‘Mobilize –Monitor – Mortgage -Manage Money’-4M’s Strategy of Banks

Ms. R.Seranmadevi MBA., M.Com., MCA., M.Phil., (Ph.D)., Dr.M.G.Saravanaraj MBA., MPhil., Ph.D.,
Dr. M.LathaNaterajan, MBA., M.Phil., Ph.D.,
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ABSTRACT
The research mainly focuses to know about the perception of deposits and loans
among customers in Tamil Nadu. The primary objective of this research is to understand the
customers own personal opinion about the Bank services regarding the mobilization of
deposits, monitoring their funds, extending the loan facility and managing the money
effectively. Thus based on these analyses the findings and suggestions have been made. A
well designed interview schedule was distributed among sample population which consists of
deposits and loans holders in Banks to collect primary data. The secondary data are also
collected from the published reports and records. The researcher has analyzed the data using
various statistical tools such as, percentage analysis, Chi-square, ANOVA, Correlation,
Ranking method, F-test, Diagrams, hypothesis etc.

Keywords: Mobilize, Mortgage, Monitor, Correlation, ANOVA

INTRODUCTION

At the time of Nationalization, 1969, there were 14 major banks that were
nationalized in 1969. On the eve of nationalization in 1969, 195 branches in Indian with
aggregate deposits of Rs 67.70 crores and advances of Rs.44.90 crores. Among that IOB had
the distinction of being the first bank in banking Industry to obtain ISO 9001 certification for
its computer policy and planning department from Det Norske Veritas (DNV), Netherlands in
September 1999.

Vision of the bank is “to emerge as the most competitive bank in the Industry”.

Moreover, IOB was the first bank to venture into consumer credit. The minimum
margin for consumer durables is 10% of the cost of the article. It introduced the popular
personal loan scheme during this period. The rates of interest are calculated using various
parameters depending on the account, scheme or facility used. IOB bagged the NABARD’s
award for credit linking the highest number of self help groups for 2000-2001 among the
banks in Tamilnadu.

RECENT PERFORMANCE

Operating profit improved to Rs. 794 crore, net profit up by 81% at Rs.416 crore, EPS up
from RS 5.18 to Rs .9.35. The bank’s global deposits stood at Rs. 36699 and Rs. 17447 crore
domestic deposits grew by 14.03% (system -12.20%) domestic deposits grew by Rs.4770
crore to Rs. 3571 core. The bank had lead responsibility in 12 districts in Tamilnadu state and
one district in Kerala state.
 At present, 544 branches have been totally computerized and 883 branches have been
partially computerized as of march 2003. In all 1427 branches have been brought under
computerization i.e. 100% of the bank’s branch network as of march 2003 is covered under
computerization 100 automated teller machines (ATM) in- operation, 42 centre are linked
under any branch banking (ABB) covering 293 branches.
The bank’s house magazine in Hindi “VANI” got the first prize in the Hindi house
journal competition conducted by reserve bank of India for the year 2000-2001.

MOBILIZING DEPOSIT

Deposits are one of the important sources of bank’s funds. In order to attract customers
the bank offer attractive facilities to different types of deposit account holder. Types of
deposits offered are fixed deposits, Savings bank deposits, and Current deposits.

MORTAGAGING LOANS
A loan is a kind of advance made with or without security. In the case of a loan the
bank makes a lump sum payment to the borrower or credit his deposit account with the
money advanced. A loan once repaid in by the borrower unless the banker functions a fresh
loan. Repayments may be made in installments or at the expiry of a certain period. It gives
for a fixed period at an agreed rate of interest.

MONITORING PERFORMANCE AND CUSTOMERS

By extending the services to valid customer and maintaining the complete database of
the customer of all the categories, it is possible by the bank to monitor all the performance of
the bank. Now a days the banks are implementing some right and tight measures to eradicate
the NPA ie Non performing assets in order to utilize the funds for productive purpose to
attain sustainable development of the economy.

MANAGING CUSTOMERS
Being the service oriented financial industry, Customer satisfaction and customer
delights are the prima facie goal of the banks. By extending the service and maintaining
proper relationship with its customers, they are trying to retain the customer for a long while.
For a glance, SBI is introducing the scheme called “HAPPY CUSTOMER” ie the bank
establishes the Happy customer cell, if any customer dislikes the performance and feel
unhappy, then it is requested the customer to send SMS to the bank toll free number stating
the message that “UNHAPPY”, immediately the bank responds them and rectify the problem
with in short of 24 hours.

OBJECTIVES OF THE STUDY

 To analyze the depository system (mobilize) of Bank.

 To evaluate the performance of various loan (mortgage) offered by Bank.
 To elucidate the banking services and facilities (monitor) rendered by Bank.
 To evaluate the customer’s attitude (manage) towards the services of Bank.
RESEARCH METHODOLOGY

Research methodology is a way to systematically solve the research problem.

Research in common parlance refers to reach for knowledge. It may be understood as a
science of studying how research is done scientifically. Analysis of data involves a number
of closely related operations which are performed with the purpose of summarizing the
collected data. After analysis inferences are drawn from the collected data, which gives
broader findings and will help to arrive at generalization.
The research was of descriptive design, which aims to procure a clear, complete and
accurate description of the situation. A well designed interview schedule was distributed
among sample population which consists of deposits and loans holders to collect primary
data. The secondary data’s are also collected from the published reports and records. The
researcher has analyzed the data using various statistical tools such as, percentage analysis,
Chi-square, ANOVA, Correlation, Ranking method, F-test, Diagrams, hypothesis etc

PERCENTAGE ANALYSIS

 The percentage analysis of age of respondent infers 35-45 belongs to 35%, 25-35
belongs to 30%, 45-above belongs to 20%, and 18-25 belongs to 15%. We can easily
understand through pie-diagram.
 Analysis of gender depicts that, male 70% and female 30%.Male respondent is more
than female respondent.
 In marital status of respondent, 18% are single and married is 82%.Married respondent
is more than single respondent.
 In family size analysis 3-4 belongs to 40% families are 3-4 in size, 30% are 2-3, 4-5
belongs to 20% and 5-above belongs to 10% category. Family size 3-4 of 40% is more
than other family size.
 Educational qualification of respondent reveals that 48% are belongs to profession,
36% belongs to graduate, 11% belongs to schooling, and only 5% are illiterate.
Education qualification of profession respondents is more than other respondents.
 In the analysis of occupation, 31% respondents are doing business,28% are
government employee , 23% are private employee and agriculture holds remains 18%
 Financial soundness of respondents infers that 54% are belongs to 4-above lakhs, 20%
lies under 2-3 lakhs, 20% are in 3-4 lakhs and only 10% belongs to 1-2 lakhs.
 Geographical location table reveals that 31% respondents are residing in town, 28% in
city, 23% in urban and 18% in rural areas. Town respondents are more in number than
the other geographical locations.
 Gen
Age
Resp
20 15 Options onde % 30%
% % nts 7
30 Age
35 % 18-25 15 15%
% 25-35 30 30%
35-45 35 35%
Family size 5%
45-above Educational Qualification
20 20%
10%
Gender 11%
30% Male 70 70%
20%
Female 48% 30 30%
40% Marital Status36%
Single 18 18%
Married 82 82%
Family Size
2-3
Occupation 30 30%
3-4 40 40%
28% 4-5
23% 20 20%
5-above 10 10%
Educational Qualification
Illiterate 5 5%
18% 31%
Schooling 11 11%
Graduate 36 36%
Profession 48 48%
Occupation
Financial Soundness Pvt. Employee 23 23%
Business 31 31%
Agriculture 10% 18 18%
20%
Govt. employee 28 28%
Financial Soundness
54% 1-2 lakh 10 10%
16%
2-3 lakh 20 20%
3-4 lakh 16 16%
4-above
Geographical Location 54 54%
Geographical Location
Rural
18% 18 18%
28% Urban 23 23%
Town 31 31%
City23% 28 28%

31%

Source: Primary data

CHI-SQUARE

Chi-square distribution table can be used to get chi-square values for a particular
degree of freedom and at a particular level of significance. Chi-square distribution is a
continuous probability distribution.
Where,
O is the observed frequency, and E is the expected frequency.
The degree of freedom for the one-dimensional chi-square
statistic is: df = C – 1; Where, C is the number of categories
~ (r-1) (c-1) df
or levels of the independent variable

OPINION ABOUT THE NUMBER OF LOANS BASED ON OCCUPATION AND

FAMILY SIZE AND LOANS REPAYMENT AMOUNT

No. of loans 1 2 3 4
occupation
Pvt. Employee 15 4 3 1
Business 21 6 3 1
Agriculture 12 3 2 1
Govt. employee 18 6 4 0
L.R.Amt. HS S DS HDS
Family size
2-3 8 21 1 0
3-4 10 29 1 0
4-5 5 15 0 0
5-above 3 7 0 0
(Source: Primary data)

Factors Calculat Table Level of Degree of Remarks

ed value value significance freedom
No. of loans & 0.74205 16.919 5% 9 CV<TV.
Occupation H0 Accepted
Loan Repayment 0.87286 16.919 5% 9 CV<TV.
Amount & Family Size H0 Accepted

INFERENCE:

The calculated value of chi-square is less than the table value, so Ho is accepted. Hence
there is no relationship existing between the number of loans and occupation and family sizes
based on loans repayment amount.

ANOVA (ANALYSIS OF VARIANCE)

Analysis of variance is a statistical method used to test whether the difference

between means of several samples is significant.

Hypothesis in analysis of variance:

 The statistical test used in Analysis of variance is “F-test”. The null hypothesis in
this test is “sample means are equal. If the null hypothesis is accepted, it is concluded that the
effects of the different factors which cause variation are the same”.

CALCULATION OF ANOVA TABLE

Source of variation Sum of squares Degree of freedom Mean squares

GEOGRAPHICAL LOCATION AND MARGIN ON VARIOUS LOANS

Between variation SSC=1638 K-1=3 MSC= 546
Within samples SSE= 557 N-K=12 MSE= 46.416
Total SST=1081 N-1=15 F = 11.763
LEVEL OF SECURITY AND FINANCIAL SOUNDNESS
Between samples SSC=1346.5 K-1=3 MSC=448.833
Within samples SSE=635.5 N-K=12 MSE=52.958
Total SST=1982 N-1=15 F = 8.475
EMI BASED ON OCCUPATION
Between samples SSC=1284.5 K-1=3 MSC=428.166
Within samples SSE=51.5 N-K=12 MSE=4.2916
Total SST=1336 N-1=15 F = 99.768
GRANDING LOAN BASED ON GENDER
Between samples SSC=1304.5 K-1=3 MSC=434.833
Within samples SSE=1721.5 N-K=4 MSE=143.458
Total SST=3026 N-1=7 F = 3.0310
NUMBER OF DEPOSITS HOLD BASED ON FAMILY SIZE
Between samples SSC=1102 K-1=3 MSC=367.33
Within samples SSE=212 N-K=12 MSE=17.66
Total SST=1314 N-1=15 F = 20.8001
(Source: Primary Data)

Factors Calculat Table Level of Degree of Remarks

ed value value significance freedom
Margin on various loan & 11.763 3.49 5% (3, 12) CV>TV.
Geographical Location H0 Rejected
Eligibility Constraints & 8.475 3.49 5% (3, 12) CV>TV. H0
Financial Soundness Rejected.
EMI & Occupation 99.768 3.49 5% (3, 12) CV<TV.
H0 Rejected
Conditions specified for 3.0310 6.591 5% (3, 4) CV<TV.
Geographical Location & Gender H0 Accepted
Deposits Hold & 20.8001 3.49 5% (3, 12) CV>TV. H0
Family size Rejected

INFERENCE:
From the above table it is inferred that margin on various categories of loan get
changed on the basis of geographical region ie, different interest rates charged for different
geographical location. Level of security was considered as the strong base for financial
soundness of the customer. The calculation of EMI is totally based on the customers’
Occupation, since the income level of the person gets varied due to this factor. There is no
gender bias in relation to the conditions specified for granting loans. Family size played a
vital role in determining the number of deposits hold by the family.

CORRELATION COEFFICIENT

Coefficient of correlation is an algebraic method of measuring correlation.

Correlation coefficient is a numerical value. It shows the degree or the extent of correlation
between two variables. Coefficient of correlation is a pure number lying between -1 and +1.
It is represented as r.
Karl Pear son’s co-efficient correlation:

r = ∑( X- X ) ( Y- Y ) / √ ∑ (X - X )2 ( Y- Y)2

Factor 1 Factor 2 r Value Result

Types of deposits Time of maturity 0.3671 Accept Ha
Terms of deposits Tax planning -0.3924 Accept H0
Deposits before maturity period Age 0.4824 Accept Ha
Loans repayment amt. Level of amount sanctioned 0.9657 Accept Ha
INFERENCE:
There is a positive correlation exists between the variables like types of deposits and
time of maturity, deposits before maturity period and age factor and loans repayment
schedule with level of amount sanctioned. It clearly explains that there is a direct relation
exists between these variables. One variable activity is strongly based upon another variable.
While considering the terms of deposits and tax planning relation it finds its negative. So only
few people use deposits as a tax planning tool.

F-TEST (FISHERS TEST)

F-test is used for test of hypothesis. The test on the basis of ‘F’ statistic is called F-test.
F-test can be used to: (a) Test the equality of variances of two populations. (b) Test the
equality of means of three or more populations.
f = S12 / S22 ~ f n1-1, n2-1df

SATISFACTION LEVEL OF AMOUNT SANCTIONED BASED ON AGE

Ho: There is no satisfaction over the level of amount sanctioned based on age.
Ha: There is satisfaction over the level of amount sanctioned based on age.
Age \ Amount Sanctioned HS S DS HDS
18-25 1 11 1 2
25-35 4 23 3 0
35-45 5 27 3 0
45-above 3 15 2 0
(Source: Primary Data)

Degree of freedom = (n1-1, n2-2) = (3, 3)

Factors Calculati Table value Level of Degree of Remarks

on value significant freedom
Age & Amount 0.7511 9.28 5% (3, 3) CV<TV. H0
Sanctioned Accepted
INFERENCE:
The calculated value is less then the table value. So we accept null hypothesis,
therefore the two variance are not significant.

RANKING METHOD
There are some variables whose quantitative measurement is not possible. These
variables are known as qualitative variables, such as beauty, intelligence, virtue, wisdom etc.
These variables cannot be expressed in numbers or in quantitative terms. But the relative
expression of these variables can be ascertained on the basis of their order of performance or
ranking.
INFERENCE:
Options Respondents Rank
Size  The ranking method of relationship
Relationship with bank of respondent with bank shows, more
A/c holder 10 3 respondent is related to all. This
Deposits 24 2 relationship is help to reputation and
Borrower 8 4
goodwill of the bank.
All 58 1
No. of loans
1 66 1  66% respondents are taken only one
2 19 2 type of loan. Number of loans and
3 12 3 deposits shows the stabilization of
4 3 4 bank.
Deposits holder
1-2 30 2  This research reveals that nearly
2-3 58 1 58% respondents are maintaining
3-6 12 3 their deposits with the bank. It shows
7-above 0 4
the financial strength of the bank.
Types of deposits
Fixed deposits 40 1  The table shows that people would
Current deposits 36 2 like to prefer the Fixed deposits than
Term deposits 12 3 any other deposits scheme for their
Recurring deposits 12 3 future prosperous and safety.
Time of maturity
Withdraw 16 3  It is clear to understand that the first
Renewal 48 1 preference will go to the renewal of
Change 6 4 deposits, and next the re-depositary
Re-deposits 30 2
scheme, and withdrawal and change
(Source: Primary Data)
FINDINGS
 51% of the customers are happy about the relationship with bank in deposits.
 58% of the customers are satisfied about the comfortness of borrowing loan.
 76% of the customers are satisfied about the level of amount sanctioned.
 75% of the customers are satisfied about the level of security.
 72% of the customers are satisfied about the loans repayment amount.
 80% of the customers are satisfied about the margin collected on various loans.
 68% of the customers are satisfied about the rate of amount.
  60% of the customers are satisfied about the processing charge.
 55% of the customers are satisfied about the processing time.
 70% of the customers are satisfied about the eligibility constraints.
 68% of the customers are satisfied with the calculation of EMI with fixed rate of interest.
 56% of the customers are satisfied about the conditions for granting loan.
 75% of the customers are satisfied about the depository services.
 66% of the customers are satisfied about the rate of amount on various deposits
Schemes.
 85% of the customers are high satisfied about the nominee factors.
 68%of the customers are satisfied about the money yield schedule on deposits assistance.
 70% of the customers are satisfied about the terms of deposits.
 46% of the customers are satisfied over the other services offered.
 58% of the customer is satisfied with the tax planning.
 70% of the customers are satisfied the deposits before the maturity period

SUGGESTIONS:

 The savings deposits show an unfavorable trend, thus we suggest to implement small
savings scheme and steps can be taken to provide attractable interest.
 Since the housing loan shows a declining trend, we suggest increasing the number of
installments will kelp to stabilize it.
 In order to increase their revenues, new types of loans can be introduced like T.V loan,
Pre-shipment credit, and post-shipment credit in overseas business.
 The bank can also provide agency services.
 They can extend the computerized services with ATM facility in all the branches
including the rural areas.
 The bank should provide service with tasty of acceptable by everyone.
 The bank can go for more advertisements and publicity to popularize the services than the
competitors.
 The bank should improve the services offered to the customers, mainly in the area of
prompt and fast delivery of loan.

CONCLUSION

Now Banks are extends with "E-See" Banking, you can access your Savings,
Current and Cash credit Accounts in any of our online branches from anywhere with a PC
and an Internet connection. It's easy, convenient and free.
“Non-interest income jumped to Rs 808 crore in 2007-08 from Rs 387 crore the
previous year; the growth is expected to continue this year as well. RBI has given its
approval for the bank to set up a branch in Australia and a representative office in Dubai.
“We are yet to get permission from the respective countries to start our operations,” Mr.
Bhat said

Moreover it extends the helping hand to other sick banks in their rehabilitation activities.
“The Reserve Bank of India (RBI) may approve the merger of Pune-based urban cooperative
bank (UCB) Shri Suvarna Sahakari Bank with Indian Overseas Bank (IOB), the Chennai-
based public sector lender”.

Banks currently provides specialized banking services to its retail customers that
include Any Branch Banking (ABB), ATM Banking, IOB STARS (Indian Overseas Bank -
Speedy Transfer And Realization Service) and the most popular and latest one is the 8%
Saving (Taxable) Bond Scheme.

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Customer Satisfaction for Firms," Marketing Science, Vol. 12, pp. 125-143
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New Delhi.
 Jham, Vimi, 2005, "Insights into Customer Interactions in the Banking Industry--A
Qualitative Relationship Marketing Study", Review of Professional Management, Vol.
3, No. 1 pp 10-17
 Kothari C.R. (1990) Research Methodology. (Seventh Edition) Wishawa Prakashan
New Delhi.
 Richare.I.Levin, David.S.Rubin, “Statistics for Management”7th Edition.
 Rural banking — Opportunity for diversification and growth – published in The Hindu
“Business Line”, April 20, 2004.
 Soteriou, A. and S. A. Zenios (1999), "Operations, Quality, and Profitability in the
Provision of Banking Services," Management Science, Vol. 45, No. 9
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Websites

 http://ideas.repec.org/p/iim/iimawp/282.html
 http://pdfcast.org/pdf/technology-trust-and-e-banking-adoption-the-mediating-
effect-of-customer-relationship-management-performance
  http://www.ifad.org/evaluation/public_html/eksyst/doc/profile/pa/gm.htm
 http://www.infosys.com/finacle/solutions/rural-banking-in-india.asp
 www.creditcard.com
 www.icici.com
 www.iob.com
 www.kvb.com & www.sbi.com
 www.marketresearch.com
 www.privatebanking.com
 http://finance.indiamart.com/investment_in_india/indian_overseas_bank.html
 www.iobnet.co.in
 http://www.rupeetimes.com/banks/indian_overseas_bank.html
 www.indiahousing.com/banks-in-india/indian-overseas-bank.html
 http://www.thehindubusinessline.com/2008/10/06/stories/2008100650791400.html
 http://www.business-standard.com/india

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Ms. R.SERANMADEVI, MBA., M.Com., MCA., M.Phil., (Ph.D),
Research Scholar/Senior Lecturer, Department of Management Studies,
CMS College of Engineering, Namakkal. Contact : 97505 92924
Mail: seranmadevi@yahoo.co.in & seranamadevi@gmail.com
Dr. M.G.SARAVANARAJ, MBA., M.Phil., Ph.D.,
Professor & Head,
Department of Management Studies,
Muthayammal Engineering College,Rasipuram.

Dr. M.LATHANATARAJAN, MBA., M.Phil., Ph.D.,

Professor & Head,
Department of Management Studies,
Vivekanandha College of Engineering, Tiruchengode.