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Synopsis
On A STUDY ON MOBILE BANKING IN RURAL SECTOR SUBMITTED FOR THE PARTIAL FULFILLMENT OF THE REQUIRMENT OF PAPER CP-402 FOR THE DEGREE OF MASTERS OF BUSINESS ADMINISTRATION (MBA) SESSION (2011-2013)

Under the Supervision of:

Ms. URVASHI KALRA Asst. Professor MMIM, MM UNIVERSITY MULLANA, AMBALA

Submitted By:
AKSHIT KUMAR Roll No.-1208107

SUBMITTED TO:

MAHARISHI MARKANDESHWAR INSTITUTE OF MANAGEMENT MAHARISHI MARKANDESHWAR UNIVERSITY MULLANA - AMBALA HARYANA, 133203 INDIA

Contents

Introduction Literature review Research Methodology 1. Research design 2. Objectives 3. Sample design 4. Data Collection method 5. Data Analysis method Significance of the study Limitation of the study Scope of the project Scope of the further study Appendix Bibliography

Introduction of the Mobile banking: India lives in its villages, and the founding fathers deemed it imperative to enable financial inclusion for the rural population. The Regional Rural Bank (RRB) emerged from Indias early aspirations for a stronger institutional arrangement to develop a savings culture in the rural eco-system, provide rural credit and agriculture finance, while enabling poverty elevation. The formation of the Narasimham Committee in 1975, and eventually the passing of the RRB Act in 1976 were key milestones in this journey. Legislation mandated joint ownership of RRBs by the Central Government, State Government and a sponsor commercial bank, in the ratio of 50%: 35%: 15%, respectively. From a modest beginning of just 6 RRBs with 17 branches covering 12 districts in 1975, the numbers grew to 196 RRBs with 14,446 branches working in 518 districts across the country, in 2004. However, given the multiagency shareholding and entailed restrictions, several RRBs failed to sustain viable operations and others merged vertically or horizontally, resulting in the total number of RRBs stabilizing at 91, in 2012, with over 14,000 branches, spread across 585 of the 622 identified districts. Thus, history has clearly established that the original mandate of promoting profitable banking with a rural focus will be an enduring phenomenon, only when the RRB is able to deliver customer-relevant products with optimal operational efficiency and ensure the functioning of a sustainable and viable business. With 80% of RRBs in rural India, it serves the larger cause of financial inclusion as well. Overview of Banking: Banking Regulation Act of India, 1949 defines Banking as accept ing, for the purpose of lending or of investment of deposits of money from the public,

repayable on demand or otherwise or

withdraw able by cheque, draft order or

otherwise. The Reserve Bank of India Act, 1934 and the Banking Regulation Act, 1949, govern the banking operations in India. Organizational Structure of Banks in India:

Reserve Bank of India

Commercial Banks

Co-operative Banks

Development Banks

Nationalized

Private

Short-term credit

Long-term credit

Agricultural Credit

Urban Credit

EXIM

Industrial

Agricultural

RURAL BANKING Introduction Rural banking in India started since the establishment of banking sector in India. Rural Banks in those days mainly focused upon the agro sector. Today, commercial banks and Regional rural banks in India are penetrating every corner of the country are extending a helping hand in the growth process of the rural sector in the country. As mobile networks are upgraded with WAP, GPRS and UMTS to deliver nextgeneration multimedia services, the banks are getting ready to unleash services on mobile phones. Customers will be able to view their account statement, transfer funds between accounts, be notified of large payments or get notified of

transactions above a pre-defined threshold, and will have immediate and full control over their finances. Next-generation mobile banking services will deliver significant improvements with user-friendly icon driven instructions, instant access, security and immediate transaction processing all at a lower session cost. Banks will attain higher levels of customer satisfaction and increased loyalty by providing anywhere, anytime banking. They will benefit further from lower administrative costs, lesser number of branches, reduced headcount, streamlined call centers and lower handling charges - savings which, hopefully, will be passed onto customers.

REVIEW OF LITERATURE The increasing cell phone penetration in the country is coming out as a key factor for the banks to reach out the rural population. The banks can target the market by offering mobile commerce services like banking services, which can help in expanding the reach. "Mobile banking offers an opportunity for banks to reach out to the rural population and doing business in rural areas has become more viable" said Divakar Goswami, Executive Manager global consultancy firm Deloitte Research. According to Goswami, the mobile penetration is much higher as compared to the banks, which makes the concept of mobile banking easily workable.

The industry estimates suggests that the global market for mobile based transactions in India will be more than $500 billion by 2011, which is still at an earlystage.

The other reasons for banks tapping on the rural market are the possibilities of expansion of bank's business activities and cutting down the various costs.

As the number of mobile subscribers is on the rise in the country, a majority of the subscribers are expected from rural areas in the coming years. Mobile banking is also a lucrative business venture to banks and mobile carriers. "Cell phone providers, faced with falling revenues from voice-based services, could find new streams of revenues from banks, advertisers, merchants and customers," according to a Deloitte research paper.

Even as the sector is attractive and lucrative, Goswami states that there are many challenges ahead which include partnerships between banks and mobile carriers. The research co-authored by Goswami says that mobile banking would require "smart business and sound partnership between the banking and mobile

industries". The nationwide platform for mobile commerce is expected to emerge by 2012. The research paper suggests an open federation model, which defines a collaboration of large number of banks and mobile carriers coming together to provide a common platform for mobile banking services would be a good idea. "By developing a common platform and infrastructure, open federation models reduce the cost that banks and carriers would incur from investing in proprietary software and infrastructure," defines the research paper.

As the mobile banking transactions are not secure, Goswami said that there should be awareness among the customers.

RESEARCH METHODOLOGY OF PROJECT Objectives: To know the satisfaction level of customers towards mobile banking in rural sector. To understand the value proposition of mobile services to rural customers. To expand the market penetration of Mobile banking in rural sector.

Research Design The study is aimed to evaluate perceptions and opinions of rural mobile banking users. For this a cross sectional descriptive design was adopted with ad-hoc quota sampling. A research has to collect the information of current market trends by conducting questionnaire & face to face interview.

Descriptive research: Is under taken in many circumstances when the researcher is interested in knowledge the feature of certain groups such as sex , age , educational level , occupation and income interested in knowing the proportion of given population who have behaved in a particular mine making the projection of certain things or determining the relationship between two or more variables , descriptive study may be necessary.

SAMPLE DESIGN AND SAMPLING TECHNIQUE Sample was 50 mobile banking users and non-users of Mullana, Saha and Barara in Ambala district. Non-users were defined as individuals having bank account but not using mobile banking.

 Sample Design The sample was taken using ad-hoc quota sampling. Sample size The sample size was around 50 respondents from Mullana, Saha and Barara in Ambala district. Data collection method: Data Collection is key part of project work. There are two types of data collection, first is primary source and second is secondary of data collection. Primary Sources:In Primary data, structured questionnaire was made and the target respondents were asked to fill the questionnaire. Secondary Sources:Secondary data was collected from various sources such as internet and financial magazines.

SIGNIFICANCE OF THE STUDY A very effective way of improving customer service could be to inform customers better. Credit card fraud is one such area. The mobile-payments should not be costlier than existing payment mechanisms to the extent possible. A mobile-payment solution should compete with other modes of payment in terms of cost and convenience. The speed at which mobile-payments are executed must be acceptable to customers and merchants. The customers can then check their balance on the phone and authorize the required amounts for payment.

LIMITATIONS OF THE STUDY The time, limitation is the most important problem to collect the various information. The analysis was purely based on the secondary data. So, any error in the secondary data might also affect the study undertaken. It required lot of time and more expensive. The biggest limitation of Mobile banking in the rural sector is not to aware how to use mobile phones.

BIBLIOGRAPHY Source of information: http://sundaytimes.lk/090712/FinancialTimes/ft323.html http://web.worldbank.org/ http://www.siliconindia.com/ www.rbi.org.in http://www.mpf.org.in/