status of Microfinance

in India, 2011-12.

The number of SHG borrowers declined by around four per cent, from 11.96 million to 11.48 million

between March 2011 and March 2012, according to the NABARD report. Also, in percentage terms,

the gross NPA from SHGs increased from 4.72 per cent as on March 2011 to 6.09 per cent as on

March 2012.

TABLE: BANK WISE BAD ASSETS (In Crores)

However, the amount of fresh loans issued to SHGs by banks rose 13.70 per cent to Rs 16,535 crore

in 2011-12, against Rs 14,548 crore in the previous year. The report points out the cautious attitude of

commercial banks towards SHGs. While commercial banks accounted for 63 per cent of the savings of

the SHGs, their share in fresh lending against total lending to SHGs was just 60 per cent. In contrast,

while regional rural banks had a savings share of just 20 per cent from SHGs, their share of fresh

lending to them was close to 30 per cent.

“What causes more concern is the fact that the number has been declining over the past three years,

although the rate of decline has come down from nearly 24 per cent to four per cent this year,” the

report said. Moreover, the number of SHGs having loans outstanding against banks declined by nine

per cent during the year to Rs 43.54 lakh, against Rs 47.87 lakh in the previous year. All states barring

Karnataka, Puducherry and Himachal Pradesh recorded a decline in the number of SHGs.

In absolute terms, the gross NPA against loans to SHGs increased from Rs 1,474 crore at the end of

March 2011 to Rs 2213 crore in March 2012.The gross NPA against loans to SHGs stood at Rs 2,212

crore in March 2012, against a total outstanding of Rs 36,340 crore.

“This is a matter of concern for the micro finance sector and the causes for declining recovery rate

needs to be analysed and remedial action initiated urgently,” the report said. The report also noted that

http://www.business-standard.com/search?type=news&q=Shg+Portfolios

http://www.business-standard.com/search?type=news&q=Nabard

http://www.business-standard.com/search?type=news&q=Finance


commercial banks are losing interest in lending to micro finance institutions (MFIs). In the past year,

fresh lending to MFIs declined by 38 per cent.

No of SHGs with Bank Loan The year 2013-14 witnessed a 6% decline in the Number of SHGs in Northern, Northeastern, Center

and Eastern regions witnessed a decline in number all regions have remained stagnant over a period.

Figure 7: All India and Regional Trend in No. of SHGs Availing Bank Loan

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AVERAGE LOAN DISBURSEMENT PER SHG

The average loan amount disbursed`175769per duringSHGhas20b India (Figure 11). Average loan

amount disburse period of years. Year 2012-13 witnessed a big performance of Southern region, which

also with a mixed trend.

Figure 11: All India and Regional Trend in Average Bank Loan Amount

Disbursed per SHG

) 250000 235718

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http://www.business-standard.com/search?type=news&q=Mfis


AVERAGE LOAN OUTSTANDING PER SHG

Figure: All India and Regional Trend in Average per SHG Loan Outstanding in the

Banking System

) 160000 143137

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At an all India level, the NPAs of banks stood year. This is primarily due to a decline in NP loans

outstanding to SHGs.

Figure : Non Performing Asset of SHG Loans with Banks

20 18.9

18

16 13.6 All India

14 11.1 Northern Region

12 North East Region 10 8.9

Eastern Region

6.8 8 Central Region

6 4.6 Western Region

4 Southern Region

2

0 2010-11 2011-12 2012-13 2013-14

Source: NABARD


Recommendations to overcome NPAs and Suggestions 1. The members of SHGs should be well trained to improve their productivity.

2. The governmental developmental programs must be used as a tool to enhance the proficiency

of SHGs.

3. Banks should encourage the joint liability of Groups to minimize the NPAs.

4. It is found that SHG borrowers declined by around 4% from 11.96 million to 11.48 between

March 2011 and March 2012.

5. The year 2013-14 witnessed a 6% decline in the number of SHGs especially in northern and

Northeast and eastern regions.

6. There is a need of increasing awareness about SHGs impart the training for needy stake

holders.

7. It is also found that most of the loans sanctioned to SHGs are by the commercial banks followed

by cooperative and other banks.

It is advisable to made collaborative arrangement in organizing and forming joint liability groups.


“Co Integration And Causality Of Spot And Future Markets In

India: Empirical Evidence From Bse Sensex And S&P Cnx Nifty”

Mr. Madireddi S. S. V. Sri kumar,

Research Scholar, Acharya Nagarjuna University,

Guntur. e.mail: [email protected]

Prof. Noor Basha Abdul,

Dean faculty of Commerce and Business Mgt Acharya Nagarjuna University,.

Guntur.

email. [email protected]

ABSTRACT This paper makes an attempt to find out the causal relationship between spot and future market

of Indian Stock Exchanges. Indian Derivatives market gives significant development of Indian

Capital markets. The study is based on secondary data. The period of study covers for six

years i.e. from January 2010 to December 2015. Unit root test, Johansen Co-integration test,

Granger Causality test and graphical analysis have been used for this study. And the study

found that there is an existence of co integration between spot and future market and the price

movement of spot and future are similar. Further the study has identified that there is causality

between of BSE sensex and S&P CNX nifty spot and future market.

Keywords: Spot, future, unit root test, johansen co-integration, granger causality

Introduction Derivative is a financial instrument that derives their value from their underlying assets.

When the underlying asset changes in price, the value of the derivative also changes. A

derivative is not a product. It is an agreement that derives its value from changes in the price of

the underlying. In a derivative market, there are many ways to trade like options, forwards,

futures and swaps. The derivatives can be traded in two ways; one is Over - The - Counter

(OTC) of off exchange trading and the other one is Exchange Traded Derivatives Contract

(ETD). Forwards and Swaps are traded in Over - The - Counter (OTC) and Options and Futures

are traded in Exchange Traded Derivatives (ETD).

Introduction of derivative products has been one of the most important growths in

Indian Capital Markets. The impact of index futures and stock futures may influence spot prices

if they have a cause on the actions of investors. Since, futures markets consent to investors to

hedge the price risk, the existence of futures may affect an investor decision to invest, how much

to invest and what investment strategies to use. By adding together, the futures prices may

have information about predictable demand that can give the influence for investment

decisions.

The main step is taken in the secondary market in the introduction of derivative products

in the major Indian Stock Exchanges (NSE and BSE) with a view to present tools for risk

management to the investors and furthermore to get better the information about the cash

market. The Indian Capital Markets have experienced the introduction of derivative products on

June 9, 2000 in Bombay Stock Exchange (BSE) by the introduction of BSE Sensex futures.




After just one year, index options were also introduced to help the investors for managing

their risks. As of 2005, the NSE trades futures and options.

Derivatives on stock indices and individual stocks have grown rapidly since inception.

Both Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) are the standard

indices of Indian Stock Exchange. So, the present study uses a leading stick indices in India

namely, BSE sensex and NSE nifty on which futures trading. The impact of futures introduction

on the restricted and unrestricted instability on the underlying indices is examined.

The aim of this paper is to examine the relationship between the spot and future trading

derivatives in India. Derivative futures are very much appreciable on the grounds that it gives

yawning insight about the stock market. It would be necessary for the ideal method of trading in

stock futures. So the study uses popular benchmark indices of Indian Stock Exchanges i.e.

BSE sensex spot and future and S&P CNX nifty spot and future. The study uses monthly data

for the analysis over the period from January 2010 to December 2015. This paper will get

apparent view of future trading derivatives.

LITERATURE REVIEW Bandivadekar and Ghosh (2003) conducted a study on “Derivatives and Volatility on

Indian Stock Market” and they found that a downward in spot market volatility after the

prologue of index futures due to increased recent news and decrease the result of hesitation

derived from the old news. The futures market plays a definite position in the decline of

volatility in the case of S&P CNX nifty, whereas in BSE sensex, the turnover of derivatives

is significantly small.

Misra et al. (2006) made a study on “Arbitrage opportunities in the futures market – A

study of NSE nifty futures” and they specifies that there is a contravention of spot futures

having a partly relationship for many futures in case of NSE nifty futures. And also the

arbitrage profits are more for far month futures contracts when compared to near month futures

contracts.

Nayak (2008) in a study titled “Growth of financial derivatives in India and its impact on

underlying stock assets” and the revealed that the spot and futures returns are interdependent

and hence the relationship can be used for forecasting the futures prices. Derivatives help to

increase the trading volume of the cash market resulting in the reduction of transaction cost in

the long run. Product wise derivatives turnover in India at NSE has stock future as 59% when

compared to Index futures, stock options and index options.

Debasish and Das (2008) found a study on “An econometric study on impact of futures

trading on the stability of stock index in India” and the study depicted that after the introduction

of future market, the future period was higher than the pre futures period but the volatility of

monthly returns remains unaffected. Further, it was found that there is statistical significant

evidence that the sharing of every day returns could that the significant increases in the

instability of daily returns after the commencement of futures trading is necessarily futures

induced.

Gahlot et al. (2010) investigated a study on “Impact of derivative trading on stock market


volatility in India: A study of S&P CNX nifty” and the result of the study explained that the

opposing outline of increase in its categorical GARCH volatility. This may be due to bundling

effect of constituent stocks of nifty.

Sakthivel and Kamaiah (2011) conducted a study on “The effect of derivative trading on

volatility of underlying stocks: Evidence from the NSE” and the study depicted that the spot

market variation has declined after the introduction of futures trading. In case of individual stocks,

there has been a reduction in volatility of the individual stocks. Further, the introduction of futures

trading has altered the irregularity behaviour of spot price volatility as well as individual stock

volatility.

Debasish (2011) concluded in a study titled “Relative volatility in spot and futures market

in selected indices of NSE in India – An analysis” and the study resulted that there is a

significant change in comparative daily volatility between spot and futures prices for all three

NSE indices.

Sreenu (2012) found a study on “A study on technical analysis of Derivatives stock futures

and the role for debt market derivatives in debt market development in India” and the study

depicts that the derivatives turnover on the NSE has go beyond the turnover of equity market.

And also, considerably its development in the recent years has surpassed the enlargement of

its complement worldwide.

Thomas (2013) conducted a study on “Recent issues in the Indian Capital Market”

and the study finished that the Indian capital market has undergone metamorphic reforms in

past few years. Every segment of the Indian capital market has experienced an impact of these

changes, which has significantly, improves the transparency, efficiency and integration of the

Indian market with the global market.

Juneja (2013) investigated in a study titled “Understanding the relation between FII and

Stock market” and the revealed that there is a significant positive correlation between FII

movement and effects on Indian capital markets. It also reveals that the actions in the Indian

capital market are moderately give explanation by the FII net inflows.

Subha and Musthffa (2014) conducted a study on “Dynamic volatility relationship

between Bank nifty futures and bank nifty indices – Evidence from India” and the study

resulted that the nifty indices of bank caused the futures showing the result of stabilisation

and destabilisation of the market during the underlying assets of the bank nifty indices.

Shaline and Roweendra (2014) examined a study on “A study of derivatives market in

India and its current position in global financial derivatives market” and the paper completed

that the growth of derivatives in recent years has exceeded the expansion of its counterpart

globally. In Indian scenario, the equity derivatives market is playing a major role in price

discovery. And also there is a big significance and contribution of derivatives to financial

system.

Satapathy and Kar (2015) found in a study titled “The causal relationship between

spot and future prices in India: A select case study of NSE” and the study depicted that the

vague improvement conditions are found to be negative and significant which futures validity the


relationships. From impulse response, both spot and future markets are highly sensitive to each

other’s shocks. The findings of variance decomposition indicate that in case of nifty, Tata motors

and ACC future market dominate over the spot market in explaining variations in both spot and

future market meaning future price leads to spot price. Further, bidirectional causal relationship

is found between spot and future prices of selected indices of both spot and future market plays

a significant role in explaining each other movements.

Objectives of the study Primary Objectives (i) To find out the casual relationship and impact between spot and future of major Indian

indices.

Secondary Objectives

(i) To identify the co integration relationship between spot and future of BSE Sensex

and S&P CNX nifty.

(ii) To find out the causality of BSE Sensex and S&P CNX nifty spot and future.

(iii) To ascertain the price movement of spot and future of the respective indices.

Significance of the study

The present study elucidates the role of derivatives futures is in Indian financial markets. Studies

of this type are more useful to the investors’ decision making of futures trading derivatives. By

that, the investor can get the right underlying for investment, that is totally risk free. The study

uses the monthly price movement for the selected indices.

Sources of Data

The study is entirely based on secondary data and which could have been collected from various

websites like www.bse.com, www.nseindia.com, www.investing.com and

www.moneycontrol.com. Theoretical framework of the data have been collected from various

journals, newspapers, magazines and also their relevant websites.

Period of the study

The data analysed in this paper has been collected from a broad range of reliable sources.

The data base maintained by the BSE and NSE relating to their monthly index has been used

for the purpose of the study. The data consists of monthly average closing price of 2 major stock

indices of India which is BSE Sensex and S&P CNX Nifty. The study has covered the period

for six years monthly data of calendar year i.e. from January 2010 to December 2015.

Statistical Tools

For analysing the data, EVIEWS 7 has been used. The appropriate statistical techniques as

Augmented Dickey- Fuller Test, Phillips-Perron Test, Johansen Co integration Test and

Granger Causality Test have been used for analysing the data.

http://www.bse.com/

http://www.nseindia.com/

http://www.investing.com/

http://www.moneycontrol.com/


Hypotheses of the study

The following are the hypotheses used in this study:

(i) H01: BSE sensex and S&P CNX nifty spot and future are having non stationary.

(ii) H02: Both BSE sensex and S&P CNX nifty spot and future are not co integrated.

(iii) H03: Causality does not exist between BSE sensex and S&P CNX nifty spot and

future.

(iv) H04: There is no similar trend of price movement in spot and future of BSE sensex

and S&P CNX nifty.

Limitations of the study

The limitations of the study are as follows:

(i) The study has considered only for the period for six years i.e. from January

2010 to December 2015.

(ii) The study has taken only two major indices of Indian Stock Exchanges like BSE

sensex and S&P CNX nifty.

Analysis and Interpretation Table 1: Description of Data

Sl. No Variables Symbols

1 BSE Sensex Spot Price SSP

2 BSE Sensex Future Price SFP

3 S&P CNX Nifty Spot Price NSP

4 S&P CNX Nifty Future Price NFP

The study aims to find out the relationship between spot and future market of the selected indices

(BSE Sensex spot and future and S&P CNX Nifty spot and future). For this purpose, the study

uses the statistical tools like Unit Root test, Johansen Co integration test, Granger Causality

test and for the price movement of the indices the graphical representation have been used.

Unit Root Test

Before conducting any econometric test, the stationarity properties of the variables need to be

checked through unit root test. Most commonly used method of checking the stationarity the

Augmented Dickey-Fuller Test (ADF) and Phillips Perron Test (PP) have been used.

Augmented Dickey-Fuller Test and Phillips Perron Test

The Augmented Dickey-Fuller test is based on the null hypothesis H0: (Yt is not I (0). And Phillips

Perron test is an alternative method for unit root test. If the calculated Augmented Dickey Fuller

and Phillips Perron test is less than the critical value, then the null hypothesis is rejected, or

else accepted. If the variable is non – stationary at level, the Augmented Dickey Fuller and

Phillips Perron test will be performed at the first difference.

Table 2: Unit Root Test Indices Augmented Dickey-Fuller Test Phillips Perron Test

T statistics Probability T statistics Probability


SSP -8.145547 0.0000 -8.188195 0.0000

SFP -8.481447 0.0000 -8.510150 0.0000

NSP -8.155089 0.0000 -8.200342 0.0000

NFP -8.026539 0.0000 -8.076994 0.0000

The result of Augmented Dickey-Fuller test (ADF) and Phillips Perron (PP) test are shown in table

3. The null hypothesis of no unit root is rejected at 1% level after taking the first difference.

Augmented Dickey-Fuller test (ADF) and Phillips Perron (PP) test statistics are compared with

critical values and the result revealed that the null hypothesis “H01: BSE Sensex and S&P CNX

Nifty are having non stationary” of unit root test has been rejected at 5% level of significance.

Johansen Co integration Model

The test of Johansen co integration model has been used to identify the long run relationship

of the variables. The co integration between non-stationary variables has been tested by

the Johansen’s trace statistics and maximum Eigen value tests.

Table 3 Johansen Co integration Test

Hypothesized

No. of

Coefficients

Eigen Value Trace Statistics 0.05 Critical Value Probability**

BSE Sensex

None* 0.396576 29.71261 15.49471 0.0002

At most 1 0.007126 0.414807 3.841466 0.5195

S&P CNX Nifty

None* 0.460337 36.12510 15.49471 0.0000

At most 1 0.006018 0.350119 3.841466 0.5540

Trace test indicates 1 co integrating eqn(s) at the 0.05 level.

* Denotes rejection of the hypothesis at the 0.05 level.

** MacKinnon-Haug-Michelis (1999) p-values.

Table 4 shows the result of Johansen Co integration. It shows that the number of co-integrated

equations (0) is none which means there is no co-integrated equation. The trace statistics is

greater than the 0.05 critical value, so “H02: Both BSE sensex and S&P CNX nifty spot and

future are not co integrated” is rejected. And also by looking the probability value the null

hypothesis can be rejected at 5% level at none for both BSE Sensex and S&P CNX Nifty.

Therefore, the test indicates that co integrating exists at 5% level of significance.

Granger Causality Test

The pair wise Granger Causality test is performed between all the possible pairs of variables to

determine the direction of causality. Only the rejected hypotheses are reported in Table 5.

Table 4 Granger Causality Tests

Null Hypotheses Obs. F-Statistics Probability Decision

NSP does not Granger Cause NFP

58 5.27784 0.0081** Rejected


SFP does not Granger Cause NFP

58 8.17489 0.0008** Rejected

SSP does not Granger Cause NFP

58 7.13299 0.0018** Rejected

SSP does not Granger Cause NSP

58 4.16474 0.0209* Rejected

SSP does not Granger Cause NSP

58 3.35120 0.0426* Rejected

NSP does not Granger Cause SSP

58 3.18368 0.0495* Rejected

Source: Complied Data

Table 5 reveals the result of Granger Causality test. Both BSE sensex and S&P CNX nifty

have an impact of their indices. Nifty spot price cause Nifty future price at 1% level. The

Sensex future price cause Nifty future

price at 1% level. Sensex spot price may also cause Nifty future price at 1% level. Sensex

spot price cause Nifty spot price at 5% level. Sensex spot price cause Nifty spot price at 5%

level. And Nifty spot price cause Sensex spot price at 5% level. Therefore, the null hypothesis

“H03: Causality does not exist between BSE sensex and S&P CNX nifty spot and future”

is rejected. And also it indicates that the causality exist between BSE sensex and S&P CNX nifty

spot and future.

Figure 1 shows the clear picture of price movement of spot and future trading derivatives in BSE

sensex. The movement of the price is very much similar and parallel trend in nature. It shows that

spot and future price of BSE sensex are moving in a same direction. And it depicts that there is a

strong association in spot and future price


Figure 2 shows the price movement trend of S&P CNX nifty spot and future price. The movement

of the spot and future price is almost similar. This shows the spot and future price of S&P CNX

nifty are having a strong connection. And it reveals that the S&P CNX nifty spot and future price

are following similar trend.

From both the figure 1 and 2 shows the trend of spot and future price of BSE sensex and S&P

CNX nifty and it clearly reveals that there is a similar trend of price movement in spot and future

of BSE sensex and S&P CNX nifty. So, the null hypothesis “H04: There is no similar trend of

price movement in spot and future of BSE sensex and S&P CNX nifty” is rejected. And

hence, there is a similar trend of price movement in spot and future of BSE sensex and S&P

CNX Nifty.

Findings of the study

The findings of the study are following:

❖ The study found that BSE sensex and S&P CNX nifty are stationary.

❖ The Johansen Co integration test revealed that the spot and future prices of BSE

sensex and S&P CNX nifty are co integrated.

❖ From Granger Causality test the study depicted that there is a granger cause of spot

and future prices of BSE sensex and S&P CNX nifty.

❖ And further, the study also revealed that the price movement of BSE sensex and S&P

CNX nifty spot and future prices are having a similar trend.

Conclusion

This paper concludes that the spot and future price of BSE sensex and S&P CNX nifty are

having a strong connection. And also there is a strong collision of spot and future price. So, the

investor can able to choose the right underlying for investment, which is risk free. The study

included the changes in monthly price movement of the selected indices. These helps the

investor to take right decisions regarding trading in derivative index futures.

Scope for further Research

The study was concentrated only on the selected two indices (BSE sensex and S&P CNX nifty).

The study has covered the period, only for five years. With the two indices we cannot able to


judge the whole market. So, for further the study may concentrated on the individual stocks or

individual indices of the future market. It may able to give an apparent view of futures derivatives

market.

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