A Research Project On Customer Attitude Towards Commercial Loan

(A Study Conducted at JIND)

(Submitted in the fulfillment for the award of master degree in business administration) (Session 2009-11)

Under the guidance of:DR. DALEEP Faculty Member MBA IMSAR

Submitted By:SAURABH VERMA M.B.A. HONS. 2nd SEM. Roll No. - 2174

INSTITUTE OF MANAGEMENT STUDIES AND RESEARCH MAHARISHI DAYANAND UNIVERSITY, ROHTAK

ACKNOWLEDGEMENT
"Appreciation can make a day, even change a life. Your willingness to put it into words is all that is necessary".

A research study cannot be completed without able and willing inspiration, guidance and co-cooperation from various quarters. This study also bears the imprints of much person. I take this opportunity to express my deep sense of gratitude to all those who directly and indirectly help me in pursuance of this research study. I particularly indebted to my worthy guide and mentor Dr. Daleep Singh, who provide me with his valuable time, support and inspiration during the pursuance of this research study. I am also grateful to Dr. Ajay Rajan (Principal Director, IMSAR) without whose guidance and motivational encouragement I could not do anything. Last but not the least, I would like to place a word of appreciation on record for all those who directly or indirectly have helped me for the successful completion of the project.

SAURABH VERMA
2

PREFACE
In this project attempt has been made to understand the customer attitude with respect to loan Schemes. The customers studied were the residents of Jind city. Study could not be made detailed, as there were obvious constraints of time and resources. The nature of present study is descriptive. It was aimed at establishing correlation and finding inter-relationship among various deciding factors. For this purpose the technique random sampling was used. On the basis of easy access sample size of 100 was selected. Thus an attempt was made to strike a balance between size and representative character of sample. While analyzing, the effort was made to explore possible correlation between consumer preference and some biographical aspect of respondents. So that better quality of service product can be produced resulting in consumer satisfaction and profit for the group.

DECLARATION

I SAURABH VERMA, student of INSTITUTE OF MANAGEMENT STUDIES AND RESEARCH (Maharishi Dayanand University Rohtak) hereby declare that the research report on Customer Attitude towards Commercial Loan is my original work and has not been submitted by any other person. I also declare that I have done my work sincerely and accurately.

SAURABH VERMA

RESEARCH SUPERVISORS CERTIFICATE

Certified that the Project Report entitled CUSTOMER ATTITUDE TOWARDS COMMERCIAL LOAN Submitted to IMSAR, MDU Rohtak for the award of degree of MBA(HONS.) is a record of independent research work carried out by MR. SAURABH VERMA, a research scholar MBA programme, IMSAR under my supervision & guidance. This has not been previously submitted for the award of any degree diploma or other similar titles.

Rohtak May 2010

Name Sign of supervisor:

INTRODUCTION ABOUT THE STUDY

5

There are many financial institutes which are providing many loans and provide many financial schemes in which commercial loans play very important role. Financial schemes development involves raising the socio economic status of the population on sustainable bails through optimum utilization of resources, both human and society. The essence of financial schemes like commercial loan is to make life easy people have many dreams regarding their comfort, but for that sometime they dont have enough money. Then these banks help them to come out from the problem. Commercial loans are of two types, they are given for either manufacturing purpose or trading purpose but both types of loan is income generated it is also called business loan. It is given for the setup of the industry and for the growth and development of the country. Human needs can be fulfilled by these types of loan. This concept is very comprehensive and multidimensional in nature.

CONSUMER BEHAVIOUR
A consumer is an individual or a set of individuals who have an actual or potential interest in the purchase or usage of any product, idea or a service. Consumer behaviour is the study of the processes involved when individuals or groups select, purchase, use or dispose of products to satisfy their needs and wants. Consumer behavior is very complex phenomenon, which is considered primarily in marketing decisions. It has been rightly said "Understand, you do not understand, you will not understand, you cannot understand all your customers but still you have to do your best to understand them." In consumer behavior this is very difficult to make a uniform theory that may suggest that a particular individual or group will behave in a particular manner. Consumer behavior is dynamic and to be studied regularly. Increasing awareness, living standards and urbanization has
6

led to increase in the changing preferences and the same has forced the marketers to change their product features, packaging styles, distribution channels and so on. Identical products always have their life cycle the product life cycle suggests that there is a level of maturity of the product and after that no more consumers can be attracted for that.

INDUSTRIAL DEVELOPMENT A TASK

Yes it is truly said that industrial growth and to improve economy of India is great task for that there is lots of hard work has to done for the setup of industry one must need money as well as infrastructure for the development of business or firm or any organization people takes loan from banks these loans are given for commercial purpose to generate income either from trading or manufacturing etc. Industrial growth is a complex process. It could therefore achieved only through concentrated efforts on various front. It is rightly said it seems that of major weak links in the rural development planning are absence of total approach at the strategy level lack of coordinated planning at the programmed level and weak planning components of individual programmers. Commercial loans programming or business is not successful without adequate regional planning strong central coordination effective local organization and people active participation at the planning and implementation stage. Industrial development can be possible if only there is proper balance between services oriented programmed and development oriented programmed and self centered programmed. The importance attached to service oriented schemes besides this, has also resulted in the wastage of precious resources.
7

WHAT IS A BANK?
Banking operations started in India as early as 1870 with the establishment of the Bank of Hindustan, considered as the first bank in India. The second development in the banking sector happened with the incorporation of the Bank of Calcutta, the Bank of Bombay and the Bank of Bombay in accordance with the Presidency Bank's Act, 1876. All these banks joined hands to form the Imperial Bank of India. The reserve Bank of India was engaged in the performance of central banking activities before the establishment of the Reserve Bank of India. In simple words, bank refers to an institution that deals in money. This institution accepts deposits from the people and gives loans to those who are in need. Besides dealing in money, banks these days perform various other functions such as credit creation, agency job and general service. Bank, therefore is such an institution which accepts deposits from the people, gives loans, creates and undertakes agency work. Banking is the mirror reflection of an economy. The performance of any economy to a large extent is dependent on the performance of banks. A competitive banking system requires privatisation of banks so that the full benefits of competition can accrues to the economy.

DEFINATION OF BANK
According to Whitehead, "A bank is defined as an institution which collects surplus funds from the public, safeguards them, and makes them available to the true owner when required, but also lends sums not required by their true owner to those who are in need of funds and can provide security."

TYPE OF BANKS
(A) Classification on the basis of ownership banks are of the following types:
(1) Public Sector Banks Public sector banks are those banks which are owned by the government. The government runs these banks. In India, 20 banks were nationalised in 1969 and 1980. All these banks now belong to the public sector category. Social welfare is their principal objective. (2) Private Sector Banks These are those Banks which are owned and run by the private sector Like ICICI Bank belongs to this category. An individual has control over these banks in proportion to the shares of the banks held by him. (3) Cooperative Banks Cooperative banks are those banks which are jointly run by a group of individuals having equal share in these banks. The affairs of the bank are managed by its share holders. (B) Classification according to law Banks are classified in to the following two categories on the basis of Reserve Bank Act, 1934. (1) Scheduled Banks These are the banks having paid up capital of at least Rs 5 lacs. These are like a joint stock company or a cooperative organization. (2) Non Scheduled Banks These banks are not mentioned in the second schedule of Reserve Bank. Paid up capital of banks is less than Rs 5 lacs.
9

(C) Classification according to function On the basis of their functions, banks are classified as under: (1) Commercial Banks These banks make short loans to the public and business establishments, and keep their deposits with them. Credit creations are the principal function of these banks. Punjab National Bank, Oriental Bank of Commerce and Allahabad Bank are examples. Commercial Banks in India are broadly categorized into Scheduled Commercial Banks and Unscheduled Commercial Banks. The Scheduled Commercial Banks have been listed under the Second Schedule of the Reserve Bank of India Act, 1934. The selection measure for listing a bank under the Second Schedule was provided in section 42 (60 of the Reserve Bank of India Act, 1934. Commercial banks are joint stock companies dealing in money and credit. A commercial bank may be defined as a financial institution that accepts cheque from the public and also uses the money with it for lending. The most distinctive function of a commercial bank is that it accepts deposits called ' demand deposits ' from the public which are cheque, i.e. with draw by means of cheques. Its essential function is to make use of these deposits for lending to others. Commercial banks usually give short term loans and advances. They occupy a dominant place in the money market. The commercial banks in India are governed by the Indian Banking Regulation Act 1949 Brought up to date to include additional rules thereto. Under the law, commercial banks are not supposed to do any other business, except banking. In India, However, there is a mixed banking system. At present there are 20 Nationalised banks plus the STATE BANK OF INDIA and 7 subsidiaries constituting public sector banking which controls overs 90 percent of the banking business in the country. (2) Industrial Banks
10

Industrial Banks are those banks which offer long term and medium term loans to the industries and also work for their development industrial Bank of India, Industrial Finance Corporation, and State Finance Corporation are examples. (3) Agricultural Banks Agricultural banks are those banks that give credit to agricultural sector of the economy. Short period loans are given to the farmers for the purchase of seeds, fertilizers and other inputs. Long period loans are given for making permanent improvement on land.

HISTORY OF BANKING INDUSTRY IN INDIA:

Banking in India originated in the last decades of the 18th century. The oldest bank in existence in India is the State Bank of India, a government-owned bank that traces its origins back to June 1806 and that is the largest commercial bank in the country. Central banking is the responsibility of the Reserve Bank of India, which in 1935 formally took over these responsibilities from the then Imperial Bank of India, relegating it to commercial banking functions. After India's independence in 1947, the Reserve Bank was nationalized and given broader powers. In 1969 the government nationalized the 14 largest commercial banks; the government nationalized the six next largest in 1980. Currently, India has 88 scheduled commercial banks (SCBs) - 27 public sector banks (that is with the Government of India holding a stake), 29 private banks (these do not have government stake; they may be publicly listed and traded on stock exchanges) and 31 foreign banks.

11

FROM WORLD WAR 1 TO INDEPENDENCE

The period during the First World War (1914-1918) through the end of the Second World War (1939-1945), and two years thereafter until the independence of India were challenging for Indian banking. The years
12

of the First World War were turbulent, and it took its toll with banks simply collapsing despite the Indian economy gaining indirect boost due to war-related economic activities. At least 94 banks in India failed between 1913 and 1918 as indicated in the following table:

Years

Number of banks Authorised capital Paid-up Capital that failed (Rs. Lakhs) (Rs. Lakhs)

1913 12

274

35

1914 42

710

109

1915 11

56

1916 13

231

1917 9

76

25

1918 7

209

POST-INDEPENDENCE
The partition of India in 1947 adversely impacted the economies of Punjab and West Bengal, paralyzing banking activities for months. India's independence marked the end of a regime of the Laissez-faire for the Indian banking. The Government of India initiated measures to play an active role in the economic life of the nation, and the Industrial Policy Resolution adopted by the government in 1948 envisaged a
13

mixed economy. This resulted into greater involvement of the state in different segments of the economy including banking and finance. The major steps to regulate banking included:

In 1948, the Reserve Bank of India, India's central banking authority, was nationalized, and it became an institution owned by the Government of India. In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of India (RBI) "to regulate, control, and inspect the banks in India." The Banking Regulation Act also provided that no new bank or branch of an existing bank could be opened without a license from the RBI, and no two banks could have common directors.

ROLE OF BANKS PROVIDING COMMERCIAL LOANS

The banking sector in India has overgrown diversified and overstretched like many of the sprawling big cities in India it has tried to accommodate all types of banking activities especially after the industrial revolution. Major slice banking was acquired by the state in its attempts to cover the commanding heights of the economy. It is the public sector bank if we talk about state bank of India who is the largest bank known for providing loans in various areas commercial loans are one of them besides this many private banking are also come into existence to provide many loans here we will discuss commercial loans only . Collateral security: Collateral security by way of mortgage of immovable property / any other specified securities to cover 100% of loan amount Documents: 1. Attested copy of latest salary slip of self / parent and Form 16 for salaried employees 2. Income tax returns for the last 3 years for self-employed persons.
14

3. Pass book or bank statements for last six months 4. Proof of Age and Residence of Self / Parent. 5. Certificate / Mark Sheet of last qualifying exam. 6. Details of proposed course 7. Copy of sale agreement, share certificate, NOC from society/builder or documents pertaining to other collateral as applicable. Documentation 1. Promissory Note 2. D. P. Note Delivery Letter 3. Documents pertaining to collateral security 4. Authority letter in duplicate from borrower authorizing salary deduction or PDCs 5. No dues affidavit 6 All documents to be signed jointly by the student and parent / guardian.

TYPES OF COMMERCIAL BANKS

There are two type of commercial bank.

15

Types of commercial bank

Public bank

Private Bank

(1) Public Sector Banks

Public sector banks are those banks which are owned by the government. The government runs these banks. In India, 20 banks were nationalised in 1969 and 1980. All these banks now belong to the public sector category.

(2) Private Sector Banks

These are those Banks which are owned and run by the private sector Like ICICI Bank belongs to this category. An individual has control over these banks in proportion to the shares of the banks held by him.

BANKS INCLUDED IN THE STUDY

The banks which are included in the study are the following as under:
16

A. ICICI Bank B. IDBI Bank C. Punjab National Bank (PNB) D. State Bank of India (SBI)

17

A. ICICI Bank at a Glance

1955: The Industrial Credit and Investment Corporation of India Limited (ICICI) incorporated at the initiative of the World Bank, the Government of India and representatives of Indian industry, with the objective of creating a development financial institution for providing medium-term and long-term project financing to Indian businesses. Mr.A.Ramaswami Mudaliar elected as the first Chairman of ICICI Limited 2000: ICICI Bank became the first commercial bank from India to list its stock on NYSE. 2002: ATM-on-Wheels, Indias first mobile ATM, launched in Mumbai. 2003: Indias first ever "Visa Mini Credit Card", a 43% smaller credit card in dimensions launched. 2004: Max Money, a home loan product that offers the dual benefit of higher eligibility and affordability to a customer, introduced, Mobile banking service in India launched in association with Reliance Infocom, Indias first multi-branded credit card with HPCL and Airtel launched. 2006: Introduced a new product - NRI smart save Deposits a unique fixed deposit scheme for nonresident Indians. 2008: ICICI Bank enters US, launches its first branch in New York, ICICI Bank enters Germany, opens its first branch in Frankfurt, ICICI Bank launched iMobile, a breakthrough innovation in banking where practically all internet banking transactions can now be simply done on mobile phones.

18

B. IDBI Bank at a Glance

IDBI Bank is a Board-managed organization. The responsibility for the day-to-day management of operations of the Bank is vested with the Chairman & Managing Director and two Deputy Managing Directors, who draw upon the support and expertise of a cross-disciplinary Top Management Team. As on March 31, 2008, IDBI Bank had a combined employee base of 8989, including professionals from the fields of accountancy, management, engineering, law, computer technology, banking and economics. Advantages of IDBI Loans:

Maximum Funding Flexibility of choosing between Floating or Fixed interest rate Attractive rate of interest EMI on daily reducing balance Personalised doorstep service Simple documentation Legal and technical assistance Balance transfer facility Reassessment and adjustment of applicant's loan eligibility in case of change of income and residence status

Securities accepted by IDBI bank against loans: Loan against Shares Loan against bonds Loan against Mutual fund units Loan against life insurance policies Loan against NSCs / KVP
19

C. Punjab National Bank (PNB) at a glance

Established in 1895 at Lahore, undivided India, Punjab National Bank (PNB) has the distinction of being the first Indian bank to have been started solely with Indian capital. The bank was nationalised in July 1969 along with 13 other banks. From its modest beginning, the bank has grown in size and stature to become a front-line banking institution in India at present this bank have Largest branch network in India 4525 Offices including 432 Extension Counters spread throughout the country. Amongst Top 1000 Banks in the World, The Banker listed PNB at 255th place. Further the leading international Credit Rating index provider, Standard & Poors (2006) listed PNB, amongst the 300 World companies & 7 Indian companies, which are expected to emerge as challengers to the worlds leading blue chip companies. Financial Performance: Punjab National Bank continues to maintain its frontline position in the Indian banking industry. In particular, the bank has retained its number one position among the nationalized banks in terms of number of branches, operating and net profit in the year 2006-07. The performance highlights of the bank in terms of business and profit are shown below: (Rs in Crore) Parameters March 05 March 06 March 07 Gross Profit 2404 2917 3231 Net Profit 1410 1439 1540 Deposits 103167 119685 139860 Advances 60413 74627 96597 Business 163580 194312 236457

20

D. State Bank of India (SBI) at a glance

SBI, the premier Nationalized Indian Bank. State Bank of India is actively involved since 1973 in non-profit activity called Community Services Banking State Bank of India is Indias largest bank amongst all public and private sector bank operating in India Moreover, State Bank of India has Colleges/Institutes/Training Centers that are the seats of learning and research and development. It caters not only to the employees of State Bank of India but also other banks/establishments in India and abroad. Though SBI was the clear market leader in India, the new age private sector banks that had appeared in the Indian banking arena after the reforms in the banking sector were introduced in the early 1990s, were rapidly gaining on it. These private sector banks had revolutionized the banking sector in the country by providing top class service and introducing several technological advancements. According to a 2008 Reserve Bank of India (RBI) report Trend and Progress of Banking in India, while the banking industry on an average grew by 20 percent per annum between 2001-02 and 2006-07, the new private banks led by ICICI Bank grew by 35 percent per annum during the same period.The share of the private banks increased from 9 percent to 16 percent between 2002 and 2007, while that of SBI and its associates dropped by 4 percentage points to 24 percent, according to the same report.Analysts felt that to maintain its leadership position and to gear itself up to meet the threat of intensified competition in the sector post-2009, SBI was in the process of merging all its associate banks with itself.

21

OBJECTIVES OF THE STUDY

Primary Objective:
The primary objective of the study is to know about the customer perception & attitude towards commercial Loan in the financial sector & also to check the customer satisfaction level towards their commercial loan providers.

Secondary Objective:
The secondary objectives of the study were the following: 1. To know the industrial development financial schemes provided by different players in this segment. 2. To know the effectiveness of industrial financial scheme. 3. To make the comparison of commercial loan & its providers in the financial market with reference to Private & public sector. 4. To know the RBI role & its provision towards commercial Loan. 5. To study the different financial Institution in private sector & public sector & their role in the Industrial Development.

SCOPE OF THE STUDY

This research study is very important for analyzing the attitude of the different customer. It shows the positive and negative behavior of the customers towards a particular bank. The study is also helpful in finding out that which bank is providing more satisfaction to the customers in compare to the other available banks. The study is also important for knowing better available option for taking loan and can compare with another one easily.

22

RESEARCH METHODOLOGY
Research is a systemic and objective process of gathering recording and analyzing data for aid of making decision regarding a particular problem. Research methodology is a way to systematically solve the research problem. It may be understood as a science of studying how research is done scientifically. In it we study the various steps, the research process that is generally adopted to study the research problem and basic logics behind them. In quantitative research your aim is to determine the relationship between one thing (an independent variable) and another (a dependent or outcome variable) in a population. Quantitative research designs are either descriptive (subjects usually measured once) or experimental (subjects measured before and after a treatment). A descriptive study establishes only associations between variables. An experiment establishes causality.

MEANING OF RESEARCH METHODOLOGY

All business undertakings operate in the world of uncertainty. There is no unique method which can entirely eliminate uncertainty. But research methodology, more than any other procedure, can minimize the degree of uncertainty. Thus it reduces the probability of making a wrong choice amongst alternative course of action. This is particularly significant in the light of increasing competition and growing size which make the task of choosing the best course of action difficult for any business enterprise. It is imperative that any type of organization in the present environment needs systematic supply of information coupled with tools of analysis for making sound decisions which involves minimum risk. It is in this context that research methodology plays a very important role.

23

RESEARCH PROCESS
The research process is the step to step procedure for gaining new knowledge with the help of proper scientific and other statistical method with the help of data. The research process starts from defining the problem, covers various steps involve in it and ends with the proper result or solution of the problem. It is the process of discover new best solution of the problem faced.

Chart of Research Process

Define the research problem and its objectives Review concepts and theories

Research design including sample design

Collection of data survey

Analysis of data

Interpretation and report writing

The research consisted of two stages. In the first stage, a survey was conducted to collect the data about the people. The second stage involved analysis of the data collected in the first stage.

24

1. RESEARCH DESIGN
The research design is a master plan specifying the methods and procedures for collecting and analyzing the needed information. DESCRIPTIVE RESEARCH The research design of my dissertation is descriptive research which includes surveys and facts findings inquiries of different kinds.

2. DATA COLLECTION
The data can be collected from various sources which comes under two categories primary and secondary as shown in the following figure:Data Collection Methods

P R I M A R Y D A T A

Questionnaire

Published Data

Scheduler

Books

S E C O N D A R Y D A T A

Case Study

Magazines

Observation etc.

Through Internet

25

(i) SECONDARY DATA The sources of secondary data are the websites, magazines and catalogues of different banks. The secondary data was collected from the journals, magazines, books and from websites of the banks which are included in the study. (ii) PRIMARY DATA The survey method is used for this research project. Primary data is gathered through a survey with the help of questionnaire. A general survey is to be conducted at JIND to gather the required data. The data is to be collected through both the primary as well as secondary sources. The primary source of the data is the users and nonusers of the commercial loan.

3. SAMPLING TECHNIQUE
This is the type of technique that one uses to select the items for the sample. The sampling method which is used in this study is simple random sampling which is a type of probability sampling.

4. SAMPLE DESIGN

Target population was the people from various organization. Sample size was 100 people. Sampling technique used in this research is random sampling. Sampling area JIND city.

26

5. RESEARCH INSTRUMENT
Questionnaire A questionnaire was prepared for collecting the primary data from the respondents. The questionnaire was developed in this way that it can provide data from those persons also who did not take loan yet but wants to take in coming future. ANALYTICAL TOOL The tools which I have applied in my research is Correlation analysis, Hypothesis testing, percentage analysis and mean analysis, coefficient of variation, coefficient of correlation, range of variation and the research design framed for the study. CORRELATION ANALYSIS: Correlation analysis refers to the techniques used in measuring the relationship between the variables. According to Simpson and Kafka correlation analysis deals with the association between two or more variables. It helps in determining the degree of relationship between two or more variables but it does not tell us anything about cause and effect relationship. Types: Correlation is classified in several different ways. Three of the most important ways are Positive or negative Simple partial or multiple Linear or non-linear There are two types of variables Static-Consumer preference Dynamic- Brand Name, Price, Availability.

27

Reason for using Correlation: I have used correlation to show the effect of the different factors (Price, Brand name & Availability) on the purchase behaviour of the respondents. RANGE Range is the value which can be determined by subtracting the smallest value from the largest value. HYPOTHESIS TESTING The chi-square test is one of the simplest and widely used nonparametric tests in statistical work. The symbol is Greek letter chi. It was first used by Karl Pearsons in the year 1990. The quantity chisquare describes the magnitude of the discrepancy between theory and observation Chi-square= (O-E) 2 E Where O=observed frequency And E=expected frequency Reason for using hypothesis testing: By using hypothesis testing we can check that are really the different factors affect the purchase decision for the television or not. We take one null hypothesis (opposite of what we want to prove) and one Absolute hypothesis (what we want to prove). If the null hypothesis get rejected then our Hypothesis is right.

FORMULATION OF HYPOTHESIS
It is often convenient to structure a research problem in terms of a hypothesis to be tested. The hypothesis must be agreed upon by the both the manager and researcher, although the formal statement is primarily the responsibility of the researcher. In this use of the word, a hypothesis is worded in such a way that either one or the other is correct. They can not both be simultaneously correct and they cannot both be simultaneously incorrect. Second, in order for these two hypotheses to be useful in a research decision making situation, the
28

decision makers should choose first act if the first is true and the second act if the second act is true. Both statements are characteristics of both situations in which a research problem is properly structured in terms of hypothesis testing.

HYPOTHESIS OF THE STUDY

In context of statistical analysis, we often talk about null hypothesis and alternative hypothesis. If we are to compare method A with method B about its superiority and if we proceed in the assumption that both method are equal good, then their assumption is termed as Null hypothesis. When we are starting that method A is superior or the method B is inferior, it is stated as Alternative hypothesis.

CHI SQUARE AS A TEST OF HOMOGENIETY:

Number of people considering commercial loans for business Business NonTOTAL purpose business purpose Strongly Favors 30 20 50 Moderately Favors 20 10 30 Some how Favors 10 5 15 Not in Favors 0 5 5 TOTAL 60 40 100 STEP 1: Ho: People prefer commercial loans for business. H1: People not prefer commercial loans for business. STEP 2: The rejection and non rejection regions are to be determined. The significance level is 5 %. As the homogeneity test is right tail, the area of the rejection region is 0.05, which lies in the right tail of the chi square distribution curve.
29

As this contains five rows and two columns, the degree of freedom is: df = (r-1) (c-1) = (5-1)(2-1)=4 From Appendix Table5, the critical value of chi square for 4df and alpha=0.05 area in the right tail of the chi square distribution curve is 9.488. We have to calculate the value of the test statistic. For this purpose, it is now necessary to calculate the expected frequencies (E). The expected frequencies are calculated on the basis of the following formula. E= (Row total) (Column total)/Total number of observations

WORKSHEET FOR CALCULATING CHI SQUARE

For Business purpose Business Purpose OBSERV ED 30 EXPECTE OBSERVE D D 25 20 12 7 0 10 5 5 EXPECTE D 8 9 4 2 For none

Strongly Favors

Moderately Favors 20 Some how Favors Not in Favors 10 0

Chi square= (Oi-Ei)2/Ei = (30-25)2/25+ (20-12)2/12+(10-7)2/7+(0-0)2/0+(20-8)2/8+(10-9)2/9+(54)2/4+(5-2)2/2 = 1+5.33+1.28+0+18+0.11+0.25+4.5 = 30.47

30

Make a decision- The value of the test statistic of chi square = 8.934 is lesser than the critical value of chi square =9.488 for 4 degrees of freedom at 0.05 level of significance. As such, the calculated value falls in acceptance region. We therefore, accept the hypothesis and conclude that the consumer used commercial loans for business purposes.

31

ANALYSIS AND INTERPRETAION

Q.1 What is your occupation? Businessman Traders Contractors Other 61 17 12 10

Occupation Chart

Other 10% Contractors 12% Businessman Traders Traders 17% Businessman 61% Contractors Other

Interpretation:There were one hundred respondent in the survey out of which 61% were businessman, 17% were traders, 12% were contractors and 10% were others. This analysis shows that businessmen were more in the study and 10% were those respondents whose occupation was different from the others. This analysis also shows that most of people like to be businessman as compare to other options included in the study.

32

Q.2 Have you taken any commercial loan or plan? Yes No 78 22

Loan Taken Chart

No 22%

Yes No

Yes 78%

Interpretation:As the analysis shows:There were 78% people who have taken loan from any financial institute in order to establish their self or for some other purpose. Only 22% were those did not take the loan facility so they did not enjoy the loan benefits. According to the persons who have taken the loan facility, loan is the easy way to finance. It also provides the help in establishment, the required fund for trading, for the settlement of the debts and other various different purposes.

33

Q.3 If yes then which bank you preferred? ICICI IDBI SBI PNB Other 21 26 11 14 06
Bank Preferred Chart For Loan Taken

Other 8% PNB 18%

ICICI 27%

ICICI IDBI SBI PNB Other

SBI 14% IDBI 33%

Interpretation:As the analysis shows I included the four banks in my study. The above charts represent the following: The persons who have taken loan from the different banks out of them 33% have taken loan facility from IDBI bank, 27% from ICICI bank, 18% from PNB, 14% SBI and remaining 8% from other banks. This analysis shows that the persons showed their interest towards IDBI bank more as compare to ICICI bank, PNB and SBI etc. After IDBI bank the customer showed their interest towards ICICI bank.

34

Q.4 How did you come to know about schemes? From Advertisement Bank Employees From Relative Other 41 19 11 07

Knowing Factor for Scheme

Other 9% From Relative 14% From Advertisement From Advertisement 53% Bank Employees From Relative Other

Bank Employees 24%

Interpretation:This analysis shows that how the loan seeker became aware about the scheme. According to the survey conducted:53% persons got the information of the availed scheme fro the advertisement given by the bank for promoting the commercial loan scheme. 24% persons got the information of the availed scheme by the bank employees. 14% said that they got the information about the available loan scheme from their relatives. 9% people got the information from other related source.
35

Q.5 Are you getting tax benefit on your loan scheme? Yes No 29 49
Getting Tax Benefit on Loan

Yes 37% Yes No No 63%

Interpretation:This analysis shows that the loan takers are getting any tax rebate through the loan scheme or not. As the survey was conducted following results occurred: 63% people are not getting the tax rebate through the loan scheme. The reason was that they were not aware about the tax rebate on the loan. 37% people said that they are getting the tax rebate on their loan scheme.

36

Q.6 Are you satisfied towards your existing commercial loan? Highly Satisfied Satisfied Dissatisfied Highly Dissatisfied 19 39 13 07

Satisfaction Chart

Highly Dissatisfied 9% Dissatisfied 17%

Highly Satisfied 24% Highly Satisfied Satisfied Dissatisfied Highly Dissatisfied

Satisfied 50%

Interpretation:This analysis shows the satisfaction level of the persons who are either enjoying or has enjoyed the loan facility from the different banks. As the analysis represents:24% persons are highly satisfied from their existing commercial loan, 50% are satisfied, 17% are dissatisfied and 9% are highly dissatisfied. According to the conducted interview the main reason for highly satisfaction was easily availability of the loan and low interest rate as compare to other banks. The main reason for satisfaction was that the bank helped them for providing the required fund in time when needed. The main reason for dissatisfaction was that you can not delay in the payment of installment. You have to pay installment in time either there are sufficient fund is available or not for paying the installment.
37

Q.7 Do you have any problem regarding your existing commercial Loan? Yes No 18 60
Problem with Existing Loan Scheme

Yes 23%

Yes No

No 77%

Interpretation:As the 78 persons are enjoying the loan scheme so there is only 78 persons for this analysis because this analysis is related with the loan taker only. This analysis shows that the loan taker has any problem in regard to his commercial loan scheme or not. As the charts shows: 77% persons have not any problem from their existing commercial loan scheme because the bank is providing the satisfactory service to them. 23% customers have the problem from their existing commercial loan scheme. They are less satisfied from their loan scheme due to various reasons. The main reason behind the problem is that the bank provides the less information to them in regard to loan.

Q.8 What do you think about the services & information provided by your lender?
38

Best Better Good Average Poor Very Poor

04 06 26 28 09 05
Service Chart
Very Poor 6% Poor 12%

Best Better 5% 8% Best Better Good Good 33% Average Poor Very Poor

Average 36%

Interpretation:The above designed chart represents the level of service and information provided to the loan taker. According to the person who have taken loan:5% person believes that their bank provides the high level of service and information to them as required. 8% says that their bank is providing the better services and information as compare to other banks. 33% says that their bank is providing the good services and information to them. 36% says that their bank is providing the services and information when ask them. 12% says that their bank is providing the poor services and the required information to them. Q.9 Are you satisfying with the scheme availed for you? Yes 56
39

No

22

Satisfaction from Loan Scheme

No 28% Yes No Yes 72%

Interpretation:This chart shows that how many persons are satisfied from the current loan scheme which one is adopted by them. According to the above analysis: 72 % people are satisfied from their existing commercial loan scheme. 28% are not satisfied from their existing commercial loan scheme. The main reason for dissatisfaction is that the new scheme is more beneficial as compare to the adopted scheme because of flexibility and low interest rate.

40

Q.10 In your view interest rate is? High Moderate Low 29 37 12

Interest rate Chart

Low 15% High 37%

High Moderate Low

Moderate 48%

Interpretation:This chart shows the views of different persons in regard to the interest rate on the loan. According to this: 37% people say that the interest rate charged on their commercial loan is higher as compare to other. 48% people say that the interest rate charged on their commercial loan is reasonable. This is neither low nor high as compare to other. 15% people think that the interest rate charged on their loan is low as compare to other banks because some banks are charging higher rate of interest on loan.

41

Q.11 What type of security is taken by your lender against the Loan? Fixed Assets Personal Guarantee Both 57 09 12
Security Taken Chart

Both 15% Personal Guarantee 12% Fixed Assets 73% Fixed Assets Personal Guarantee Both

Interpretation:This chart shows that which security is taken by the banks for providing the commercial loan. According to the analysis:73% people say that their bank demand for the fixed assets documents as security in order to escape from the risk. 12% says that their bank provides the loan on the basis of personal guarantee. 15% says that their bank provides the loan after getting the fixed assets as security and the personal guarantee. These days most of banks take the both personal guarantee and fixed assets as security but because the study was conducted at JIND so there the banks mainly concern on fixed assets most.
42

Q.12 If you did not take loan then in future which bank you will prefer for commercial loan? ICICI IDBI PNB SBI Other 10 07 08 01 02

Bank Preferrence Chart For Future Loan

Other 7% SBI 4% PNB 29% ICICI 35%

ICICI IDBI PNB SBI Other

IDBI 25%

Interpretation:This graph represents the views of those persons who did not take the commercial loan but now wants the loan for settling the various tasks and projects. According to this analysis 35% would like to go with ICICI bank for taking the loan in future, 29% would like to go with PNB, 25% would like to go for IDBI, 4% with SBI and 7% would like to go with other banks. This analysis shows that in these days the person gives more importance to the ICICI bank. After ICICI bank they would like to go with PNB, IDBI, and SBI etc.
43

Q.13 What parameters you are considering before taking the Loan? Rate of Interest EMI Amount of Loan Other 39 09 48 04

Parameters Considering Before Loan Taken

Other 4% Rate of Interest 39% Amount of Loan 48% EMI 9% Rate of Interest EMI Amount of Loan Other

Interpretation:This chart shows that which factor influences more to the loan seeker. What are the factors which the loan seekers consider before taking the loan? The above chart represents that there are 39% persons who give importance to the rate of interest when taking the loan, 48% give the importance to the amount of loan instead of rate of interest and amount of EMI, 9% give preference to the amount of EMI whenever 4% persons are also who consider the other factor than rate of interest, EMI and amount of loan. The other factor can be easily availability of loan etc

44

Q.14 For which purpose you are taking or have taken commercial loan? Manufacturing Trading Establishment Other 31 43 20 06
Loan Purpose

Other 6% Establishment 20% Manufacturing 31% Manufacturing Trading Establishment Other Trading 43%

Interpretation:This chart represents the purpose of the loan taker. This shows the reason why a loan seeker wants to get the loan from the bank. What is the purpose of getting the loan? This shows where an individual want to utilize the amount of fund for which purpose he/she is taking the loan. According to the survey: It was found that 43% persons want the loan for the purpose of trading. 31% persons want the loan for the purpose of manufacturing for producing the goods and services for the customers in order to make the profit for their organization. 20% persons want the loan for establishing organization setup.
45

Q.15 What factors influence you to go for the scheme? Easy Availability Low Interest Rate Amount of Loan Other 41 48 09 02

Influencing Factor Chart

Other 2% Amount of Loan 9%

Easy Availability 41%

Easy Availability Low Interest Rate Amount of Loan Other

Low Interest Rate 48%

Interpretation:The above chart represents the available factor in the scheme of loan of the loan seeker which influenced those most. According to the survey conducted at JIND city : 48% persons were influenced to go with the loan scheme because the interest rate charged on the loan is low. These persons say that they will consider only low interest rate for taking the loan. 41% people give preference to the easy availability of loan. They think that loan should be available easily so that every loan taker can utilize the amount of loan immediately when needed. There should not be extra delay in loan sanctioning. 9% persons say that amount of loan should be according to their need. Some banks provide lesser amount than the required amount by the loan taker.
46

Q.16 According to you which bank is providing the best services these days? ICICI SBI IDBI PNB Other 28 13 25 21 13
Best Service Provider Bank

Other 13%

ICICI 28%

ICICI SBI IDBI PNB

PNB 21% SBI 13% IDBI 25%

Other

Interpretation:This chart shows the credibility of the banks among the people. This shows how much persons give the importance to which bank. As I included four banks in my study so the above analysis represents the credibility of the persons in regards to these banks only. According to the survey conducted: 28% persons believe that ICICI bank is providing the best services as compare to the other banks. 25% persons think that IDBI is providing quick and best services among all banks. 21% believe that PNB is providing better services as compare to other banks.
47

 13% believe that SBI is providing best services because there is most number of ATMs all over the country of SBI. Whenever 13% persons think that other banks provide the better services as compare to the ICICI, IDBI, SBI and PNB Q.17 Do you want to give any suggestion for the commercial Loan services? Yes No 19 81
Suggestion for Commercial Loan Service

Yes 19%

Yes No

No 81%

Interpretation:This representation shows that how many persons want to give their suggestions in regard to the commercial loan scheme. According to the survey conducted: 19% persons provide their suggestions in regard to improve the commercial loan scheme. 81% persons did not like to give any suggestion in order to improve the commercial loan scheme. According to them the current commercial loan scheme are not so bad. The suggestions provided by the persons are mostly give the preference to the quick service in the commercial loan scheme. They think that commercial loan scheme should be faster as compare to the current scheme. The documents verification should be fast so that the loan can be provided within the reasonable time so that the loan takers can also utilize the amount according to the need within the required time period.
48

SUGGESTIONS
1. The all commercial banks should review their loan schemes time to time. 2. The loan scheme should be according to the need of the customer. 3. The terms and conditions of the bank should be cleared to the customer. 4. The all required information should be given to the customer about the loan scheme. 5. The loan scheme should be flexible. 6. Most of the people get loan awareness through advertisement so the banks should give advertisement of the loan schemes. 7. Bank should also try to make procedures more simplified for people. 8. The banks should try to see from time to time that application submitted to banks under commercial loan are dealt promptly 9. Invest more in marketing activates so as to impart knowledge among peoples regarding the availability to the commercial loan 10. To make procedure transparent enough so as to avoid any fraud and obtaining people confidence.

49

LIMITATIONS OF THE STUDY

1. Various hindrances occurred while carrying out the research. They have acted as limitation of the study and a few of them are:2. Short time period: The time period for carrying out the research was short as a result of which many facts have been left unexplored. 3. Small area for research: The area for study was Panipat which is quite a small area to judge out the consumer preferences for the commercial loan. 4. Lack of resources: Lack of time and other resources as it was not possible to conduct survey at large level. 5. Small number of respondents: Only 100 respondents have been chosen which is a small number to represent the whole of the population of Panipat. 6. Unwillingness of respondents: When collecting the data many consumers were unwilling to fill the questionnaire. 7. Respondents were feeling wastage of time for them. They thought that they could utilize this time to any where else instead of filling questionnaire. They thought that what the benefit of filling up the questionnaire is for them.

50

CONCLUSION
At last I derived the following suggestions from my study: These banks make a periodic review of commercial loan to evaluate, identification, formulation, release and use of funds. The most of people were aware about the loan schemes available for them. Overall in the jind city 78% people were enjoying the loan schemes out of which most of persons were the businessmen. Most of people preferred IDBI bank for taking the commercial loan schemes. SBI was preferred only by 14% people. The most of persons came to know about the scheme of commercial loan through advertisement given by the bank. There were only 37% people who were getting the tax rebate through loan scheme. The main reason for this low percentage was that the most of persons were not aware about tax rebate available through loan scheme. There were 24% people who were highly satisfied from their loan scheme and 50% were average satisfied. 17% people were dissatisfied and 9% people were highly dissatisfied because their bank did not provide the full information when needed or demanded by the customer. Sometimes information was available after delay. 77% persons have no problem with their existing commercial loan scheme whenever 23% are those people who have any problem with their existing commercial loan scheme. The main reason for problem was that there was no option for the full payment in between the loan scheme term and unnecessary delay in the information. 48% of the persons said that the interest rate on their current commercial loan scheme is moderate, 37% persons said that the
51

interest rate is higher and 12% persons said that it is lesser in compare to other banks. 73% persons disclose that the bank preferred fixed assets as the security against the loan scheme and 15% said that fixed assets and personal guarantee both were taken as security by the bank. The persons who did not take any loan scheme yet out of them 35% would like to take loan from ICICI bank. 48% of persons consider the amount of loan and 39% of persons consider rate of interest as the considering factor before taking the loan.

52

QUESTIONNARE
Dear respondent, I am conducting the survey on Customer Attitude Towards Commercial Loan which is a part of M.B.A. Program. All the information provided by you will be kept secret & will be used exclusively for academic purpose. Q.1 What is your occupation? (a) Business man (c) Contractor

(b) Traders (d) Other ..

Q.2 Have you taken any commercial loan or plan? (a) Yes (b) No Q.3 If yes then which bank you preferred? (a) ICICI (b) IDBI (c) SBI (d) PNB (e) Other . Q.4 How did you come to know about schemes? (a) From Advertisement (b) Bank Employees (c) From Relative (d) Other .. Q.5 Are you getting tax benefit on your loan scheme? (a) Yes (b) No Q.6 Are you satisfied towards your existing commercial loan? (a) Highly Satisfied (b) Satisfied (c) Dissatisfied (d) Highly Dissatisfied

53

Q.7 Do you have any problem regarding your existing commercial Loan? (a) Yes (b) No Q.8 What do you think about the services & information provided by your lender? (a) Best Service (b) Better Service (c) Good Service (d) Average Service (e) Poor Service (f) Very Poor Service

Q.9 Are you satisfying with the scheme availed for you? (a) Yes (b) No Q.10 In your view interest rate is? (a) High (c) Low

(b) Moderate

Q.11 What type of security is taken by your lender against the Loan? (a) Fixed Assets (b) Personal Guarantee (c) Both Q.12 If you did not take loan then in future which bank you will prefer for commercial loan? (a) ICICI Bank (b) IDBI Bank (c) PNB (d) SBI (e) Other Q.13 What parameters you are considering before taking the Loan? (a) Rate of Int. (b) EMI (c) Amount of Loan (d) Other ..

54

Q.14 For which purpose you are taking or have taken commercial loan? (a) Manufacturing (b) Trading (c) Establishment (d) Other .. Q.15 What factors influence you to go for the scheme? (a) Easy Availability (b) Low Interest Rate (c) Amount of Loan (d) Any other Q.16 According to you which bank is providing the best services these days? (a) ICICI (b) SBI (c) IDBI (d) PNB (e) Other .. Q.17 Do you want to give any suggestion for improving the commercial Loan services? (a) Yes (b) No

If yes please write your suggestion here: Dear respondent thank a lot for your kind information and time given for this survey. I again thank you for the co-operation.

55

BIBLIOGRAPHY
Bhole L M Financial Institutions and Markets Tata McGraw hill third edition Sundaram Satya industrial development Himalaya publishing house first edition Desai Vasant the Indian financial system Marketing management by Philip Kotler websites www.icicibank.com www.idbi.com www.pnbindia.com www.statebankofindia.com www.altavista.com www.scribd.com www.google.com

56

57