Chapter – 1

Introduction

26
 Chapter – 1

Introduction

1.1 Introduction
1.2 Evolution and Structure of Indian Banking Sector
1.3 Technology in Indian Banking Sector
1.4 Statement of the Problem / Research Gap
1.5 Importance of the Research Problem
1.6 Objectives of the Study
1.7 Hypotheses of the Study
1.8 Methodology of the Study
1.9 Limitations of the Study
1.10 Chapter Scheme

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 Chapter – 1

Introduction

1.1 Introduction

Finance is the key factor for the growth and development of any economy.
Progress of the economy depends on a well developed and well organized financial
sector. There is no doubt that the health of the economy reflects on the sound financial
performance of Banks. The Banking Sector plays a significant role in improving the pulse
rate of economic activities. They attract savings, assist financially backward sections and
circulate money for different developmental activities. Indian Banking Sector, after the
introduction of LPG (Liberalisation, Privatisation and Globalisation) Policy in the
economy, found a big push in investing on ICT strategy. A great transformation took
place from brick and mortar services to automated banking environment. Especially IT
Act, which was enacted on October 17, 2000 gave a new dimension and brought
E – Banking services to banking platform.

Today, Technology is transforming every aspect of the banking sector. Digital

capabilities in this sector are showing new vistas. After 1990’s new economic policy,
Banks started to use technology driven methods in their business activities to provide
attractive and qualitative services at a greater extent to their customers. ICT related
services have made Banking business more convenient and easy for their customers. At
present all successful Banks are engineering and redesigning their service pattern and
offering a variety of products/services to different types of customers in the economy.

Technology has become a magical wand in the hands of Banks. Technology has
created wonderful opportunities to reframe customer – centric, competitive and faster
services in their sector. Commercial Banks are successful in implementing advanced
technology in their daily business. No doubt that ICT strategy has increased productivity
and profitability of this Banking segment, but on the other hand, Urban Cooperative
Banks are also slowly sinking into the Information and Communication Technology
world. They are waking up to explore the advanced technological weapons to face a

28
series of challenges and cut throat competitions. They are going for these solutions to
reach exciting destinations. Automation in this sector is showing a ray of hope. It is
believed that ICT networking system and leading innovations revolutionalise these
technology laggards Cooperative Banks.

ICT strategy in the banking sector is the best way to face extremely intense
competition in this business world. With this new approach, Banks are sincerely trying to
win the minds of customers and gradually making their employees more competitive and
updated with the recent technology. Today click on the mouse and touch on the keypad
have made financial transactions more efficient, rapid and productive.

1.2 Evolution and Structure of Banking Sector in India

Banking sector in India can be broadly grouped into two categories namely
1. Commercial Banks
&
2. Cooperative Banks

Commercial Banks are further classified into Public Sector Banks, Private Sector Banks
and Foreign Banks.

Chart. No-1.1 Structure of Indian Banking Sector

(Self Created Chart)

According to the Reserve Bank of India reports 2012-13, there were 26 Public
Sector Banks operate their business activities with 63,976 branches. 21 Private Sector
Banks with 11,719 branches and they had their networks all over India and 43 Foreign
Sector Banks with 331 branches running their business. Now the Indian Banking Sector
with 1,175,149 employees by having 109,811 branches in the entire India and 171

29
branches outside our country have aggregate deposits of Rs. 67504 billion and Bank
credit of Rs. 52604.59 billion.

The history of Banking Sector dates back to the 18th century. In 1770 the Bank of
Hindustan was established in Calcutta. General Bank of India in 1786 was set up in the
same region to provide financial assistance to the needy people. The Bank of Bengal in
1806, The Bank of Bombay in 1840 and the Bank of Madras in the year 1921 as per the
charters from East India Company started their business between 1800 and 1921. In 1955
the above mentioned three Banks were merged and became The State Bank of India and
seven subsidiary Banks were included in SBI group. The RBI (Reserve Bank of India)
was established in the year 1935. The Government of India took a major step to
nationalise all their 14 major Commercial Banks in the year 1969 and the remaining six
Commercial Banks were nationalised in the year1980.In the same year the Bank of India
and Global Trust Banks were merged with the Punjab National Bank and OBC Bank
respectively. In the year 2005 the IDBI Ltd also became Public Sector Bank.

Private Banks with the liberalisation policy of 1991 re-emerged in the Indian
economy. There are two types of Private Banks. a. Old Private Sector Banks b. New
Private Sector Banks Between 1969 and 1980 some Banks did not come under the
nationalisation process. These Banks became Old Private Sector Banks and with the
amendment of the Banking Regulation Act in 1993, 12 Banks took new entry. These
Banks are known as New Private Sector Banks. During 1950’s there were 474 Non-
Scheduled and 92 Scheduled Private Sector Banks. (Banks which are listed in the second
schedule of the Reserve Bank of India Act of 1934 and whose deposits are more than
1000 crore rupees called Scheduled Banks and which are not listed under the same
schedule and not touched the prescribed deposit amount is called Non-Scheduled Banks)
Scheduled Banks refers to the State Bank of India constituted under the State Bank of
India Act, 1955 (23 of 1955), a subsidiary Bank which was defined in the State Bank of
India (Subsidiary Banks) Act, 1959 (38 of 1959), a corresponding new Bank constituted
under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings)
Act, 1970 (5 of 1970), or under section 3 of the Banking Companies (Acquisition and
Transfer of Undertakings) Act, 1980 (40 of 1980), Non-scheduled Bank in India is
defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949),
which is not a scheduled Bank.

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 When the nationalization process gained importance in India with a social justice
motive, number of Private Sector Banks gradually decreased. In India after 1850 British
people launched Foreign Banking operations. Countries like Germany, Japan, US,
Holland and others started to expand their banking business in this economy. HSBC and
Standard Chartered Bank, which were established in 1853 and 1858 respectively, are
considered to be the oldest Foreign Banks in India.

Cooperative Banks in India are further classified into Rural Cooperative Banks
and Urban Cooperative Banks and they are based on the seven Principles of Cooperation.
Viz,

1 Voluntary and Open Membership

2 Democratic Member Control
3 Members’ Economic Participation
4 Autonomy and Independence
5 Education, Training and Information
6 Cooperation among Cooperatives
7 Social Concern

Chart. No -1.2 Structure of Indian Cooperative Banking Sector

(Self Created Chart)

Rural Cooperative Banks operate mainly in creating Banking habits among the
rural mass to strengthen their financial position. They are financing for agriculture and
allied activities. Urban Cooperative Banks mobilize savings from middle and low income
strata, including socially backward community to finance self employment, small scale
industry, housing loan, personal loan, consumer finance etc.

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 Chart. No -1.3 Types of Urban Cooperative Banks

(Self Created Chart) Source- RBI-2013-14

The RBI under its RBI Act of 1934 decided to include UCBs in the second
schedule whose deposit touches Rs 50crores and above with satisfactory financial
performance. These Banks, whose deposits do not exceed Rs 50crores come under Non
Scheduled Banking structure. There are 53 scheduled UCBs and 1553 non scheduled
UCBs in India. Among 53 scheduled UCBs, there are 25 multi state UCBs and 28 single
state UCBs and among 1553 non scheduled UCBs there are 17 multistate and 1536 single
state UCBs in India. These Banks have to maintain a statutory cash reserve, but their
activities are restricted. But now, according to the RBI notification, UCBs by having
deposits not less than Rs750 crore for one year on a continuous basis with a minimum
capital adequacy ratio of 12 percent, and continuous net profit for the previous three years
are eligible to get for Scheduled Bank status.

As per the source of International Cooperative Alliance 2013, Cooperative

Societies are 194 million worldwide having more than one billion members with 1.6 US$
of turnover. This sector provides financial assistance to 887,000 small holders and giving
100million jobs. In India there are six lakh Cooperatives and have more than 24crores of
members and 4 lakh crore of working capital.

Cooperative Movement in India was started with the prime objective of relieving
the innocent and needy rural mass from the clutches of greedy money lenders. In 1844
Woodland Famine Commission of Bengal province recommended the loan facilitie s to
vulnerable sections of that province at a reasonable rate of interest. In 1872 the Royal

32
Commission based on that report recommended to establish Cooperative Banks to
provide credit facilities to agriculturists. In 1904 the first cooperative societies Act was
passed. With this cooperative movement the country assumed a good platform. The wave
of cooperative movement has crossed hundred years. The scope of registered non credit
society was redesigned in the year 1912 to finance the marginal and small sections of the
society. Later on the Bombay Act of 1932, Madras act of 1935 and the Bengal act of 1940
were passed. The first Urban Cooperative Credit Society was registered in Kanjivaram in
the Madaras region in October 1904. In 1914 Maclagan Committee recommended to
broaden its base. Mehtha Bhansali Committee (1939) made sincere attempts to define
UCBs as “UCBs are Primary Cooperative Banks organised on Cooperative
Principles and operate their Banking business in metropolitan, urban and semi-
urban areas to satisfy the needs of a group” They come under the Banking act
(application to Cooperative Societies) of 1965 and the Banking Regulation act of 1949.
Since 1950 Cooperative Banks are deep rooted in the economy and they have become the
major partners in the Banking Sector.

In 2012-13 there are 1,606 Urban Cooperative Banks with 8,790 branches catering
to the needs of customers in India. Maharashtra has the highest number of UCBs i.e., 517
UCBS with 4,839 branches. Next comes Gujarath by having 234 UCBs with 884
branches providing financial assistance. Karnataka occupies the second place by having
266 UCBs with 864 branches. These three states occupy the top three positions in UCBs
distribution all over the country. There are 1554 non scheduled and 52 scheduled UCBs.
Among them there are 25 multi state and 27 single state UCBs under scheduled UCBs
and 18 multi states and 1531 single state UCBs under non scheduled UCBs. In Karnataka
there are 35,502 Cooperative Societies. They have 215lakh members and 42,000crore
working capital.Out of these total Cooperative Societies 19,318 are under profit. Gadag a
district of Karnataka is considered as the cradle of Cooperative Movement in India. In
1905 May 18th the first Credit Cooperative Bank was established in the City. There are
266 UCBs working with 864 branches in Karnataka. The period between 2003 and 2008
has been considered as crisis phase. During this period One-third of newly licensed UCBs
became financially weak due to the increasing number of defaulters in the country. In that
year the number of UCBs had declined from 1926 in 2004 to 1770 in 2008. Deposits and
advances increased, but at a marginal rate.

33
 Commercial Banks mainly run under the motto of profit. They do pure business
and operate their business at the national and the international level and they provide
credit facilities from small purposes to big projects and they work on corporate principles.
But, on the other hand, for UCBs the profit is not the main agenda of their business. They
tag social justice and values of the Cooperative Sector to their Banking business. They
limit their business to local level but rarely operate at national level. They offer higher
rate of interest on deposits as compared to Commercial Banks and they are also called
Small Man’s Bank. As compared to Commercial Banks, Cooperative Banks are smaller
units. They closely work with local people and respect the local way of living and values.
They optimise the local resources and dig the new opportunities.

A strong financial institutional set up is considered as a nervous system of any

economy. Progress of any economy is in the hands of a sound Banking institution. They
play a significant role in the development process. It has a major and dominant share in
the financial sector. Strong Banking sector brings long term sustainability and achieves
economic wellbeing.

1.3 Technology in the Indian Banking Sector

ICT in India has seen excellent opportunities at low cost operation, skilled labour
pool, Optimistic economic environment; FDI Policies etc. These benefits have made India
the leader in the ICT sector. According to International Data Corporation 2012,Indian
ICT market was expected to grow to US $ 44.8 billion up to march 2014 from US $ 35.1
billion.

Over the decades, India has been the test bed for ICT developments. ICT has
become a trump card. ICT is omnipresent in this country. ICT is used in health,
education, Banking, insurance, business and other socio-economic services.ICT is
reaching the unreached and connecting the unco nnected regions of this nation and a
platform has been created to attract more players in the economy to promise and provide
better services.

There is no universally accepted definition of ICT because applications of ICT are

constantly evolving. Every day new software packages are designed and proposed for
organisations, business and other sectors.

34
 Concept of ICT can be explained with the following figure.

Chart.No -1.4
Segments of ICT

(Self Created Chart)

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 The Word ICT has three segments viz, (a) Information (b) Communication and
(c) Technology. Information is a processed data and it consists of facts, figures and
knowledge. Communication is of two types such as a traditional way of Communication
and technical communication. Newspapers, magazines, radio and television are traditional
tools of communication. Information and communication go together to share knowledge
and awareness to awaken the mass. Along with these traditional tools, today technical
communication tools are gaining familiarity such as Internet, wireless, wire lines and
satellite networks.

Chart .No -1.5 ICT in Banking Sector

(Self Created Chart)

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 In the Banking Sector, Hardware and software technological tools are used.
Computer and related machineries like printer and scanner are used. Also coins &
currency counting machines, passbook printers, currency discriminators, coin sorters,
ATM machine, Kiosks are very much needed to perform business activities and software
segment includes system software and application software. Anything that can be stored
electronically is software. System software includes all the utilities that make computers
to function and application software includes word processors, spreadsheets and data base
management systems.

India with its skilled English speaking youth is holding a success key. The ICT
industry is eager to enter into the next phase of growth to empower Indian rural
landscape, to reach the gross root level to promote development activities, to ensure
transparency and most importantly to achieve the goal of growth with equality. So ICT is
the need of the hour.

Nowadays, the usage of ICT is essential to the survival and the growth of Banking
institutions. IT is hard to assume that the Indian Banking Sector in the absence of
computers, ATMs, Mobile phones, Internets and so on stands unable to face the sky
rocketing competitions. Until recently Banking services in India were following the
footsteps of tortoise. To perform simple Banking transactions both Banking staff and
customers had to spend half a day, but with new technical tools these Banks have found
wide spread reach.

Banks in India by entering into the environment of technology led services are
digging opportunities and customers are also willing to adhere to technology based
services. But the Banks have to keep three important aspects in their business mind i.e.

a. Changing demand and choice of customers

b. Market trends
c. Exploring innovative products/services.

Along with plenty of opportunities Banks are not ready to face unprecedented risk
factors involved in ICT implementation in their business operations such as ATM frauds,
Credit Card Frauds, Internet Banking and Mobile Banking frauds, data interception and
others. Fraudulent transactions have become obstacles to go for E-Banking Services.
Banks with proper security and safety measures can design secured financial products /

37
services to have every successful transaction because ICT is bringing leap change in the
Banking environment.

RBI has directed UCBs to adopt the core banking system and has given the
deadline for Large UCBs by December 31st , 2013, branch Banks by June 30th, 2014 and
unit Banks by December 31 st 2014.In this background there is a call for the integration of
Banking Sector and advanced technology up gradation. It is not an exaggeration that ICT
based services in the Banking sector saves energy, time and provides virtualised services
to its customer. Speeder and effective progress are ensured only with this latest
technology.

Good customer service is becoming a main motto of Banks in recent years.

Customer’s satisfaction is a prime goal in each Bank case. Customers are the end users of
this Banking technology. When customers consider these innovative services as
interesting one, the Bank’s attempt becomes successful. E-Banking services apart from
some security and safety measures have positive effects on customers. Banking sector in
India with advanced technology found a paradigm shape and introduced E- Banking
products / services gradually. As ICT is becoming essential as-well-as a sufficient
condition for Banks in recent years good customer service in this sector has become a
prime objective.

It is a highly challenging task to read customers’ minds. Customers’ preferences

and satisfaction levels change with the evolution and development of technology.
Therefore, Banks are also implementing customer - focused strategies to increase their
customer base. Customers’ are also turning their faces towards E – Banking services to
reap maximum satisfaction.

Modern customers have some special features and they want to utilize the best
ICT based services. Most of the customers are computer literates, frequent mobile users
and Internet dependents. So they want to perform banking transactions which satisfy the
following aspects.

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 Chart. No-1.6 Opinion of Customers in Modern Banking Sector

(Self Created Chart)

The new face of Banking is alluring customers to utilize hi-tech services in Banks.
Banks also with new types of E – Channels are delivering a variety of financial services.
They are designed to cater the needs and expectations of customers.

 Banks with various E- payments and E – Banking services are able to provide
24 x 7 / 365 services to provide quality and transparent services.

39
 Customers anywhere at any time can draw, deposit any amount of money, can
check Bank statement and open or close account. E- Banking services have
become more convenient to them and they can transact their business even in their
physical absence.
 Banks by selling their higher end financial products are attracting new customers
and with these services/ products are providing E – Transactions are made easy
without the geographical or demographical limitations.
 Customers feel prestigious and proud to use credit/debit/smart cards E – Payments
and internet/mobile Banking transactions.
 Banks with advanced technology have aimed at providing flexible, qualitative,
friendly and easily accessible services to their customers.

Today brick and mortar Banks have become click mouse and touch keypad Banks.
Banks are trying hard to catch up the buzzword consumer satisfaction. Customers are also
convinced that E – Banking services of Banks have a basket of wonderful services.

Though a customer of any Bank is a potential buyer of a product/service,

efficiency of the Bank can be judged only from the point of employees. Technology up
gradation in the Banking sector, not only requires customers’ demand for advanced
technology based services, but also needs adoptable and dynamic employees to utilize the
advantages of these updated services.

To understand the status and developments of ICT tools in the banking sector, it is
important to know the perception of employees. It is essential to understand their work
experience. Therefore an attempt has been made to get information regarding the pros and
cons of ICT usage from employees and customers point of view.

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 Chart. No -1.7 Opinion of Employees in Modern Banking Sector

(Self Created Chart)

Environment in the Banking sector has made its employees capable of dealing
with their routine work successfully. It has brought employees out from the monotonous
and isolated work to ever changing working environment.

Employees with these updated services are ready to handle any situations or
responsibilities:-

 E – Banking services have reduced the working hours and work pressure of
employees.

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 ICT based services have a positive impact on the performance and productivity of
employees
 Modern Banking is increasing the competitive spirit of employees a nd on the
other hand, they are also feeling comfortable and getting updated.
 Customers for any queries or doubts approach websites and get quick responses
from employees with upgraded technology. Therefore, it has improved the
relationship between employees and customers.

Certainly technology is bringing a new luster to the banking sector. Both the
customers and employees of this sector are aware of the importance of technology driven
services. This new trend has increased competitive spirit and commitment of employees
and has made customer service easy, faster and dynamic.

1.4 Statement of the Problem/Research Gap

ICT has helped the Indian Banking Sector to become more vital and energetic.
This spark of growth has benefited not only the employees but also the customers of these
Banks. Both of them are enjoying a variety of advanced Banking services. Today ICT is
not at all a luxury tool for Commercial Banks. According to National Association of
Software and Services Companies (NASSCOM), in 2014 they have spent 15percent of
the total expenditure on technology up gradation but spending on ICT by UCBs in India
was just 5 percent. It is comparatively very lower than Commercial Banks.

The behaviour of the customer is changing in a positive way. His income is

increasing, priorities are changing, his ability and willingness to access communication
and technology is also enhanced. Keeping this new trend in view, UCBs have to provide
best quality and transparent services by adopting user friendly software packages to their
customers. Employees have found positive developments in their working
environment.ICT tools have brought structural changes in the profitability, productivity
and financial performance of Indian Banks. Commercial Banks have been successful in
implementing E-Banking services but UCBs have not seen success in the process of
transformation of brick and mortar system to digital Banking.

Technology up gradation has changed the mindset of customers. The customer’s

perception towards E-Banking services has changed them to come out of Conventional
Banking set up to modern technology updated Banks. But UCBs are still slow in imbibing

42
technology related strategy in their business operation. It is observed in the study that
many of the selected UCBs are not aware of this latest technology drive. Lack of funds,
lack of technical skill among staff, inadequate information about ICT tools etc. have
made these UCBs to log out of this new challenge.

The key purpose of this study is to analyse the integration of IC T and Banking
sector and satisfaction of customers and employees in both Commercial Banks and UCBs
with ICT based service offerings. The Topic has been chosen to test the impact of ICT
based services in Commercial Banks as well as in UCBs. On the other hand customer’s
as well as employees’ perception towards E-Banking services are analysed. E-Banking
services in UCBs are still at an initial stage, but in the Commercial Banks delivery of E-
Banking services has become successful. RTGS, NEFT, ECS, POS, ATM cards, Credit
cards, MICR, Internet Banking, Mobile Banking, etc. are the common features of
Commercial Banking Sectors.

1.5 Importance of the Study

Technology has brought structural changes in financial performance, profitability

and productivity of Banks. So the present study has made sincere attempts to analyse the
changes which started to take place after the introduction of ICT application and has also
examined the performance of both Commercial Banks and UCBs. The study has also
analysed the perception regarding ICT based services in the Banking business of both
customers and employees of selected Banks.

The role of technologies in the modern world is well recognised by the financial
sector. ICT tools occupy the vital position in Banking transactions. Banks are also
looking forward to ride a vehicle of technology to bring a positive change for a much
lauded development. ICT based services are surprisingly changing the platform of Indian
Banks. They are providing scope for innovative products to customers. At present,
providing best services to their customers has become the prime objective of Banks.

Commercial Banks have introduced ICT tools in a big way, but UCBs are not
fully enabled to go for e- payments and e- Banking in large volumes. In this background
the present research has made a comparative analysis of ICT impact on both Commercial

43
Banks and UCBs in India. There is a considerable difference between the services
provided by the Commercial Banks and UCBs. So, there is a need to study the growth
and trends in financial performance, productivity and profitability with ICT tools in
Indian Banking Sector. Therefore the present study has made an attempt to identify the
impact of ICT tools on performance of Banking sector and to analyse the perceptions of
customers and employees regarding E- Banking services.

Hither to reviewed Working papers, Conference proceedings, Books, Committee

reports expose the various studies in the field of ICT applications in both Commercial
Banks and Urban Cooperative Banks have been considered for the present study. The
available research studies have analysed the role of IT tools in the Banking Sector and
perception of customers on E-Banking services. Many success stories show that the latest
technology is holding a golden key to open the doors of success to the Banking Sector.
Few studies have stressed on ICT strategy in Cooperative Banks. It has been noticed that
none of the studies have compared Commercial Banks and UCBs with regard to ICT
solutions and also Customers’ And Employees’ Perceptions especially in Mysore city. In
this background an attempt has been made to fill the research gap and tried to trace out
the reason behind the hesitation towards ICT strategy in Urban Cooperative Banks.

1.6 Objectives of the Study

The present study is based on the following objectives:-

 To make a comparative analysis of the performance of Commercial Banks and

UCBs in India.

 To study the nature and extent of ICT practices in the Banking Sector in India

 To examine the impact of ICT tools on the performance of both Commercial

Banks and UCBs in India.

 To analyse the perception of customers and employees of selected Commercial

Banks and UCBs in Mysore regarding ICT based Banking transactions.

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1.7 Hypotheses of the Study

Following are the hypotheses formulated for the prescribed study:-

H1: There is a significant difference between Commercial Banks and UCBs in terms
of their performance in India.

H2: There is a significant difference between Commercial Banks and UCBs in terms
of the impact of ICT based services on their performance in India.

H3: There is a significant difference between Commercial Banks and UCBs in terms
of satisfaction of their customers in Mysore city.

H4: There is a significant difference between Commercial Banks and UCBs in terms
of satisfaction of their employees in Mysore city.

1.8 Methodology of the Study

A simple random sampling method is adopted to choose customers and employees

of particular Banks and purposive sampling method is used to select both Commercial
Banks and UCBs in the study area The study has used a simple percentage method,
AAGR, graphical method, T-test, F-test, Dummy variable analysis and chi square test
measures to analyse the trend and impact of ICT on Banking sector and perception of
employees and customers about ICT based services in Banks. For the Present study 150
customers from Commercial Banks and 150 customers of UCBs of Mysore city and 100
employees of Commercial Banks and 100 employees of UCBs of the same study area are
selected on simple random sampling method. RBI reports, NFFSCOB reports and reputed
journals, books, newspapers and websites are reviewed to get secondary information. The
Sample for this study is limited to Mysore city of Karnataka State, Ind ia. Ten Commercial
Banks and ten UCBs of Mysore city have been selected for the study (1/4 th of the total
Banks in the city). The present study has used a questionnaire, schedule and interview
method to collect information from the selected samples. The study period is divided into
two parts to know the impact of ICT before the formation of the working group on IT
support for Urban Cooperative Banks [2008] and after 2008 to till 2013.In this context
study has taken the time period from 2003-04 to 2012-13.

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 1.9 Limitations of the Study

The Present study has certain limitations. They are listed below

 An effort has been made to collect useful and accurate information for the present study

from selected respondents, but some of the respondents hesitated to share the information

and might have given vague information

 Analysis of this study is made on the basis of the available information taken from

respondents but it may lack accuracy.

 The study is limited to E-Banking services offered by selected Commercial Banks and

UCBs.

 The present study has used the dummy variable method to analyse the impact of ICT on

Banking Sector. The study has taken qualitative variable, i.e. ICT and it has also taken

quantitative variables such as total deposits, total advances, total investment and total

business, deposit per employee, advances per employee and business per employee,

deposit per branch, advances per branch and business per branch to make a comparative

study of the performance in both Commercial Banks and UCBs in India. To estimate the

impact of ‘time period’ i.e. Period of technology up gradation(2003-08) and Period of

rapid usage of technology (2008-13)on the performance, productivity and profitability of

Banks dummy variable method is adopted.

 It is a very difficult task to understand and analyse the perception of customers and

employees because of new product/services offered by Banks choices and opinions

change very often.

 A research is limited to the period from 2008-2009 to 2012-13 to study the performance

of the Karnataka Banking sector due to the lack of information about UCBs. Therefore a

comparison between Commercial Banks and UCBs is made only for five years.

46
1.10 Chapter Scheme
The present study is organized into six chapters, they are as follows

The chapte r one contains a brief introduction to the present study. It covers the
meaning of ICT, evolution and structure of the banking sector, stages of transformation in
the Indian Banking Sector and ICT relevance in Indian Banks, objectives and hypotheses.
The study also covers the statement of the research problem, the importance of the study,
methodology, research gap and limitations of the study.

The chapter two shows the studies of different scholars and experts related to the
present study. Here an attempt has been made to review the available literature, i.e.
reviews related to ICT & Development, reviews related to ICT adoption in Commercial
Banks, reviews related to ICT adoption in Urban Cooperative Banks, reviews related to
Customers’ and Employees’ opinion on ICT Adoption in Banks and Committee Reports
and this review work has helped to get necessary conclusions.

The third chapter explains a relevant literature and theories which are already
carried out by different economists. It has covered both technological background and
conceptual framework of the study and the research design and methodology adopted for
the analysis. It also shows the study area, data collection method, sampling technique and
suitable statistical tools used for study.

The fourth chapter discusses the trend and the impact of ICT on the
performance (total deposits, total advances, total investments, number of branches),
productivity (both branch productivity and labour productivity) and profitability (return
on investment) of the Commercial Banks and UCBs in India and performance of Banks in
Karnataka has also been discussed and makes a comparison between Commercial Banks
and UCBs with regard to the growth of Banks. Here recent trends in the ICT practices in
the Banking sector are also analysed with trend analysis and dummy variable model.

The fifth chapter deals with the Perception of 200 employees and 300 customers
of both Commercial Banks and UCBs regarding RTGS,NEFT,ECS,MICR, Mobile

47
Banking, Internet Banking, ATM services, SMS Alert and Card Based Services in
selected Banks. They are analysed with a chi square analysis.

The chapter six being a concluding chapter gives a summary of the study major
findings and suggestions.

The present study shows the outline of entire research study and also exhibits the
nature, extent and impact of ICT introduction and up gradation both in Commercial
Banks and Urban Cooperative Banks in India. The study also considers the perception of
customers and employees regarding ICT development in Banks in Mysore City.
Hypotheses, objectives, scope and significance of the stud y are outlined in this chapter.
The study also shows methodology, research gap, limitations and organizations of the
thesis.

48