A STUDY ON BANKERS PERFORMANCE AND BORROWERS PERCEPTION ON EDUCATION LOAN IN TAMIL NADU

Transcription

1 A STUDY ON BANKERS PERFORMANCE AND BORROWERS PERCEPTION ON EDUCATION LOAN IN TAMIL NADU A THESIS Submitted to BHARATHIAR UNIVERSITY in partial fulfillment of the requirements for the award of the degree of DOCTOR OF PHILOSOPHY in the DEPARTMENT OF MANAGEMENT STUDIES By P. RAMAN [Reg. No: R - Ph.D. - E ] Under the guidance of Dr. N. THANGAVEL, Ph.D., Principal (P.G) Jeppiaar Engineering College Chennai-119 BHARATHIAR SCHOOL OF MANAGEMENT & ENTREPRENEUR DEVELOPMENT (BSMED) BHARATHIAR UNIVERSITY COIMBATORE TAMIL NADU. INDIA. NOVEMBER 2011

2 P.Raman, M.Com, MBA, M.Phil, Associate Professor Department of Management Studies Panimalar Engineering College Chennai DECLARATION I, P.Raman hereby declare that the thesis, entitled A STUDY ON BANKERS PERFORMANCE AND BORROWERS PERCEPTION ON EDUCATION LOAN IN TAMIL NADU submitted to the Bharathiar University, in partial fulfillment of the requirements for the award of the Degree of Doctor of Philosophy in Management is a record of original and independent research work done by me during under the supervision and guidance of Dr.N.Thangavel in the Department of Management Studies and it has not formed the basis for the award of any Degree / Diploma / Associateship / Fellowship or other similar title to any candidate in any University. Place : Chennai -123 Date : Signature of the Candidate (P.RAMAN)

3 Dr. N. Thangavel, M.Com, MBA, PGDMM, PGDHRD., Ph.D., D.Lit., Principal (P.G) Jeppiaar Engineering College Rajiv Gandhi Salai, Chennai CERTIFICATE This is to certify that the thesis entitled A STUDY ON BANKERS PERFORMANCE AND BORROWERS PERCEPTION ON EDUCATION LOAN IN TAMIL NADU, submitted to the Bharathiar University, in partial fulfillment of the requirements for the award of the Degree of Doctor of Philosophy in Management is a record of original research work done by Mr. P.Raman during the period of his study in the Department of Management studies at Bharathiar University under my supervision and guidance and the thesis has not formed the basis for the award of any Degree / Diploma / Associate ship / Fellowship or other similar title to any candidate of any University. Place: Chennai Date : Signature of the Guide (Dr.N. THANGAVEL) Countersigned (Director, Research and Development Centre)

4 ACKNOWLEDGEMENTS I would like to thank Prof. Dr.C. Swaminathan Vice Chancellor, Bharathiar University for his support. I would like to place on record my thanks to Dr.P.K. Manoharan, Director, Research and Development Centre, Bharathiar University, Coimbatore. I would like to express my sincere thanks to Dr.R.Venkatapathy and Dr. R. Shanmugam, Doctoral Committee Members (Expert) and all the Faculty Members of Bharathiar School of Management & Entrepreneur Development (BSMED), Bharathiar University for their continuous support and encouragements to complete this research work. I am grateful to Dr. Jeppiaar M.A., B.L., Ph.D., Chancellor, Sathyabama University for his invaluable advice. I am thankful to Dr. P. Chinnadurai M.A., Ph.D., Secretary & Correspondent, Panimalar Engineering College for his continuous motivation. I thank the Directors Tmt. C.Vijayarajeswari and Mr.C. Sakthikumar, M.E., M.Phil., for their help. I would like to express my heartfelt thanks and gratitude to Prof. Dr.N. Thangavel, Principal (P.G) Jeppiaar Engineering College, Chennai, for his unstinted support and professional guidance. His timely interventions, valuable suggestions and recommendations helped me shape the thesis to ensure that it adheres to the quality standards prescribed by Bharathiar University. Prof. Dr.N. Thangavel spent most of his busy hours in shaping my thesis. His encouragement and motivation greatly helped me and in this regard. I would like to express my indebtedness for all that he has done for me.

5 I am indebted to Prof.Dr.K. Mani, Principal, Panimalar Engineering College and Prof.Dr.V. Mahalakshmi, Dean-MBA, Panimalar Engineering College. I am grateful to Dr.K.G. Jayaprakesh, who helped me with the application of SPSS package. I am extremely thankful to all the officials at the State and District levels, particularly to the different bank branches for providing the necessary data and sparing their valuable time to discuss various aspects of the study. I am also thankful to the sample respondents for providing me necessary data. I express my thanks to the Library authorities of Institute for Financial Management and Research (IFMR), Library authorities of University of Madras, Indian Bank Association, Reserve Bank Officials, Chennai, Authorities from Indian Overseas Bank, Central Office Chennai, State Level Banker Committee (SLBC) Members, Chennai, Tamil Nadu, for having permitted me to use their respective centers and libraries. I am thankful to the support given by family and as their unconditional love cannot be taken for granted. I am thankful for the love and support of my Parents and my brother Mr.P. Lakshmanan. I am grateful to everybody else who played their respective roles in the successful completion of my research. (P.RAMAN)

6 ABSTRACT This research intends to examine the performance of commercial banks in Tamil Nadu towards education loan and the bankers perception and the problems faced by them with regard to education loan. Borrowers perception, their level of satisfaction and the problems faced by the borrowers of education loan. The literature was reviewed for the performance of commercial banks and both bankers and borrowers perception on education loan in Tamil Nadu. Based on the literature survey, the objectives of the study were also decided keeping in view the scope as well as need for covering uncovered areas. The present study has used both primary and secondary data. The secondary data, national level data were collected from the publishers of Government of India, RBI, and Indian bankers association such as economic survey, report on trends and progress in banking, statistical tables relating to bank in India etc. The state level data have been collected from the periodical report of State Level Bankers Committee (SLBC), IOB Central office, Department of Priority Credit Section (PCD), Chennai, Tamil Nadu. District level data for analyzing the performance of education loan scheme by Commercial Banks in Tamil Nadu. The above said levels of secondary data are authentic and reliable to make the analysis meaningful for drawing a conclusion. The primary data of sample education loan borrowers from various banks were collected through well structured questionnaire and collected primary data from the officials of both public sector and private sector banks using a separate questionnaire. 260 bank branches were taken as a sample of which 50 percent from public sector and the remaining 50 percent from private sector banks. The selection of bankers according to their financial performance of both Public sector and Private sector banks in Tamil Nadu, the present study consists with five banks from Public sector viz., Indian Bank, State Bank of India, Indian Overseas Bank, Canara Bank and Central Bank of India as well as five banks from Private sector viz., Axis Bank, Federal Bank Ltd., HDFC Bank, Lakshmi Vilas Bank and Karur Vysya Bank officials respectively from Tamil Nadu for the purpose of conducting this interview with the bank officials regarding problems in sanction and recovery of loan, attitudes and achievements of the bankers etc. 500 sample beneficiary of

7 education loan drawn for the sample district as a proportionate basis using the simple random sampling method. All data analysis was conducted using SPSS V-15. Sample means and standard deviation are presented in the analysis chapter for all the variables of the study. The data were screened in order to obtain the variance between various factors considered to study the level of satisfaction of education loan borrowers as well as bankers. Factor analysis, cluster analysis, discriminate analysis, analysis of variance (ANOVA), Karl Pearsons coefficient of correlation, chi-square test, t-test. The performance of priority sector advances by commercial banks in India. The target for aggregate to Priority sector is 40% of the Adjusted Net Bank Credit (ANBC) for domestic banks both public sector and private sector and 32% for foreign sector banks. Public sector and Private sector banks and foreign banks as a whole achieved their overall target, viz., 40% and 32% of net bank credit respectively over the study period starting from 2001 to From the study, the activity-wise performance of commercial banks Tamil Nadu over 10 years starting from , agriculture advances grow over 18%, Education loan and housing loan continued to grow over 30% and 8% respectively. It is evident that the result the rate of change on advances to priority sector segment both planned as well as achievement led the phenomenal growth in not only quantity but also qualitative. The analysis reveals that the bank group-wise analysis consists of 50 percent bank officials from Public sector Banks and the remaining 50 percent private sector banks. Most of the bankers use Loan Mela (62.3%) and Direct Marketing (59.6) as a medium to create awareness among the public. It is observed from the analysis that more than 80 percent bankers select the borrowers through followed by eligibility criteria and 77.7 percent bankers select the borrowers through personal interview. It inferred from the analysis that the valuable suggestions given by the various bankers to improve the existing credit scheme with regard to Education loan. Among 260 bankers, 66.9% bankers suggest to avoidance of the political interference, 39.2% bankers suggest more funds to be allocated, 59.6% bankers recommend increase in the eligibility conditions of the borrowers, 66.2% bankers recommend creating a separate institution for

8 control and monitoring and 48.8% bankers suggest stopping the attitude of waiving the loan by the government The majority of Education loan borrowers were male 73.2 percent and the rest of 26.8 percent were Female. The maximum education loan borrowers are found in the category years of age group. The data shows that the majority of 41.4% respondents belonged to rural places. It is found from the analysis of respondents with regard to borrowers educational qualification, most of the 29.6% (148) educational loan borrowers were professional degree holders, Occupation wise data analysis indicated that the maximum number of loan borrowers were private employees (25.8%) while 22.6% were working in their family owned business. The responses regarding the monthly household income indicated that the majority of the respondents (33.2%) who s income were in 10,000 to 20, 000 categories and the majority of the loan borrowers belong to the salaried category (31.6%). It is found that the maximum number of education loan borrowers (74.2%) whose family size ranges from 4-6. The gap analysis revealed 15 percent disparity in the opinion of bankers and borrowers. If is found that 76 percent of the borrowers ascertained their regular repayment capacity whereas 61 percent of the bankers alone agreed that the regularity of repayment. The mean values of the level of agreement of the borrowers agreed that the banks policy & procedures followed by banks towards Education loan process, priority and preference, uniformity policy, security procedure, quantum of loan policy. The borrowers were dissatisfied with the clarity of information and explanation about the Education Loan and the borrowers expressed moderate level of satisfaction on the overall services provided by banks. The borrowers were agreeing that they face the problems of attitude of bank officials and unnecessary delay due to the banking procedures and formalities. There is a positive correlation between Service efficiency and the Procedural satisfaction, Between Service efficiency and the Banking policies & procedures followed

9 by banks while processing education loan were positively correlated. It is also found that there is no correlation between Service efficiency and the problems faced by the borrowers of education loan. Association among various clusters of level of satisfaction and Banking Policies adopted by banks with regard to education loan, it is found that there is a deep association between level of satisfaction and the banking policies and procedures followed by banks. Association among various clusters of level of satisfaction and the problems of borrowers of education loan, it is found that the level of satisfaction of the borrowers were independent of the problems faced by them. That is there is no association among the cluster variables. The analysis revealed that more than 50 percent of the education loan borrowers have not reached the high level of satisfaction. Therefore the bankers should take initiatives by providing the financial assistance to meet the required objectives and make them to satisfy in all levels. Hence, it is concluded that even though there is good recovery preference less delay in sanction and disbursement of loan. Less entering of influence, rendering good co-operation and supply to the students community to grow better by having financial assistance and better services to education segment and achievement of target (both Physical and financial) fixed by RBI in Tamil Nadu.