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An International Research Journal of Management and Commerce

ISSN: 2454-2733

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ManaCom: An International Research Journal of Management and Commerce ISSN 2454-2733

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ManaComm: An International Research Journal of Management

and Commerce Vol. 01 Issue. 04 December 2015 ISSN: 2454 -2733

CONTENTS GUJARATI PEOPLE’S MIND SET ABOUT CASH TRANSFER SUBSIDY ON LPG’S: WITH REFERENCE TO MEHSANA DISTRICT.

Dr. Ashish J. Dave & Prof. (Dr.) R. L. Godara 1 - 8 A COMPARATIVE STUDY OF PRIORITY SECTOR LENDING FOR

SELECTED PUBLIC SECTOR BANKS AND PRIVATE SECTOR BANKS

Daxesh Pandya 9 - 12

MERGERS AND ACQUISITIONS PERFORMANCE IN THE INDIAN

SELECTED BANKS -- A COMPARATIVE STUDY OF ‘INDIAN OVERSEAS

BANK LTD’ AND ‘ORIENTAL BANK OF COMMERCE LTD’

Datt Talebali Valibhai 13 – 25

ROLE OF WOMEN ENTREPRENEURSHIP IN INDIA ECONOMY

Ishwarbhai R. Patel 26 – 30

THE ROLE OF FOREIGN INSTITUTIONAL INVESTOR’S IN INDIAN

STOCK MARKET

Amit N. Ratnotar & Dr. K. S. Dave 31 - 35 A STUDY ON THE ROLE OF COMMERCIAL BANKS IN THE DEVELOPMENT OF FARMERS THROUGH CROP LOAN IN SRIKAKULAM DISTRICT OF ANDHRA PRADESH Dr. Rima Shah 36 – 41

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ManaComm: An International Research Journal of Management and Commerce ISSN: 2454 - 2733 DECEMBER 2015

A Research Wings of ‘ACT’ 1

ManaComm: An International Research Journal of Management and Commerce ISSN: 2454 - 2733 Vol. 01 Issue. 04 December 2015 Paper ID: MC01040262015 GUJARATI PEOPLE’S MIND SET ABOUT CASH TRANSFER SUBSIDY ON LPG’S: WITH REFERENCE TO MEHSANA DISTRICT.

Dr. Ashish J. Dave, Associate professor, Smt. C.C Mahila Arts & Sheth C.N Commerce College, Visnagar (Gujarat) Prof. (Dr.) R. L. Godara, Vice Chancellor, Hemchandracharya north Gujarat University, PATAN. (Gujarat)

INTRODUCTION Since Independence, India has seen six most distinctive institutionalization of policies; Panchayati Raj Institutions (PRIs), Right to Information Act (RTI), National Rural Employment Guarantee Act (NREGA), Right to Education Bill, Cash Transfer Subsidy Scheme and National Food Security Bill . The latest talk in the political circles is that the government is making a big effort before FSB to win the fight for the 2014 elections by switching over to direct cash transfer (DCT) system from the current system of rationing and PDS. This is when there are serious arguments against such quick a switchover. Rajiv Gandhi once remarked how 85 per cent of the funds released by the center never reached its beneficiaries. There have been different numbers, but everyone agrees that there are serious leakages. The energy sector is one of the most important and heavily subsidised sectors in many countries across the globe. In India, energy subsidies aimed at protecting consumers are provided for electricity and four major petroleum products: petrol, diesel, kerosene and LPG. Petrol subsidies have been removed and those on diesel are being gradually phased out. Energy commodities such as kerosene and LPG are still subsidised to reduce the cost of energy, particularly for economically weaker households. Subsidies impose tremendous pressure on the government’s fiscal budget and yet their benefits often fail to reach the targeted population. For example, while the government of India provides huge LPG subsidies, the majority of Indians who use LPG as a cooking fuel live in urban areas and are economically well-off. On the other hand, most of India’s roughly 1.2 billion people who are below the poverty line dwell in rural areas and continue to use traditional fuels such as coal, wood or dung for cooking and heating. Also, both subsidised kerosene and LPG, which were available to the poor through the public distribution system earlier, was wrongly diverted for commercial usage. Recently, the government of India has initiated energy subsidy reforms to stop leakages and corruption in the PDS and benefit the targeted population Consequently, subsidies on LPG and kerosene are being replaced by direct cash transfers, also termed as direct beneficiary transfers. Under this Direct Cash Transfer Scheme, money is directly deposited in the beneficiaries’ bank accounts to enable them to buy energy commodities at the market price. These DCTs are not



conditional, therefore there is a possibility that the subsidy amount may be misspent by the beneficiaries on items other than LPG and kerosene. Minister's National Committee on Direct Cash Transfers has been tasked with an ambitious mandate to provide vision and direction to enable direct cash transfers of subsidies under various government schemes and programmes to individuals to enhance efficiency. Certain activists warn against an ill-considered and hasty transition from food to cash. Others believe directly transferring the subsidy amount to citizens can offer beneficiaries more choice and allow the state to sidestep poor supply side management practices plaguing the public distribution of goods and services that result in leakage. Cash transfers have increasingly become synonymous with ideological contestation on the role of the state, making the debate on feasibility shriller. Like most medicine, cash transfers are a cure, but not a cure-all. It helps to clarify which maladies can be solved by cash transfers, which cannot — and identify those cases where the side effects of introducing cash could be worse than the disease. Over the years, studies of the Public Distribution System show that some states manage supply of in-kind transfers fairly well, while in a large number of cases, the pipeline connecting citizens to ration supplies is prone to leakage and corruption. Money at the top, spent by state treasuries for the distribution system, produces little food or fuel for PDS beneficiaries at the bottom. Such findings, in combination with fiscal stress, have bolstered the characterization of the current delivery of in-kind transfers as inefficient. However, we need to consider three key issues when thinking of using cash transfers as an antidote to inefficiencies within the public distribution channel. If the only inefficiency within any public distribution system was that the costs of moving materials and getting the public sector to produce or procure goods and services were much higher relative to the overall gain, transparent and direct cash transfers would be a complete and comprehensive solution. The development of technologies such as biometrics and centralised fund-flow management systems have created new pipelines through which cash can flow cheaply and accurately to recipients. The programme, also called “Apna Paisa, Apne Hath” (your money in your hands), is being billed as ensuring effective delivery of cash payments to beneficiaries and eliminating pilferage in government welfare programmes. The government launched the DCT’s programme as a pilot in 20 districts for 26 schemes starting 1 January, to transfer cash subsidies and welfare payments using Aadhaar (UIDAI) directly into the bank accounts of the beneficiaries. Aadhaar (UIDAI) is a unique digital identity number being issued to all residents in India and bank accounts of beneficiaries are being linked to it for them to receive the subsidies. Based on a good response to the pilot project, the cabinet committee on economic affairs (CCEA) decided to rapidly roll out DCT’s for cooking gas subsidies in a little less than half of the country. Starting 1 September, DCT’s for subsidies on liquefied petroleum gas (LPG) cylinders will be rolled out in 34 districts, while the remaining districts will be added to the programme in phases by 1 January 2014. India has about 140 million consumers of subsidized cooking gas cylinders. Government said for beneficiaries without bank accounts, it will be the joint responsibility of banks and oil marketing companies to prod customers to open banks accounts. “The bank managers will be responsible to seed Aadhaar numbers into the bank accounts, consumers will have a three-month grace period to link their Aadhaar numbers with their bank accounts.



Bank account “seeding” with Aadhaar is seen as a bottleneck to rolling out direct transfer of cooking gas subsidies to customers faster. REVIEW LITERATURE Steve Wiggins (2010). The technology transfer (“learning”) argument is one that corresponds to best practice advice, because of its public good aspect. However, this calls for a relatively small time-bound subsidy. What is being proposed, particularly in Africa, is intervention on a much larger scale, and for a longer duration, than warranted by this objective. In general, input subsidy programmes are being developed to address the specific circumstances of countries at a low level of economic development, where there are: extensive and severe market failures with resulting poverty traps, so that any increased production has directly reduces poverty and raises human capability and locations where the food markets are naturally protected by distance from other markets, so that local prices will be driven down by increases in local production. Bhamy V. Shenoy (2010). In developing countries we need greater publicity to the generation of black money through the misuse of fossil subsidies and the real beneficiaries of such subsidies. Beneficiaries are not the poor as often claimed by politicians. Like the strategy “publish what you pay” to reduce corruption in upstream, we need a new initiative by TI for downstream supported by international financial institutions, UN, donor agencies etc if we are serious to reform. Centre for Energy Economics (2011). The success of the first Oil Conservation Week organized in January, 1991 has led to its continuance in subsequent years and an extension to Oil Conservation Fortnights since 1997. These are organized by the entire oil sector in close coordination with the concerned Ministries and Departments of the Union and State Governments, Public Sector Undertakings, Chambers of Commerce etc., with PCRA acting as the coordinating agency. OBJECTIVE OF STUDY

1) To study users attitude towards to subsidy..

2) To study users attitude towards to Aadhar Card and Banking System..

3) To study future for Cash Transfer Subsidy.

HYPOTHESIS

Ho: There is no significance difference in attitude of users for effect of Aadhaar Card

(UIDAI) and Indian Banking Systems (IBS) on DCT’s

Ho: There is no significance difference in attitude of users for methods of subsidy.

Research Methodology & tools to be used in the collection of Data:

Research Method: The present research study is fundamentally based on opinion of respondents. So the researcher will use descriptive research method. Sources of Data: Primary Sources: Primary information will be collected through multiple choice questionnaires. Secondary Sources: The secondary data will be collected from relevant books, journals, web sites.



Universe and sampling planning: In the present research study, all the residential LPG users in the entire Gujarat state will comprise universe of the study. Samples from the entire Mehsana district were selected as below. Samples were selected by using non-probability simple random sampling method, stratified random sampling method and systematic random sampling method. Mehsana district divided in nine talukas namely Satlasana, Kheralu, Unjha, Visnagar, Vadnagar, Vijapur, Mahesana, Becharaji and Kadi with total population of district is 1837892. From each talukas of Mehsana district, the researcher select samples of 10 units from each taluka. Sample Size: Sample size for the present research work were 90. 90 samples were divided equally into nine talukas i.e. 10 samples from each taluka. ANALYSES AND INTERPRETATION OF DATA

Keeping in view the objectives of the study, the data collected through the multiple-choice and close-ended questionnaire classified and tabulated. Data in the tables were analyzed and interpreted with the help of statistical techniques. The statistical analysis of the collected information presented in terms of frequency, percentage and average.

The researchers do bi –variate data analysis and tabulate the data in cross tabulation to study the respondent’s opinion about selected variables. The relationship between selected attributes / variables tested using statistical test named “Chi – Square Test”’. Profile of Respondents The researcher has made an attempt to present profile of respondents according to their demographical characteristics which are presented as below Table-1.

Table 1: Profile of Respondents

Characteristics of Respondents No. of Respondents Frequency (A) Gender : Male Female

47 43

52.22 47.78

Total 90 100% (B) Income per Month Below Rs. 10,000 Rs. 10,001 to Rs. 20,000 Above Rs. 20,000/

24 28 38

26.67 31.11 42.22

Total 90 100% (C)Age Below 18 Years 19 to 25 years Above 25 years

27 35 28

30.00 38.89 31.11

Total 90 100% (D) Occupation Study Service Business

19 44 27

21.11 48.89 30.00

Total N= 90 90 100% Sources Questionnaire, Q. No. 1.3 to 1.8 1. Respondents’ Opinion about Effect of Aadhaar(UIDAI) and Indian Banking

System(IBS) on DCT’s.



The researcher has attempted to collect respondents’ opinion about probable effect of UIDAI and IBS on DCT’s in terms of selected variables which are presented in table- 2 & 3

Table 2: Respondents’ Opinion about "Effect on DCT’s of UIDAI and IBS"

Characteristics of Respondents DCT’s will affected by UIDAI and IBS. Agree Disagree Neutral Total

(A) Gender : Male Female

35 (38.89)

10 (11.11)

12 (13.33)

31 (34.44)

-

2 (2.22)

47

43

Total 45 (50.00)

43 (47.78)

2 (2.22)

90 (100)

(B) Income per Month Below Rs. 10,000 Rs. 10,001 to Rs. 20,000 Above Rs. 20,000/

15

(16.67) 20

(22.22) 12

(13.33)

09

[10.00] 08

(08.89) 20

(22.22)

- -

06 (06.67)

24

28

38

Total 47 (52.22)

37 (41.11)

06 (6.67)

90 100

(C) Age Below 18 Years 19 to 25 years Above 25 years

05

(5.55) 23

(25.56) 24

(26.67)

14

(15.56) 10

(11.11) 4

(4.44)

8

(8.89) 2

(2.22)

27

35

Total 32 (35.56)

48 (53.33)

10 (11.11)

90 100

(D) Occupation Study Service Business

10

[11.11) 20

(22.22) 3

(3.33)

8

(8.88) 24

(26.67) 24

(26.67)

1

(1.11) - -

Total N= 90 33 (36.67)

56 (62.22)

1 (1.11)

90 100

Note: Figures in the brackets indicate frequency with total at 100% Sources: Questionnaire Q. No. 1.3 to 1.8 & 2.1 Above table shows that –



38.89 percent male respondents and only 11.11 percent female respondents agree with UIDAI and IBS effect on DCT’s. So male and female respondents significantly very with UIDAI and IBS effect on DCT’s.

In the income group, below Rs. 10,000 income 16.67 percent respondents, Rs. 10,000 to Rs. 20,000 - 22.22 percent respondents and above Rs. 20,000 - 13.33 percent respondents agree with UIDAI and IBS effect on DCT’s. So respondents of this income group significantly very with UIDAI and IBS effect on DCT’s.

In the age group, below 18 years – 5.55 percent respondents, 19 to 25 years - 25.56 percent and above 25 years – 26.67 percent respondents agree with UIDAI and IBS effect on DCT’s. So respondents of this age group significantly very with UIDAI and IBS effect on DCT’s.

In the group of occupation, 11.11 percent respondents student, 22.22 percent respondents with service people and 3.33 percent respondents Business persons or farmers agree with UIDAI and IBS effect on DCT’s. So respondents of this occupation group significantly very with UIDAI and IBS effect on DCT’s.

Table 3: Respondents’ opinions about effectiveness of DCT’s. Characteristics of

Respondents DCT’s will more effective than current system

Agree Disagree Neutral Total (A) Gender : Male

Female

37 (41.11)

13 (14.44)

10 (11.11)

30 (33.33)

- -

-

Total 50 (55.55)

40 (44.45)

90 (100)

(B) Income per Month Below Rs. 10,000 Rs. 10,001 to Rs. 20,000 Above Rs. 20,000/

14

(15.56) 07

(07.78) 18

(20.00)

9

(10.00) 20

(22.22) 20

(22.22)

1

(1.11) 1

(1.11) -

Total 39 (43.34)

49 (54.44)

2 (2.22)

90 100

(C) Age Below 18 Years 19 to 25 years Above 25 years

21

(23.33) 20

(22.22) 19

(21.11)

03

(3.33) 12

(13.33) 9

(10.00)

3

(3.34) 3

(3.34) -

Total 60 (66.66)

24 (26.66)

6 (6.68)

90 100

(D) Occupation Study Service Business

8

(8.89) 28

(31.11) 24

10

(11.11) 15

(16.68) 3

1

(1.11) 1

(1.11) -



(26.66) (3.33) Total N= 90 60

(66.66) 28

(31.12) 2

(2.22) 90

100 Note: Figures in the bracket are frequency to total at 100. Sources: Questionnaire Q. No. 1.3 to 1.8 & 2.2

Above table shows that –

41.11 percent male respondents and only 14.44 percent female respondents agree with DCT’s will more effective than current system. So male and female respondents significantly very with DCT’s will more effective than current system.

In the income group, below Rs. 10,000 income 15.56 percent respondents, Rs. 10,000 to Rs. 20,000 – 7.78 percent respondents and above Rs. 20,000 – 20.00 percent respondents agree with DCT’s will more effective than current system. So respondents of this income group significantly very with DCT’s will more effective than current system.

In the age group, below 18 years – 23.33 percent respondents, 19 to 25 years - 22.22 percent and above 25 years – 21.11 percent respondents agree with DCT’s will more effective than current system. So respondents of this age group significantly very with DCT’s will more effective than current system.

In the group of occupation, 8.89 percent respondents’ student, 31.11 percent respondents with service people and 26.66 percent respondents Business persons or farmers agree with DCT’s will more effective than current system. So respondents of this occupation group significantly very with DCT’s will more effective than current system.

Testing of Hypothesis: Table -4 indicate acceptance of hypothesis- Ho or H1 Table 4: Acceptance of hypothesis

Attitude for Regional Channels.

acceptance of hypothesis -- group of respondents Gender Income Age Occupation

1) DCT’s will effect from Aadhaar (UIDAI) and IBS?

H1 H1 H1 H1

2) DCT’s will more effective than current system?

H0 H0 H1 H1

FINDING

Direct Cash Transfer Scheme will affect from UIDAI and current insufficient banking system in India.

Income and Gender of users think that there is no significant difference between effectiveness of current subsidy system and Direct Cash Transfer Scheme, but Age and occupation of users think it will make significant difference in PDS.

SUGGESTION Before introducing DCT’s government must develop banking system at rural area as much

as possible. Fast processing in UIDAI. Public awareness about government schemes through local NGO’s

LIMITATIONS OF STUDY



Mehsana district is very wide. So it is very difficult task to select respondents from the entire Mehsana district. Hence the researcher has segmented Mehsana district into nine talukas, in order to complete the research work in time.

Halo effect about respondents’ opinions is also subject to consideration.

REFERENCES http://socialjustice.nic.in/ Filipski, M. and Taylor, J.E. (2012). A Simulation Impact Evaluation of Rural Income

Transfers in Malawi and Ghana, Journal of Development Effectiveness, Vol. 4(1): pp.109-129.

http://www.kpmg.com/in/en/issuesandinsights/articlespublications/kbuzz/pages/gov.aspx Financial times – Lexicon Direct cash subsidy: Challenges for implementation; Business Standard, 25 April 2011 Union Budget 2012-13 http://theglobaljournals.com/paripex/file.php?val=MTI1Nw==

http://theindianeconomist.com/direct-cash-transfer-part-2/ http://www.indiantaxupdates.com/2013/05/20/directbenefit-transfer-of-lpg-dbtl-scheme-

in-20-districts-aadhar mandatory/#sthash.Hoz0kAOx.dpuf http://www.indiantaxupdates.com/2013/05/20/directbenefit-transfer-of-lpg-dbtl-scheme-

in-20-districts-aadhar mandatory/ http://www.indiastudychannel.com/resources/157140-Subsidies-through-banks-by-Direct-

Cash-Transfer-DCT-from-2013-benefits.aspx http://www.crin.org/docs/CashTransfer_FS5.pdf http://slbc.bih.nic.in/documents/FI-CIRCULARS-BY-DFS.pdf http://www.ohchr.org/Documents/Issues/EPoverty/casher/Uganda.pdf http://www.ifrc.org/Global/Publications/disasters/guidelines/guidelinescashen.pdf http://www.governancenow.com/news/regularstory/protesters-want-cash-transfer-scheme-

scrapped



ManaComm: An International Research Journal of Management and Commerce ISSN: 2454 - 2733 Vol. 01 Issue. 04 December 2015 Paper ID: MC01040272015 A COMPARATIVE STUDY OF PRIORITY SECTOR LENDING FOR SELECTED PUBLIC SECTOR BANKS AND PRIVATE SECTOR BANKS

Daxesh Pandya, In Charge Regional Director, Baba Saheb Ambedkar University, RAJKOT

INTRODUCTION A bank is a financially institution which deals with deposits and advances and other related services. It receives money from those who want to save in the form of deposits and it lends money to those who need it. Most of the bank operates under a system known as fractional reserve of the funds deposited and lend out the rest for earning profit. Generally, they are subject to minimum capital requirements which are based on an international set of capital standards, known as Basel accords. Loans and advances can be arranged from banks in keeping with the flexibility in business operations, Traders, may borrow money for day to day financial needs availing of the facility of cash credit, bank overdraft and discounting of bills. The amount raised as loan may be repaid within a short period to suit the convenience of the borrower. Thus business may be run efficiently with borrowed funds from banks for financing its working capital requirements. REVIEW OF LITERATURE Several studies on Lending activity of Bank in a restricted sense have been undertaken by particular bank, group of banks, individuals and organizations. Number of Committees appointed by the Government of India and RBI, have also studied the banking problems of the country. 1) N. S. Toor (1993) He is of the view that Monitoring, supervision, follow-up and control are

essential to ensure the desired result towards SSI units. 2) A V. Dhond (1994) conducted a study on the role of commercial banks in the Development of

Small Scale Industries. In the study, he remarks that the importance of small scale industries in the economic development of our country cannot be ignored. Therefore, the commercial banks should take necessary steps to increase the credit to SSI units.

3) A.R. Patel (1996) opines that the Government can help the commercial banks in the implementation and monitoring of schemes for the development of rural areas. State participation will help to increase the productivity and the amount of credit to the weaker sections.

4) Varghese K. John and Dr. C.V. Jayamani (1997) conducted a micro level study on Prime Minister's Rozgar Yojana The study reveals that the procedures and formalities in sanctioning the loans are too lengthy and time consuming. They also suggest that the PMRY Scheme must be operated for the benefit of the deserving people

5) D P Sarda (1998) He suggests that the problems relating to overdue and recovery of loans should be discussed in the State Level Bankers Meeting and to take the help of Government

ManaComm: An International Research Journal of Management and Commerce ISSN: 2454 - 2733 SEPTEMBER 2015


authorities on such matters. OBJECTIVE OF THE STUDY Present article is based on the comparative study of Priority Sector Loan and Advances for Selected Public Sector Bank and Selected Private Sector Bank of India. Period of Study The study period is to be converted 10 years; from 2005-06 to 2014-15. No. of Sample Selection of Sample is based on the highest Advances on March 2006 of the Universe of the Public Sector Bank and Private Sector Bank as Per RBI records. SBI, Canara Bank, PNB, BOI, and BOB has selected from public sector Bank while ICICI, HDFC, AXIS Bank, Jammu & Kashmir Bank and Fedral Bank has been selected from private sector bank for the present study Tools & Techniques For the present study, Ratio-Analysis in percentage as an Accounting tools and F-Test - ONE WAY ANOVA is used as a tools of Statistics. DATA ANALYSIS AND INTERPRETATION PRIORITY SECTOR ADVANCES TO TOTAL ADVANCES RATIO Priority sector was first properly defined in 1972; after the National Credit Council emphasized that there should be a larger involvement of the commercial banks in the priority sector. The overall objective of priority sector lending program is to ensure that adequate institutional credit flows into some of the vulnerable sectors of the economy, which may not be attractive for the banks from the point of view of profitability.

Table1 1: Priority Sector Advances To Total Advances

(A) Public Sector Banks Name of

Bank Year

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 SBI 30.56 30.24 28.61 26.48 26.99 30.61 28.84 25.28 23.21 22.23 CANARA 37.68 37.84 39.15 33.27 33.48 32.19 29.80 33.88 32.10 32.40 PNB 45.68 37.81 38.67 31.81 35.70 32.48 31.33 30.04 33.74 36.33 BOI 31.50 29.81 28.41 26.27 25.48 25.76 22.56 22.45 20.88 21.16 BOB 29.36 28.76 27.62 26.70 26.35 24.01 22.59 24.21 21.20 22.31

(B) Private Sector Banks Name of

Bank Year

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 ICICI 29.20 28.22 26.48 28.42 29.79 24.68 23.37 20.60 19.06 19.67 HDFC 30.99 37.67 27.47 30.12 35.09 34.24 32.68 32.01 29.58 29.03 AXIS 34.64 35.79 27.78 28.14 28.69 28.99 28.56 24.62 27.28 24.82 J&K 19.53 19.24 25.81 35.10 37.44 39.23 30.11 29.20 27.58 33.23 FEDRAL 34.30 37.26 36.51 37.80 36.55 33.13 32.28 26.07 35.72 33.81 Formula : (Priority Sector Advances/Total Advances) x 100 Source: rbi.gov.in



Table 2: Average & Variances of Priority Sector Advances To Total Advances Ratio

Sr. No.

Name of Bank Year Sum of the Ratio

Average Variances

[A] Public Sector Banks 01 State Bank Of India 10 273.05 27.305 9.066294 02 Canara Bank 10 341.79 34.179 9.154877 03 Punjab National Bank 10 353.59 35.359 21.39801 04 Bank Of India 10 254.28 25.428 13.53104 05 Bank Of Baroda 10 253.11 25.311 8.093921

[B] Private Sector Banks 01 ICICI Bank 10 249.49 24.949 16.73612 02 HDFC Bank 10 318.88 31.888 9.644929 03 AXIS Bank 10 289.31 28.931 13.33323 04 Jammu & Kashmir

Bank 10 296.47 29.647 47.24516

05 Fedral Bank 10 343.43 34.343 11.81982 Analysis for calculated ratio for selected Public Sector Bank and Selected Private Sector Bank: From the above table it is clear that Selected Public Sector Bank is providing their advances to Priority Sector average 25% to 35% during research period while Selected Private Sector Banks is also providing their advances to Priority Sector at the same average 25% to 35% during research period. That shows that banks are following the norms for advances to priority sector on an average nearer one third of their total advances during the research period. Statistical Analysis

H0 (Null Hypothesis): All the selected Public Sector and Selected Private Sector Banks of India have equal norm with respect to priority Sector Advance To Total Advances.

H1 (Alternative Hypothesis): All the selected Public Sector and Selected Private Sector Banks of India have unequal norm with respect to priority Sector Advance To Total Advances.

Table 3: “F”-Test One Way ANOVA for Ratio of Priority Sector Advances to Total Advances for Selected Public Sector and Selected Private Sector Banks of India

Source of Variation

Sum of Square

Degree of Freedom

Mean Sum of Square

Fc Ft

B.S.S. 1448.345 09 160.922 10.05648 1.985595 W.S.S. 1440.211 90 16.00234 T.S.S. 2888.555 99



From the “F” test one way ANOVA Table as calculated above it shows that Calculated value of Fc = 10.05648 while tabular value of Ft = 1.985595 which show that calculated value Fc is greater than tabular value Ft, Fc > Ft Hence Null Hypothesis is rejected and Alternative Hypothesis is accepted that All the selected Public Sector and Selected Private Sector Banks of India have unequal norm with respect to priority Sector Advance To Total Advances Graphical Analysis

By observation of the graph of selected Public sector and selected private sector banks of India it shows overall fluctuation 25 % to 35% ranging during the research period for the priority sector advances to total advances during research period by research units. CONCLUSION Accordingly to the analysis, it shows that the lending activity towards priority sector by the entire selected research units are following the norms for advances to priority sector on an average nearer one third of their total advances during the research period. It is suggested that bank have to increase their lending activity towards priority sector to boost up the economy as priority sector is the key segment of the development of the country. REFERENCES Toor, N. S. (1993) , "Banks Finance for SSI: Need for New Approach," The Banker, Vol

XL (6). August 20, 1993, pp. 20-23. Dhond, Aid (1994).. "Role of Commercial Banks in the Development of Small-scale

1ndustr.ial Sector," IBA Bulletin, Vol. XVI (12), December 1994, pp. 35-38. Patel. A. R.(1996) "Cred~tto the Farm Sector : Need for New Initiatives," IBA Bullettin,

Vol. XVlll (6), June 1996, pp. 13-15. Dr. Jayamani C.V. and Varghese K. John (1997), "Prime Minister's Rozgar Yojana a micro

study", Kurukshetra. Vol XLV (10) July 1997, pp 50-52. Sarda D.P. (1998), "Recovery of dues under government sponsored schemes"" Prajnan, Vol

XXVll (3) July-September 1998. moneycontrol.com rbi.gov.in



ManaComm: An International Research Journal of Management and Commerce ISSN: 2454 - 2733 Vol. 01 Issue. 04 December 2015 Paper ID: MC01040282015 MERGERS AND ACQUISITIONS PERFORMANCE IN THE INDIAN SELECTED BANKS -- A COMPARATIVE STUDY OF ‘INDIAN OVERSEAS BANK LTD’ AND ‘ORIENTAL BANK OF COMMERCE LTD’

Datt Talebali Valibhai, Associate Professor, Saifee Jubilee Arts & Commerce College, Sidhpur (Gujarat)

INTRODUCTION Now a day, the International Banking position has shown drastic changes in the past few years in terms of the Mergers and Acquisitions and restructurings. Due to the financial system deregulation, openly accepted generous privatization, entry of new players and products with advanced and updated technology, globalization of the financial markets, changing customer's perception and behaviour, wider services at cheaper rates, shareholder wealth demands etc., have been on a top rise. In the present scenario, Mergers and Acquisitions is one of the widely used tool and strategies by the various banks to strengthen and maintain their position in the cut-throat competitive market. Companies are confronted with the facts that the only big players can survive as there is a cut-throat competition in the market and the success of the merger depends on how well the two companies integrate themselves in carrying out day to day operations and legal complexities. Banks will get the benefits of economies of scale and to cover more market with lesser time through mergers and acquisition. For expanding the operations and cutting costs, Business Entrepreneur and Banking Sector is using mergers and acquisitions world wide as a strategy for achieving larger size, increased market share, faster growth, and synergy for becoming more competitive through economies of scale. A Merger is a combination of two or more companies into one company or it may be in the form of one or more companies being merged into the existing companies. On the other hand, when one company takes over another company and clearly well known itself as the new owner, this is called as Acquisition. The banks must follow the legal procedure of mergers and acquisitions which is given by the Reserve Bank of India, SEBI, Indian Companies Act and Banking Regulation Act 1949. Mergers and acquisitions is not a short term process, it takes much time to take decisions after examining all the aspects. Indian Corporate Sector had stringent control before liberalization but, the Government has initiated the Reform after 1991 which resulted in the adaptation of the different growth and expansion strategies by the Companies.



INDIAN BANKING CAN BE DIVIDED INTO THREE MAIN PHASES Phase I (1786 – 1969): Initial phase of Banking in India where many small banks were set up Phase II (1969 – 1991): Nationalization, Regularization and Growth marked this period Phase III (1991 onwards): Liberalization and its aftermath In post liberalization regime, Government had initiated the policy of liberalization and licenses were issued to the private banks which led to the growth of the Indian Banking Sector. In the recent times, Indian Banking Industry showed a tremendous growth because of an increase in the retail credit demand, proliferation of ATMs and debit cards, decreasing NPAs, improved macro economic conditions, diversification, interest rate spreads and regulatory and policy changes. LITERATURE REVIEW AND GAP Under this study, the researcher reviewed few research papers for the purpose of providing an insight into the work related to Merger and Acquisitions (M&As) of selected banks. A banking firm can achieve growth both internally and externally. Internal growth may be achieved by expanding its operation or by establishing new units, or launching new products and external growth may be in the form of Merger and Acquisitions (M&As), Takeover, Joint venture, Amalgamation etc. Many studies have investigated the various reasons for Merger and Acquisitions (M&As) to take place, just to look into the effects of Merger and Acquisitions on Indian financial services sector. Singh R (2003), in his paper Profitability management in banks under deregulate environment, IBA bulletin, No25, has analyzed profitability management of banks of major four bank groups i.e. public sector banks, old private sector banks, new private sector banks and foreign banks, profitability has declined in the deregulated environment. He emphasized to make the banking sector competitive in the deregulated environment. They should prefer non interest income sources. Singla HK (2008), in his paper,’ financial performance of banks in India,’ in ICFAI Journal of Bank Management No 7, has examined that how financial management plays a crucial role in the growth of banking. It is concerned with examining the profitability position of the selected sixteen banks of banker index for a period of six years (2001-06). The study reveals that the profitability position was reasonable during the period of study when compared with the previous years. Strong capital position and balance sheet place, Banks in better position to deal with and absorb the economic constant over a period of time. Singla (2008) examines that how financial management plays a crucial role industrialists growth of banking. It is concerned with examining the profitability position of the selected sixteen banks of banker index for a period of six years (2001-06). The study reveals that the profitability position was reasonable during the period of study when compared with the previous years. Strong capital position and balance sheet place. Banks are in better position to deal with and absorb the economic constant over a period of time. Research Gap As observed from the above few studies, most of the works have been done on trends, policies and their framework but researchers were not focused on mergers and acquisitions in the banking sector. The present paper would go to investigate the details of Mergers and Acquisitions (M&As)



with greater focus on the Indian Banks. The study will also discuss the pre and the post merger and acquisition financial performance of selected banks. OBJECTIVES OF THE STUDY The objectives of the proposed research paper are:

To study the conceptual framework of Mergers and Acquisitions of Banks from 1969 to till date

To evaluate the banks performance in terms of Operating and Net Profitability To analyze the performance of the Banks after merger in terms of return on Assets To find out the impact of merger on company’s Total debt equity ratio To examine the effects of merger on equity shareholders through EPS. To make comparison and find out the outcomes of research

METHODOLOGY Sources of Data: The study is based on secondary data. The financial and accounting data of

banks is collected from the Annual report of the select Banks to examine the impact of Mergers and Acquisitions on the performance of the sample banks. Data are also collected from the Bombay Stock Exchange, National Stock Exchange, Securities and Exchange Board of India and Money Control for the study.

Sample: Two banks, one from Public Sector and the other from Private Sector, are taken as the sample banks to evaluate the impact of mergers and acquisitions on the financial performance of

the Banks. Period of the Study: To compare the performance of Banks, four years pre merger and four years

post merger financial ratios are being computed and compared. The year of merger was considered as a base year and will be ignored.

Financial Parameters: The performances of the Banks are made in respect of the financial parameters such as Net Profit Margin, Return on Capital Employed, Total Assets Turnover Ratio, Earnings per Share (Rs.), Total Debt Equity Ratio and Return on Net Worth.

Hypothesis: 1. H0 (Null Hypothesis) – There is no significant difference between the pre and post merger and

Acquisition Performance with respect to Net Profit Margin. H1 (Alternative Hypothesis) - There is significant difference between the pre and post merger

and Acquisition Performance with respect to Net Profit Margin 2. H0 (Null Hypothesis) – There is no significant difference between the pre and post merger and

Acquisition Performance with respect to Return on Capital Employed. H1 (Alternative Hypothesis) - There is significant difference between the pre and post merger and

Acquisition Performance with respect to Return on Capital Employed. 3. H0 (Null Hypothesis) – There is no significant difference between the pre and post merger and

Acquisition Performance with respect to Total Assets Turnover Ratio. H1 (Alternative Hypothesis) - There is a significant difference between the pre and post merger

and Acquisition performance with respect to Total Assets Turnover Ratio. 4. H0 (Null Hypothesis) – There is no significant difference between the pre and post merger and

Acquisition Performance with respect to Earnings per Share (RS.)



H1 (Alternative Hypothesis) - There is a significant difference between the pre and post merger and Acquisition Performance with Respect to Earnings per Share (Rs.)

5. H0 (Null Hypothesis) – There is no significant difference between the pre and post merger and Acquisition Performance with respect to Total Debt Equity Ratio.

H1 (Alternative Hypothesis) - There is significant difference between the pre and post merger and Acquisition Performance with respect to Total Debt Equity Ratio.

6. H0 (Null Hypothesis) – There is no significant difference between the pre and post merger and Acquisition Performance with respect to Return on Net Worth.

H1 (Alternative Hypothesis) - There is significant difference between the pre and post merger and Acquisition Performance with respect to Return on Net Worth.

TOOLS FOR ANALYSIS Ratios and percentages are used for the analysis of data and for better understanding, Bar Diagrams are used for the presentation of the data. To test the hypothesis, `t’ test is employed. The performance of the banks before and after the mergers and acquisitions has been compared. For the pre merger, the combined ratios of both the banks are considered and for the post merger the ratios of acquiring bank were used. To analyze the financial performance of the Banks before and after merger, a few ratios like Net

Profit Margin, Return on Capital Employed Ratio, Earning per Share (Rs), Return on Net Worth,

Total Assets Turnover Ratio, and Total Debt Equity Ratio, have been calculated and the same are

presented in Table 5 and Table 11 for IOB Bank and the OBC respectively.

Ratios: Following ratios are considered for financial performance comparison. (1) Net Profit Margin = Net Profit/Sales × 100 (2) Return on Capital Employed =Net Profit (before Int. &Tax)/Total Capital Employed × 100 (3) Total Assets Turnover Ratio= Turnover/Total Assets × 100 (4) Earnings per Share (Rs.) =Net Profit (after Int. &Tax. & Pref. Divi.)/ No. Equity Shares (5)Total Debt Equity Ratio = Total Debt/ Share Holder Equity (6) Return on Net Worth = Net Profit / Net Worth × 100

Table 1: Merger Dates

Sr No.

Bidder Bank Target Bank Date of Merger Announcement

Case 1 Indian Overseas Bank Ltd. Bharat Overseas Bank Ltd.

March 31, 2007

Case 2 Oriental Bank Of Commerce Global Trust Bank Ltd.

August 14, 2004



Table 2: Profile of Indian Overseas Bank Ltd. and Bharat Overseas Bank for the last four Financial years before the Merger announcement.

Financial Ratios (in Percentage)

Indian Overseas Bank (Bidder Bank)

Bharat Overseas Ltd. (Target Bank)

Financial Ratios

31-03-2003

31-03-2004

31-03-2005

31-03-2006

31-03-2003

31-03-2004

31-03-2005

31-03-2006

Net Profit Margin

10.52 11.40 14.27 16.44 13.45 15.31 9.20 2.11

Return on Capital

Employed

186.94 149.51 125.82 107.40 108.77 92.51 69.71 75.69

Total Assets turnover

Ratio

0.10 0.10 0.09 0.09 3.81 3.44 2.74 3.09

Earnings Per Share (Rs.)

9.35 9.41 11.96 14.38 181.09 222.72 127.31 3.54

Return on Net Worth

32.10 30.25 29.85 28.55 20.32 20.37 10.10 2.72

Total Debt Equity Ratio

25.14 21.49 18.18 16.54 15.32 14.35 13.86 15.86

(Source: - Compilation from financial statement of Banks retrieved, www.moneycontrol.com)

Table 3: Combined Profile of Indian Overseas Bank and Bharat Overseas Bank Ltd. for Last Four Financial Years Before Merger announcement.


Combined Data of Indian Overseas Bank and Bharat Overseas Bank Ltd.

Parameters As on 31-03-2003

As on 31-03-2004

As on 31-03-2005

As on 31-03-2006

Net Profit Margin 11.985 13.355 11.735 9.275 Return on Capital Employed 147.855 121.01 97.765 91.545

Total Assets Turnover 1.955 1.77 1.82 1.995 Earnings Per Share (Rs.) 95.22 116.065 69.635 8.96

Return on Net Worth 26.21 25.31 19.975 15.635 Debt Equity Ratio 20.23 17.92 16.02 16.20




Table 4: Profile of Indian Overseas Bank (Bidder Bank) for the next Five Financial Years Ending after Merger Announcement. Financial Ratios (in Percentage)

Indian Overseas Bank (Bidder Bank)


As on 31-03-2009

As on 31-03-2010

As on 31-3-2011

Net Profit Margin 13.94 11.87 6.14 8.04 Return on Capital Employed 146.37 145.71 126.87 116.17

Total Assets Turnover 0.09 0.10 0.09 0.08 Earnings Per Share (Rs.) 22.07 24.34 12.98 17.33

Return on Net Worth 25.35 22.31 11.13 13.13 Debt Equity Ratio 17.78 16.85 17.45 17.79


Table 5: shows various ratios in %.

INDIAN OVERSEAS BANK LTD.

YEARS 2003 PRE

2004 PRE

2005 PRE

2006 PRE

2007 2008 POST

2009 POST

2010 POST

2011 POST

NET PROFIT MARGIN

11.985 13.355 11.735 9.275 0 13.94 11.87 6.14 8.04

RETURN ON CAPITAL

EMPLOYED

147.855 121.01 97.765 91.545 0 146.37 145.71 126.87 116.17

TOTAL ASSETS

TURN OVER RATIO

1.955 1.77 1.82 1.995 0 0.09 0.1 0.09 0.08

EARNING PER SHARE

(RS.)

95.22 116.065 69.635 8.96 0 22.07 24.34 12.98 17.33

RETURN ON NET WORTH

(IN %)

26.21 25.31 19.975 15.635 0 25.35 22.31 11.13 13.13

TOTAL DEBT-

EQUITY RATIO (IN %)

20.23 17.92 16.02 16.2 0 17.78 16.85 17.45 17.79




Table 6: Mean and Standard Deviation of Pre-merger and Post-merger Ratios of Combined Banks (Indian Overseas Bank and Bharat Overseas Bank Ltd.) and acquiring Bank (IOB) Financial Ratios (in Percentage)

Mean Standard Deviation t – value Significant (two tail test)

Net Profit

Margin

Pre 11.5875 2.883825

1.027338088

0.379851809

Post 9.9975 12.587225

Return on

Capital Employe

d

Pre 114.54375

653.9735729

-2.75353512

0.070532999

Post 133.78 219.5644

Total Assets

Turnover Ratio

Pre 1.885 0.011483333

31.42600626

0.0000707982185704521

Post 0.09 0.0000666666666666667

Earnings Per

Share (Rs.)

Pre 72.47 2153.214617

2.448347782

0.091814445

Post 19.18 25.6134

Return on Net Worth

Pre 21.7825 24.368275

2.182900053

0.11703032

Post 17.98 47.83693333

Total Debt

Equity Ratio

Pre 17.5925 3.825158333

0.126820796

0.907104978

Post 17.4675 0.194425

(Data compiled with the help SPSS)

INTERPRETATION:

• Here Significant value is > 0.05 so null Hypothesis will be accepted i.e There is no

significant difference between the pre and post merger and acquisition of selected

banks with reference to Net Profit Margin.



banks with reference to Return on Capital Employed.

• Here Significant value is < 0.05 so null Hypothesis will be rejected and alternative hypothesis will be accepted i.e There is a significant difference between the pre and post merger and acquisition of selected banks with reference to Total Assets Turnover Ratio.



• Here Significant value is > 0.05 so null Hypothesis will be accepted i.e. there is no significant difference between the pre and post merger and acquisition of selected banks with reference to Earnings Per Share (Rs.).

٠ Here Significant value is > 0.05 so null Hypothesis will be accepted. i.e. there is no significance difference between the pre and post merger and acquisition of selected banks with reference to Return On Net Worth.

• Here Significant value is > 0.05 so null Hypothesis will be accepted i.e There is no significant difference between the pre and post merger and acquisition of selected banks with reference to Total Debt Equity Ratio.

TABLES FOR STUDY- CASE NO. 2 ORIENTAL BANK OF COMMERCE LTD V/S GLOBAL TRUST BANK LTD.

Table 7: Merger Dates

Sr No.

Bidder Bank Target Bank Date of Merger Announcement

1 ORIENTAL BANK OF COMMERCE GLOBAL TRUST BANK LTD.

AUGUST 14, 2004

Table 8: Profile of Oriented Bank of Commerce and Global Trust Bank Ltd. for the Last Four years is ending before the Merger Announcement. Financial Ratios (in Percentage)

Financial Ratios

Oriental Bank of Commerce (Bidder Bank)

Global Trust Bank Ltd. (Target Bank)

As on 31-03-2000

As on 31-03-2001

As on 31-03-2002

As on 31-03-2003

As on 31-03-2000

As on 31-03-2001

As on 31-03-2002

As on 31-03-2003

Net Profit Margin

10.39 6.70 9.12 11.89 12.38 7.56 2.17 -37.21

Return on Capital

Employed

141.69 140.15 147.19 134.72 124.25 132.17 221.49 132.17

Total Assets Turnover

Ratio

10.92 11.22 10.98 11.36 11.66 11.22 13.01 9.84


14.47 10.54 16.54 23.73 8.74 6.47 3.32 0.00

Return on Net Worth

19.50 13.63 20.23 24.51 26.54 14.39 4.22 0.00


15.47 15.94 17.59 14.13 11.74 13.14 16.34 25.87

(Source: www.moneycontrol.com)



Table 9: Combined Profile of Oriental Bank of commerce and Global Trust Bank Ltd. for the last four financial years was ending before the Merger Announcement. Financial Ratios

(in Percentage)

Financial Ratios Combined Data of Oriental Bank of Commerce and Global Trust Bank Ltd.


As on 31-03-2001

As on 31-03-2002

As on 31-03-2003

Net Profit Margin 11.39 7.13 5.65 -12.66

Return on Capital Employed 132.97 136.16 184.34 133.445

Total Assets Turnover 11.29 11.22 12.00 10.60

Earnings Per Share (Rs.) 11.61 8.51 9.93 11.87

Return on Net Worth 23.02 14.01 12.225 12.225

Debt Equity Ratio 13.61 14.54 16.965 20


Table 10: Profile of Oriental Bank of Commerce Ltd (Bidder Bank) for the next four financial years which were ending after the Merger Announcement. (i.e. 14 August, 2004)


Financial Ratios

Oriental Bank of Commerce


As on 31-03-2006

As on 31-03-2007

As on 31-03-2008

Net Profit Margin 19.44 12.54 15.35 11.38

Return on Capital Employed 87.09 67.27 80.04 111.07

Total Assets Turnover 0.08 0.08 0.08 0.09

Earnings Per Share (Rs.) 37.71 22.24 23.18 14.10

Return on Net Worth 24.19 13.11 10.78 14.55

Debt Equity Ratio 13.33 14.38 9.71 13.48




Table11: different ratios calculated for pre merger and post Merger period. ORIENTAL BANK OF COMMERCE

YEARS 2000 PRE

2001 PRE

2002 PRE

2003 PRE

2004 2005 POST

2006 POST

2007 POST

2008 POST

NET PROFIT MARGIN

11.39 7.13 5.65 -12.66 0 19.44 12.54 15.35 11.38

RETURN ON CAPITAL

EMPLOYED

132.97 136.16 184.34 133.445 0 87.09 67.27 80.04 111.07

TOTAL ASSETS

TURN OVER RATIO

11.29 11.22 12 10.6 0 0.08 0.08 0.08 0.09

EARNING PER SHARE

(RS)

11.61 8.51 9.93 11.87 0 37.71 22.24 23.18 14.1

RETURN ON NET WORTH

23.02 14.01 12.225 12.255 0 24.19 13.11 10.78 14.55

TOTAL DEBT-

EQUITY RATIO

13.61 14.54 16.965 20 0 13.33 14.38 9.71 13.48


Table 12: Mean and Standard Deviation of Pre-merger and Post-merger Ratios of Combined Banks (Oriental Bank of Commerce and Global Trust Bank Ltd.) and Acquiring

Bank (Oriental Bank of Commerce) Financial Ratios (in Percentage)

Mean

Standard Deviation

t – value

Significant

(two tail test)

Net Profit Margin

Pre 2.88 113.2156917 2.82665341

0.066372673 Post 14.68 12.85869167

Return on Capital

Employed

Pre 146.73 630.6886063

3.458158195

0.040694569

Post 86.37 338.4957583

Total Assets Turnover Ratio

Pre 11.28 0.328158333 38.81751175

3.76141 Post 0.08 0.000025


Pre 10.48 2.464133333 -2.83505972 0.065914185

Post 24.31 96.45529167

Return on Net Worth

Pre 15.38 26.71805 -0.32584442 0.765947481

Post 15.66 34.76995833


Pre 16.28 8.15470625

1.840619931

0.162937325

Post 12.73 4.2551

(Data compiled with the help of SPSS)



Interpretation: • Here Significant value is > 0.05 so null Hypothesis will be accepted i.e there is no


banks with reference to Net Profit Margin.

• Here Significant value is < 0.05 so null Hypothesis will be rejected and alternative

hypothesis will be accepted i.e There is significant difference between the pre and post

merger and acquisition of selected banks with reference to Return on Capital

Employed.



banks with reference to Total Assets Turnover Ratio.



banks with reference to Earnings Per Share (Rs.).

• Here Significant value is > 0.05 so null Hypothesis will be accepted. i.e There is no

significance difference between the pre and post merger and acquisition of selected

banks with reference to Return On Net Worth.



banks with reference to Total Debt Equity Ratio.

Summary, Conclusion and Recommendation:

This Research paper is intended to study the”pre and post Mergers and Acquisitions Performance of Selected Banks”, financial ratios are one of the best ways to see whether the banks are doing well or not. What are the plus points that a bank will get after merger and what competencies can be created by the mergers. In order to study that impact a small study has been conducted.

What I have found that after banking sector reforms, the merger process has got transparent, in order to check the performance on merged bank, we used paired compared t- tests and following are the conclusions of the tests:-

As far as, the Ratios of Combined Banks (Indian Overseas Bank and Bharat Overseas Bank Ltd.) and acquiring Bank (IOB) are concerned:-

• There is no significant difference between the pre and post merger and acquisition of

selected banks with reference to Net Profit Margin.


selected banks with reference to Return on Capital Employed.



• There is a significant difference between the pre and post merger and acquisition of

selected banks with reference to Total Assets Turnover Ratio.


selected banks with reference to Earnings Per Share (Rs.).

• There is no significance difference between the pre and post merger and acquisition of

selected banks with reference to Return On Net Worth.


selected banks with reference to Total Debt Equity Ratio.

As far as, the Ratios of Combined Banks (Oriental Bank of Commerce and Global Trust Bank Ltd.) and Acquiring Bank (Oriental Bank of Commerce) are concerned:-


selected banks with reference to Net Profit Margin.

• There is significant difference between the pre and post merger and acquisition of

selected banks with reference to Return on Capital Employed.


selected banks with reference to Total Assets Turnover Ratio.


selected banks with reference to Earnings Per Share (Rs.).

• There is no significance difference between the pre and post merger and acquisition of

selected banks with reference to Return On Net Worth.


selected banks with reference to Total Debt Equity Ratio.

LIMITATIONS OF THE STUDIES

The following are the limitations of the studies:-

(1)This research study ignores the impact of possible differences in accounting methods

adopted by different companies.

(2) This research study is based on secondary data available from various sources.

(3) This research study has been taken from the period Pre merger or Post merger

depending upon date of merger.

(4) It may possible that some time data may not be available for recent merger took place

after 2010 so research could be limited to post merger data available.

(5) This research study is limited to the companies which are merged.



(6) Findings and suggestions on proposed research study may not be suitable or

convenient for the comparisons of the companies which are not merged.

(7) Non-availability of useful data from various sources on some aspects, may restrict the

research study to certain limitations.

REFERENCES

Selvam, M. (2007), Mergers and Acquisitions in the Banking Sector- The Indian Scenario.

S.Viswanathan (Printers & Publishers) Pvt. Ltd.

Madan Mohan Dutta and Suman Kumar Dawn. (2012), “Merger and Acquisitions in

Indian Banks after Liberalization: An Analysis,” Indian Journal of Commerce and

Management Studies, Vol. 3, No.1, (January), pp. 108-14.

Vardhana Pawaskar, (2001), Effect of Mergers on Corporate Performance in India. Vikalpa,

26 (1): 19-32.

Dr. Neena Sinha, Dr. K.P.Kaushik & Ms. Timcy Chaudhary,(2010), “Measuring Post

Merger and Acquisition Performance: An Investigation of Select Financial Sector

Organizations in India”, International Journal of Economics and Finance Vol. 2, No. 4;

November 2010

Anup Agrawal Jeffrey F. Jaffe (1999), “The Post-merger Performance Puzzle”, Journal

of Corporate Finance, USA

www.moneycontrol.com

www.rbi.org

www.cmie.com

www.nseindia.com

www.bseindia.com



ManaComm: An International Research Journal of Management and Commerce ISSN: 2454 - 2733 Vol. 01 Issue. 04 December 2015 Paper ID: MC01040292015

ROLE OF WOMEN ENTREPRENEURSHIP IN INDIA ECONOMY

Ishwarbhai R. Patel, R. R. Mehta College of Science & C. L. Prikh Commerce College, Palanpur (Gujarat)

INTRODUCTION Entrepreneurs play very important role in socio-economic welfare of the country. They identify the needs of the business, purchase the other factors of production and coordinate them for some productive purposes. They are the innovators, researchers and risk-takers of the company. Today business is built around human capital and women are one of the valuable factors. Globalization and Liberalization of market encouraged women to come forward to become an entrepreneur and start new industries. A role of modern women is not confined to the traditional role as a mother and housewife; it has and is undergoing changes. As woman gets educated she begins to think of herself as an independent person, she becomes aware of her own identity, potentials and decision making capabilities. Interested women with creative and innovative ideas are coming forward to start the small and medium sized enterprises. It is a common assumption that majority of women in India are economically non-productive as they are not involved in activities that are financially remunerative. But this trend is gradually changing. Today’s women are taking more and more professional and technical degrees to cope up with market need and are flourishing as designers, interior decorators, exporters, publishers, garment manufacturers and still exploring new avenues of economic participation. It is perhaps for these reasons that Government Bodies, NGO’s, Social Scientists, Researchers ,and International Agencies have started showing interest in the issues related to entrepreneurship among women in India. At the same time, it is also recognized that their challenges are immense and complex. For women entrepreneurs, starting and operating a business involves considerable risks and difficulties, because in the Indian social environment women has always lived as subordinate to men. There have been noticeable changes in the socio-psycho-cultural and economic norms of our society due to liberalized policy of the government of India, increase in the education levels of women and increased social awareness in respect of the role women plays in the society. It has now been recognized that to promote self-employment and to reduce the incidence of poverty, some drastic efforts have to be made to accelerate self-employment of women in various sectors. OBJECTIVES OF THE STUDY The present study aims at fulfilling the following objectives. To explore the reasons why women start business of their own. To study the characteristics of women entrepreneurs.



To critically examine the types of issues & problems they encounter in order to reach the level of success. To suggest different remedial measures in helping and accelerating women entrepreneurs. REASONS FOR WOMEN BECOMING ENTREPRENEURS The glass ceilings are shattered and women are found indulged in every line of business. The entry of women into business in India is traced out as an extension of their kitchen activities, mainly 3P‘s, Pickle, Powder and Pappad. But with the spread of education and passage of time women started shifting from 3P‘s to modern 3E‘s i.e., Energy, Electronics and Engineering. Skill, knowledge and adaptability in business are the main reasons for women to emerge into business ventures.. A strong desire to do something positive is an inbuilt quality of entrepreneurial women, who is capable of contributing values in both family and social life. With the advent of media, women are aware of their own traits, rights and also the work situations. The challenges and opportunities provided to the women of digital era are growing rapidly that the job seekers are turning into job creators. Many women start a business due to some traumatic event, such as divorce, discrimination due to pregnancy or the corporate glass ceiling, the health of a family member, or economic reasons such as a layoff. But a new talent pool of women entrepreneurs is forming today, as more women opt to leave corporate world to chart their own destinies: To achieve for independence & flexibility, To better balance work & family, To make optimum use of technical education & qualifications. CHARACTERISTICS OF WOMEN ENTREPRENEURS Women entrepreneurs tend to be highly motivated &self directed, they also exhibit a high internal locus of control & achievement. Researchers contend that women business owners possess certain specific characteristics that promote their creativity and generate new ideas and ways of doing things. One key characteristic of all successful entrepreneurs is that they have vision. They find a niche in a particular market and find a way to fill it. They give life to their vision/business and eitherpersonally or finding a way to make it happen. This “vision” keeps them focused and able to bring product or service to the market. Entrepreneurs are also very self-motivated. They don’t wait for someone to tell them to get to work. They are self-propelled and do the work because they want to. They know that it takes discipline and self-sacrifice to make their dreams come true. Think hard before you decided to quit your present job and start your own business. It’s doable but not without many sacrifices. Still, the rewards can be great if you’re willing to put in the effort. Sharp Communication skills, Good interpersonal skills, Consensus building competencies,.Very High level of Emotional Quotient, Good decision making capabilities. PROBLEMS OF WOMEN ENTREPRENEURSHIP IN INDIA

PROBLEM OF FINANCE: Finance is regarded as “life blood” for any enterprise, be it big or small. However, women entrepreneurs suffer from shortage of finance on two counts. Firstly, women do not generally have property on their names to use them as collateral for obtaining funds from external sources. Thus, their access to the external sources of funds is limited. Secondly, the banks also consider women less credit- worthy and discourage women borrowers on the belief that they can at any time leave their business. Given such situation, women entrepreneurs are bound to rely on their own savings, if any and loans from friends and relatives



who are expectedly meager and negligible. Thus, women enterprises fail due to the shortage of finance. SCARCITY OF RAW MATERIAL: Most of the women enterprises are plagued by the scarcity of raw material and necessary inputs. Added to this are the high prices of raw material, on the other. FAMILY TIES: In India, it is mainly a woman’s duty to look after the children and other members of the family. Man plays a secondary role only. In case of married woman, she has to strike a fine balance between her business and family. Her total involvement in family leaves little or no energy and time to devote for business. Support and approval of husbands seem necessary condition or women’s entry in to business. Accordingly, the educational level and family background of husbands positively influence women’s entry into business activities. LACK OF EDUCATION: In India, majority of women are still illiterate. Illiteracy is the root cause of socio- economic problems. Due to the lack of education, women are not aware of business, technology and market knowledge. Also, lack of education cases low achievement motivation among women. Thus, lack of education creates problems for women in the setting up and running of business enterprises. MALE DOMINATED SOCIETY: Male chauvinism is till the order of the day in India. The constitution of India speaks of equality between gender. But, in practice women are looked upon LOW RISK- BEARING ABILITY: Women in India lead a protected life. They are less educated and economically not self- dependent. All these reduce their ability to bear risk involved in running an enterprise. Risk bearing is an essential requisite of a successful entrepreneur. In addition to above problems, inadequate infra structural facilities, shortage of power, high cost of production, social attitude, low need for achievement and socio- economic constraints also hold the women back from entering into business. FINANCIAL PROBLEMS: Finance is a most important aspect of any business. Nonavailability of long-term finance, regular and frequent need of working capital and long procedure to avail financial help are found to be the financial problems faced by women. MARKETING PROBLEMS: During the process of marketing of products women entrepreneurs faced certain problems viz. poor location of shop, lack of transport facility and tough competition from larger and established units. PRODUCTION PROBLEMS: Production problems faced by maximum women are nonavailability of raw material. Non-availability of raw material is one of the reasons to the slow growth of women entrepreneurs. Other production problems are non-availability of machine or equipment, lack of training facility and nonavailability of labour, high cost of required machine or equipment. HEALTH PROBLEMS: Major health problems faced by women entrepreneurs were tension, backache, eyestrain fatigue and headache. It is found that women feeling the problem of feeling fatigued after returning home, lack of rest and sleep and heavy schedule. WOMEN EMPOWERMENT AND PLANNING PROCESS IN INDIA The all round development of women has been one of the focal point of planning process in India. The First Five-Year Plan (1951-56) envisaged a number of welfare measures for women. Establishment of the Central Social Welfare Board, organization of MahilaMandals and the Community Development Programmes were a few steps in this direction. In the Second Five-



Year Plan (1956-61), the empowerment of women was closely linked with the overall approach of intensive agricultural development programmes. The Third and Fourth Five-Year Plans (1961-66 and 1969-74) supported female education as a major welfare measure. GOVERNMENT SCHEMES FOR WOMEN EMPOWERMENT The government programme for women development began as early as 1954 in India but the actual participation began only in 1974. At present, the Government of India has over 27 schemes for women operated by different departments and ministries. Some of these are: Integrated Rural Development Programme (IRDP) Training of Rural Youth for SelfEmployment (TRYSEM) Prime Minister’s RojgarYojana (PMRY) Women’s Development Corporation Scheme (WDCS) Working Women’s Forum Indira MahilaYojana Indira Mahila Kendra MahilaSamitiYojana RashtriyaMahilaKosh Khadi and Village Industries SUGGESTIONS FOR THE GROWTH OF WOMEN ENTREPRENEURS Right efforts from all areas are required in the development of women entrepreneurs and their greater participation in the entrepreneurial activities. The following measures are suggested to empower the women to seize various opportunities and face challenges in business. There should be a continuous attempt to inspire, encourage, motivate and cooperate women entrepreneurs. An Awareness programme should be conducted on a mass scale with the intention of creating awareness among women about the various areas to conduct business. Attempts should be there to enhance the standards of education of women in general as well making effective provisions for their training, practical experience and personality development programmes, to improvise their over-all personality standards. Organize training programmes to develop professional competencies in managerial, leadership, marketing, financial, production process, profit planning, maintaining books of accounts and other skills. This will encourage women to undertake business. Vocational training to be extended to women community that enables them to understand the production process and production management. Educational institutes should tie up with various government and non-government agencies to assist in entrepreneurship development mainly to plan business projects. International, National, Local trade fairs, Industrial exhibitions, seminars and conferences should be organized to help women to facilitate interaction with other women entrepreneurs. Women in business should be offered soft loans & subsides for encouraging them into industrial activities. The financial institutions should provide more working capital assistance both for small scale venture and large scale ventures. Making provision of micro credit system and enterprise credit system to the women entrepreneurs at local level.



CONCLUSION The emergence of women entrepreneurs and their contribution to the national economy is quite visible in India. The glass ceilings are shattered and women are found to be indulged in every line of business from papad to power cables. Even though we have many successful Women Entrepreneurs in our country, but as we have a male dominated culture there are many challenges which women entrepreneurs face from family & Society. Since 1980 the government of India has shown increasing concern for women issues through a variety of legislations promoting the education and political participation of women. There should also be efforts from all sectors to encourage the economic participation of women. Along with adequate training, institutional and financial support as a composite package needs to be encouraged. It can be said that today we are in a better position wherein women participation in the field of entrepreneurship is increasing at considerable rate, efforts are being taken at the economy as well as global level to enhance woman’s involvement in the enterprise sector. This is mainly because of attitude change, diverted conservative mindset of society to modern one, daring and risk-taking abilities of women, support and cooperation by society members, changes and relaxations in government policies, granting various upliftment schemes to women entrepreneurs etc. REFERENCES

Bhatia Anju (2000) “ Women Development and NGOs”. Rawat Publication, New Delhi. BharatiCollen and Indira Parikh (August 2005), „A Reflection of Indian Women In the

Entrepreneurial World., Indian Institute of Management, Ahmadabad, Working paper Number 2005-08-07.

David H .Holt (2003), „Entrepreneurship New Venture Creation., prentice-Hall India. Hattangadi V, (2007), „Entrepreneurship –Need of the hour.Himalaya Publishing House. Helene Ahl “Why Research on Women Entrepreneurs Needs New Directions”,

Entrepreneurship Theory and Practice Volume 30 Issue 5. Lalita .N, (2005) “Micro Finance and Rural Development”, Gandhi gram Rural Institute,

Gandhi gram, Dindigal, Tamilnadu. Ram Naresh Thakur (2009). “Rural Women Empowerment in India” in Empowerment of

Rural Women in India Kanishka Publishers, New Delhi.



ManaComm: An International Research Journal of Management and Commerce ISSN: 2454 - 2733 Vol. 01 Issue. 04 December 2015 Paper ID: MC01040302015

THE ROLE OF FOREIGN INSTITUTIONAL INVESTOR’S IN INDIAN STOCK MARKET Amit N. Ratnotar (Research scholar) & Dr. K. S. Dave (Research Guide) MEANING OF RESEARCH Research means “know about new things”. Sometimes, it may refer to scientific and systematic search pertinent information on specific topic. In fact research is an art of scientific investigation. Research can use the scientific method, but need not do so. Research can also be said as a process that is followed by a person to answer either his/her own queries or somebody else queries about a particular object, person, subject etc. INTRODUCTION Foreign Institutional Investors are said to be the driver of the market. Those are the one cause behind the rise and fall of SENSEX. FII investment trends tell us about many effects that the Indian market is experiencing. The companies in which they investment are getting overvalued. Whenever FII find any trouble they withdraw their investments. The empirical investigation of the course of causation between FIIs activities and Indian stock market performance over the time period from the year 2000-01 to 2014-15 for 15 years has revealed that FIIs activities are caused by rather than causing the Indian Stock Indices. Researcher has used the BSE SENSEX for the study and investigated the effect of FIIs investments on volatility of BSE SENSEX for the year 2000-01 to the year 2014-15. METHODOLOGIES APPLIED Researcher defines various existing literatures related with the study and problems of the title, various objective frames by the researcher, which leads to research phenomenon. The study is based on the secondary data and it collected from secondary source. There are two type of data used for the study first FIIs investments as independent variable and Indian stock indexes BSE SENSEX as dependent variables. In data classification, researcher has endeavoured 15 years Net FIIs investments in terms Total Investment on year wise and its impact on BSE SENSEX for the period from 2000-01 to 2014-15. Researcher employed Statistical tools Coefficient of correlation and coefficient of determination employed in the variables for purpose of measure the effect of independent variables FIIs investments on dependent variables Indian stock indexes BSE SENSEX and study the association with independent and dependent variables. Regression residual model exploited to examine cause and effect relationship between FIIs investment and Indian stock indexes BSE SENSEX. The regression analysis predicts the performance of Indian stock index BSE SENSEX owing to FIIs investment in Equity, Debt and Total investment trend for the period from 2000-01 to 2014-15. F-test established the overall significance of the regression model. This F-test determines endure



regression coefficients are different from zero. Regression provides only one predictor and only one regression coefficient test. The regression coefficient is the slop of the regression line, the F-test for overall significance is testing the same thing as the t-test in regression. Consequently, methodologies applied in this research study to investigate the main objectives that is cause of volatility in Indian stock indexes; BSE SENSEX. Due to the effect of FIIs investments in Indian stock market, there is a suitable result found with proper methodologies employed in this research study. LITERATURE REVIEW In the absence of adequate empirical evidence, the emergence of FIIs in stock market has been a debatable issue over the posh lobby of the Parliament to common man. While it is generally held that FII flows benefit the economies of recipients‟ countries, policy makers worldwide have been more than a little uneasy about such investment. FII flows often referred, as “hot money” is notoriously volatile compared to other forms of capital flows. Investors are known to pull back portfolio investments at the slightest hint of trouble in the host country often leading to disastrous consequences to its economy. Following reviews is considered before present study by the researcher. Panda, Chkradhara (2005), examined the impact of FIIs and mutual fund investments on Indian stock market by using Vector Auto regression (VAR) analysis and Granger Causality Test on data of NSE and BSE for the period from Oct. 2003 to Mar. 2004 and found that the returns on Indian stock market indices were more affected by the mutual fund investment than FIIs investment. FIIs are found to follow positive feedback strategy and to have return chasing tendency. Dr Renuka Sharma1 & Dr. Karan Mehta (2012) the investment made by FIIs in any capital market has grabbed the attention of researchers to identify the relationship between the capital market performance and net inflow of FIIs. The present study is focused to examine the relationship in the movement of investment by foreign institutional investors and movement of Indian stock market. To conclude it can be said that the degree of relationship is very low in the capital flows by FIIs on Indian stock markets and movement in the stock market indices. But the performance of equity index of National Stock Exchange, i.e., S&P CNX Nifty has shown some drift in the findings obtained through previous results. Karan Walia ,Dr. Rimpi Walia ,Monika Jain(2012) On the basis of above discussion and data analysis, It is clear that the FIIs are influencing the Sensex movement to a greater extent. Further it is evident that the sensex has increased when there are positive inflows of FIIs and there were decrease in sensex when there were negative FII inflows. The Pearson correlation values indicate positive correlation between the foreign institutional investments and the movement of sensex (pearson’ correlation value is 0.746424196). Dr. Mamta Jain , Ms. Priyanka Laxmi Meena, Dr. T. N. Mathur (2012) On the basis of above discussion and data analysis, It is clear that the FIIs are influencing the sensex movement to a greater extent. Further it is evident that the sensex has increased when there are positive inflows of FIIs and there were decrease in sensex when there were negative FII inflows. The Pearson correlation values indicate positive correlation between the foreign institutional investments and the movement of sensex (pearson’ correlation value is 0.746424196). S. Suresh Babu ** Dr. M. Venkateswarlu (2013) The correlation between FII AND SENSEX comes out at about 0.68 which is significantly positive. That means each one rupee investment by



FII would move up Sensex by about 0.68 point. To sum up, we can safely say FIIs have been major drivers for Indian markets and would continue to remain so. OBJECTIVE OF THE STUDY The present study mainly aims to know the exact impact of FIIs on the Indian stock market. To study the impact on BSE SENSEX on the Total Investment made by FIIs during the period of 2000-01 TO 2014-15 Years wise Period of Study The study period is to be converted 15 years; from 2000-01 to 2014-15. Tools & Techniques For the present study, Regression Model in four Parts have been considered as a Tools and Techniques which are as follows (a) Overall Regression Equation’s Accuracy (Multiple R; R Square and Adjusted R Square) (b) Probability that this output was not by chance (ANOVA –Significance of F) (c) Individual Regression Coefficient and Y-Intercept Accuracy (d) Visual Analysis of Residuals (Graphical Presentation) HYPOTHESIS A hypothesis is a special proposition, formulated to be tested in a certain given situation as a part of research which states what the researcher is looking for the broader hypothesis for the research have been included as follows H0 : There is no significant impact on SENSEX for FII’s investment in India. H1 : There is significant impact on SENSEX for FII’s investment in India.

Table 1: Year Wise 2000- 01 To 2014 -15

Year FII’s TOTAL

Investment

SENSEX

2000-01 427.6 3604.38 2001-02 115363 3469.35 2002-03 31442 3048.72 2003-04 276031 5590.60 2004-05 202538.9 6492.82 2005-06 202267.5 11279.96 2006-07 146661 13072.1 2007-08 567521 15644.44 2008-09 -302604 9708.5 2009-10 872221 17527.77 2010-11 959991.43 19445.22 2011-12 475600.39 17404.2 2012-13 179776.1 18835.77 2013-14 47275 22386.27 2014-15 425482.96 27957.49



Table 2: Regression Statistics for the year 2000 – 01 to 2014 - 2015

Multiple R: This is the Correlation Coefficient. it show how strong the linear relationship is. For the period from 2000-01 to 2014-15 the value of it shows 0.484379528 that means 48.44 % relationship exist on FII’s Total Investment on SENSEX for the period 2000-01 to 2014-15. R Square:This is r2, the Co efficient of Determination which shows that how many points fall on the regression model that means how well the regression line approximates the real data. For the Period from 2000-01 to 2014-15 the value of it shows 0.234623527 that means 23.46% variation of y- values around the mean are explained by the x-values. In other words, 34.85% of the values fit the model. Adjusted R Square: This is quoted most often when explaining the accuracy of the regression equation. Adjusted R Square is more conservative the R Square because it is always less than R Square. For the year from 2000-01 to 2014-15 the value of it shows 0.175748414 that means 17.58% Standard Error of the Regression: An estimate of the standard deviation of the error for population mean. This is not the same as the Standard Error in Descriptive Statistics. The Standard Error of the regression is the precision that the regression coefficient is measured which is shown as 6962.940504 for the period from 2000-01 to 2014-15. Observation: Number of observations in the sample is 15

Table 3: ANOVA for Significance f for the year 2000-01-2014-15 Significance F: This indicates the probability that the Regression output could have been obtained by chance. A small significance of F say Ft confirms the validity of the Regression output. For the period from 2000-01 to 2014-15 Fc =3.985105 while Ft is 0.067288 that means 6.73% SENSEX have significant impact on FII’s Total Investment in India. Table: 4 Sensex Intercept Accuracy for Regression Model for the year 2000-01 to 2014 - 15

Coefficients Standard Error

T Statistics P-Value Lower 95%

Upper 95%

Intercept X 9910.820179 2382.313397 4.160166413 0.00112 4764.145 15057.5 Variable 0.01114413 0.005582468 1.996272858 0.067288 -0.00092 0.023204

The most important aspect of this section is that it show the linear regression equation (model) as y = mx + b (it means y = slope * x + Intercept) as per above Table slope m = 0.01114413 while intercept b = 9910.820179 Hence Linear Regression Equation is for the period from 2000-01 to

Multiple R 0.484379528 R Square 0.234623527 Adjusted R Square 0.175748414 Standard Error 6962.940504 Observations 15

DF SS MS Fc Ft Regression 1 193208030.1 193208030.1 3.98510

5 0.067288

Residual 13 630273025.9 48482540.46 Total 14 823481056



2014-15 is y = 0.01114413x + 9910.820179 this model is base for time series analysis for any period. Visual Analysis of Residuals (Graphical Presentation)

The residual are the difference between the Regression’s predicted value and the actual value of the output variable. It is plotted the Residuals on a scatterplot chart. Look the patterns in the scatterplot in the above chart. The more random (without patterns) and centred around zero the residuals appear to be, the more likely it is that the Regression equation is valid it can be seen that Residual patterns is little far to centre around zero on Y axis the residuals appear to be, the more likely it is that the Regression equation is valid which can be shown from the above chart during the period. CONCLUSION Accordingly to the analysis, it shows that FIIs activities exceedingly effect of performance of BSE SENSEX. Trend of FIIs Net investment lead to bull and bear trend toward Indian stock market. FIIs investments are the predictable variables for the Indian stock index. Both variables have positive association relationship. The profound result of this research study defined in the next section regarding Fundamental effect of FIIs investments activities on Indian stock market. REFERENCES Gujarati, Damodaran. Basic Econometrics (2004), Tata McGraw-Hill Publication, 5th edition Jeevanandanam (2004), C. Foreign Exchange and Risk Management, Sulltan Chand

Publication, 4th edition Yang, Y. (2005). "Can the strengths of AIC and BIC be shared", Biometrika Lukacs, P.M., et al. (2007). "Concerns regarding a call for pluralism of information theory

and hypothesis testing", Journal of Applied Ecology, www.bseindia.com www.moneycontrol.com www.sebi.org



ManaComm: An International Research Journal of Management and Commerce ISSN: 2454 - 2733 Vol. 01 Issue. 04 December 2015 Paper ID: MC01040302015 A STUDY ON THE ROLE OF COMMERCIAL BANKS IN THE DEVELOPMENT OF FARMERS THROUGH CROP LOAN IN SRIKAKULAM DISTRICT OF ANDHRA PRADESH Dr. Rima Shah, Visiting Lecturer, G. B. Shah College, Ahmedabad (Gujarat) INTRODUCTION Developing countries like India still have dominance of agriculture in their economy in terms of revenue generation as well as manpower employment. About 60% population engage in agriculture in India contributes 18% of GDP whereas the developed countries get only 2% of their GDP from agriculture. About 10% of the national exports originate in this sector it shows clearly that economic growth and development of India is closely tied to the development of agriculture. The agriculture sector, as such has been growing at a relatively low rate in comparison to other sector of the economy. Following data shows the sector wise growth rate of economy.

TABLE 1: YEAR ON YEAR GROWTH RATE IN PERCENT

Annual rates

2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12

Agriculture 5.1 4.2 5.8 -0.1 0.4 6.6 3.0

Industry 9.7 12.2 9.7 4.4 8.0 7.9 7.1

Services 11.0 10.1 10.3 10.1 10.1 9.4 10.0

Non-agriculture

10.5 10.8 10.1 8.2 9.4 8.9 9.0

Disguised unemployment and low productivity is the negative feature of this sector. Credit plays a vital role for the development of agriculture .As this sector generates low income or surplus due to increasing cost of inputs and implements. It results, Indian agriculture a way of sustenance not a surplus yielding work. Use of technology and high yielding varieties of seeds is still cry for mars for marginal and small farmers. Credit needs is beneficiary for all types of farmers. However it is inevitable for small and marginal farmers which constitute 78% of the total farmers. Small farmers having holding less than 2 hectares and marginal farmers having holding less than1 hectares. Economy of Indian farmer is dualistic where existence of two different segments. One segment of the economy is developed, makes use of modern technique of production and is usually market oriented and have a few problems regarding bank finance. The other segment is subsistence type of economy that makes use of primitive methods of production and has lot of problems in financing agriculture credit. Agricultural credit needs can be classified in three categories: 1. Short term 2. Medium term



3. Long term Short term needs varies between 3 months to 15 months it is seasonal and for purchasing of seeds, fertilizers, pesticides and payment of wages and operational expenses. This type of need is mostly required by all farmers. Medium term needs varies between 15 months to 5 years for the purchase of cattle, small agricultural implements, repairs and constructional wells etc. Long term needs are required for the permanent improvement on lands , digging tube wells, purchase of larger agricultural implements and machinery like tractor, harvesters etc and repayment of old debts . The period of such credit extends beyond 5 years. Commercial banks provide two types of loan i.e. crop loan and investment loan. Crop loan is a short term loan, stands due for repayment immediately after the harvesting of the crop whereas investment loan is a long term loan required for the purposes of capital formation on land. SOURCES OF AGRICULTURAL CREDITS The various sources of agricultural credit can be classified in two groups. 1) Non Institutional Agencies 2) Institutional Agencies Non institutional agencies include the local village money lender and their agents and Landlords. Institutional agencies includes cooperatives societies, commercial banks regional rural banks and NABARD

TABLE 2: SOURCES OF AGRICULTURAL CREDIT (IN %) Source 1952-53 1961-62 1970-71 1981-82 1991-92 2002-03 2010-11

Government 3.3 2.6 3.6 4 6.1 3 4

Cooperative societies

3.1 15.5 22.7 28.6 21.6 26 24.9

Commercial banks

.9 .6 4.0 28 33.7 27 43.1

Money lenders 90.9 67.4 68.4 38.8 32.7 41 21.9

Others 1.8 13.9 1.3 .6 5.9 3 6.1

Total 100 100 100 100 100 100 100

Source: Report of the all India rural credit review committee 1969, RBI bulletin and NSSO, May 2011, Economic Survey 2010-11 POLICY DEVELOPMENTS IN RESPECT OF AGRICULTURAL CREDIT Government and RBI views in respect of agricultural credit policy, can be divided into two phases 1. Period before 1970 Before 1970 the government was committed to the exclusive development of cooperatives as major source of institutional credit in rural areas. This period is called cooperative period. 2. Period since 1970 Two major developments occurred; the first was the green revolution in the wake of adoption of the new agricultural technology. The second was the nationalization of 14 major commercial banks in July 1969(six more commercial banks was nationalize in April 1980) .Multi agency Approach (MAA) was started regarding agricultural and rural credit. Commercial banks begin to



participate with full heart in agriculture finance. Two new institutions known as regional rural banks and the farmers service societies were also establish during this period. The following table shows the share of commercial banks and Co-operatives in India. TABLE 3: RELATIVE SHARE OF COMMERCIAL BANKS AND COOPERATIVES (%)

Year Co-operatives Commercial Banks

Regional Rural Banks

1970-71 100.0 - - 1980-81 61.6 38.4 - 1990-91 49.0 47.6 3.4 2000-01 39.4 52.6 8.0 2001-02 38.0 54.1 7.9 2002-03 34.1 57.2 8.7 2003-04 31.0 60.3 8.7 2004-05 25.0 65.0 10.0 2005-06 21.8 69.7 8.5 2009-10 19.6 71.8 8.6 Source: Economic survey of India The main objectives of the study are as 1. To study and review the present agricultural credit setup in India. 2. To evaluate the role and performance of commercial banks in the development of farmers. 3. To know the problems faced by farmers in getting agricultural finance by commercial banks. 4. To analyze the present multi institutional approach of agriculture in India. 5. On the basis of micro level study (sample area), suggest some new ideas and changes for macro planning. RESEARCH DESIGN AND METHODOLOGY Primary data were collected through Questionnaire from Sample area. Purposive discussion with bank staff is conducted regarding problems and remedial measures. Secondary data from various committees reports RBI bulletin are collected from our research point of view. A sample unit of 100 borrowers from sample area (Srikakulam) financed by Andhra Bank, Srikakulam is collected and this unit is further stratified in small, medium and big farmers in the ratio of 3:2:1. weightage is given according to their numbers in universe(total). Borrower farmers through questionnaires were asked about some problems mentioned in questionnaire to answer with preference order. Collected data are classified and tabulated and result is presented in tabular form Data received through questionnaire are analyzed in three categories A. Problems of marginal and small farmers B. Problems of medium farmers C. Problems of big farmers. Almost all marginal and small farmers responded about problems and there high rank problems are – high rate of interest on loan, lack of financial knowledge about bank products and plans and cumbersome process of getting loans and lack of security and collateral. Medium farmers responded there problems rank wise as cumbersome process of getting loan, lack of financial knowledge and high rate of interest. Bank staff is not cooperative it is also reported by this group. Responded top problems of big farmers are as – cumbersome process of getting loan, bank staff is not cooperative, lack of financial knowledge and high interest rate. Some common



problems faced by all the three groups of farmers are cumbersome process of getting loan, high rate of interest and bank staff is not cooperative.

TABLE 4: AGE OF THE RESPONDENTS Age in years Total number of

respondents % of the

respondents Below 25 18 18 26 to 35 34 34 36 to 45 30 30

46 and above 18 18 Total 100 100

Source: Primary data Interpretation: The above table shows that among 100 respondents 18% of the respondent are below 25 years of age, 34% of the respondents belong to the age group 26-35, 30% of the respondents belong to the age group of 36-45 while the remaining 18% of the respondents belong to the age group of 46 and above.

TABLE 5: MARITAL STATUS OF THE RESPONDENTS Marital status Total number of

respondents % of the respondents

Married 76 76 Unmarried 24 24

Total 100 100 Source: Primary data Interpretation: The above table clearly reveals that 76% of the respondents are married while the remaining 24% of the respondents are unmarried.

TABLE 6: EXPERIENCE OF THE RESPONDENTS Experience in years Total number of


3-5 years 22 22 5-10 years 40 40

10-15 years 18 18 above 15 years 10 10

Total 100 100 Source: Primary data Interpretation: From the above table it is inferred that among 50 respondents 22% of the respondents have 3-5 years of experience, 40% of the respondents have 5-10 years experience, 18% of the respondents have 10-15 years experience, while the remaining 10% of the respondents have more 15 years experience.

TABLE 7: SHOWING THE REASON FOR GETTING THE LOANS Reasons Total number of


Cultivation crops 26 26 Buying fertilizers 54 54

Deepening the well 12 12 Buying farming

equipments 08 08

Total 100 100 Source: Primary data Interpretation: From the above table it is understood that among 100 respondents 54 percent of the respondents conveyed that they borrow loan from buying fertilizers, 26 percent of the



respondents informed that they get loan for cultivation purpose, 12 percent of the respondents informed that they borrow loan for deepening the well while the remaining 8 percent of the respondents stated that they get loan for buying farming equipments.

TABLE 8: SHOWING THE REASON FOR GETTING THE LOANS Size of farmers Total number of

Respondents % of the respondents

Marginal and small 32 32 Medium 45 45

Large 23 23 Total 100 100

Source: Primary data Interpretation: The above table shows that among 100 respondents 45 percent of the respondents are medium size farmers, 32 percent of the respondents told that they do marginal and small medium agriculture, while the remaining 23 percent of the respondents informed that they have large size of land for doing agriculture.

TABLE 9: SHOWING THE AMOUNT OF LOAN BORROWED BY THE RESPONDENTS

Amount of loan Total number of respondents

% of the respondents

Less than Rs.50000 23 23 Rs.50001-100000 19 19

Rs-100001-300000 46 46 Above Rs.300000 12 12

Total 100 100 Source: Primary data Interpretation: The above table depicts that among 100 respondents 46 percent of the respondents borrowed between Rs.100001-300000 as the loan from the commercial banks, 23 percent of the respondents told that they borrowed less that Rs.50000 as the loan from the bank, 19 percent of the respondents informed that they borrowed between Rs.50001-100000 as the loan from the bank, while the remaining 12 percent of the respondents conveyed that they got above Rs.300000 as the loan from the bank.

TABLE 10: SHOWING THE RATE OF INTEREST CHARGED BY THE COMMERCIAL BANKS

Rate of interest % per annum

No. Of respondents % of the respondents

8-10 17 17 10-12 21 21 12-15 48 48

Above 15 14 14 Total 100 100

Source: Primary data Interpretation: The above table reveals that among 100 respondents 48 percent of the respondents informed that the interest rate 12-15%, 21 percent of the respondents expressed that the bank charges 10-12 percent interest for crop loan, 17 percent of the respondents conveyed that they pay 8-10 percent interest per annum while the remaining 14 percent of the respondents stated that they pay interest for loan @ rate of above 15% FINDINGS

Majority of (34%) the respondents belong to the age group 26-35 Most (76%) of the respondents are married.



Major proportions (40%) of the respondents have 5-10 years experience Majority of respondents (45 percent) are medium size farmers Most (54 percent) of the respondents conveyed that they borrow loan from buying

fertilizers, Considerable (46 percent) of the respondents borrowed between Rs.100001-300000 as the

loan from the commercial banks Most (48 percent) of the respondents informed that the interest rate 12-15% Majority (58%) of the respondents are not satisfied with the procedures for applying the

loan in the commercial banks Most of the respondents (67percent) gave good opinion about the approaches of the bank

employees. Most of the respondents (49 percent) informed that due to crop failure they could not

repay the loan in time. Most of the respondents (56 percent) are not satisfied with the time taken for getting the

loan. Most of the respondents (61 percent) informed that there is training provided by the bank

the farmers. Considerable portions (53 percent)of the respondents have informed that they are not

satisfied with subsidy scheme available to the farmers Majority of the respondents (42 %) are not satisfied with loan amount sanctioned to them.

SUGGESTIONS AND CONCLUSION There are many studies are in vogue at macro level on agricultural finance by commercial

banks but study at micro level about problems faced by farmers is out of vogue and need of the time for realistic approach. The present study is an attempt in this regard and will serve a base for future policy makers. All types of farmers have responded high interest rate and cumbersome process of getting loan. Policy makers should simplify the procedure of agriculture credit, interest rate for marginal and small farmers should be reduced and about problem of lack of cooperation by bank staff, training college of bank staff should provide compulsory rural oriented training. Education about financial knowledge (financial inclusion) to marginal and small farmers be spread through NGOs and educational institutions. Role of government should strictly be adhesive to infrastructure development like road, transport, irrigation and electricity Micro financing (bank linkage) is a right step for financial inclusion. Recovery process of loan must be elastic and based on reality. Fear factor about recovery process of bank amongst rural poor should be reduced through education and image of bank be presented in rural society as friend, philosopher and guide. REFERENCES

Misra & puri, “Indian Economy”, Himalaya Publishing House Mumbai 2010, pp.375- 377.

Bhole L M , “Financial Institutions and Markets”, 2010 pp. 295 Tata McGraw hill pub. Sharma , R. D. , “Farm financing by commercial banks—a regional study” , Bharat book

depot, Bhagalpur Reserve bank of India , trend and progress of banking in India . Mohan Rakesh, “Agricultural credit in India”, Economic & political weekly, March,2006. Reserve Bank of India (2004): “Report of the Advisory Committee on Flow of Credit to

Agriculture and Related Activities From the Banking System”. URL (www.rbi.org.in). Statistical Tables Relating to Banks in India (Various Issues), Reserve Bank of India,

Mumbai. URL: (www.rbi.org.in)

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