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380

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SAARJ Journal on
Banking & Insurance
Research (SJBIR)

( Dou b l e B li n d Ref e r e e d & Re vi e we d I n te r n a ti on a l J ou r n a l )

SR. PAGE DOI NUMBER

PARTICULAR
NO. NO.

DESIGN AND IMPLEMENTATION OF

EMPLOYEE MANAGEMENT SYSTEM
SOFTWARE (A CASE STUDY OF ECO
10.5958/2319-1422.2017.00020.0
BANK OF NIGERIA BAUCHI BRANCH
1. BAUCHI STATE) 5-13

Shafiu Muhammad Tahir, Aminu

Abdullahi Yari & Abdulhamid Tahir
Hamid

ISSUES OF THE DEVELOPMENT OF

COMPETITIVENESS AND THE 10.5958/2319-1422.2017.00021.2
2. PROSPECTS OF SPECIALIZATION IN 14-19
RICE FARMS

Ibragimov A.G. & Durmanov A.Sh.

MONETARY MOBILIZATION OF
COMMERCIAL BANK WITH SPECIAL
REFERENCE TO EASTERN REGION OF 10.5958/2319-1422.2017.00022.4
INDIA
3. 20-28
Dr.S.Ganapathy,(Mrs)Thangam
Alagarsamy & Mugesh Kannan
Raguraman

DETERMINANTS OF NONPERFORMING
LOANS: A STUDY OF LICENSED
DOMESTIC COMMERCIAL BANKS IN 10.5958/2319-1422.2017.00023.6
4. SRI LANKA 29-38

Ananda sayanan.S & Jalatharini

Rajaratnam

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COMPETITIVE POSITION AND TREND

ANALYSIS OFCOMMERCIAL BANKS IN
5. NEPAL 39-46
10.5958/2319-1422.2017.00024.8

Kapil Khanal

A STUDY OF DETERMINANTS OF
CONSUMERS’ PERCEIVED RISK IN 10.5958/2319-1422.2017.00025.X
6. 47-57
E-BANKING SERVICES

Dr. A. Joseph Xavier & Ms. M. Kala Devi

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ISSN: 2319-1422 Vol 6, Issue 5, September. 2017 Impact Factor SJIF =2.380

SAARJ Journal on
Banking & Insurance
Research (SJBIR)

( Dou b l e B li n d Ref e r e e d & Re vi e we d I n te r n a ti on a l J ou r n a l )

DOI NUMBER: 10.5958/2319-1422.2017.00020.0

DESIGN AND IMPLEMENTATION OF EMPLOYEE MANAGEMENT
SYSTEM SOFTWARE (A CASE STUDY OF ECO BANK OF NIGERIA
BAUCHI BRANCH BAUCHI STATE)
Shafiu Muhammad Tahir*; Aminu Abdullahi Yari**; Abdulhamid Tahir Hamid***

*Department of Engineering & Technology,

Sunrise University Alwar,
Rajasthan, INDIA.
Email id: [email protected]
**Department of Computer Science and Information Technology
Kebbi State University of Science and Technology, NIGERIA
Email id: [email protected]
***Department of Engineering & Technology,
Sunrise University Alwar,
Rajasthan, INDIA.
Email id: [email protected]
______________________________________________________________________________
ABSTRACT

This Research report includes a development presentation of an Employee system for managing
the staff data within a small company or organization. The work addresses limitations identified
with manual method of handling records of employees in a firm by providing a better platform
to eliminate fraud, corruption, file hiding and misplacement, records falsification, duplication,
fragmentation, inconsistencies and other vices attendant with manual method of handling
employee records. Employee management system software is a user friendly package that gives
one the fit to accurately monitor employees' records effortless. it consists of functionally related
application program and database, The choice of the programming tools is individual the goal of
this Research was to design and develop an employee management system this system was
developed to fill existing gaps in the electronic management of employees. This software is
designed for stand-alone windows environment, but has the ability to be networked. The
interface is PHP with the structured query language (SQL). The implementation of the system
will provide speedy retrieval of data as well as enhancing effective and efficient data.
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KEYWORDS: Design, Implementation, Employee Management, System Software, Eco Bank,
Nigeria, Bauchi State
______________________________________________________________________________
1. INTRODUCTION
The “EMPLOYEE MANAGEMENT SYSTEM” is software for managing data of employees in
a company or institute, for the maintenance of the service registers of individuals in an
organization. Personnel records will be simultaneously integrated and rationalized. It should then
be seen as a route to eradicating all the problems of manual method of handling records through
the creation of a single system that would provide accurate information to all in a time and cost
efficient manner.
It is the database system for any organization, the goal of this Research was to automate
processes and improve efficiency to provide a system which manages the employee details in an
organization. The purpose of this document is to analyze and elaborate on the high-level needs
and features of the Employee Management System. It focuses on the capabilities and facilities
provided by accompany.With the help of nice friendly graphical interface, retrieval of
information is possible based on any individual or on collective information grouped by certain
categories... Thus the issue of ghost workers, hiding of files, falsification of records, and other
devices that are often associated with manual system will be things of the past.
AIMS: This Research seeks to design and develop an efficient and effective employee
management System. It also aims at identifying the importance of employee management
System in handling personnel records against the manual method. Specifically, the following are
the objective of the study.
 To identify the various problems of manual approach towards handling employee

 To identify and eliminate the major problems encountered through the use of
management System in the organisation.

manual method of processing employee information like falsification of records,

manipulation of attendance among others. To suggest other measures that will help
in eradicating the problem associated with manual method of handling personnel
information matters.
2. METHODOLOGY
At the very commencement, we proceeded to a decision to carry out the development of my task
into the following steps:


Exploring the available development environments and techniques.
Database Analyzing.


Database design and Implementation.
Program‟s Structure Analyzing.


GUI (Graphical User Interface) constructing.
Bringing all the stuff together (controls data binding and functions implementation).
 Tests.
Each one of these steps could be explained in some brief details as follows:

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1. Exploring the available development environments and techniques there is a lot of
programming environments available to be used for such kind of elaborations. The point is to
choose such an environment that we will be able to operate with in a convenient and easy way.
This is more or less optional and individual process that depends on the developer‟s experience
as well.
2. Database analyzing it concerns all of the demands, put upon the database content and its
functionality. The database should be designed and implemented in a way that the user would
expect it to be.
3. Database design and Implementation this step is tightly related with the previous one as it is
completely determined by the requirements, analyzed and discussed in step2.
4. Program‟s Structure Analyzing The application program as an interface between the users and
the database should be an accurate “reflection” of the database on the screen; hence a well
analyzed and defined structure is needed.
5. GUI Constructing After analyzing the program‟s structure and defining what it should consist
of, a graphical representation of this stuff is needed in order to enable the user to interact with the
data.
6. Bringing all the stuff together the next step that should be taken is connecting the program
with the database and performing the necessary functionality upon all of the controls.
7. Tests to ensure that everything works properly and as it has been expected, test performance
has to be done upon the system‟s functionality.
2.1 DATA BASE, DESIGN AND IMPLEMENTATION
The database for the system should include information of company‟s staff, respectively of its
employees. The data is subdivided into the following groups:
Attendance Register Employee list Salary Employee Logout
Employee Report
Present Name ID ID Employee name
Name Address Name Name Attendance
Department Mobile Email Employee report
Email Mobile type Salary Report
Birth date Department Current Date Start
Blood group Salary salary End Date
Department Action Increment View
Amount
Increment
date
Action
TABLE 1.
3. RESULT, ANALYSIS AND FINDINGS:
PROBLEMS OF THE EXISTING SYSTEM (FINDINGS):
In looking at the problems facing the existing system, which is the use of manual approach in the
Employee management System in an organization,

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 It generally poses problem during processing of data and also reduces the speed,
The following issues could be outlined;

efficiency in manipulation of records in an organization.

 It subjects personnel data to high standard of insecurity as anyone who is
opportune can pick up a file and gain access to personnel data.
 Data corruption and duplication is highly encountered. Large volume of data
occupies much space
REQUIREMENT SPECIFICATION
Requirement specification refers to the operational constrain services or functions which the
system is expected to deliver (Nwaocha; 2008). The overall systems capabilities and the tasks for
which it was designed is sum up. The Employee management System (EMS) is designed to meet
the following requirement as they exist within any organization. The software is expected to after
its design and implementations achieve the following aims:
 Reduction or total eradication of computational errors that were frequently
observed in the manual approach.
 Personnel Information captures and database management.
 Modular/global password control system for user authentication and authorization.
 Data encryption and compression.

SOFTWARE SYSTEM DESIGN:

The software system design gives a clear and logical outline from which the software evolved. It
also portrays the general procedures or Planning of the software, which guided the software
designers approach towards the Research realization. The Research design is done as an
integration of various subsystems each performing a specific task but all working in synergy to
contribution to the overall through put of the system.
MODULAR DESIGN:
A Modular is a system component that provides services to other components but would not
normally be considered as a separate system (Nwaocha 2008; 84). Random House (1999) defines
it as "A separable component one that is interchangeable with others for assembling into units of
differing size, complexity or function".
Therefore Employee management system is designed along modular techniques. This
necessitated the decomposition of the system into clearly defined subsystems with their
associated sub-modules such that the initial requirements specifications were met. The software
system comprises this subsystems namely: Login Module, Home Module, Attendance Module,
Register Employee, Employee List, Salary, Employee Report.
LOGIN MODULE. This where you input your password and user name to gain access to the
software
Home: this module give room where to select from the ranges of date and view the names
department and number of times an employee has come to work.
The figure below shows a snapshot of home interface.

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Fig 1. Home module.

Attendance: this module allows the selection of staffs and ticks them present.
Here give list of employee in the organization there names, department and where employee is
ticking present. The figure below shows the snapshot of Attendance module.

FIG2. Attendance module

REGISTER EMPLOYEE:
This module is use to register a new worker that has been hired into the organization. This
module accepts input on employee's name, address, mobile, e-mail address, Department,
Birthdates, and the Register button which will register the employee whose details is entered.
The figure below shows snapshot of register employee module

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FIG 3. Register employee module

EMPLOYEE LIST:
This module displays the list of employee that are in the organization it displays their Names,
email address, mobile number, department salary details, it also displays them in range of 10, 25,
50,or 100 entries. It also give space for search of employees. In this module it also gives buttons
for editing each employee record. The figure below shows snapshot of employee list

module.

Fig 4. Employee list module.

SALARY: this module displays details of employee‟s salary it displays employee

Name the type of employee weather trainee or employee, the employee current salary, his/her
increment amount, the increment date. And provides click buttons for the edition/updating of
each employee salary record. The snapshot below show salary module interface.

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FIG 5. Salary module.

EMPLOYEE REPORT:
This module provides the facility to view employee‟s report on attendance and salary, here you
input the range of date you want and the employee you want to view his/her attendance report or
salary report then click on the view button to view the employee report. The figure below
shows the interface of Employee report module

FIG 6. Employee report module.

Logout module: this module will log you out of the software.
THE DATABASE DESIGN:
According to Modum (1996; 90) "The advantages of an electronic database are numerous. It
provides for mass storage of all the organization's relevant data in a structured manner, in such a
way as to eliminate redundancy". Therefore, good organization of data is vital, and unnecessary
information and repetition of data/information should be avoided. Due to the diverse nature of its
data collation routine, Employee management system draws and manages its needed data from
five this district databases. Each of these databases contains tables with so many relevant fields.

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The snapshot below shows example of database table

FIG1.8 is a snapshot of the database structure.

THE DATABASE TABLE LAYOUT:
A table is a collection of related records and a record is a collection of related fields, and a
Fig 7. Database

Filed a collection of characters (Adams, 1986). The district database managed by EMS
Involve around tables within which are organized specific records (resulting from various field):
Analysis of these can be given as follows:
Attendance table: This table is used to store all the attendance data for each staff.
Employee details table: this table stores all the employee data which include employee ID,
employee Name, Employee Address, employee mobile, employee Email, employee birthdates,
Employee blood group, and employee department.
Increment detail Table: This table stores employee salary increment data.

Salary detail table: this table stores the data concerning the salary details of employees.
USER TABLE: this table stores data concerning user id user name and user password.

4. CONCLUSION
The problem of any public organization is not on the availability of human and material
resources of the conceptual and development of sound policies but rather on the accurate
implementation of these polices which rely on the management and utilization of the resources
whose baselines hinge on Employee Management.Personnel cannot be managed efficiently and
effectively without adequate and timely information required on any staff of the organization.
Hence, EMS is designed and developed to efficiently take care of these Requirements that will
replace the manual system of handling Employee information in any organization.

 AbdallaUbaAdamu "Information Systems Design and Programming'". 2006.

5. REFERENCES

 Anderson R.G."Data processing Volume 1, Principles and Practice".London,

M&E Hand Books Pitman Publishing coy 7th Edition. 1990
 Clifton H.D.' Business Data Systems, A practical Guide System Analysis and Data
Processing". Prentice Hall of India. 1983.
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 Date C.J."An Introduction to Database System". Addison-Wesley Publishing


Company.1981
Futhrman, Peter, Back Gregory F. "Micro Computer For Management Design
Making". Published by Prentice Hall, Englewood Cliffs N.J 07632 4 thEdition.


1971.
Graham T.H 1998,"Human Resources Management".United Kingdom, Macdonald


and Evans Ltd.
Ikeagwu E.K. “Element of Personnel Management"". In Business Management


Topics, E.U.L. Imaga and U.J.F. Ewurum (eds). Enugu, Okeke Publishers. 1998.


Nkuma-Udah Kenneth Ikechukwu."Advanced Information Storage and Retrieval'.
National Open Uniersity of Nigeria. Lagos, 14/16 Ahmadu Bello Way Victoria


Island. 2009
Rejaraman, V."Analysis and Design of Information System".Published by Prentice


Hall, New Delhi India. .1991.
Robert Techo."Data Communication, And Introduction to Concepts and
Design".Lodon, Planm Press. 1984.
 Stahl. O. Elem."Public Personnel Administration".New York, Harper and Row


Publishers.1962.
Tomeski, Edward A."Fundamentals of Computer in Business.A System


Approach".2nd Edition.1990.
Unamka P.C. and Ewurum U.JC. "Business Administration".Enugu, Precision


Printers and Publishers.1995.
Vivian Nwaocha. "Advanced System Analysis and Design". National Open
University Nigeria.Lagos, 14/16 Ahmadu Bello Way victoria Island. 2009.

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SAARJ Journal on
Banking & Insurance
Research (SJBIR)

( Dou b l e B li n d Ref e r e e d & Re vi e we d I n te r n a ti on a l J ou r n a l )

DOI NUMBER: 10.5958/2319-1422.2017.00021.2

ISSUES OF THE DEVELOPMENT OF COMPETITIVENESS AND THE
PROSPECTS OF SPECIALIZATION IN RICE FARMS
Ibragimov A.G.*; Durmanov A.Sh.**
*Tashkent Institute of Engineers of Irrigation and
Mechanization of Agriculture,
UZBEKISTAN.
**Tashkent Institute of Engineers of Irrigation And
Mechanization of Agriculture,
UZBEKISTAN.
Email id: [email protected]
______________________________________________________________________________
ABSTRACT

In this article, theoretical and practical recommendations have been developed for the paddy
farms to determine the prospects for the development of competitiveness and the prospects for
the development of competitiveness in science and practice. Although, in a market economy
where the law of supply and demand leads production companies into market based
specialization. On the contrary, the rice field sown during the analyzed period decreased from
143,700 hectares to 43,800 hectares, and its share in total crops decreased from 4.5% to 1.3%.
In some years, the massive harvesting of the larvae increases its wheat yield due to its high
yields. At the same time, 350-560 cubic centimeters of cylinder for water consumption to get a
centner rice raw material, which is equivalent to water consumption for cotton and other crops.
As a result, total net earnings from rice production increased by 532.1 mill. In the reporting
period, the company increased its capital by 1484.8 million soums. Analysis of the rice
cultivation in Tashkent region shows that in the last five years the rice crops have dropped from
10.3 per hectare to 38.8 centner per hectare, though the rice fields have dropped from 10602 ha
to 9,348 hectares.

KEYWORDS: Rice (Paddy) farms, competitiveness, development, specialization, enhancement,

and prospects.

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INTRODUCTION
In the conditions of market economy, high profitability of agricultural enterprises of various
ownership correlated in many prospects to the factors of specialization, effective use of material
and technical resources, minimizing the cost of products. Because of an optimal arrangement and
specialization of agricultural industry can give the best natural and economic condition to
produce different types of agricultural products.
By some scientists it has given a definition such specialization corresponds to the period of
planned economy. Thus following ideas were stated: during the period of planned economy the
basis of persistent specialization from the top (the country scale) to the bottom planning were
comfortable. Although, in a market economy where the law of supply and demand leads
production companies into market based specialization.

RESEARCH METHODOLOGY
In this article the research works of the worldwide published and announced at sciencedirect.com
portal in the last 5 years period (2011-2015) were professionally reviewed to define the concept
term of “middle class owners”.

LITERATURE REVIEW.
Professor F.A.Baraev, O‟.P.Umurzakov, O.Ramazonov and other researchers studied the issues
of irrigation optimization and irrigation water saving technologies, and carried out special
scientific research on optimal reclamation systems and development of new irrigation
technologies. The importance of their work was the implementation of the Cabinet ministers‟
decree about reducing the volume of production of raw cotton, and to reduce the area of cotton
fields, in the certain areas the need to expand crop fields in cereal grains, fertilization of
vegetable crops. An investigations on improving the irrigation of the tailing dumps have been
conducted by the Institute of Nguen III Xe Kuang, Garsia Soto Rafael, Le Zuan, Kake Maju,
Abdul Kadir Abbos, A.Kuchkarov, Ahmad Hasan. These studies cover the issues of uniform
water flow along the edges, weeds control, pipes and rainwater irrigation, abatement and
permanent water outages. In these studies it has been given sufficient attention to the
combination of water regiment and herbicides.

ANALYSIS AND RESULTS

Specialization in agriculture is a complex versatile process; it covers not only agriculture but
other areas that are linked to it as well. The implementation of a specialization process as stated
above are required a consideration the past few factors, which the main criteria would be
providing the highest utility level and the competitiveness of the product.
In the conditions of market economy the factors influencing to specialization can be divided into
two groups: natural and economic factors (Figure 1)

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In a market economy condition a system of factors

affecting agricultural specialization

Natural factors Economic Factors

The soil structure Availability of demand for

the product type

The sum of annual Volume of income per

temperatures hectare

Precipitation volumes Availability of material and

labor resources

Water supply Capital adequacy ratio

Relief of the place Availability of transport,

communications and other
manufacturing
infrastructure facilities
Vegetation period and so on

Proximity to processing
facility and so on

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FIGURE 1: Factors influencing on agricultural Specialization in the context of market economy

The rice plants require specific soil climatic conditions and water supply compare to other plants.
It should be noted that rice cultivation has grown by 10.5 centners per hectare in 2005 - 2015,
with the cultivation of rice cultivation not only in our country, but also in 2004.
As we mentioned above in the specialization of the rice industry, it is necessary to take into
account the following:
- Natural and climatic conditions in the regions;
- Rational use of agricultural crops;
- Quantity and quantity of rice products;
- Material and technical and human resources availability;
- Availability and qualification of specialists in the sphere;
- Earnings per hectare, etc.
It is important to take into consideration the natural and climatic conditions of the regions,
especially the status of the land, in the specialization of the rice industry. The following analysis
shows the dynamics of varieties of cereal and rice crops in agricultural crops. As you can see
from the data, it is possible to notice that the share of cereal crops in crops has diminished. The
area of grains in 2015 increased from 988.3 thousand hectares to 1245.0 thousand hectares or by
1.3 times. The share of crops in total crops in this period increased from 30.8% to 37.8%,
respectively. On the contrary, the rice field sown during the analyzed period decreased from
143,700 hectares to 43,800 hectares, and its share in total crops decreased from 4.5% to 1.3%.
In terms of specialization and perspective development of paddy farms, the natural climatic
conditions of the regions are taken into account when determining the alternate planting time of
the zoned and sowing rice varieties in the regions. Rice is more profitable than other crops. For
example, the income from an hectare rice field is 40-50 percent higher than cotton, 5-6 times
more wheat, and 3 times more than the vegetable crops. Rice is one of the main products of the
majority of the population. Rice is one of the most important agricultural crops in the world.
Rice from the cultivated fields and grains of grains occupies the second place in the world after
wheat. In some years, the massive harvesting of the larvae increases its wheat yield due to its
high yields.
Rice is sour, it is much richer than starchy cereals and has less protein, and is easily digested in
the human body. The chemical composition of the rice depends on the varieties of rice, the
conditions of cultivation and the area under cultivation. According to the World Health
Organization, one of the best measures is to consume adult and diarrhea adults 150 mg / day; At
least 250 mkg for pregnant and breastfeeding women; for children ages 1 to 7 and 90 mcg and
from age 7 to 100 mcg. The amount of iodine in the 100 grams of rice is 1.6 mkg and the rice
product of 100 mkg iodine is 5300 m.gr. Nutritional value of rice is 284 kcal. When we use rice
to feed the animals in general, the Italians prepare cookies for cleaning, grinding and drinking
tea. Therefore, it is desirable to diversify and specialize the rice fields taking into account the
specificity of the regions.
One of the reasons for the decline in the production of rice in Uzbekistan is the lack of water in
the current irrigation norm, which is significantly higher than optimal. In this context, the water
consumption in the Karakal pakstan Republic is 20 to 27 cent per hectare, while water
consumption is between 30 and 35 thousand m3 / ha and 40-45 centners per hectare. In Khorezm
and Chirchik-Angren Valley 25-30 thousand m3 per hectare and more water were consumed.

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Similar situation can be observed in other rice fields of Uzbekistan. When irrigation standards
reach 18-25 thousand m3 per hectare, it is possible to obtain more than 50-60 centner per hectare
and higher foliage. At the same time, 350-560 cubic centimeters of cylinder for water
consumption to get a centner rice raw material, which is equivalent to water consumption for
cotton and other crops.
Because of the shortage of water in the case of the limit of rice cultivation area, fertilizer, fuel
and lubricating materials, the price of the growth and development of new drugs and Chemical
water saving technologies is one of the main reasons of the high price of low efficiency products.
Rice cultivation technology, irrigation checks, by way of the discharge the temperature of the
water, from the border to hold low does not provide. At the same time, many authors and
practitioners-entrepreneurs, an excessive increase of the temperature of that water going to be
flowing water, checks the level of salinity depending on the phase of development and prevent
the flow of a numerous amount of various water grass in rice crops which appear to be necessary
for you to fight against, that is. Flowing water is less saline and in saline soils does not show
positive effect on yield, but rather, prolong the period vegetation the development phase of late
produces. All of the country's total water demand in the district who planted the rice of the rice
plant varieties for irrigated and 100 days does not make much difference from 8-9 thousand
m3/ha., 120 days and more varieties of irrigated 11-12 thousand m3/ha and constitute neither.
Less studied are the issue of checks distribution flat on the water, also in Rains watering,
irrigation watering the soil in a flat across borozdalar also gives a description of statistical
indicators of evaluation of norms moistening. Rice planting and other agronomic methods of
crop irrigation mode, in combination with the fight against weeds with herbicides, it is necessary
to pay special attention to efficiency.
It is well known that rice cultivation in the Republic of Karakalpakstan and 4 regions
(Surkhandarya, Syrdarya, Tashkent and Khorezm) are specialized. However, while the rice
grows in the Tashkent region, the rice in the region is much more expensive than any other
region throughout the year. The reason for this is the high demand for rice in Tashkent, which is
due to the fact that the rice production grown in Tashkent region does not meet this demand.
Analysis of the rice cultivation in Tashkent region shows that in the last five years the rice crops
have dropped from 10.3 per hectare to 38.8 centner per hectare, though the rice fields have
dropped from 10602 ha to 9,348 hectares.
In some districts, including Urtachirchik and Kuyichirchik districts, the rice yield was 34.1 and
42 centners per hectare in 2001, whereas in 2005 these figures were 40.4 and 47.0 centners per
hectare. From the analysis of rice production economic indicators in Tashkent region, one can
say that the income from one hectare of land was 50,000 soums in 1999, and by 2005 it reached
158,800 soums or by 3 March. As a result, total net earnings from rice production increased by
532.1 mill. In the reporting period, the company increased its capital by 1484.8 million soums.
It is clear from the analysis that it is desirable to increase the volume of rice production in the
Tashkent region. It is desirable for rice cultivation to be included in agricultural crops in districts
of Bostanlik, Ahangaran, Pskent, Tashkent and Kibray districts, where rice cultivation areas are
expanded in rice cultivated areas.
Taking this into consideration, in the future, in the Tashkent region, it is recommended to expand
the rice area through the reduction of agricultural crops, which are less profitable to develop rice
production based on natural and climatic conditions in order to further enhance the specialization

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of the branch network. It is desirable to develop and introduce the following measures in order
to turn it into a more profitable network by specializing in farming. Including;
- State financial support of rice production;
- Implementation of a leasing system for small scale equipment and targeted long-term
preferential crediting mechanism to improve material and technical supply of rice farms;
- organization of farming enterprises specializing in plowing, stony, tall and near the banks of the
river;
- Exemption from single land tax, taking into account the use of low-income farms;
- Implementation of measures on re-specification of rally crop yield indicators;
- Introduction of mechanisms of economic incentives for poultry farms to introduce new
technologies and modern techniques in the shrinking sector;
- Creation of seeds, selection works, creation of new technical means, directed on further
development of the branch network, financial support of development of modern technologies
and other scientific and technical products;
- Creation of legal, economical and institutional conditions for increasing the competitiveness of
rice products and their export potential; - To improve the quality of seeds and quality of seeds
by promoting the material interests of researchers and research institutes in the rice seed breeding
system, etc.
SUMMARY. Development and implementation of the above arrangements will serve as an
important factor in raising productivity in the country‟s paddy field sector and satisfying the
demand of the population for rice products and increasing the export potential of the sector.

LIST OF USED LITERATURE

1. The law of the Republic of Uzbekistan 25.12.2009 N ZRU-240 "On amendments and
additions to some legislative acts of Uzbekistan in connection with deepening economic reforms
in agriculture and water management"
2. The decree of the President of the Republic of Uzbekistan "on measures On improvement of
an ameliorative condition of irrigated lands and rational use of water resources in the period
2013-2017 gg" for # PC-1958от 19 April 2013.
3. Statistical publication “trends and indicators of socio-economic development of the Republic
of Uzbekistan during the independence years and forecast for 2011-2015”, Tashkent, 2011.
4. Umurzakov O'P, Sultonov A.S., Rashidov J.K. Economy and management of water economy.
-T .: 2016.

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SAARJ Journal on
Banking & Insurance
Research (SJBIR)
( D o u b le B l i n d R e fe r e e d & R e v ie we d I n t e r n a t io n a l J o u r n a l)

DOI NUMBER: 10.5958/2319-1422.2017.00022.4

MONETARY MOBILIZATION OF COMMERCIAL BANK WITH
SPECIAL REFERENCE TO EASTERN REGION OF INDIA
Dr.S.Ganapathy*; (Mrs)Thangam Alagarsamy**; Mugesh Kannan Raguraman***

*Professor,
Department of Commerce,
Alagappa University,
Karaikudi, Tamil Nadu, INDIA.
Email id: [email protected]

**Research Scholar,
Department of Commerce,
Alagappa University,
Karaikudi, Tamil Nadu, INDIA.
Email id: [email protected]

***Research Scholar,
Department of Commerce,
Alagappa University,
Karaikudi, Tamil Nadu, INDIA.
Email id: [email protected]
______________________________________________________________________________
ABSTRACT

This study is about the monetary mobilization of commercial bank with special reference to
eastern region of India. The researcher was used to secondary data. Deposits are an
indispensable tool commercial banks use to enhance its profitability through advancing deposits
mobilized to its customers in form of loans which make in return mobilize enough funds form
their customers. The researcher found that there is conclusive relationship between deposits and
loans of the commercial banking, the more deposits should be mobilized so as to lend more
which in turn brings more revenue to the bank. In these banks should open more branches so
that it could mobilize more deposit by covering more member of customer. The required
secondary data were collected from RBI website of state-wise deposits of scheduled commercial
according to type of deposits. The study covers a period of five years from 2011 to 2015.

KEYWORDS: Mobilization, Current Account, Saving Account, Term Account

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INTRODUCTION
Mobilization of deposit is one of the main functions of banking business and so an essential
source of working fund for the bank. The source of finance for these financial institutions is also
the main determinants for their performance. An institution whose main source of fund is
donation most likely behave in different way from an institution whose main source of fund is
raised from either deposit or commercial source of funds. Deposit mobilization is an
indispensable factor to increase the source of the banks to serve effectively. The importance of
deposits of the all banking structure to provide satisfactory service to any programme of
agricultural production and industrial manufacturing hardly needs to be over emphasized.
Mobilization of deposits for a bank is as essential as oxygen for human being

REVIEW OF LITERATURE
Francis Appiah-Kubi Banson, Emmanuel Sey, Jonathan Sakoe (2010), in his analyse, “The Role
of Mobile Deposit in Deposit Mobilization in Ghana”, as a result that mobile deposit is a 24
hours a day 7 days a week services which makes in convenient for customers to deposit money
any time, any where. It has reduced queuing at FCP‟s banking hall, encouraged the culture of
saving especially among low income earners reduced the risk associated with carrying money to
the bank to deposit and reduced the time and cost of travelling to the bank to deposit money.
The mobile deposit solution through the use of speed Banking cards has proven to be an
complementary deposit system.
Narayana Magaraba (2013), in her study, “Deposit Mobilization of Commercial Banks: A
Comparative Study of BOB and Axis Bank in Bhubaneswar City”, the result found that there
is a significant increase in current deposit and term deposit over the period under study the
mobilization of demand deposit and term deposit by the BOB and Axis bank over the period and
BOB in Bhubaneswar city has performed well in deposit mobilization in five from 2010-11 to
2014-2015
METHODOLOGY
The present study was mainly based on secondary data. The secondary data have been used to
analyze the performance of the commercial bank with reference to its financial mobilization. The
required secondary data were collected from RBI website of state-wise deposits of scheduled
commercial according to type of deposits. The study covers a period of five years from 2011 to
2015.

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TABLE 1
TRENDS IN GROWTH RATE OF BIHAR STATE
Deposits Mobilization (Millions) Rate of Growth (%)
Years/Accounts Current Savings Term Growth Growth Growth
Account Account Accounts of of of term
current saving deposit
deposit deposit
2011 128761.0 676173.6 387283.6 -- -- --
2012 124228.0 776240.3 493030.1 -3.52 14.80 27.30
2013 144195.0 925181.5 565534.8 16.07 19.19 14.71
2014 152493.4 1061804.0 690044.6 5.75 14.77 22.02
2015 191000.9 1165410.4 811687.1 25.25 9.76 17.63
MEAN 148135.66 920962 589516
SD 26546.66 200296.67 166018.50
CAGR 10% 15% 20%
Source: Secondary Data
The researcher has inferred the following points from Table 1 The amount of current deposit
accounts in 2011 was 128761.0 million it has a growth of -3.52% in 2012 but has shown a
fluctuation in growth in the following years and a CAGR of 10% at the same time “Saving
Deposit” and “Term Deposit” show a gradual increase and decrease in growth rate but the
CAGR of saving deposit is 15% Followed by term deposit 20%. One more thing can be noticed
here that the growth a current deposit has one negative figure (-3.52) during the periods of
2012.At the same time no negative figures growth rate of Saving and Term deposit

TABLE 2
TRENDS IN GROWTH RATE OF JHARKHAND STATE

Deposits Mobilization (Millions) Rate of Growth (%)

Years/Accounts Current Savings Term Growth Growth Growth
Account Account Accounts of current of saving of term
deposit deposit deposit
2011 91376.1 307571.4 356524.3
2012 85913.4 342906.7 450560.6 -5.98 11.49 26.38
2013 102568.7 389618.2 548607.1 19.39 13.62 21.76
2014 110066.9 425559.1 667785.7 7.31 9.22 21.72
2015 138836.4 481509.7 800766.7 26.14 13.15 19.91
MEAN
105752.3 389433 564848.9
SD 20757.93 68281.16 175341.1
CAGR 11% 12% 22%
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Source: Secondary Data
The researcher has inferred the following points from Table 2
The amount of current deposit accounts in 2011 was 91376.1 million it has a growth of -5.98%
in 2012 but has shown a fluctuation in growth in the following years and a CAGR of 11% at the
same time “Saving Deposit” and “Term Deposit” show a gradual decrease in growth rate but the
CAGR of saving deposit was 12 % and term deposits is 22%. One more thing can be noticed
here that the growth a current deposit has one negative figure (-5.98) during the periods of
2012.At the same time no negative figures growth rate of Saving and Term deposit.

TABLE 3
TRENDS IN GROWTH RATE OF ODISHA STATE
Deposits Mobilization (Millions) Rate of Growth (%)
Years/Accounts Current Savings Term Growth Growth Growth
Account Account Accounts of of of term
current saving deposit
deposit deposit
2011 93900.7 379289.1 554475.0
2012 107533.5 447856.9 689291.7 14.52 18.08 24.31
2013 113240.6 511394.3 802971.9 5.31 14.19 16.49
2014 121516.8 600956.4 923807.2 7.31 17.51 15.05
2015 140599.3 660157.4 1099982.1 15.70 9.85 19.07
MEAN 115358.2 519930.8 814105.6
SD 17328.99 113221.3 210279.8
CAGR 15% 19% 19%
Source: Secondary Data
The researcher has inferred the following points from Table 3

The amount of current deposit accounts in 2011 was 93900.7 million it has a growth of 14.52%
in 2012 but has shown a fluctuation in growth in the following years and a CAGR of 15% at the
same time “Saving Deposit” and “Term Deposit” show a gradual decrease in growth rate but the
CAGR of saving deposit and term deposit was 19%. One more thing can noticed that no
negative figures growth rate of Current Deposit ,Saving Deposits and Term deposit.

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TABLE 4
TRENDS IN GROWTH RATE OF SIKKIM STATE
Deposits Mobilization (Millions) Rate of Growth (%)
Years/Accounts Current Savings Term Growth Growth Growth
Account Account Accounts of current of of term
deposit saving deposit
deposit
2011 2711.7 9409.9 20800.3
2012 3707.2 10953.5 25442.3 36.71 16.40 22.32
2013 6560.0 14304.9 28550.3 76.95 30.60 12.22
2014 2841.7 14838.0 33841.3 -56.68 3.73 18.53
2015
4121.7 16437.7 36584.8 45.04 10.78 8.11
MEAN
3988.46 13188.8 29043.8
SD
1553.613 2906.783 6345.32
CAGR
11% 15% 15%

Source: Secondary Data

The researcher has inferred the following points from Table 4
The amount of current deposit accounts in 2011 was 2711.7 million it has a growth of 36.71% in
2012 but has shown a fluctuation in growth in the following years and a CAGR of 11% at the
same time “Saving Deposit” and “Term Deposit” show a gradual increased in growth rate but the
CAGR of saving deposit and term deposit was 15%. One more thing can be noticed here that the
growth a current deposit has one negative figure (-56.68) during the periods of 2014.At the
same time no negative figures growth rate of Saving and Term deposit.

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TABLE 5
TRENDS IN GROWTH RATE OF WEST BENGAL STATE

Deposits Mobilization (Millions) Rate of Growth (%)

Years/Accounts Current Savings Term Growth Growth Growth
Account Account Accounts of current of of term
deposit saving deposit
deposit
2011 328027.7 928944.9 1885243.6
2012 340785.0 1043745.7 2354921.3 3.89 12.36 24.91
2013 395162.5 1212078.7 2748484.9 15.96 16.13 16.71
2014 366080.4 1376818.8 3058185.1 -7.36 13.59 11.27
2015
462879.3 1555484.0 3518552.8 26.44 12.98 15.05
MEAN
378587 1223414 2713078
SD
53669.33 251458.1 629032.6
CAGR
9% 14% 17%
Source: Secondary Data
The researcher has inferred the following points from Table 5
The amount of current deposit accounts in 2011 was 328027.7 million it has a growth of 3.89%
in 2012 but has shown a fluctuation in growth in the following years and a CAGR of 9% at the
same time “Saving Deposit” and “Term Deposit” show a gradual increased in growth rate but the
CAGR of saving deposit was 14% and term deposit was 17%. One more thing can be noticed
here that the growth a current deposit has one negative figure (-7.36) during the periods of
2014.At the same time no negative figures growth rate of Saving and Term deposit.

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TABLE 6
TRENDS IN GROWTH RATE OF ANDAMAN & NICOBAR ISLANDS
Deposits Mobilization (Millions) Rate of Growth (%)
Years/Accounts Current Savings Term Growth Growth Growth
Account Account Accounts of current of of term
deposit saving deposit
deposit
2011 2134.3 7662.2 8070.5
2012 2024.2 9126.3 8966.6 -5.16 19.11 11.10
2013 2423.2 10482.3 10379.8 19.71 14.86 15.76
2014 2157.4 11584.7 12163.3 -10.97 10.52 17.18
2015
2475.2 13298.5 13712.5 14.73 14.79 12.74
MEAN
2242.86 10430.8 10658.54
SD
195.83 2175.13 2303.76
CAGR
4% 15% 14%
Source: Secondary Data
The researcher has inferred the following points from Table 6
The amount of current deposit accounts in 2011 was 2134.3 million it has a growth of -5.16% in
2012 but has shown a fluctuation in growth in the following years and a CAGR of 4% at the
same time “Saving Deposit” and “Term Deposit” show increased in growth rate but the CAGR
of saving deposit was 15% and term deposit was 14%. One more thing can be noticed here that
the growth a current deposit has two negative figure (-5.16),(10.97) during the periods of 2012
and 2014.At the same time no negative figures growth rate of Saving and Term deposit Shows
there the current deposit, saving deposit, term deposit in bank decreased drastically in that period
of showing an unfavorable environment for the banks.

FINDINGS OF THE STUDY

The number of current deposit accounts in 2011 was 128761.0 million it has a growth of -3.52%
in 2012 but has shown a fluctuation in growth in the following years and a CAGR of 10% at the
same time “Saving Deposit” and “Term Deposit” show a gradual increase and decrease in
growth rate but the CAGR of saving deposit is 15% Followed by term deposit 20%.
The number of current deposit accounts in 2011 was 91376.1 million it has a growth of -5.98%
in 2012 but has shown a fluctuation in growth in the following years and a CAGR of 11% at the
same time “Saving Deposit” and “Term Deposit” show a gradual decrease in growth rate but the
CAGR of saving deposit and term deposits is 12%.

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The number of current deposit accounts in 2011 was 93900.7 million it has a growth of 14.52%
in 2012 but has shown a fluctuation in growth in the following years and a CAGR of 15% at the
same time “Saving Deposit” and “Term Deposit” show a gradual decrease in growth rate but the
CAGR of saving deposit and term deposit was 19%. The number of current deposit accounts in
2011 was 2711.7 million it has a growth of 36.71% in 2012 but has shown a fluctuation in
growth in the following years and a CAGR of 11% at the same time “Saving Deposit” and
“Term Deposit” show a gradual increased in growth rate but the CAGR of saving deposit and
term deposit was 15%. The number of current deposit accounts in 2011 was 328027.7 million it
has a growth of 3.89% in 2012 but has shown a fluctuation in growth in the following years and
a CAGR of 9% at the same time “Saving Deposit” and “Term Deposit” show a gradual increased
in growth rate but the CAGR of saving deposit was 14% and term deposit was 17%.
The number of current deposit accounts in 2011 was 2134.3 million it has a growth of -5.16% in
2012 but has shown a fluctuation in growth in the following years and a CAGR of 4% at the
same time “Saving Deposit” and “Term Deposit” show increased in growth rate but the CAGR
of saving deposit was 15% and term deposit was 14%.
CONCLUSION
The study shows that Eastern Region for west Bengal is term deposit is higher, comparing with
other state, its ranges for term deposits of west Bengal for more than 35 lakhs, but the state of
Bihar more saving deposit compare with term deposit and current deposit and the state of
Andaman was Term deposit and Saving deposits is nearly same 13000 to 14000 but current
deposit is very low. The researcher found that there is conclusive relationship between deposits
and loans of the commercial banking, the more deposits should be mobilized so as to lend more
which in turn brings more revenue to the bank. In these banks should open more branches so that
it could mobilize more deposit by covering more member of customer.

REFERENCE
1. Dr. (Smt.) Rajeshwari M.Shettar, “Deposit Mobilization and Socio- Economic Impact: A
Case Study of Union Bank of India”, ISRO Journal of Engineering, Issue 05,Vol 4, 2014,pp
21-26.
2. Narayana Magaraba, Suman Kalyan Choudhury, Ashok Kumar Panigrahi, “Deposit
Mobilization of Commercial Banks: A Comparative Study of BOB and Axis Bank in
Bhubaneswar City”, Journal of Management and Analysis , 2015,pp 195-203.
3. Mohammed Alhaji Audu, Alexander Soloman Oghoyone, Musa Garba Gulani, “The Impact
of Target Deposit Mobilization on the Banking Industry: A Study of Selected Banks in
Maiduguri Metropolis”, IOSR Journal of Business and Management, Issue 5,Vol 17, May
2015,pp 36-52.
4. Venkatesan. S, “An Empricial Approach to Deposit Mobilization of Commercial Banks in
Tamilnadu”, IOSR Journal of Business and Management, Issue 2,Vol 4, Sep- Oct 2012,pp
41-45.
5. Francis Appiah-Kubi Banson, Emmanuel Sey, Jonathan Sakoe, et.,al “The Role of Mobile
Deposit in Deposit Mobilization in Ghana”,Asian Journal of Business and Management
Science, Vol.3 No. 03 ,2010.pp 1-18.
6. www.google.co.in
7. www.rbi.co.in

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BIHAR JHARKHAND
1400000 900000
1200000 800000
700000
1000000
600000
Axis Title

Axis Title
800000 Series1 500000 Series1
600000 Series2 400000 Series2
300000
400000 Series3 Series3
200000
200000 100000
0 0
1 2 3 4 5 1 2 3 4 5

ODISHA SIKKIM
1200000

1000000 40000
35000
800000
30000
Axis Title

Series1
Axis Title

600000 25000
Series1
Series2 20000
400000 15000 Series2
Series3
10000 Series3
200000
5000
0 0
1 2 3 4 5 1 2 3 4 5

WEST BENGAL ANDAMAN

16000
14000
4000000
12000
Axis Title

3000000 10000
Series1
Axis Title

Series1 8000
2000000 6000 Series2
Series2
4000 Series3
1000000 Series3
2000
0 0
1 2 3 4 5 1 2 3 4 5

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SAARJ Journal on
Banking & Insurance
Research (SJBIR)
( D o u b le B l i n d R e fe r e e d & R e v ie we d I n t e r n a t io n a l J o u r n a l)

DOI NUMBER: 10.5958/2319-1422.2017.00023.6

DETERMINANTS OF NONPERFORMING LOANS:
A STUDY OF LICENSED DOMESTIC COMMERCIAL BANKS IN
SRI LANKA
Anandasayanan.S*; Jalatharini Rajaratnam**
*Senior Lecturer
Dept of Financial Management,
Faculty of Management Studies and Commerce,
University of Jaffna, SRI LANKA.
Email id: [email protected]
**Student
Department of Financial Management,
Faculty of Management Studies and Commerce,
University of Jaffna, SRI LANKA.
______________________________________________________________________________
ABSTRACT

During the last two decades, a significant increase of credit growth provided by financial
institutions was recorded. More specifically, competition was increased to a large and medium
degree within domestic markets. A big strand of literature found that, competition increased
banks’ credit risk, i.e. affecting their loan portfolios in terms of bad loan screening procedures
and relaxing borrowing criteria. One of the most common indicators that used to identify credit
risk is the ratio of nonperforming loans (NPL). Study found that liquidity and profitability
significantly correlated with non performing loans. Regression model showed that liquidity,
profitability and bank size significantly impacts the non performing loans. The focus of this study
was bank specific determinants of nonperforming loans, the other factors such as
macroeconomic determinants are not considered. The study contributes to literature in Sri
Lanka. It can help identify the causes of NPL ratio and thus lead analysts, policymakers,
investors and financial institutions to a better understanding of Nonperforming loans.

KEYWORDS: Nonperforming loans, Liquidity, Profitability, bank size, Capital adequacy ratio,
Loan growth, Liquid asset ratio, Return on equity

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INTRODUCATION
BACKGROUND OF THE STUDY
Banks role in the economy of any country is very significant. They play intermediation function.
In that way they collect money from those who have excess and lend it to others who need it for
their investment. Providing credit to borrowers is one mean by which banks contribute to the
growth of economies. A commercial bank is a type of bank that provides services such as
accepting deposits, making business loans, and offering basic investment products. Commercial
bank can also refer to a bank or a division of a bank that mostly deals with deposits and loans
from corporations or large businesses and individuals.
Lending represents the heart of the banking industry. Loans are the dominant asset and represent
50-75 percent of the total amount at most banks, generate the largest share of operating income
and represent the banks greater risk exposure (Mac Donald and Koch, 2006). In finance, a loan is
a debt provided by one entity (organization or individual) to another entity at an interest rate, and
evidenced by a note which specifies, among other things, the principal amount, interest rate, and
date of repayment. A loan entails the reallocation of the subject assets for a period of time,
between the lender and the borrower.
A loan is nonperforming when payments of interest and principal are past due by 90 days or
more, or at least 90 days of interest payments have been capitalized, refinanced or delayed by
agreement, or payments are less than 90 days overdue, but there are other good reasons to doubt
that payments will be made in full (International Monetary Fund). The link between the Non
Performing Loans and loss of banks, is regarded a fact in literature of banking. Increase in NPLs
rate is referred often as the failure of credit policy too. By viewing other side of the picture, it is
also evident that financial crisis is also the effect of high NPLs rate in the banking sector.
Financial crisis of late 2000s, which started from US and spread into whole world having trading
relationships with US, is also labeled as cause of default in mortgages/loans. Increases in NPLs‟
rate are the main reason of reduction in earnings of banks. The reason behind the bad debts is
low repaying capacity of borrowers.
NPLs are a disease directly affects two main components of the banks responsible for overall
efficiency. High level of nonperforming loan is linked with banks failures and financial crisis.
Failure in one bank might lead to run on bank which in turn has contagious impact affecting the
whole banking industry.
Hettiarachchi (2013) examined the reasons for Non-performing loans in Sri Lanka Banking
sector. A Survey was carried out covering a sample of 188 loan default customers and 5 credit
officers and 3 recovery officers in the bank. Main reasons for Non-performing loans are
excessive lending, wrong appraisal, willful defaulters, government policy changes and impact on
high interest rates.
However concerning Sri Lanka, the empirical evidence is very unsatisfactory. The chief aim of
this study is to fill this gap. Thus this study provides empirical analysis of Nonperforming loans
in SriLanka. Particularly, the main focus is on the determinants of nonperforming loans. There
are few studies in Sri Lanka in the same topic to my knowledge.

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STATEMENT OF THE PROBLEM
Banks exist to provide financial intermediation services while at the same time endeavor to
maximize profit and shareholders' value. Lending is considered the most important function for
fund utilization of Commercial Banks as major portion of their income is earned from loans and
advances (Radha, 1980). Despite the fact that loan is major source of banks income and
constitutes their major assets, it is risky area of the industry. That is also why credit risk
management is one of the most critical risk management activities carried out by firms in the
financial services industry. In fact of all the risks banks face, credit risk is considered as the most
lethal as bad debts would impair banks profit. It has to be noted that credit risk arises from
uncertainty in a given counterparty‟s ability to meet its obligations.
The Central Bank said that because of the NPL ratio going up as a result of default of gold-
backed loans and high interest rates, loan expansions suffered. Sri Lanka's two largest state
banks have taken a 20 billion rupee hit on credit losses in 2013 and had slashed their troubled
gold-backed loan portfolios as the precious metal's price slumped, interim accounts show.
People's Bank NPL rose to 5.3 percent of loans by end 2013 from 2.8 percent a year earlier
and capital adequacy rose to 15 percent from 14 percent while NPL at the Bank of Ceylon rose to
4.3 percent of loans by end 2013 from 2.76 percent a year earlier while capital adequacy was
stable at 11.14 percent only slightly down from 11.38 percent. Therefore it is obvious the
Commercial banks in Sri Lanka are suffering by the problem of nonperforming loans and
consequently it leads to inefficiency of banking performance.

 To what extent each of these factors impact on non performing loans?

This research is guided by the following questions:

OBJECTIVE OF THE STUDY

Non-performing loans proportion is one of the determinant factors that illustrate soundness of the
banking sector. Thus, identifying and investigating the determinants of nonperforming loans is
very vital to minimize loan default. The primary objective of this study is to identify the impact
of bank specific factors on non performing loans..

LITERATURE REVIEW
Adela and Iulia(2010) presented the idea by using Pearson correlation coefficient that how these
banking elements average interest rate is connected with Non performing loans in Romanian
banking system covering the period of 2006 till 2010, results of their study also suggest that
there are other indirect channels which affect the non performing loans as well.
Boudriga, Taktak, and Jellouli (2009), using aggregate banking, financial, institutional and legal
environment data of 59 countries for the period 2002-2006, they examined whether and which
factors determine the NPL rate. Their empirical results showed that the NPL is influenced mainly
by bank-specific factors, such as capital adequacy, provisions, and bank ownership, while credit
exposure is reduced in countries where legal and institutional conditions are improved.
Kwan and Eisenbeis (1997) found a U-shaped relationship between bad loans and loans growth.
At a low growth rate, loans growth has a negative effect on the number of bad loans. As loans
growth rate exceeds a certain point, further loans growth adds increase bad loans. Godlewski
(2004) using the return on assets (ROA) as a proxy for performance, shows that banks
profitability negatively impacts the level of nonperforming loans ratio.

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Podpiera and Weill (2008) showed that two of the key determinants that result in bank failures
are reduced cost efficiency and an increase of NPLs. In examining the causality between the two
determinants, they verify that reduced costs efficiency usually precedes the onset of increased
NPLs. However, they find no strong evidence that an increase in NPLs have any effect on
reduced cost efficiency.
Negera (2012) assessed determinants of nonperforming loans. The mixed research approach was
adopted for the study. Survey was conducted with professionals engaged in both private and state
owned Banks in Ethiopia holding different positions using a self administered questionnaire. In
addition, the study used structured review of documents and records of banks and in-depth
interview of senior bank officials in the Ethiopian banking industry. The findings of the study
shows that poor credit assessment, failed loan monitoring, under developed credit culture, lenient
credit terms and conditions, aggressive lending, compromised integrity, weak institutional
capacity, unfair competition among banks, willful default by borrowers and their knowledge
limitation, fund diversion for unintended purpose, over/under financing by banks ascribe to the
causes of loan default.

RESEARCH HYPOTHESES
The following the hypotheses are formulated for the study.
H1: There is significant impact of bank specific factors on non performing loans.
H1a: There is significant impact of liquidity on Non Performing Loans.
H1b: There is significant impact of profitability on Non Performing Loans.
H1c: There is significant impact bank size on Non Performing Loans.
H1d: There is significant impact of capital adequacy on Non Performing Loans.
H1e: There is significant impact of loan growth on Non Performing Loans.
RESEARCH METHODOLOGY
Data Collection
The objective of the study is analyzing the impact and relationship of bank specific variables on
non performing loans. The data used for this analysis are obtained from the annual reports of
banks and central bank reports. They are yearly data and secondary in nature. The period
concerned here is four years, from 2010 to 2013 which is more suitable for the topic because this
is the most available data. The following are the sources which facilitated to obtain data.



Annual reports of particular Banks


Magazines of the sample Banks


Annual reports of central bank


Hand book of CSE


Websites of banks


Colombo Stock Exchange (CSE) websites
Other publications

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SAMPLE SELECTION
There are 24 licensed commercial banks in SriLanka. 12 of them are licensed domestic
commercial banks and 12 of them are licensed foreign commercial banks. Among the 12
domestic commercial banks 10 of them are private commercial banks and 2 of them are public
commercial banks. The population of this study is 12 banks which are licensed domestic
commercial banks. Among these population researcher has selected 11 banks due to availability
of data.

CONCEPTUALIZATION
After careful study of review of literature the researcher developed the following
conceptual Model.

Bank Specific Factors

Liquidity
Profitability
Bank Size Non Performing
Capital Adequacy Loan
Loan growth

Non Performing
Loan Ratio

Source: Developed by Researcher.

OPERATIONALIZATION
Concept Variable Indicator Measurement

Bank Specific Liquidity Liquid Asset Total Liquid Asset/Current Liability

Factors Ratio
Profitability Return on Net Profit/Total Equity
Equity
Bank Size Total Asset Log(Total Assets)
Capital Capital Tier 1 Capital + Tier 2 Capital / Risk
Adequacy Adequacy ratio Weighted Assets
Loan Growth Loan Growth Present year loan- previous year
Rate loan/Previous year loan
Non Performing Non Non Total Non performing loans/Total
Loans Performing Performing loans
Loan Loan Ratio

REGRESSION MODEL USED IN THIS STUDY:

To find out the impact of impact of bank specific factors on non performing loans regression
analysis was carried.

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NPL= f (LR; PR; BS; CAR and LG)
Y= β0+β1LR+β2PR+β3BS+β4CAR+β5LG+e (1)
Where, β0,β1, β2,β3,β4,β5 are the regression co-efficient:

NPL= Non Performing Loans

LR= Liquidity
PR= Profitability
BS= Bank Size
CAR= capital Adequacy
LG= Loan Growth
e= error term
RESULTS AND DISCUSSIONS
Descriptive Statistics
The Table 01 shows the number of observations, minimum, maximum, mean and standard
deviation of the sample data. Liquidity, profitability, bank size, capital adequacy ratio and loan
growth are independent variables and the non performing loan ratio is the dependent ratio in this
study.
TABLE 01 DESCRIPTIVE STATISTICS

N Minimum Maximum Mean Std. Deviation

LR 44 20.59 34.00 25.1898 3.30194
PR 44 2.06 44.69 18.4702 9.54863
BS 44 7.47 12.08 11.1883 .75197
CAR 44 10.90 35.11 15.3655 4.03342
LG 44 3.16 92.82 28.4230 19.04603
NPL 44 1.31 25.07 5.1989 4.48884
Valid N (listwise) 44
The liquid asset ratio indicates the liquidity the mean is 25.1898, the maximum of the liquid asset
ratio is 34 and the minimum is 20.59. The return on equity indicates the profitability of the
banks. The mean is 18.4702, it ranges from 2.06 to 44.69. The mean is 11.1883 regarding the
bank size, the maximum is 12.08 and the minimum is 7.47. The mean capital adequacy ratio is
15.3655; it ranges from 10.90 to 35.11. The mean of the loan growth is 28.4230, the maximum is
92.82 and the minimum is 3.16. the mean of the non performing loan ratio is 5.1989, the
maximum is 25.07 and the minimum is 1.31.

CORRELATION ANALYSIS
The following table shows the result of the correlation analysis which indicates the relationship
between variables.

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TABLE 02 CORRELATIONS
LR PR BS CAR LG NPL
LR Pearson
1 -.262 -.079 -.039 -.223 .463**
Correlation
Sig. (2-tailed) .086 .608 .801 .146 .002
N 44 44 44 44 44 44
PR Pearson
1 .171 -.068 -.042 -.422**
Correlation
Sig. (2-tailed) .266 .659 .786 .004
N 44 44 44 44 44
BS Pearson
1 .240 .023 .147
Correlation
Sig. (2-tailed) .116 .885 .340
N 44 44 44 44
CAR Pearson
1 -.216 -.090
Correlation
Sig. (2-tailed) .159 .562
N 44 44 44
LG Pearson
1 -.174
Correlation
Sig. (2-tailed) .258
N 44 44
NPL Pearson
1
Correlation
Sig. (2-tailed)
N 44
**. Correlation is significant at the 0.01 level (2-tailed).
From the Table 02 the researcher can conclude there is evidence of significant relationship
between liquidity and non performing loans at 0.01 level, because the P value is 0.463 which
indicates moderate positive relationship between liquidity and non performing loans. There is a
significant relationship between profitability and non performing loan at 0.01 level. The P value
is -.422, which represents moderate negative relationship between profitability and non
performing loans. The P value falls on 0.147 regarding the relationship between bank size and
non performing loans. This result represents very weak positive insignificance relationship
between bank size and non performing loans. Capital Adequacy Ratio and non performing loans
has very weak negative insignificance relationship as the P value falls on -.090. The loan growth
and the non performing loans has very weak negative insignificance relationship, because the P
value falls on -.174.

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REGRESSION ANALYSIS
The regression analysis was performed to recognize the impact of bank specific factors on non
performing loans. The following table shows the result of regression analysis. Table 03 shows
the Regression summary.
TABLE 03 Regression summary

COEFFICIENTS

Standardized
Unstandardized Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) -2.756 5.585 -.494 .624
LR .455 .181 .334 2.515 .016
PR -.192 .062 -.408 -3.087 .004
BS .303 .132 .299 2.291 .028
CAR -.137 .085 -.213 -1.604 .117
LG -.038 .030 -.170 -1.286 .206
a. Dependent Variable: NPL

Y= β0+β1LR+β2PR+β3BS+β4CAR+β5LG+e
Y= -2.756+0.455-0.192+0.303-0.137-0.038+3.63781
The result of the regression analysis in Table 03 shows the coefficient for all five variables such
as Liquidity, Profitability, Bank size, Capital Adequacy Ratio and Loan growth. The coefficient
of regression β is 0.455 for liquidity. It indicates that if liquidity increased by one unit then the
non performing loans increase by 0.455 unit. It is positively impact the non performing loans and
it is statistically significant at 0.01 level.
The coefficient of regression β is –.192 for profitability. It represents that if profitability
increased by one unit the non performing loans decrease by 0.192 unit. Profitability negatively
impacts the non performing loans and statistically it is significant at 0.01 level.
The bank size has the β of 0.303 regarding the coefficient of regression. It indicates that if bank
size increased by one unit the non performing loans increase by 0.303 unit. The bank size
positively impacts the non performing loans and statistically it is significant at 0.01 level.
The coefficient of regression β is –.137 for Capital Adequacy ratio. Thus, Capital Adequacy
Ratio increased by one unit the non performing loans decrease by 0.137 unit. Capital Adequacy
ratio negatively impacts the non performing loans and statistically it is insignificant.
The β for loan growth is -.038, therefore if the loan growth increase by one unit the non
performing loan will decrease by 0.038 unit. The loan growth negatively impacts the non
performing loans and statistically it is insignificant.

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HYPOTHESIS TESTING
Hypothesis testing is a form of statistical inference that uses data from a sample to draw
conclusions about a population parameter or a population probability distribution.
The following table is the summary of hypothesis testing.

TABLE 4.12 HYPOTHESIS TESTING

No Hypotheses Results Tools
H1 There is significant impact of bank specific factors on non performing loans.
There is significant impact of liquidity on Non
H1a Accepted Regression
Performing Loans.
There is significant impact of profitability on Non
H1b Accepted Regression
Performing Loans.
There is significant impact bank size on Non
H1c Accepted Regression
Performing Loans.
There is significant impact of capital adequacy on
H1d Rejected Regression
Non Performing Loans.
There is significant impact of loan growth on Non
H1e Rejected Regression
Performing Loans.

CONCLUSION
The objective of this research was to find out the impact of bank specific factors on
nonperforming loans.. To achieve this broad objective, the study used regression analysis. The
results showed that, there is moderate positive relationship between liquidity and non performing
loans, there is negative relationship between profitability and non performing loans both are
statistically significant at 0.01 level other variables are not significant. The liquidity, profitability
and bank size has significant impact on non performing loans, other variables are not significant.
The findings have several implications in terms of policy and regulation. It can help identify the
causes of NPL ratio and thus lead analysts, policymakers, investors and financial institutions to a
better understanding of banking and credit market conditions as well as their impact on economic
activity, and the national financial stability and soundness.
REFERENCES
 Adela, S. and Iulia. (2010). “Study of correlation between average interest rate and
nonperforming loans in the Romanian banking system during 2006- February 2010” The
Journal of the Faculty of Economics- Economic, Issue2, 777-782.

 Boudriga, A., Neila, T., and Sana.,J. (2009). Bank specific business and institutional
environment determinants of nonperforming loans:Evdence from MENA countries, Shocks
vulnerability and theraphy,1-31.

 Godlewski, C.J., (2004). “Bank capital and credit risk taking in emerging market
economies”, Journal of Banking Regulation, Vol. 6, no. 2, , pp. 128-145.

 Hettiarachchi M (2013). “Study on the determinants of Non Performing Loans; A Case

study”

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 Keeton, William R. (1999). “Does Faster Loan Growth Lead to Higher Loan Losses?”
Federal Reserve Bank of Kansas City Economic Review, 84(2): 57-75.

 Khemraj, T., Pasha, S. (2009), The determinants of non-performing loans: An econometric

case study of Guyana. The Caribbean Centre for Banking and Finance Bi-annual Conference
on Banking and Finance, St. Augustine, Trinidad.

 Kwan, S. and Eisenbeis, R.A.,.(1997) “Bank Risk, Capitalization, and Operating Efficiency”,
Journal of Financial Services Research, Vol. 12, no. 2-3, pp. 117-131.

 Mac Donald, S.S. and Koch, T.W. (2006), Management of Banking, 6 th edition, U.S.A:
Thomson - South Western.

 Negera, W. (2012), Determinants of nonperforming loans: the case of Ethiopian banks.

 Podpiera, J., Weill, L., (2008). Bad luck or bad management? Emerging banking market
experience. Journal of Financial Stability 4, 135–148.

 Radha, M & Vasudevan,S.V.(1980). A Text Book of Banking: Law, Practice and Theory of
banking, S, Chand &Co. Ltd: New Delhi.

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SAARJ Journal on
Banking & Insurance
Research (SJBIR)
( D o u b le B l i n d R e fe r e e d & R e v ie we d I n t e r n a t io n a l J o u r n a l)

DOI NUMBER: 10.5958/2319-1422.2017.00024.8

COMPETITIVE POSITION AND TREND ANALYSIS OF
COMMERCIAL BANKS IN NEPAL
Kapil Khanal*
Associate Professor
Shanker Dev College
Kathmandu, NEPAL
Email id: [email protected]
______________________________________________________________________________
ABSTRACT

To find out the trend and competitive position of commercial banks in Nepal by analyzing capital
adequacy ratio and assets composition ratio. Different descriptive statistical tools such as mean,
percentage and ratios were used to analyze and interpret the data. Review of various articles
and collection of secondary data through the websites of Nepal Rastra Bank. Analysis showed
that more than 50 percent commercial banks have low capital adequacy ratio and the newly
operating private commercial banks had higher assets composition ratio than the other
commercial banks."According to the conventional wisdom in banking, a higher capital-to-assets
ratio is associated with lower profitability" Berger (1995). On the other hand, if increasing loans
lead to higher funding requirements, a negative impact of the loan ratio on the banks
profitability may accrue. Empirical evidence of the impact of loan portfolio diversification on
bank profitability also remains inconclusive and suggests that banks face a tradeoff between
diversifying and focusing their loan portfolio. Newly operating commercial banks had high
assets composition ratio. Very high assets composition ratio may also not be beneficial to the
banks because of loan issues i.e. if that loan is not recovered in time, it causes low profit.
Government-owned banks had lowest assets composition ratio of all the banks. Newly operating
commercial banks had high assets composition ratio. Government-owned commercial banks had
lowest assets composition ratio, while the private sector commercial banks had highest assets
composition ratio.

KEYWORDS: Capital adequacy ratio; assets composition ratio; commercial banks; Nepal.

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INTRODUCATION
STATEMENT OF PROBLEM
The status of Nepalese banking industry has changed significantly over the past few decades as a
result of liberalization, deregulation, advancement in information technology and globalization.
The financial sector liberalization resulted into entry of new banks in the market; deregulation
widened the scope of activities and delimited the banking activities; advancement in technology
resulted into new ways and tools to perform banking activities; and globalization added more
pressure on competitiveness of individual banks. Moreover, the banks, nowadays, are entering
into non-banking markets and other financial institutions are entering into the banking markets
that have traditionally been served by the banks (Pradhan, 2012).
Commercial banks play a vital role in the financial resource allocation of countries. They
channel funds from depositors to investors continuously. They can do so, if they generate
necessary income to cover their operational cost they incur in the due course. In other words for
sustainable intermediation function, banks need to be profitable. Beyond the intermediation
function, the financial performance of banks has critical implications for economic growth of
country. Good financial performance rewards the shareholders for their investment. This, in turn,
encourages additional investment and brings about economic growth. On the other hand, poor
banking performance can lead to banking failure and crisis which have negative repercussions on
the economic growth. By considering this fact, this study tries to analyze the present status,
competitive positions and trends of two major financial ratios such as capital adequacy ratio and
assets composition ratio of all commercial banks in Nepal.
REVIEW OF LITERATURE
a. CAPITAL ADEQUACY RATIO
Capital adequacy ratio (CAR) is calculated as tier 1 capital divided by the total risk weighted
assets as a proxy for bank overall capital strength as opposed to the ratio of total equity to total
assets frequently used in the literature. It is believed that this ratio reflects more insights about
bank total risk than does any other equity ratio as it indicates bank minimum regulatory capital
charge for different types of risks, namely, credit, market and operational risks and therefore, is
more likely to become subject to more scrutiny by all stakeholders equally as opposed to other
equity ratios. This would be expected to have a reflection on the outlook of bank performance.
Theoretical arguments and empirical evidence, however, provide mixed results about the impact
of bank capital structure on its profitability. "According to the conventional wisdom in banking,
a higher capital-to-assets ratio is associated with lower profitability" Berger (1995). This is
because higher capital ratio tends to reduce the risk on equity and therefore lowers the expected
return on equity required by investors. Similarly, Hoffmann (2011) argues that an excessively
high capital ratio could denote that banks are operating over-cautiously and ignoring potentially
profitable trading opportunities, which negatively affect profitability. Conversely, Demnirguc-
Kunt and Huizinga (1998) and Golin (2001) among others, indicate that banks with higher
capital ratio face lower cost of funding because of lower prospective bankruptcy costs and hence
experience higher profitability. In addition, Bourke (1989) reports that well capitalized banks
may enjoy access to less risky sources of funds and better quality asset markets. In the same vein
within the Islamic banks literature Ben naceur and Goaied, (2008) suggest that highly capitalized
banks can charge more for loans and or pay less on deposits because they face lower bankruptcy

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risks, which would result in higher margins and profitability. The higher amount of capital
injected, the more confident customers will be and the more deposits that will be placed at the
bank (Haron and Azmi, 2004).
In the presence of asymmetric information and bankruptcy costs, the way the assets are funded
could affect the banks value. In a way or another well-capitalized bank may send a good signal to
the market regarding its performance (Athanasoglou et al., 2006). In this regard, well-capitalized
banks perceived to be safer, with lower profits commensurate with the risks, for this reason a
negative relation between capital and profits is expected. On the other hand, if the profits earned
are reinvested, a positive relation between capital and profits should be valid. In his study for 12
European countries, Bourke (1989) concluded a positive and significant effect of the capital
adequacy on bank profitability. Berger (1995a), finds that the capital and bank profitability tend
to be positively related for a sample of US banks. Also, Angbazo (1997) finds that well-
capitalized banks in USA are more profitable than other less-capitalized banks. A positive
relation between capital adequacy and profitability was suggested by Kosmidou (2007).
b. ASSET COMPOSITION RATIO
Deposits and loans are the most important indicators in the bank financial statements, because
they reflect the bank's primary activity. Assuming other variables constant, the higher the rate of
transforming deposits into loans, the higher the profitability will be. For that, a positive relation
between the loans and banks profitability are expected. On the other hand, if increasing loans
lead to higher funding requirements, a negative impact of the loan ratio on the banks profitability
may accrue. In their study, Abreu and Mendes (2000) found a significant positive relation
between asset composition and profitability. In contrast,Staikouras and Wood (2004) and Bashir
and Hassan (2003) documented a negatively significant relation with the profitability.
Despite the fact that loan diversification may be ideally perceived as the optimum approach by
financial institutions to minimize their portfolio risk, theoretical arguments on the benefits of
diversification present conflicting views . According to the traditional portfolio and banking
theory, an optimal bank's asset portfolio should be as highly diversified as possible to reduce
their risks of suffering a costly bank failure (Hayden et al, 2006). One the other hand Abreu and
Mendes (2000), argue that a highly diversified bank tends to monitor less besides that the
opening out into new sectors, markets or regions imposes involves additional costs such as steep
learning costs, which might undermine the intended benefits of diversification. Empirical
evidence of the impact of loan portfolio diversification on bank profitability also remains
inconclusive and suggests that banks face a tradeoff between diversifying and focusing their loan
portfolio. Acharya et al (2006) examine the impact of sect oral and industrial loan diversification
on the performance of Italian banks and find evidence that diversification of banks‟ assets is not
guaranteed to result in a superior return performance and/or greater safety for Italian banks.
Similarly, (Hayden et al., 2006) calculate three measurements of different types of diversification
(sectoral, counterparty, regional) to assess the impact of diversification on banks‟ profitability in
the case of German banks and conclude that each measurement of diversification tends to lower
German banks‟ returns.
OBJECTIVES OF THE STUDY
1. To calculate and compare the capital adequacy ratio and assets composition ratio.

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2. To analyze the competitive position of commercial banks of Nepal with respect to capital
adequacy ratio and assets composition ratio.
3. To examine the trends of some of the capital adequacy ratio and assets composition ratio.

RESEARCH DESIGN
This research is basically a quantitative in nature. Descriptive research design is used for
quantitative data. Annual reports and online databases were used to get required information for
the quantitative research design.

TYPES AND SOURCES OF DATA

Secondary data was gathered from the banks‟ annual reports and financial reports including
profit and loss accounts and balance sheets via the internet (Nepal Rastra Bank‟s website),
government papers and consultancy reports.
POPULATION
The population of the research study is all 30 commercial banks in Nepal of mid-July, 2015.
Basically, these banks are classified into three broad categories- government-owned banks, joint-
ventures banks and private sector commercial banks. All types of banks are the area of concern.
The financial information of all the banks is available for the year 2014 and 2015. Two major
financial ratios such as capital adequacy ratio and assets composition ratio are selected for
analysis purposes.
DATA ANALYSIS AND FINDINGS
CAPITAL ADEQUACY RATIO
Capital adequacy ratio is the ratio which determines the bank's capacity to meet the time
liabilities and other risks such as credit risk, operational risk etc. In the simplest formulation, a
bank's capital is the "cushion" for potential losses, and protects the bank's depositors and other
lenders. Banking regulators in most countries define and monitor capital adequacy ratio to
protect depositors, thereby maintaining confidence in the banking system.
It is similar to leverage; in the most basic formulation, it is comparable to the inverse of debt-to-
equity leverage formulations (although capital adequacy ratio uses equity over assets instead of
debt-to-equity; since assets are by definition equal to debt plus equity, a transformation is
required). Unlike traditional leverage, however, capital adequacy ratio recognizes that assets can
have different levels of risk. High capital adequacy ratio blocks the financial institutions to create
unlimited liability. It helps to maintain national and international credibility.
TABLE 1
CAPITAL ADEQUACY RATIO OF COMMERCIAL BANKS
Bank 2014 2015 Average Bank 2014 2015 Average
NBL 0.70 2.90 1.80 LAXMI 7.20 6.20 6.70
RBB 1.20 1.10 1.20 SBL 6.20 5.20 5.70
NABIL 3.30 2.80 3.10 ADB/N 14.20 12.00 13.10
NIBL 3.90 4.30 4.10 GLOBAL 8.30 6.60 7.40
SCBN 3.60 3.70 3.70 CITIZEN 11.40 10.00 10.70

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HBL 4.10 4.30 4.20 PRIME 10.00 8.00 9.00
NSBI 4.00 3.50 3.80 SUNRISE 11.00 10.70 10.80
NBBL 11.00 8.80 9.90 BOA 9.90 9.00 9.40
EBL 2.70 2.50 2.60 DCBL 14.70 11.20 13.00
BOK 5.30 5.40 5.30 NMBL 12.30 10.50 11.40
NCCB 9.30 7.00 8.20 KIST 10.20 8.50 9.30
NICB 5.80 5.10 5.40 JANATA 26.90 19.30 23.10
LUMBINI 14.20 14.00 14.10 MEGA 22.10 13.90 18.00
MBL 8.00 9.70 8.90 C&T 33.30 17.70 25.50
KUMARI 6.80 6.00 6.40 CIVIL 26.80 11.10 18.90
AVERAGE 10.30 8.00 9.20
The average capital adequacy ratio of two years of commercial banks in Nepal shows that C&T
(25.5), JANATA (23.1), CIVIL (18.9) and MEGA (18.0) were maintaining higher capital
adequacy ratio (more than 18%) than the rest of the other individual commercial banks. The least
capital adequacy ratio was being maintained by the government owned banks, RBB (1.2) and
NBL (1.8). The analysis of the ratio in 2011 and 2012 also provides similar picture. However,
overwhelming majority of commercial banks (23 banks) was facing with decreasing capital
adequacy ratio. The mean capital adequacy ratio was recorded at 10.3 in 2014 which had
decreased to 8.0 in 2015.
The combined mean of capital adequacy ratio of two years of all commercial banks comes 9.2.
The banks which maintained more than 9.2 were 13 banks and the banks which maintained less
than 9.2 were 17 banks. This average capital adequacy ratio was 10.3 in 2014 which dropped
down to 8.0 in 2015. The numbers of banks above and below 10.3 in 2014 were 11 and 19 banks
respectively. This was also same in 2015. The capital adequacy ratio for many of the commercial
banks ranges from 4 to 13. The banks maintaining more than 6 capital adequacy ratio as per the
central bank directives comes 19 in number.
Most of the joint venture commercial banks had 2 to 10 percent capital adequacy ratio on an
average but except ADBN, both government-owned commercial banks had below 2 percent
capital adequacy ratio. All private commercial banks had lowest 5 to highest 25 percent capital
adequacy ratio. It was noted that, NBL had the lowest capital adequacy ratio. Due to lowest
capital fund, the bank may not be able to invest as per the demand of customers‟. Similarly, C&T
bank had the highest CAR which implies that if a bank does not invest capital, the idle capital
can‟t earn anything.
ASSET COMPOSITION RATIO
The ratio of total loan to total assets is called assets composition ratio. Deposits and loans are the
most important indicators in the bank financial statements because they reflect the bank's
primary activity. Keeping other variables constant, the higher the rate of transforming deposits
into loans, the higher the profitability will be. Usually, there is a positive relation between the
loans and banks profitability.

TABLE 2
ASSET COMPOSITION RATIO OF COMMERCIAL BANKS
Bank 2014 2015 Average Bank 2014 2015 Average
NBL 47.80 48.40 48.10 LAXMI 68.00 58.40 63.20

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RBB 38.90 37.50 38.20 SBL 72.10 65.00 68.60
NABIL 63.20 59.70 61.50 ADB/N 60.60 57.20 58.90
NIBL 67.90 60.90 64.40 GLOBAL 70.60 61.50 66.10
SCBN 39.10 42.80 40.90 CITIZEN 71.10 68.40 69.70
HBL 64.20 61.30 62.80 PRIME 76.20 68.30 72.20
NSBI 46.00 44.60 45.30 SUNRISE 64.80 66.30 65.60
NBBL 54.30 46.60 50.50 BOA 61.20 65.70 63.40
EBL 67.20 64.30 65.80 DCBL 69.30 63.60 66.50
BOK 67.40 60.50 64.00 NMBL 66.60 58.60 62.60
NCCB 61.30 64.50 62.90 KIST 68.20 63.70 65.90
NICB 67.10 67.30 67.20 JANATA 68.90 72.00 70.50
LUMBINI 68.10 68.20 68.10 MEGA 65.20 68.70 67.00
MBL 72.70 63.00 67.80 C&T 59.20 69.40 64.30
KUMARI 68.00 66.60 67.30 CIVIL 70.40 67.20 68.80
AVERAGE 63.50 61.00 62.30

In the above table (Table 4.4), the average assets composition ratio of two years of commercial
banks in Nepal shows that PRIME (72.2), JANATA (70.5), CITIZEN (69.7) and other 23 banks
(greater than 62.3) were keeping higher assets composition ratio (more than average) than the
rest of the other individual commercial banks. The least assets composition ratio was being kept
by the 2 government-owned banks, RBB (38.2) and NBL (48.1) and one joint venture bank
SCBN (40.9). The analysis of the ratio in 2014 and 2015 also provides similar picture.
Surprisingly, majority of commercial banks (20 banks) were facing with decreasing assets
composition ratio. The mean assets composition ratio was recorded at 63.5 in 2014 which had
decreased to 61.0 in 2015.
The combined mean of assets composition ratio of two years of all commercial banks comes
62.3. The banks which were keeping more than 62.3 are 23 banks and less than 62.3 were 7
banks. This average assets composition ratio was 63.5 in 2014 which went down to 61.0 in 2015.
The numbers of banks above and below 63.5 in 2014 were 20 and 10 banks respectively. There
were 19 and 11 banks which have above and below 61.0 in 2015. The assets composition ratio
for many of the commercial banks ranges from 60.0 to 70.0. The banks keeping more than 60.0
to 70.0 percent assets composition ratio were 22.
There were four joint venture commercial banks, which had assets composition ratio between
61.5 to 65.8 percent. It is noted that, RBB bank has the lowest assets composition ratio.
Basically, joint venture and newly operating commercial banks had high rate of assets
composition ratio in comparison to government-owned commercial banks.
Most of the government commercial banks had 38.2 to 48.1 percent assets composition ratio on
an average but all newly operating commercial banks had above 60 percent assets composition
ratio.
Assets composition ratio explains how much loan is invested in different sector. This is the main
source of revenue in commercial banks. The table shows that government-owned banks had the
lowest assets composition ratio compared to other banks. Newly operating commercial banks
had high assets composition ratio. Very high assets composition ratio may also not be beneficial
to the banks because of loan issues i.e. if that loan is not recovered in time, it causes low profit.
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CONCLUSION
It is found in the study that more than 50 percent commercial banks have low capital adequacy
ratio. The capital adequacy ratio of government-owned commercial banks found lowest in
comparison to other types of commercial banks. Among three government-owned commercial
banks, only ADBN had satisfactory capital adequacy ratio. NBL and RBB had below two
percent capital adequacy ratio, which is very low in comparison to industry average. The
regression analysis of capital adequacy ratio shows that there was inverse relationship between
the banks‟ capital adequacy ratio and their profitability. This result is consistent with the research
of Berger (1995). He argued that a higher capital adequacy ratio was associated with lower
profitability, because higher capital adequacy ratio had a tendency to reduce the risk on equity
and therefore lowered the expected return on equity required by investors.
The newly operating private commercial banks had higher assets composition ratio than the other
commercial banks. The higher the assets composition ratio, the greater the amount of loan
provided by the bank. Government-owned banks had lowest assets composition ratio of all the
banks. Newly operating commercial banks had high assets composition ratio. Government-
owned commercial banks had lowest assets composition ratio, while the private sector
commercial banks had highest assets composition ratio. The assets composition ratio of the bank
had negative significant impact on their profitability. This finding was consistent with the study
of Staikouras and Wood (2004) and Bashir and Hassan (2003) documented a significantly
negative relationship with the profitability. On the contrary, the findings of Abreu and Mendes
(2000) were significant positive relationship between assets composition and profitability.
BIBLIOGRAPHY
Abreu, M., Mendes, V. (2000). Commercial bank interest margins and profitability: evidence
from some EU countries. Paper presented at the Pan-European Conference Jointly Organized by
the IEFS-UK & University of Macedonia Economic & Social Sciences.
Acharya, V., Hasan, I., Saunders, A. (2006). Should Banks Be Diversified? Evidence from
Individual Bank Loan Portfolios. Journal of Business 32, 1355–1412.
Angbazo, L. (1997). Commercial bank net interest margins, default risk, interest-rate risk, and
off-balance sheet banking. Journal of Banking and Finance, Vol. 21 pp.55-87
Athanasoglou P., Delis M. and C. Staikouras (2006). Determinants of Banking Profitability in
the South Eastern European Region. Bank of Greece Working Paper 06/47.
Bashir and Hassan (2003). The Determinants of the UAE Commercial Banks‟ Performance: A
Comparison of the National and Foreign Banks. Journal of Trans-national Management, 10(4).
35 - 47.
Ben Naceur S., & Goaied M., (2008). The Determinants of Commercial Bank Interest Margin
and Profitability: Evidence from Tunisia. Working Paper Series.
Berger A. N., (1995). The Relationship between Capital and Earnings in Banking. Journal of
Money, Credit, and Banking, 27(2) 432-456.
Berger, A.N. (1995a). The profit-structure relationship in banking-tests of market power and
efficient-structure hypotheses. Journal of Money, Credit and Banking, Vol. 27 pp.404-31.

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Bourke, P. (1989). Concentration and Other Determinants of Bank Profitability in Europe, North
America, and Australia. Journal of Banking and Finance, Vol. 13, No. 1, pp. 65–79.
Demirguc-Kunt, A & Huizinga, H (1998). Determinants of Commercial Bank Interest Margins
and Profitability: Some International Evidence, Policy. Research Working Paper Series 1900.
The World Bank.
Golin, J. (2001). The Bank Credit Analysis Handbook: A Guide for Analysts, Bankers and
Investors. John Wiley & Sons (Asia) Pre Ltd.
Haron, S., & Azmi W. N. W.,(2004). Profitability Determinants of Islamic Banks: A Co
integration Approach. Creating Dynamic Leaders Working Paper Series 004. December 2004
The Paper Was Presented At The Islamic Banking Conference, Union Arab Bank, Beirut,
Lebnon, 5-7 December.
Hayden, E., Porath, D., & Von W. N., (2006). Does Diversification Improve The Performance
Of German Banks? Evidence from Individual Bank Loan Portfolios. Discussion Paper Series 2:
Banking and Financial Studies No 05.
Hoffmann, P. S., (2011). Determinants of the Profitability of the US Banking Industry.
International Journal of Business and Social Science 2(22), 255-269.
Kosmidou, K., (2007). “The Determinants of Banks‟ Profits and Margins in Greece during the
period of EU financial integration”, Managerial Finance, (forthcoming).Pradhan, Radhe Shyam.
(2012), Concentration and Competition in Nepalese Banking. Journal of Business, Economics
and Finance, 12, Vol. 1, Issue 1
Staikouras, C.K., Wood, G.E. (2004).The Determinants of European Bank Profitability.
International Business and Economics Research Journal, vol. 3, no. 6, pp. 57-68.

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SAARJ Journal on
Banking & Insurance
Research (SJBIR)
( D o u b le B l i n d R e fe r e e d & R e v ie we d I n t e r n a t io n a l J o u r n a l)

DOI NUMBER: 10.5958/2319-1422.2017.00025.X

A STUDY OF DETERMINANTS OF CONSUMERS’ PERCEIVED RISK IN
E-BANKING SERVICES
Dr. A. Joseph Xavier *; Ms. M. Kala Devi**
*Assistant Professor,
Department of Commerce,
Ayya Nadar Janaki Ammal College,
Sivakasi. INDIA.
**Assistant Professor,
Department of Commerce,
JP College of Arts and Science
Ayikudi, INDIA.
Email id: [email protected]
______________________________________________________________________________
ABSTRACT

The study concluded that different age group of customers have different view towards e-banking
services and the usage level of these banks’ customer is different so bank should concentrate on
all the age group of customers for betterment of e-banking . It has also revealed that different
education group of customers and occupation group of customers have different awareness
towards the e-banking services. There are good number of customer in every group like student,
service class, business class and professionals, it shows that each and every one are interested in
using the e-banking services. The banker should take care of the medium people in his/her task,
reduce drudgery and at the same time efficiently discharge his functions. These technological
aids not only take care of some of the physical routine tasks but also contribute proficient
housekeeping functions and also render services that are in turn will fulfil the customer needs
and satisfaction. In addition, some customers are even charged a commission fee just to speak to
a real live bank teller! In a recent checking account pricing study, it was found that interest-
bearing checking account customers charged the worst. E-Banking denotes the provision of banking
and related service through Extensive use of information technology without direct recourse to the bank
by the customer. There are good number of customer in every group like student, service class,
business class and professionals, it shows that each and every one are interested in using the e-
banking services.

KEYWORDS: E-Banking, socio economic factors, perception, risk, age

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INTRODUCATION
The growth of technology has changed payment systems the world over during the past two
decades. More and More innovations are being introduced in both the cash payments system and
non-cash payment systems. Cash in the form of notes and coins was the principal method of
payment before the introduction of the „Banking‟ paper instruments such as „cheques‟ and credit
transfer now have become a part of the payment system with a popularity of banking. With the
introduction and implementation of the recent technology in banking, electronic devices are
making the job of cash payment as well as non cash payments easy and efficient (Kapoor.,
2011). This study involved the collection of both primary and secondary data. The primary data
was collected with the help of a questionnaire by adopting personal interviews. The secondary
data was collected from books, published journals, magazines and articles from various
newspapers. The scaling technique adopted was summated rating scale.

PERCENTAGE ANALYSIS
Percentage analysis is used to compare between the attributes. The percentages are calculated
based on the following formula.
Percentage = Number of respondents / Total Number of respondents

Chi – Square Test

Chi – Square Test is a very strong tool for testing the significance between the observed and
expected values.

X2 = ∑ (O-E)2/E

HYPOTHESES OF THE STUDY

1. There is no relationship between the age and usage of respondents.
2. There is no relationship between the education and usage of respondents.
3. There is no relationship between the occupation of the respondents and Action taken by the
bank due to misrepresentation if any.
4. There is no relationship between the education of the respondents and privacy in transactions
REVIEW OF LITERATURE
The internet banking is a new delivery channel for banks in India. The Internet banking channel
is both an informative and a transactional medium. Internet Banking and Mobile Banking made
it convenient for customers to do their banking from geographically diverse places. However,
Internet banking has not been popularly adopted in India as expected. Being a savings based
culture still, Indian consumers are cautious about their financial assets. They are also relatively
recent entrants to internet based services. Design of these systems must therefore be based on an
understanding of these users‟ outlook and priorities through task centric, security assured and
service oriented solutions minus the technological challenges. The objective of this paper is to
find the perception of Internet banking users. The profiles may be used to target and attract
potential customers to adopt Internet banking Varsha Kuchara., (2012). The advances in
electronic banking technology have created new ways of handling banking transactions,
especially via the online banking channel. In Saudi Arabia, internet banking is still in its early

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stages and it is not utilised as a considerable savings tool in operating costs for banks and in
improving customer relationships. The intent of this research is to identify the factors affecting
the adoption of Internet banking by customers in Saudi Arabia in the light of the technology
acceptance model (TAM). The model was tested with a survey sample (n = 202). The findings of
the study indicate that the security, quality of the Internet connection and awareness about
Internet banking and its benefits have significant effects on the perceived usefulness (PU) and
perceived ease of use (PEOU) of Internet banking acceptance. It was revealed that the effects of
education and trust also have significant impact on the attitude towards the acceptance Internet
banking. Overall, the results of this study are vital to both researchers and practitioners and it
allowed us to understand TAMs validity in technology acceptance research (Sabah Abdullah
Al-Somali., 2011). The factors affecting the customers demand for E-Banking services, by
analyzing a sample of 450 consumers‟ responses who have been interviewed personally through
structured questionnaire in 3 districts of Uttar Pradesh, India, namely Lucknow, Kanpur and
Varanasi. The factor analysis using principal component extraction method with Varimax
rotation has extracted 4 factors which explained the 62.84 percent of the variance. All the four
factors - ambiance and infrastructures, technology and innovation, services and security, and
consumer support and timings - represent different banking attributes important to customers.
This provides a basis for the banks in order to modify and offer demanding services to the banks
Shariq Mohammed., (2013). The bank fees often strike fear in the heart of the average banking
customer. According to a survey by Bank-rate, a company that reports on banks and banking,
customers continue to get smashed with higher fees, ranging from ATM charges to minimum-
balance fees. In addition, some customers are even charged a commission fee just to speak to a
real live bank teller! In a recent checking account pricing study, it was found that interest-bearing
checking account customers charged the worst. The average interest charging checking account
earns only 0.27 percent interest while account holders pay $10.86 on average in monthly fees.
This review in internet banking seeks to show an alternative to banking through “bricks and
mortar” and provide an understanding of the pros and cons of going online. Many traditional
banks offer some online services, but the very cheapest choices some will find are internet-only
banks, which operate specifically online. Customers can get the same services online that are
used to from traditional banks, such as checking and savings accounts, CDs, and other financial
products and services. Those who are interested in paying lower fees for better customer service,
they should investigate internet banking (Loannis Koskosas., 2011). The internet is perhaps one
of the most useful tools to businesses and individuals in contemporary world economies. Its use
has touched virtually every aspect of human endeavour including banking. Technological
breakthroughs and product designs have led to the emergence of e-banking services which, in
recent time has become globally popular except in developing countries including Nigeria. The
Central Bank of Nigeria (CBN) recently released a circular on the introduction of „cashless‟
policy which sets cash deposit and withdrawal limits. The success of this policy requires the
increased use of alternative payment systems including e-banking. However, despite the growing
popularity of e-banking in the world, its rate of adoption in Nigeria has been relatively slow. It
has therefore become imperative to study the underlying determinants of acceptance e-banking in
order to understand and remove the inhibitions surrounding its use and enhance its popularity.
The study takes a cross sectional analysis of determinants of acceptance of e-banking in Nigeria
using a modified Technology Acceptance Model (TAM) as research framework. Four hundred
questionnaires were distributed customers of different banks to elicit relevant data out of which
two hundred and forty nine (249) were found to be useful. These questionnaires were designed

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using the 5- point Likert scale and the Cronbach Coefficient Alpha was used to test for reliability
and consistency of research instrument. Linear Multiple Regression Analysis was employed to
determine the effect of Age (A), Educational Background (PB), Income (Y), Perceived Benefits
(PB), Perceived Ease of Use (PEOU), Perceived Risk (PR) and Perceived Enjoyment (PE) on
Acceptance of E-banking (AI).The Statistical Package for Social Sciences (SPSS) was used for
computation. The result shows that acceptance of e-banking in Nigeria is significantly influenced
by Age, Educational Background, Income, Perceived Benefits, Perceived Ease of Use, Perceived
Risk and Perceived Enjoyment (James A. Odumeru.,2012). The Internet banking is booming in
Jordan and it is time for banks and customers to reap the benefits from such technology. Bank
customers‟ propensity to use internet banking is dependent on their attitudes towards such
technology. This work validates an Arabic technology acceptance instrument through a rigorous
process so that banks can better understand the factors that affect the customer‟s intention to use
the internet banking technology. The work utilized the backward translation method and
developed an Arabic instrument for eleven constructs that yielded an acceptable level of
reliability (Emad Abu-Shanab., 2012). The operational issues related to e-banking as well as
customer‟s perception on usage of e-banking a case study of Askari Bank, Pakistan. 40 staff
members and four customers are selected as sample for this study. Both qualitative and
quantitative methods are used to present the results. Descriptive statistics is applied to describe
the demographic variables while for operational problems correlation was used. Finally cross
case analysis present customers‟ perception about e-banking practices. Analysis shows that
customer is not ready to adopt new technology that why their satisfaction level with e-banking is
low. Internet speed and government policies are not supportive for e-banking in Pakistan. Due to
lack of trust on technology and low computer literacy rate, customer hesitates to adopt new
technology. : In order to promote IT culture in Pakistan, government has to reduce the internet
rate. to promote the benefits of e-banking on media so that more user get facilitated from e-
banking services (Muhammad Shakil Ahmad., 2011). The measurement of customer
perception towards E-Banking which is becoming very popular and convenient method of
dealing with banks now-a-days. E-Banking denotes the provision of banking and related service
through Extensive use of information technology without direct recourse to the bank by the
customer. In this paper consumer perception toward the usefulness and willingness to use e-
banking are identified and measured. Customer satisfaction level towards the E- Banking has
been identified. DESIGN/METHODOLOGY: A Questionnaire has been designed to collect the
data from the respondents. Our survey is undertaken in Ferozepur District (Fazilka, Jalalabad and
Ferozepur Cities in particular) as these cities are underdeveloped and very less studies have been
conducted there; so to understand the potential of E-banking in this area this study has been
conducted. Convenient sampling design has been used. ANOVA and percentage methods have
been used to analyze the data. FINDINGS: The data showed that about 60% people have positive
perception about E-Banking. In spite of having positive perception about E-banking services
only 52.9% respondents are using it frequently. Consumers are using various services provided
by their respective banks and the highest used services are the ATM and bill payment across
various income groups followed by viewing of the account history (Malika Rani., 2012). The
factors affecting adoption of Internet banking in India. The data for this study is based upon a
survey of bank customers using a convenience sampling technique with the aid of a structured
self-administered questionnaire. The survey was conducted during the period of April 2012. Chi
square test and Principal component factor analysis is employed to explore the factors affecting
the adoption of Internet banking in India. The results show that the demographic factors

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particularly age; qualification, profession, income and no. of banks dealing with are the
significant variables affecting usage of internet banking. Factor analysis results show that prior
computer experience, prior technology experience, personal banking experience, and reference
group influence, affect attitude towards online banking as well as online banking usage. The
purpose of this study is to help fill significant gaps in knowledge about the inhibitors of Internet
banking in India. The findings of this study are expected to be of great use to the bank marketers.
An understanding of the factors identified in this study allows bank managers to direct efforts
and resources in the most effective and efficient way to increase bank business in the long run
and encourage their bank customers‟ to adopt Internet banking (Neetu Jain., 2012). The
traditional function of banking is limited to acceptance of Deposits and providing the credit in
the market. Today‟s banking is known as Innovative banking. The coming together of
information technology, communication and entertainment (ICE) has given rise to new
innovations in the product design and their delivery in the banking and finance industry. Driven
by new technologies, changing customer preferences, and increased competition, banks have
taken to heavy investments in new distribution channels like advance automated teller machines,
telephone systems, and on-line banking, one of the reasons for internet applications not to have
picked up as expected so far have been the concerns about the security and lack of the legal
framework related to such transactions. This hurdle has been reduced to a large extent in the
recent past with framing of laws enabling financial transactions through electronic media. The
most of the private and nationalized Indian banks have entered in the technology age and
providing various types of electronic products and services to their customer. The objective of
this paper is to analysis the implementation of technology in Indian banks and understanding the
customers‟ perception. This study is based on the survey and the data which is collected through
the issue of questionnaire to the bank‟s customer. The results show that customers are satisfied
with technology oriented banks products and services. The empirical findings not only determine
the different parameters also provide guidelines to bankers to focus on the parameters on which
they need to improve and spread the awareness of electronic banking products and services to
each and every section of the society (Syed Abdul Mannan., 2010). The researcher has gathered
the details about socio economic profile of the respondents and presented in the following Table.
TABLE 1.1
SOCIO ECONOMIC PROFILE OF THE RESPONDENTS
Variable Category Total respondents Percentage
(N = 180)
Sex Male 122 67.78
Female 58 32.22
Age of the Below 25 years 54 30.00
respondents 25-35 years 48 26.67
35-45 years 62 34.44
Above 45 years 16 8.89
Educational SSLC 16 8.89
Qualification of the HSC 14 7.78
respondents UG DEGREE 84 46.67
PG DEGREE 48 26.66
Diploma Course 18 10.00
Occupation of the Government 35 19.44

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respondents Employee
Private employee 57 31.67
Self employee/student 39 21.67
Business /retired 49 27.22
Source: Primary Data

GENDER
The researcher has classified the respondents based on their gender and it is found that out of
180 respondents, 122 respondents (67.78 per cent) are male and the remaining 58 respondents
(32.22 per cent) are female. It is found that majority (67.78 per cent) of the respondents are male.
AGE
It is found that (62) 34.44 per cent of the respondents are in the age group between 25 years and
35 years, (54) 30.00 per cent of the respondents are below 25 years, (48) 26.67 per cent of the
respondents are between 35 and 45 years, (16) 8.89 per cent of the respondents are above 45
years of age. It is understood that most of the respondents (34.44 per cent) are in the age group
between 35 and 45 years.
EDUCATIONAL QUALIFICATION
Educational qualification is an important factor used to analyse the E-Banking Services. Hence,
the researcher has classified the respondents based on their educational qualification. It is
observed that out of 180 respondents, (84) 46.67 per cent of the respondents have taken up
graduate level education, (48) 26.67 per cent of the respondents have taken up post graduate
level education, (16) 8.89 per cent of the respondents have cleared secondary level education,
(14) 7.78 per cent of the respondents have qualified upto higher secondary level and the
remaining (18) 10.00 per cent of the respondents have got diploma. It is understood that most of
the respondents 46.67 per cent of the respondents have taken up graduate level education in the
study area.
TABLE 1.2
E – BANKING SERVICES
Variable Category Total respondents Percentage
(N = 180)
Usage of E-Banking Daily 16 8.89
Services Weekly 57 31.67
Monthly 63 35.00
Any Time 44 24.44
Operational Yes 123 68.33
Problems No 57 31.67
Privacy in Highly Secured 46 25.56
transactions
Secured 53 29.44
Unsecured 42 23.33
Highly Unsecured 39 21.67
Instructions given to Highly satisfied 68 37.78

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access the E- Satisfied 41 22.78
Banking
Unsatisfied 55 30.55
Highly unsatisfied 16 8.89
Action taken by the Highly satisfied 72 40.00
bank due to
Satisfied 69 38.33
misrepresentation if
any Unsatisfied 29 16.11
Highly unsatisfied 10 5.56
Source: Primary Data

USAGE OF E-BANKING SERVICES

Regarding the usage of e-banking services about (16) 8.89 per cent of the customers have
respondent that they utilize the e-banking services on a daily basis. About (57) 31.67 per cent of
the customers utilize on a weekly basis. About (63) 35.00 per cent of the customers on a monthly
basis and (44) 24.44 per cent of tem utilize the e-banking services at any time. It is understood
that most of the customers (35.00 per cent) have respondent that they utilize the e-banking
services on a daily basis.
OPERATIONAL PROBLEMS
Regarding the operational problems only (123) 68.33 per cent of the customers agreed that they
have faced this problem. The remaining (57) 31.67 per cent of the customers have agreed that
they have not faced such a problem. It is found that majority (123) 68.33 per cent of the
customers agreed that they have faced this problem.
PRIVACY IN TRANSACTIONS
Regarding privacy in transactions nearly (46) 25.56 per cent of the customers by using e-banking
services they have privacy in their transactions and it also highly secured. About (53) 29.44 per
cent of the customers expressed as secured this feature and nearly (42) 23.33 per cent of the
customers that they are unsecured for this facility and (39) 21.67 per cent of the customers
expressed as highly unsecured for this security feature. It is found that most 29.44 per cent of the
customers expressed as secured this feature.
INSTRUCTIONS GIVEN TO ACCESS THE E- BANKING
About (68) 37.78 per cent of the customers are highly satisfied with the instructions given to
utilize the e-banking services. Nearly (41) 22.78 per cent of the customers that they are satisfied.
(55) 30.55 per cent of the customers expressed as unsatisfied and the remaining (16) 8.89 per
cent of the customers expressed as highly satisfied for this feature. It is understood that most
37.78 per cent of the customers are highly satisfied with the instructions given to utilize the e-
banking services.
Action taken by he bank due to misrepresentation if any
Regarding the action taken by the bank due to any crime, nearly (72) 40.00 per cent of the
customers are highly satisfied. About (69) 38.33 per cent of the customers satisfied for this
service. About (29) 16.11 per cent of the customers are unsatisfied and the remaining (10) 556

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per cent of the customers are highly unsatisfied. It is found that most 40.00 per cent of the
customers are highly satisfied.
Chi- Square Test
Hypothesis No : 1
H0 : There is no relationship between the age and usage of respondents.
Age/Usage Daily Monthly Weekly Anytime Total
Below 25 4 10 24 16 54
25-35 3 21 23 1 48
35-45 5 16 16 25 62
45-65 4 10 0 2 16
Total 16 57 63 44 180
Chi- Square Test
Table value @ 1% Table value @ 5% Computed value Degrees of Freedom
level of significance level of significance

21.67 16.92 44.37 9

TEST RESULT
The table value for 1% level of significance is 21.67, 5% level of significance is 16.92. The
computed value is 44.37. Since, the computed value is more than both the table values the H0 is
rejected. Hence there is a relationship between the age and usage of the customers.

Chi- Square Test

Hypothesis No: 2
H0 : There is no relationship between the education and usage of respondents.
PG Professional
Education/Usage SSLC HSC UG DEGREE DEGREE Total
Daily 0 3 5 4 4 16
Monthly 0 6 21 17 13 57
Weekly 16 4 22 20 1 63
Any time 0 1 36 7 0 44
Total 16 14 84 48 18 180

Chi- Square Test

Table value @ 1% Table value @ 5% Computed value Degrees of Freedom
level of significance level of significance
21.67 16.92 74.69 12

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TEST RESULT
The table value for 1% level of significance is 21.67, 5% level of significance is 16.92. The
computed value is 74.69. Since, the computed value is more than both the table values the H0 is
rejected. Hence there is a relationship between the education and usage of the customers.

Chi- Square Test

Hypothesis No : 3
H0 : There is no relationship between the occupation of the respondents and Action taken
by the bank due to misrepresentation if any.
Highly Highly
Occupation/Service Satisfied Satisfied Unsatisfied Unsatisfied Total
Government
Employee 13 12 6 4 35
Private employee 34 18 2 3 57
Self employee/Student 14 23 1 1 39
Business /retired 11 16 20 2 49
Total 72 69 29 10 180

Chi- Square Test

Table value @ 1% Table value @ 5% Computed value Degrees of Freedom
level of significance level of significance
21.67 16.92 46.73 9

TEST RESULT
The table value for 1% level of significance is 21.67, 5% level of significance is 16.92. The
computed value is 46.73. Since, the computed value is more than both the table values the H0 is
rejected. Hence there is a relationship between the occupation of the respondents and usage of
the customers.
Chi- Square Test
Hypothesis No : 4
H0 : There is no relationship between the education of the respondents and privacy in
transactions
Education / Privacy UG PG Professional
in transactions SSLC HSC DEGREE DEGREE Total
Highly Secured 3 3 25 8 7 46
Secured 9 7 32 0 5 53
Unsecured 2 2 23 12 3 42
Highly Unsecured 2 2 4 28 3 39
Total 16 14 84 48 18 180
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Chi- Square Test
Table value @ 1% Table value @ 5% Computed value Degrees of Freedom
level of significance level of significance
21.67 16.92 70.23 12
TEST RESULT
The table value for 1% level of significance is 21.67, 5% level of significance is 16.92. The
computed value is 46.73. Since, the computed value is more than both the table values the H0 is
rejected. Hence there is a relationship between the education of the respondents and privacy in
transactions.
FINDINGS OF THE STUDY
1. It is found that majority (67.78 per cent) of the respondents are male.
2. It is found that most of the respondents (34.44 per cent) are in the age group between 35 and
45 years.
3. It is found that most of the respondents 46.67 per cent of the respondents have taken up
graduate level education in the study area.
4. It is found that most of the customers (35.00 per cent) have respondent that they utilize the e-
banking services on a daily basis.
5. It is found that majority (123) 68.33 per cent of the customers agreed that they have faced
this problem.
6. It is found that most 29.44 per cent of the customers expressed as secured this feature.
7. It is found that most 37.78 per cent of the customers are highly satisfied with the instructions
given to utilize the e-banking services.
8. It is found that most 40.00 per cent of the customers are highly satisfied.
SUGGESTIONS
This study refers that the private sector banks customers are more happier than the public sector
banks regarding e-Banking services. Different age group customers have different awareness
towards the e-banking services, mainly the old age group of people are having the unwillingness
for using e-banking facilities, so the proper training on the usage of e-banking services is
necessary for all age groups. Majority of the customers prefer e-banking for quickness. So banks
should try in all the ways that e-banking is working 24 hour round the clock and service is
available to customers without any hassles. Online Customers are mainly concerned on safety
issues so the banks should educate their customers on the safety use of their passwords and pin
numbers and it should insist the customers that they should change the passwords and pin
numbers frequently so no unauthorized fraudulent practices happen in the e-banking.
CONCLUSION
The study concluded that different age group of customers have different view towards e-
banking services and the usage level of these banks‟ customer is different so bank should
concentrate on all the age group of customers for betterment of e-banking . It has also revealed
that different education group of customers and occupation group of customers have different
awareness towards the e-banking services. There are good number of customer in every group
like student, service class, business class and professionals, it shows that each and every one are
interested in using the e-banking services. The banker should take care of the medium people in
his/her task, reduce drudgery and at the same time efficiently discharge his functions. These
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technological aids not only take care of some of the physical routine tasks but also contribute
proficient housekeeping functions and also render services that are in turn will fulfill the
customer needs and satisfaction.
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3. Kapoor, “Priciples and Practices of Banking.” First Edition Mew Century Publishing House
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4. Loannis Koskosas, “The Pros and Cons Of Internet Banking: A Short Review.” Business
Excellence and Management 1.1 (2011):49-58.
5. Malika Rani, “A Study on the Customer Perception Towards E-Banking In Ferozepur
District.” International Journal of Multidisciplinary Research 2.1 (2012):108-118.
6. Muhammad Shakil Ahmad, “E-Banking: A Case Study of Askari Commercial Bank
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7. Neetu Jain, “Factors Affecting Consumer Attitude Towards Internet Banking in India.”
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Empirical Study in Maharashtra.” ICBI 2010 - University of Kelaniya Sri Lanka (2010):1-9.
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