Siddarth Gabra Final Report.docx

A Dissertation on IMPACT OF DEMONETIZATION ON BANKING HABITS WITH SPECIAL REFRENCE TO ONLINE BANKING IN INDIA Submitted to Amity University Madhya Pradesh

In partial fulfillment of the requirements for the award of the degree of Bachelor of Commerce (Honors) In Finance & Marketing By SIDDARTHA GABRA Under the guidance of Ms. CHHAVI AGRAWAL Assistant Professor AMITY BUSINESS SCHOOL AMITY UNIVERSITY MADHYA PRADESH April 2019

Amity Business School

DECLARATION I Siddartha Gabra, student of B.Com. (H) hereby declare that the dissertation titled “Impact of Demonetization on banking habits with special reference to online banking in India” which is submitted by me to Amity Business School, Amity University Madhya Pradesh, in partial fulfillment of requirement for the award of the degree of Bachelor of Commerce (H) has not been previously formed the basis for the award of any degree, diploma or other similar title or recognition.

Gwalior Date

Siddartha Gabra

i

Amity Business School CERTIFICATE

It is to certify that the dissertation titled “Impact of Demonetization on banking habits with special reference to online banking in India” which is submitted by Mr. Siddartha Gabra to Amity Business School, Amity University Madhya Pradesh, in partial fulfillment of the requirement for the award of the degree of Bachelor of Commerce (H) is an original contribution with existing knowledge and faithful record of work carried out by him under my guidance and supervision.

To the best of my knowledge this work has not been submitted in part or full for any Degree or Diploma to this University or elsewhere.

Gwalior Date Ms. Chhavi Agarwal Asstt. Professor

HOI / HOD Amity Business School, Amity University Madhya Pradesh, Gwalior

ii

ACKNOWLEDGEMENT I extend my deep sense of gratitude and sincere thanks to Prof. (Dr.) Anil Vashisht, Director, Amity Business School for allowing me to take up this dissertation. I would also like to thank Ms. Chhavi Agrawal, Asstt. Professor-ABS for continuous support in my dissertation. I also thank my parents for their continuous support, understanding and patience without whose support and understanding this endeavour would never have been fruitful. I also thank all my friends for helping me out in completing this dissertation and helping me in solving various problems encountered during the progress of this dissertation.

SIDDARTHA GABRA

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ABSTRACT The objective of this study is to investigate about the impact of the demonetization over the banking habits with special reference to online banking. Demonetization is the act of stripping a currency unit of its status as legal tender. It is a process of removing a currency from general usage or circulation of money in a country. Demonetization is an act where the old unit of currency gets retired and replaced with a new currency unit. It can also be considered as withdrawal of a specific currency from market. To check undisclosed black money, corruption and fake currency the Government of India on the 8 November 2016 announced demonetization of high denomination currency notes Rs 500 and Rs1000. A new redesigned series of Rs 500 and Rs 2000 banknote is in circulation since 10 November 2016. Banking can be defined as the business activity of accepting and safeguarding money owned by other individuals and entities, and then lending out this money in order to earn a profit. In this paper I want to discuss the impact of demonetization on the banking habits with special reference to online banking.

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CONTENTS Front page Declaration

i

Certificate

ii

Acknowledgement

iii

Abstract

iv

Contents

v

List of figures

vi-vii

List of tables

viii

Chapter 1: Introduction 1.1 Demonetization History and Background in India..........................................

3-4

1.2 Facts about Demonetization 1946, 1978 And 2016…………………………

4-6

Chapter 2: Literature Review 2.1 literature review……………………………………………………………...

7-10

Chapter 3: Research Methodology 3.1 Methodology………………………………………………………………...

11-12

Chapter 4: Results And Discussions 4.1 Discussions………………………………………………………..………....

13-14

4.2 Data Analysis…………………………………………..…………………....

15-40

Chapter 5: Conclusion And Future Prospects 5.1 Conclusion…………………………………………………………………...

41-42

5.2 Future Prospects…………………………………………...............................

42

Chapter 6: Summary 6.1 Summary

43

References Appendix Questionnaire Plagiarism Report

v

LIST OF FIGURES Figure 4.1

Gender of Respondents

Pg. 15

Figure 4.2

Age of Respondents

Pg. 16

Figure 4.3

Education Level of Respondents

Pg. 17

Figure 4.4

Occupation of Respondents

Pg. 18

Figure 4.5

Using Internet Since

Pg. 19

Figure 4.6

Use of Internet Every Day

Pg. 20

Figure 4.7

Respondents are Aware About

Pg. 21

Figure 4.8

Frequency of Usage of Services before Demonetization

Pg. 22

Figure 4.9

Frequency of Usage of Net Banking before Demonetization

Pg. 22

Figure 4.10

Frequency of Usage of Mobile Banking before Demonetization

Pg. 23

Figure 4.11

Frequency of Usage of Payment Wallets before Demonetization

Pg. 23

Figure 4.12

Frequency of Usage of Cryptocurrency before Demonetization

Pg. 24

Figure 4.13

Frequency of Usage of Online Trading before Demonetization

Pg. 24

Figure 4.14

Frequency of Usage of Online Insurance Purchase before

Pg. 25

Demonetization Figure 4.15

Frequency of Usage of Services after Demonetization

Pg. 26

Figure 4.16

Frequency of Usage of Net Banking after Demonetization

Pg. 26

Figure 4.17

Frequency of Usage of Mobile Banking after Demonetization

Pg. 27

Figure 4.18

Frequency of Usage of Payment Wallets after Demonetization

Pg. 27

Figure 4.19

Frequency of Usage of Cryptocurrency after Demonetization

Pg. 28

Figure 4.20

Frequency of Usage of Online Trading after Demonetization

Pg. 28

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Figure 4.21

Frequency of Usage of Online Insurance Purchase after

Pg. 29

Demonetization Figure 4.22

Since how many years respondents are using these service

Pg. 30

Figure 4.23

Which Attribute of the Bank is Valued Most by Respondents

Pg. 31

Figure 4.24

Which Factor Promotes to Use New Technologies?

Pg. 32

Figure 4.25

Usage of Technology

Pg. 33

Figure 4.26

Frequency of Usage of Services per month before Demonetization

Pg.34

Figure 4.27

Frequency of Usage of Branch Banking per month before

Pg. 34

Demonetization Figure 4.28

Frequency of Usage of ATM per month before Demonetization

Pg. 35

Figure 4.29

Frequency of Usage of Internet Banking per month before

Pg. 35

Demonetization Figure 4.30

Frequency of Usage of Telephone Banking per month before

Pg. 36

Demonetization Figure 4.31

Frequency of Usage of Mobile Banking per month before

Pg. 36

Demonetization Figure 4.32

Frequency of Usage of Services per month after Demonetization

Pg. 37

Figure 4.33

Frequency of Usage of Branch banking per month after

Pg. 37

Demonetization Figure 4.34

Frequency of Usage of ATM per month after Demonetization

Pg. 38

Figure 4.35

Frequency of Usage of Internet Banking per month after

Pg. 38

Demonetization Figure 4.36

Frequency of Usage of Telephone Banking per month after

Pg. 39

Demonetization Figure 4.37

Frequency of Usage of Mobile Banking per month after

Pg. 39

Demonetization Figure 4.38

Attitude of Bank employees during demonetization period

vii

Pg. 40

LIST OF TABLES

Table 4.1

Gender of Respondents

Pg. 15

Table 4.2

Education Level of Respondents

Pg. 17

Table 4.3

Respondents are Aware About

Pg. 21

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CHAPTER-1 INTRODUCTION On 8 November 2016 midnight, the Government of India reported the demonetization of every one of the 500 and 1000 category monetary certificates of the Mahatma Gandhi Series. The legislature guaranteed that the activity would shorten the shadow economy and get serious about the utilization of unlawful and fake money to support illicit movement and fear based oppression. This plan greatly affects the organizations, average citizens, and monetary establishments alongside multi-assorted mechanical foundation of India. Demonetization speaks to considerably more than destabilization; it has struck a body blow on the monetary action in India. While the defenders of demonetization may have had great expectations, the anguish it has caused to a great many Indians is baseless. Since Rs500 and Rs1000 notes make up about 86% of the aggregate money available for use in India, particularly in the immense rustic regions, the agony to what people may understanding if 86% of their blood was expelled from their bodies. The poor were taken thoroughly flat footed and the managing an account foundation in the hinterland is fairly constrained. The tech class has poor presentation to basic social hypothesis with a specific end goal to comprehend the effect on the ground. There is a compassion deficiency. The term demonetization isn't new to the Indian economy. The most elevated category note at any point printed by the Reserve Bank of India was the Rupees 10,000 note in 1938 and again in 1954. Be that as it may, these notes were demonetized in January 1946 and again in January 1978, as indicated by RBI information. The objective was to battle tax avoidance by "dark cash" held outside the formal monetary framework. In 1946, the pre-autonomy government trusted demonetization would punish Indian organizations that were disguising the fortunes amassed providing the Allies in World War II. It ended up becoming more like a money change drive as the legislature couldn't accomplish quite a bit of benefit in the destitute economy around then. In 1978, the administration demonetized banknotes of 1000, 5000 and 10,000 rupees, again in the expectations of checking fake cash and dark cash. The Wanchoo Committee had prescribed the administration to pull back the cash in light of the fact that the nation was experiencing a troublesome period In 2012, the Central Board of Direct Taxes had suggested against

1

demonetization, saying in a report that "demonetization may not be an answer for handling dark cash or economy, which is to a great extent held as benami properties, bullion and adornments." Demonetization is an apparatus to fight Inflation, Black Money, Corruption and Crime, demoralize a money subordinate economy and help exchange. Its strategy of the legislature by forbidding Rupees 500 and 1000 cash notes has impacted all the side of the economy. Its impact on Banking Sector is critical as Bank is a middle for directing the lawful delicate cash to all needs of the general public. The greatest recipients of demonetization are Banks. It influenced the banks to acknowledge the stores with no cost of advancement and radically expanded liquidity to position of the banks. The present investigation is made out of accessible writing on post demonetization. It depicted the impact of demonetization on Banking Sector. It included the current choice of the focal government on Demonetization and its steady impact on Indian saving money part. Banks are center piece of any economy. They channelized the cash to the smooth working of various segments. Activities of Green Banking, made the banks to change regular keeping money administrations into present day saving money administrations. The items and administrations are offered through electronic gadgets with the assistance of web. Presently a day, bank administrations are provided food at the fingertip of clients. Surgical Strike on Black Money called 'Demonetization' got tremendous changes every one of the segments of the nation. Banks are not remarkable from the impact of Demonetization and it made vibrations in the tasks and additionally items and administrations of Banks. It made more prominent request to computerized keeping money administrations where cashless exchanges are organized. Everyday activities of Banks are influenced and discovered intense in Management of liquidity and Employees. It made more prominent effect on Management of liquidity and its request brought by clients up in trading of their restricted cash notes while limiting danger and amplifying nature of administration. In the meantime meeting the direction of Reserve Bank of India was testing. Demonetization has irritated the bank tasks and made the representatives to work under unqualified worry in expanded working hours of a day. A large portion of the banks were not ready to release other saving money administrations while trading the prohibited cash notes. Henceforth, the present examination is made to make sense of the impact of demonetization on keeping money segment. It grandstands post demonetization impact on banks and its activities.

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1.1 Demonetization History and Background in India 

This is not the first time when Indian currency is demonetized in India.



The first instance was in 1946 and the second in 1978 when an ordinance was promulgated to phase out notes with denomination of Rs 1,000, Rs 5,000 and Rs 10,000.



The highest denomination note ever printed by the Reserve Bank of India was the Rs 10,000 note in 1938 and again in 1954. But these notes were demonetized in January 1946 and again in January 1978, according to RBI data.



Rs 1,000 and Rs 10,000 bank notes were in circulation prior to January 1946. Higher denomination banknotes of Rs 1,000, Rs 5,000 and Rs 10,000 were reintroduced in 1954 and all of them were demonetized in January 1978.



The Rs 1,000 note made a comeback in November 2000. Rs 500 note came into circulation in October 1987. The move was then justified as attempt to contain the volume of banknotes in circulation due to inflation.



However, this is the first time that Rs 2,000 currency note is being introduced.



Bank notes in Ashoka Pillar watermark series in Rs 10 denomination were issued between 1967 and 1992, Rs 20 in 1972 and 1975, Rs 50 in 1975 and 1981 and Rs 100 between 19671979.



The banknotes issued during this period contained the symbols representing science and technology, progress and orientation to Indian art forms.



In the year 1980, the legend Satyameva Jayate - ‘truth alone shall prevail’ - was incorporated under the national emblem for the first time.



In October 1987, Rs 500 banknote was introduced with the portrait of Mahatma Gandhi and Ashoka Pillar watermark. Mahatma Gandhi (MG) series banknotes – 1996 were issued in the denominations of Rs 5, (introduced in November 2001), Rs 10 (June 1996), Rs 20 (August 2001), Rs 50 (March 1997), Rs 100 (June 1996), Rs 500 (October 1997) and Rs 1,000 (November 2000).



The Mahatma Gandhi Series – 2005 bank notes were issued in the denomination of Rs 10, Rs 20, Rs 50, Rs 100, Rs 500 and Rs 1,000 and contained some additional/new security features as compared to the 1996 MG series.

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

The Rs 50 and Rs 100 banknotes were issued in August 2005, followed by Rs 500 and Rs 1,000 denominations in October 2005 and Rs 10 and Rs 20 in April 2006 and August 2006, respectively.

1.2 Facts about Demonetization 1946, 1978 And 2016 Demonetization and Bank Operations Demonetization has acquired plenty of difficulties increments to the difficulties which are as of now looking by Banks. The impacts were here and now and long haul sees. In here and now, it upset the banks and focused on unequivocally to complete bank activities and in long run it helped the banks to pool the stores without acquiring of any cost. Here are four impacts of demonetization on Banks. 1. Increase in Deposits: Demonetization has expanded the stores in Banks. Unaccounted cash as Rs.500 and Rs.1000 were streaming to the Banks and the sizes of stores have been expanded. It helped the banks to get the stores and increment their stores. 2. Fall in cost of Funds: In the course of recent months, the stores are expanded. It drove the banks to keep a noteworthy piece of stores as money stores. PSU Banks have a lion share (more than 70%) of the stores and greatest gainers of the ascent in stores, prompting lower cost of assets. 3. Demand for Government Bonds: After sharp ascent in stores on post demonetization, banks began loaning such surplus stores to the RBI under the invert repo alternatives. PSU Banks, especially, sent abundance subsidizes in government bonds. The arrival on bond speculation is probably going to add 15 to 20 for every penny increment in the income of banks. 4. Sagginess in Lending: Loaning development of the banks is impressively less even after demonetization and its effect of development in the measure of open store. Banks have endeavored to loan the cash to the destitute gathering by lessening their financing costs, however it contracted in the course of the most recent couple of months.

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Results of Post Demonetization on Bank Operations There are certain and negative aftereffects of Post Demonetization on Bank activities. Both have impacted Banks' liquidity and productivity and workers as well. The accompanying are sure consequences of demonetization. 1. Free flow of deposits: Banks have picked up stores considerably after demonetization which they can contribute for enhancing their liquidity and benefit. 2. Improved digital Interface: Change in advanced devices and gear to execute bank exchanges has kept away from money misfortune for different reasons like burglary, dacoits and misappropriations. 3. People’s surplus at Bank: Money is a sit still resource which does not yield any wage unless kept in a bank. Along these lines, demonetization made the general population to keep their surplus cash in a bank to procure a type of wage. 4. Increased number of Customers: Demonetization has impacted open to come and execute exchanges with banks. It made even a non-salary assemble individuals to visit bank and have a record. It expanded number of record holders in banks while expanding store corpus. So also, Demonetization has conveyed some operational issues to Banks. It disturbed Banks’ Employees, Operational Costs and Profitability. The following are negative influences of Demonetization. 1. Cash Reserve Requirement: 100% CRR on incremental stores implied that banks did not acquire any enthusiasm on Rupees 3 Lakh crore of stores for about a fortnight. 2. Waived off ATM Charges: ATM charges were postponed off amid restricted note trade and banks acquired lost Rupees 20 in each exchange. 3. Waived off Merchant Discount Rate: Banks brought about loss of 1% markdown charges from traders on utilizing of each card exchange. 4. Non Selling of Loans: Banks were centered on trading money notes and they were not ready to offer any advance items. This made banks to control their loaning exercises.

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5. Reduced SMEs Sale and influence on NPAs: Amid demonetization, some SME organizations had seen their business drop by 50-80 percent and could default in their portions to banks. This drove the banks to consider it as NPA and influenced its level in banks. 6. Stress on Employees: Bank Employees were put under strain and extra time workplace. It discouraged them and kept imbalanced way of life. Barely any cases were discovered where the representatives submitted suicide because of work weight.

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CHAPTER-2 LITERATURE REVIEW 2.1 Literature Review 1. Manpreet Kaur (2017) directed an investigation on demonetization and effect on Cashless Payment System. She said that the cashless framework in the economy has numerous productive advantages less tedious, less cost, paper less exchange and so forth and he expected that the future exchange framework in every one of the parts is cashless exchange framework. 2. Lokesh Uke (2017) researched on demonetization and its belongings in India. He contemplated positive and negative effect of defamation in India. The examination depended on optional information accessible in daily paper, magazines and so forth. The primary reason for demonetization is to kill the dark cash and reduce the debasement. He communicated that Government of India has progressed toward becoming accomplishment to some degree. Demonetization had negative effect for a brief length on Indian money related markets. Yet, he said that the genuine effect will be appeared in future. 3. Sweta Singhal (2017) completed research on Demonetization and E Banking in India. It was a contextual investigation to check the mindfulness level of individuals of provincial territories in India about e-managing an account offices and the amount it has expanded after demonetization. An example size of 100 was utilized with ANNOVA test to demonstrate that rustic individuals contrast much with urban individuals in their mindfulness level and also utilization level of e-keeping money. It was discovered that urban male youth have higher mindfulness and use of e-managing an account. She felt that the investigation might likewise supportive for banks to enhance their e-managing an account offices. 4. M. Angel Jasmine Shirley (February, 2017) has contemplated about the "Effect of Demonetization in India" in her examination paper. In the initial segment of the paper, the effect over Indian economy had been clarified. According to the examination, the BSE SENSEX and NIFTY 50 stock had been fall close around 6% on the precise following day. Besides on the later on days, the nation felt extreme deficiency of the money. Besides 7

because of absence of money general generation had diminished. Banks had insufficient new cash for the trading of the old notes, which breakdown the general financial framework. Additionally in the paper effect of the demonetization over world economy likewise appeared. The primary thing that occurred after demonetization was decrement in to general utilization of wares which brings about to diminish in the fare import. Additionally there was a noteworthy effect over the local parts, diminishment in the Government obligation, cultivating and angling industry, business, drop in modern yield, dark cash, affect over fake money, hawala, bank stores, adornments and land, IT segment and so forth. Discoveries in this segments says that, however demonetization is a decent idea to snatch the dark cash holders, the greater part of dark cash is kept in type of land, gold, land and so forth. "Not all dark cash is in real money, not all money is dark cash". Individuals confront excessively inconveniency because of dishonorable arranging about post demonetization. In addition for number of days they had invested their energy by remaining in lines. To decrease over all negative effect of it, routes are to centering over duty perspective, money accessibility, and disposal of escape clauses. 5. Mr. Brijesh Singh and Dr. N. Babitha Thimmaiah (January 2017) in their exploration paper examined the impact of demonetization as far as "Won or lost". By utilizing the auxiliary information technique i.e. articles, they had directed their examination. In the examination report they had attempted to clarify the idea of cashless economy by taking the reference of Woodford (2003). It isn't about how much cash you are having in your wallet, you can pay by any of the bank card or keeping money exchange. In the examination paper they had demonstrated the impact of demonetization in the territories like, money surge, securities exchange, transportation, horticulture, managing an account, business, pay impose, railroads and so on. There are no correct evidences of correct dark cash holding in real money yet ponders demonstrate that around 8% of dark cash is held in real money. As indicated by the Center for Monitoring the Indian Economy (CMIE), the exchange cost of demonetization until 30th December, 2016 is evaluated around Rupees 1.28 lakh crore. According to R. Gandhi, Deputy Governor of RBI, talking on seventh December 2016, Rupees 11.5 lakh crore has been now stored at bank out of aggregate 14.5 lakh crore which implies still 3 lakh crore are unidentified.

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6. Shweta Mehta & Kruti Patel & Krupa Mehta, (2016) "Demonetization: Shifting Gears from Physical Cash to Digital Cash," Working papers 2016-12-14, Voice of Research. In this paper researchers aim to study the advantages and disadvantages of demonetization and its impact on Indian banking sector. Despite major developments in paperless currency over the past decade, physical cash remains widely used throughout the world. Therefore one of the main motivating factors for this study is to find out the alternatives of physical cash payments such as online bank transfer, e- clearing, e- KYC, digital locker and Unified Payment Interface. 7. Tax Research Team (2016) in their working paper stated in favor of demonetization its main objective is to analyze the impact of demonetization on Indian economy. This paper shows the impact of such a move on the availability of credit, spending, and level of activity and government finances. 8. Banerjee & Chatterjee (2016). Writes in their blog about impact of demonetization on Indian auto industry and its impact on car market. The major factor like non cash transactions has considered to be harder hit for the sale of car. The impact results in inventory piling issue, increased fear among the end customer regarding changing government norms for possession of wealth and assets. 9. Sherline T.I (December 2016) has undertaken the research on “Demonetization as a prelude to complete financial inclusion “. The main objective of the study was to understand the importance of demonetization as a measure of financial inclusion. Financial inclusion mainly stands for, the delivery of the financial services at the affordable cost to the low income segments of society. As per the report financial inclusion can boost the savings as well as credit availability. The study shows that this move of the Government has likely to create long term benefits. Moreover medium to long term Current account and saving account (CASA) ratio could improve. Moreover demonetization would reduce cash transaction the real estates, which may decrease the price of that avenues which make it affordable to general public. Moreover the near future inflation will decrease due to less cash transaction.

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10. Sukanta Sarkar (2010) conducted a study on the parallel economy in India: Causes, impacts & government initiatives in which the researcher focused on the existence of causes and impacts of black money in India. According to the study, the main reason behind the generation of black money is the Indian Political System i.e. Indian govt. just focused on making committees rather than to implement it .The study concludes that laws should be implemented properly to control black money in our economy. 11. Arpit Guru and Shruti Kahanijow (2010) researcher analysed the black money income? Need for amendment in DTAA &ITEA and analyzed that black money is spread everywhere in India up to a large extent International Journal of Interdisciplinary Research in Arts and Humanities (IJIRAH) Impact Factor: 4.675, ISSN (Online): 2456 - 3145 (www.dvpublication.com) Volume 2, Issue 1, 2017 10 which continuously stashed towards abroad in a very large amount. The researcher also identified how black money had caused menaces in our economy and in what ways it is used.

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CHAPTER-3 RESEARCH METHODOLOGY 3.1 Methodology In this study, a combination of both Primary & Secondary data has been used. Primary data is used in the form of questionnaire method, which has been created using Google forms & distributed among internet & social media users. In addition to it, secondary data has been used to support the study.

OBJECTIVES OF STUDY 1. To get idea about demonetization. 2. To identify the reasons for demonetization. 3. To analyze the demonetization post effects on banking habits. 4. To know the trends and behavior change in consumers buying. 5. To know the effects of demonetization on general public.

METHODOLOGY OF THE STUDY The research project is mainly based on primary data. Some part of investigation depends on Secondary Sources of information. The sample size is 40 consumers. The questionnaire survey was conducted on students based on convenience sampling method. It incorporates accessible distributed literary works, for example, daily papers and significant government sites. The examination goes for the degree of demonetization impact on banking habits and change in buying behavior of consumers.

SAMPLE SIZE 40 samples were selected for the study at Gwalior. Sample consists of professionals, graduates, post graduates etc.

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SAMPLE AREA Gwalior is area from where all this information collected.

DATA COLLECTION Both primary and secondary data were used. i.

Primary data: data regarding the topic is collected directly by interacting with the employees by using structured questionnaire method.

ii.

Secondary data: the secondary data was collected from the existing data sources, catalogues, and internet.

SAMPLING The questionnaire was initially pilot-tested by trainer. The results of the pilot test proved to be satisfactory, since all the respondents found most of the questionnaire items understandable. Nevertheless, some wording mistakes and unwanted questions were found, which were corrected in the questionnaire’s version that was finally distributed in the field research. Respondents were approached randomly.

MODE OF ANALYSIS The instrument used for data collection was in the form of questionnaire. The questionnaire was used as it facilitated the tabulation and analysis of the data to be collected. The data collected was subjected to simple frequency distribution and percentage analysis.

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CHAPTER-4 RESULTS AND DISCUSSIONS 4.1

Discussion

On 8 November 2016 midnight, the Government of India reported the demonetization of every one of the 500 and 1000 category monetary certificates of the Mahatma Gandhi Series. The legislature guaranteed that the activity would shorten the shadow economy and get serious about the utilization of unlawful and fake money to support illicit movement and fear based oppression. This plan greatly affects the organizations, average citizens, and monetary establishments alongside multi-assorted mechanical foundation of India. Demonetization speaks to considerably more than destabilization; it has struck a body blow on the monetary action in India. While the defenders of demonetization may have had great expectations, the anguish it has caused to a great many Indians is baseless. Since Rs500 and Rs1000 notes make up about 86% of the aggregate money available for use in India, particularly in the immense rustic regions, the agony to what people may understanding if 86% of their blood was expelled from their bodies. The poor were taken thoroughly flat footed and the managing an account foundation in the hinterland is fairly constrained. The term demonetization isn't new to the Indian economy. The most elevated category note at any point printed by the Reserve Bank of India was the Rupees 10,000 note in 1938 and again in 1954. Be that as it may, these notes were demonetized in January 1946 and again in January 1978, as indicated by RBI information. The objective was to battle tax avoidance by "dark cash" held outside the formal monetary framework. In 1946, the pre-autonomy government trusted demonetization would punish Indian organizations that were disguising the fortunes amassed providing the Allies in World War II. It ended up becoming more like a money change drive as the legislature couldn't accomplish quite a bit of benefit in the destitute economy around then. In 1978, the administration demonetized banknotes of 1000, 5000 and 10,000 rupees, again in the expectations of checking fake cash and dark cash. The Wanchoo Committee had prescribed the administration to pull back the cash in light of the fact that the nation was experiencing a troublesome period In 2012, the Central Board of Direct Taxes had suggested against 13

demonetization, saying in a report that "demonetization may not be an answer for handling dark cash or economy, which is to a great extent held as benami properties, bullion and adornments." Demonetization is an apparatus to fight Inflation, Black Money, Corruption and Crime, demoralize a money subordinate economy and help exchange. Its strategy of the legislature by forbidding Rupees 500 and 1000 cash notes has impacted all the side of the economy. Its impact on Banking Sector is critical as Bank is a middle for directing the lawful delicate cash to all needs of the general public. The greatest recipients of demonetization are Banks. It influenced the banks to acknowledge the stores with no cost of advancement and radically expanded liquidity to position of the banks. The present investigation is made out of accessible writing on post demonetization. It depicted the impact of demonetization on Banking Sector. It included the current choice of the focal government on Demonetization and its steady impact on Indian saving money part. Banks are center piece of any economy. They channelized the cash to the smooth working of various segments. Activities of Green Banking, made the banks to change regular keeping money administrations into present day saving money administrations. The items and administrations are offered through electronic gadgets with the assistance of web. Presently a day, bank administrations are provided food at the fingertip of clients. Surgical Strike on Black Money called 'Demonetization' got tremendous changes every one of the segments of the nation. Banks are not remarkable from the impact of Demonetization and it made vibrations in the tasks and additionally items and administrations of Banks. It made more prominent request to computerized keeping money administrations where cashless exchanges are organized. Everyday activities of Banks are influenced and discovered intense in Management of liquidity and Employees. It made more prominent effect on Management of liquidity and its request brought by clients up in trading of their restricted cash notes while limiting danger and amplifying nature of administration. In the meantime meeting the direction of Reserve Bank of India was testing. Demonetization has irritated the bank tasks and made the representatives to work under unqualified worry in expanded working hours of a day. A large portion of the banks were not ready to release other saving money administrations while trading the prohibited cash notes. Henceforth, the present examination is made to make sense of the impact of demonetization on keeping money segment. It grandstands post demonetization impact on banks and its activities.

14

4.2

Data Analysis

1. GENDER

Figure 4.1: Gender of Respondents The pie chart above shows that proportion of the gender differs by 30% where the females have responded by 35% and male by 65%. The pie chart above shows that the research done on the people doesn’t differ much in the gender which means that the report is not bias towards any side of the gender.

Gender

No of Responses

Percentages (%)

Male

24

65

Female

16

35

Table 4.1: Gender of Respondents

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2. AGE

Figure 4.2: Age of Respondents

This shows that people who have filled this questionnaire falls in the category of 18-30 age group. Not even single person has responded from the age group above 30 category which shows that the most of the respondents are youth. In the pie chart above the 100% of the respondents fall in the 18-30 age group category.

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3. EDUCATION LEVEL

Figure 4.3: Education Level of Respondents The above pie chart shows the education level of the respondents which mainly constitutes of graduates. 92.5% of the respondents are graduates which means the research is mainly from the perspective of students than any other profession. 2.5% of the respondents are professional and only 5% respondents are post graduate. The education level is necessary in the research as it shows the view of the different people with different opinions.

Profession

%(percentages)

Students

92.5

Professional

2.5

Post Graduate

5

Table 4.2: Education Level of Respondents

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4. OCCUPATION

Figure 4.4: Occupation of Respondents

The above pie chart shows the occupation of the respondents which mainly constitutes of students. 87.5% of the respondents are students which means the research is mainly from the perspective of students than any other profession. 5% of the respondents are self-employed and 5% respondents are employees. The occupation is necessary in the research as it shows the view of the different sectors of the profession.

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5. SINCE HOW MANY YEARS ARE YOU USING INTERNET?

Figure 4.5: Using Internet Since

The above pie chart shows since how many years the respondents are using internet. 40% of the respondents are using internet since more than 10 years. 25% of the respondents are using internet since more than 7 years but less than 10 years and 32.5% respondents are using internet since last 4 to 7 years. Only 2.5% respondents were new to internet since they have started using internet just 4 years back. So this pie chart states that majority of respondents are aware about internet since many years and some of them are even using internet since more than 10 years.

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6. How often do you use internet every day

Figure 4.6: Use of Internet Every Day

The above pie chart shows how often the respondents use internet every day. 65% of the respondents spend more than 4 hours daily on internet. 22.5% of the respondents spend 2 to 4 hours every day using internet and 12.5% respondents use internet for 1 to 2 hours daily. So this pie chart states that all the respondents are aware about internet and spend at least 1 hour daily on internet.

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7. Are you aware about

Figure 4.7: Respondents are Aware About

Table 4.3: Respondents are Aware About

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8. What was the frequency of usage of these services? (Before Demonetization)

Figure 4.8: Frequency of Usage of Services before Demonetization

Figure 4.9: Frequency of Usage of Net Banking before Demonetization

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Figure 4.10: Frequency of Usage of Mobile Banking before Demonetization

Figure 4.11: Frequency of Usage of Payment Wallets before Demonetization

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Figure 4.12: Frequency of Usage of Cryptocurrency before Demonetization

Figure 4.13: Frequency of Usage of Online Trading before Demonetization

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Figure 4.14: Frequency of Usage of Online Insurance Purchase before Demonetization

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9. What is the frequency of usage of these services? (After Demonetization)

Figure 4.15: Frequency of Usage of Services after Demonetization

Figure 4.16: Frequency of Usage of Net Banking after Demonetization

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Figure 4.17: Frequency of Usage of Mobile Banking after Demonetization

Figure 4.18: Frequency of Usage of Payment Wallets after Demonetization

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Figure 4.19: Frequency of Usage of Cryptocurrency after Demonetization

Figure 4.20: Frequency of Usage of Online Trading after Demonetization

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Figure 4.21: Frequency of Usage of Online Insurance Purchase after Demonetization

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10.Since how many years are you using these service?

Figure 4.22: Since how many years respondents are using these service

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11.Which attribute of the bank do you value the most?

Figure 4.23: Which Attribute of the Bank is Valued Most by Respondents

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12. Which factor promotes you to use the new techniques in banking?

Figure 4.24: Which Factor Promotes to Use New Technologies?

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13. Customer level of usage of technology

Figure 4.25: Usage of Technology

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14. How frequently did you use the following banking services per month (Before Demonetization?)

Figure 4.26: Frequency of Usage of Services per month before Demonetization

Figure 4.27: Frequency of Usage of Branch Banking per month before Demonetization

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Figure 4.28: Frequency of Usage of ATM per month before Demonetization

Figure 4.29: Frequency of Usage of Internet Banking per month before Demonetization

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Figure 4.30: Frequency of Usage of Telephone Banking per month before Demonetization

Figure 4.31: Frequency of Usage of Mobile Banking per month before Demonetization

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15. How frequently did you use the following banking services per month (After Demonetization?)

Figure 4.32: Frequency of Usage of Services per month after Demonetization

Figure 4.33: Frequency of Usage of Branch banking per month after Demonetization

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Figure 4.34: Frequency of Usage of ATM per month after Demonetization

Figure 4.35: Frequency of Usage of Internet Banking per month after Demonetization

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Figure 4.36: Frequency of Usage of Telephone Banking per month after Demonetization

Figure 4.37: Frequency of Usage of Mobile Banking per month after Demonetization

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16. Attitude of Bank employees during demonetization period

Figure 4.38: Attitude of Bank employees during demonetization period

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CHAPTER-5 CONCLUSION AND FUTURE PROSPECTS 5.1 Conclusion Demonetization though it has created some positive and some negative impacts on different sectors but in long run it definitely will have positive impact in controlling black money and fake money. So the study shows that initially the demonetization effects on market were painful but this also instigate the shopkeepers and consumers to adopt cashless means such as paytm, debit card use, internet banking to buy goods. By adopting the cashless means economy will be sound in coming time and Indian Economy will get benefits of early and hassle free transactions. Demonetization effect will be positive in coming time for Indian Economy. Indian consumers will strives to learn new ways of cashless transactions. By adopting the cashless means certainly there will be a check on black money. The demonetization undertaken by the government is a large shock to the economy. The impact of the shock in the medium term is a function of how much of the currency will be replaced at the end of the replacement process and the extent to which currency in circulation is extinguished. While it has been argued that the cash that would be extinguished would be “black money” and hence, should be rightfully extinguished to set right the perverse incentive structure in the economy, this argument is based on impressions rather than on facts. While the facts are not available to anybody, it would be foolhardy to argue that this is the only possibility. As argued above, it is possible that these cash balances were used as a medium of exchange. In other words, while the cash was mediating in legitimate economic activity, if this currency is extinguished there would be a contraction of economic activity in the economy and that is a cost that needs to be factored in while assessing the impact of the demonetization on the economy and its agents. It is likely that there would be a spurt in the banking deposits. While interpreting the phenomenon, however, one has to keep in mind that a large part of their deposits were earlier used for transactional purposes. For example, if a small trader deposits 2 lakh Rupees in the Jan Dhan account since the currency in which he held these balances in for transactional purposes has been 41

scrapped, it would be incorrect to interpret this as success of the programmer in bringing in people who were hiding black money. Nor can they be interpreted as additional balances that the banking sector can lend out on the same basis as earlier deposits, since the deposits now would remain in accounts for much shorter periods that deposits based on savings would be The success and the efficiency of implementing demonetization lies in the preparedness of The entire economy, the government machinery and the awareness amongst the general public and the entire political system being taken into confidence through an effective communication by all means and by the transparent approach of the government implementing Demonetization.

5.2 Future Prospects It is early to come to any conclusions. Few months’ results may not help to conclude long term impact. This study has further scope to study long term impact with more specific and wider factors covering the impact.

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CHAPTER-6 SUMMARY 6.1 Summary On 8 November 2016 midnight, the Government of India reported the demonetization of every one of the 500 and 1000 category monetary certificates of the Mahatma Gandhi Series. The legislature guaranteed that the activity would shorten the shadow economy and get serious about the utilization of unlawful and fake money to support illicit movement and fear based oppression. This plan greatly affects the organizations, average citizens, and monetary establishments alongside multi-assorted mechanical foundation of India. Demonetization though it has created some positive and some negative impacts on different sectors but in long run it definitely will have positive impact in controlling black money and fake money. So the study shows that initially the demonetization effects on market were painful but this also instigate the shopkeepers and consumers to adopt cashless means such as paytm, debit card use, internet banking to buy goods. By adopting the cashless means economy will be sound in coming time and Indian Economy will get benefits of early and hassle free transactions. Demonetization effect will be positive in coming time for Indian Economy. Indian consumers will strives to learn new ways of cashless transactions. By adopting the cashless means certainly there will be a check on black money. The demonetization undertaken by the government is a large shock to the economy. The impact of the shock in the medium term is a function of how much of the currency will be replaced at the end of the replacement process and the extent to which currency in circulation is extinguished. While it has been argued that the cash that would be extinguished would be “black money” and hence, should be rightfully extinguished to set right the perverse incentive structure in the economy The success and the efficiency of implementing demonetization lies in the preparedness of The entire economy, the government machinery and the awareness amongst the general public and the entire political system being taken into confidence through an effective communication by all means and by the transparent approach of the government implementing Demonetization. 43

REFERENCES Web Sources: 1) http://www.businessdictionary.com/definition /demonetization.html 2) http://www.investopedia.com/terms/d/demo netization.asp#ixzz4PhFwOAeH 3) http://www.investorguide.com/definition/demonetization. 4) http://www.careratings.com/upload/NewsFiles/SplAnalys is/Effects%20of%20Demonetization%20of%20500%20a nd%201000%20notes.pdf 5) http://www.careratings.com/upload/NewsFiles/SplAnalysis/Effects%20of%20Demonetiz ation%20of%20500%20and%201000%20notes.pdf 6) https://www.thequint.com/india/2016/11/09/rs-500-1000- notes-scrapped-narendra-modia-look-back-at-1977- when-notes-were-scrapped-demonetization-blackmoney-rbi 7) http://www.livemint.com/Politics/uzZItqeHdMPHHgFJaq2BnM/A-history-ofdemonetization-in-India.html 8) http://blogs.timesofindia.indiatimes.com/paperweight/ind

ia-repeatedly-ruled-out-

demonetization-in-the-1970s/ 9) http://indianexpress.com/article/business/banking-andfinance/rs-500-rs-1000-notesdeclared-illegal-rbi-issues25-point-faq-explaining-move-4365032/ 10) Padmini Sivarajah. (2016, Nov. 11). Demonetisation: Madurai Corporation makes record tax collection on a single day. The Times of India. Retrieved from http://timesofindia.indiatimes.com/city/chennai/Demonetisation-Madurai-Corporationmakes-ecordtax-collection-on-a-single-day/articleshow/55374378.cms 11) (2016, Nov. 9), Demonetisation will benefit economy in long run: Jaitley. The Hindu Business Line.Retrieved from http://www.thehindubusinessline.com/economy/demonetisation-to-increase-ecosizeenhance-revenue-base-says-jaitley/article9324312.ece 12) (2016, Nov. 12). Hyderabad civic body collects Rs 65 crore of property tax. The Indian Express.Retrieved from http://indianexpress.com/article/india/india-news-india/demonetisation-hyderabadcivicbody-collects-rs-65-crore-of-property-tax-4372156/

13) The Hindu. Retrieved from http://www.thehindu.com/business/Economy/rbi-urges-public-to-adoptdigital-as-atmsrun-dry/article9339020.ece 14) http://www.indianeconomy.net/splclassroom/309/whatare-the-impacts-of-demonitisationon-indianeconomy/#sthash.wIhn787q.dpuf 15) https://en.wikipedia.org/wiki/2016_Indian_banknote_de monetisation 16) http://www.moneycontrol.com/news/economy/impactanalysisdemonitizationindia 8044821.html?utm source=ref article Books: 17) Prelec, Drazen, and Duncan Simester. "Always leave home without it: A further investigation of the creditcard effect on willingness to pay." Marketing letters. 12.1 (2001): 5-12. 18) Prelec, D., and G. Lowenstein. (1998). “The Red and the Black: Mental Accounting of Savings and Debt.” Marketing Science. 17:4–28. 19) Raghubir, P., Srivastava, J., (2008). Monopoly money: The effect of payment coupling and form on spending behavior. Journal of Experimental Psychology-Applied, 14(3), 213- 225. 20) Special correspondent. (2016, Nov. 13). As ATMs run out of cash, RBI ‘encourages’ public to go digital.

Appendix-1

QUESTIONNAIRE Name of the employee………………………….. Designation……………………………………….. Contact no………………………………………….. 1. What is your gender? a) Male b) Female 2. From which age group do you belong from? a) 18-30 years old b) 30-50 years old c) 50-65 years old 3. What is your educational level? a) Professional b) Post graduate c) Graduate 4. What is your occupation? a) Self-employed b) Employee c) Student 5. Since how many years are you using internet? a) 0-4 years b) 4-7 years c) 7-10 years d) More than 10 years 6. How often do you use internet every day? a) 1-2 hours b) 2-4 hours c) More than 4 hours

7. Are you aware about? a) Net banking b) Mobile banking c) Payment wallets d) Cryptocurrency e) Online trading f) Online insurance purchase 8. What was the frequency of usage of these services? (Before Demonetization) a) Net banking b) Mobile banking c) Payment wallets d) Cryptocurrency e) Online trading f) Online insurance purchase 9. What was the frequency of usage of these services? (After Demonetization) a) Net banking b) Mobile banking c) Payment wallets d) Cryptocurrency e) Online trading f) Online insurance purchase 10.Since how many years are you using these services? a) 0-4 years b) 4-7 years c) 7-10 years d) More than 10 years 11.Which attribute of the bank do you value the most? a) Location b) Trust c) Technology d) Security e) Quality of service

12.Which factor promotes you to use the new techniques in banking? a) Cost effectiveness b) Technology savvy c) Reduced time of transactions d) Ease of use 13.How many of these technologies are been used by you? a) ATM/Debit card services b) Connected to the internet at home or work to do their financial transactions c) Uses E-mail d) Online banking services e) E-payments f) Electronic Fund Transfer(EFTs)/NEFT/RTGS g) Credit card services 14.How frequently did you use the following banking services per month? (Before Demonetization) a) Branch banking b) ATM c) Internet banking d) Telephone banking e) Mobile banking 15.How frequently did you use the following banking services per month? (After Demonetization) a) Branch banking b) ATM c) Internet banking d) Telephone banking e) Mobile banking 16.Rate out of 5 the attitude of bank employees during demonetization period. a) 1 b) 2 c) 3 d) 4 e) 5