CHAPTER-1

INTRODUCTION
On 8 November 2016 midnight, the Indian Government announced the demonetization of all the
500 and 1000 monetary category currency notes of the Mahatma Gandhi series. The legislature
guaranteed that the activity would shorten the shadow economy and get serious about the
utilization of unlawful and fake money to support illicit movement and fear based oppression. This
plan greatly affects the organizations, average citizens, and monetary establishments alongside
multi-assorted mechanical foundation of India. Demonetization speaks to considerably more than
destabilization; it has struck a body blow on the financial activity in India. While the defenders of
demonetization may have or had great expectations, the anguish it has caused to a many Indians is
baseless. Since Rs500 and Rs1000 notes make up about 86% of the total cash accessible for use in
India, especially in the massive provincial locales, the anguish to what individuals may
understanding whether 86% of their blood was removed from their bodies. The poor were taken
completely level footed and the dealing with a record establishment in the hinterland is genuinely
compelled. The tech class has poor introduction to basic social hypothesis with a specific end goal
to comprehend the effect on the ground. There is a compassion deficiency.

The term demonetization isn't new to the Indian economy. The most raised class note anytime
printed by the Reserve Bank of India was the Rupees 10,000 note in 1938 and again in 1954.
Nevertheless, these notes were demonetized in January 1946 and again in January 1978, as
mentioned in RBI data. The objective was to battle tax avoidance by "dark cash" held outside the
formal monetary framework. In 1946, the pre-autonomy government trusted demonetization
would punish Indian organizations that were disguising the fortunes amassed providing the Allies
in World War II. It ended up becoming more like a money change drive as the legislature couldn't
accomplish quite a bit of benefit in the destitute economy around then. In 1978, the administration
demonetized currency notes of 1000, 5000 and 10,000 rupees, again in the expectations of
checking fake cash and dark cash. The Wanchoo Committee had prescribed the administration to
pull back the cash in light of the fact that the nation was experiencing a troublesome period In
2012, the Central Board of Direct Taxes had recommended against demonetization, saying in a
report that "demonetization may not be a response for dealing with dull money or economy, which
is, as it were, held as benami properties, bullion and embellishments ".

Demonetization is a mechanical assembly to battle Inflation, Black Money, Corruption and Crime,
unsettle a cash subordinate economy and help trade. Its technique of the lawmaking body by
denying Rupees 500 and 1000 money notes has affected all the side of the economy. Its effect on
Banking Sector is basic as Bank is a center for guiding the legal fragile money to all needs of the
overall population. The best beneficiaries of demonetization are Banks. It affected the banks to
recognize the stores with no expense of headway and fundamentally extended liquidity to position
of the banks. The present examination is made out of open composition on post demonetization. It
delineated the effect of demonetization on Banking Sector. It incorporated the present decision of
the central government on Demonetization and its consistent effect on Indian setting aside some
cash part.

Banks are focus bit of any economy. They channelized the money to the smooth working of
different sections. Exercises of Green Banking, made the banks to change normal keeping cash
organizations into present day setting aside some cash organizations. The things and organizations
are offered through electronic contraptions with the help of web. By and by multi day, bank
organizations are given sustenance at the fingertip of customers. Careful Strike on Black Money
called 'Demonetization' got colossal changes all of the sections of the country. Banks are not
striking from the effect of Demonetization and it made vibrations in the errands and moreover
things and organizations of Banks. It made progressively noticeable solicitation to mechanized
keeping cash organizations where cashless trades are composed. Ordinary exercises of Banks are
impacted and found exceptional in Management of liquidity and Employees. It made increasingly
conspicuous impact on Management of liquidity and its solicitation brought by customers up in
exchanging of their confined money notes while restricting threat and intensifying nature of
organization. Meanwhile meeting the course of Reserve Bank of India was trying. Demonetization
has disturbed the bank errands and made the delegates to work under inadequate stress in extended
working hours of multi day. A vast part of the banks were not prepared to discharge other setting
aside extra cash organizations while exchanging the disallowed money notes. From this time
forward, the present examination is comprehends the effect of demonetization on keeping cash
fragment. It grandstands post demonetization sway on banks and its exercises.
1.1Demonetization History and Background in India
 This isn’t the first time when Indian currency notes is demonetized in India.
 The first demonetization occurred in 1946 and the second in 1978 when a mandate was
proclaimed to eliminate notes with group of Rs 1,000, Rs 5,000 and Rs 10,000.
 The most noteworthy category note at any point printed by the Reserve Bank of India was the
Rs 10,000 note in 1938 and again in 1954. However, these notes were demonetized in January
1946 and again in January 1978, as per RBI information.
 Rs 1,000 and Rs 10,000 monetary certificates were available for use preceding January 1946.
Higher category banknotes of Rs 1,000, Rs 5,000 and Rs 10,000 were reintroduced in 1954
and every one of them were demonetized in January 1978.
 The Rs 1,000 note made a rebound in November 2000. Rs 500 note came into dissemination
in October 1987. The move was then defended as endeavor to contain the volume of banknotes
available for use because of expansion.
 However, this is the first occasion when that Rs 2,000 money note is being presented.
 Bank notes in Ashoka Pillar watermark arrangement in Rs 10 group were issued somewhere
in the range of 1967 and 1992, Rs 20 out of 1972 and 1975, Rs 50 out of 1975 and 1981 and
Rs 100 between 1967-1979.
 The banknotes issued amid this period contained the images speaking to science and
innovation, advancement and introduction to Indian works of art.
 In the year 1980, the legend Satyameva Jayate - 'truth alone will win' - was fused under the
national image out of the blue.
 In October 1987, Rs 500 banknote was presented with the representation of Mahatma Gandhi
and Ashoka Pillar watermark. Mahatma Gandhi (MG) arrangement banknotes – 1996 were
issued in the groups of Rs 5, (presented in November 2001), Rs 10 (June 1996), Rs 20 (August
2001), Rs 50 (March 1997), Rs 100 (June 1996), Rs 500 (October 1997) and Rs 1,000
(November 2000).
 The Mahatma Gandhi Series – 2005 monetary certificates were issued in the group of Rs 10,
Rs 20, Rs 50, Rs 100, Rs 500 and Rs 1,000 and contained some extra/new security includes
when contrasted with the 1996 MG arrangement.
 The Rs 50 and Rs 100 banknotes were issued in August 2005, trailed by Rs 500 and Rs 1,000
groups in October 2005 and Rs 10 and Rs 20 in April 2006 and August 2006, individually.

1.2 Facts about Demonetization 1946, 1978 And 2016

Demonetization and Bank Operations

Demonetization has obtained a lot of challenges augmentations to the troubles which are starting
at now looking by Banks. The effects were without further ado and whole deal sees. In at this very
moment, it upset the banks and concentrated on unequivocally to finish bank exercises and in long
run it helped the banks to pool the stores without securing of any expense. Here are four effects of
demonetization on Banks.

1. Increment in Deposits: Demonetization has extended the stores in Banks. Unaccounted

money as Rs.500 and Rs.1000 were spilling to the Banks and the sizes of stores have been
extended. It helped the banks to get the stores and augmentation their stores.
2. Fall in expense of Funds: throughout ongoing months, the stores are extended. It drove
the banks to keep an essential bit of stores as cash stores. PSU Banks have a lion share
(over 70%) of the stores and most prominent gainers of the rising in stores, inciting lower
cost of advantages.
3. Interest for Government Bonds: After sharp rising in stores on post demonetization,
banks started advancing such surplus stores to the RBI under the upset repo choices. PSU
Banks, particularly, sent bounty finances in government bonds. The entry on bond theory
is most likely going to add 15 to 20 for each penny increase in the salary of banks.
4. Droopiness in Lending: Loaning advancement of the banks is stunningly less even after
demonetization and its impact of improvement in the proportion of open store. Banks have
tried to advance the money to the down and out social occasion by decreasing their
financing costs, anyway it contracted over the span of the latest couple of months.
Results of Post Demonetization on Bank Operations

There are sure and negative delayed consequences of Post Demonetization on Bank exercises.
Both have affected Banks' liquidity and efficiency and specialists also. The going with are certain
results of demonetization.

1. Free stream of stores: Banks have grabbed stores impressively after demonetization which
they can contribute for upgrading their liquidity and advantage.
2. Improved computerized Interface: Change in cutting edge gadgets and apparatus to execute
bank trades has avoided cash incident for various reasons like robbery, dacoits and
misappropriations.
3. People's surplus at Bank: Money is a sit still asset which does not yield any compensation
except if kept in a bank. Thusly, demonetization made the all inclusive community to keep
their surplus money in a bank to get a kind of compensation.
4. Increased number of Customers: Demonetization has affected open to come and execute
trades with banks. It made even a non-pay collect people to visit bank and have a record. It
extended number of record holders in banks while growing store corpus. So likewise,
Demonetization has passed on some operational issues to Banks.

It exasperates Banks' Employees, Operational Costs and Profitability. Coming up next are
negative impacts of Demonetization.

1. Cash Reserve Requirement: 100% CRR on steady stores inferred that banks did not procure
any energy on Rupees 3 Lakh crore of stores for about a fortnight.
2. Waived off ATM Charges: ATM charges were deferred off in the midst of limited note
exchange and banks gained lost Rupees 20 in each trade.
3. Waived off Merchant Discount Rate: Banks achieved loss of 1% markdown charges from
dealers on using of each card trade.
4. Non Selling of Loans: Banks were fixated on exchanging cash notes and they were not
prepared to offer any propel things. This made banks to control their advancing activities.
5. Reduced SMEs Sale and effect on NPAs: Amid demonetization, some SME associations had
seen their business drop by 50-80 percent and could default in their parts to banks. This drove
the banks to think about it as NPA and impacted its dimension in banks.
6. Stress on Employees: Bank Employees were put under strain and additional time work
environment. It disheartened them and kept imbalanced lifestyle. Scarcely any cases were
found where the delegates submitted suicide as a result of work weight.
 CHAPTER-3
RESEARCH METHODOLOGY
3.1 Methodology
In this study, a combination of both Primary & Secondary data has been used. Primary data is used
in the form of questionnaire method, which has been created using Google forms & distributed
among internet & social media users. In addition to it, secondary data has been used to support the
study.

OBJECTIVES OF STUDY

1. To get idea about demonetization.

2. To identify the reasons for demonetization.

3. To analyze the demonetization post effects on banking habits.

4. To know the trends and behavior change in consumers buying.

5. To know the effects of demonetization on general public.

METHODOLOGY OF THE STUDY

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

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

SAMPLE AREA
Gwalior is area from where all this information collected.
 DATA COLLECTION
Both primary and secondary data were used.

i. Primary data: data regarding the topic is collected directly by interacting with the employees
by using structured questionnaire method.
ii. Secondary data: the secondary data was collected from the existing data sources, catalogues,
and internet.
SAMPLING
The questionnaire was initially pilot-tested by trainer. The results of the pilot test proved to be
satisfactory, since all the respondents found most of the questionnaire items understandable.
Nevertheless, some wording mistakes and unwanted questions were found, which were corrected
in the questionnaire’s version that was finally distributed in the field research. Respondents were
approached randomly.

MODE OF ANALYSIS
The instrument used for data collection was in the form of questionnaire. The questionnaire was
used as it facilitated the tabulation and analysis of the data to be collected. The data collected was
subjected to simple frequency distribution and percentage analysis.
 CHAPTER-4
RESULTS AND DISCUSSIONS
4.1 Discussion
On 8 November 2016 midnight, the Government of India announced the demonetization of all of
the 500 and 1000 class financial authentications of the Mahatma Gandhi Series. The lawmaking
body ensured that the action would abbreviate the shadow economy and quit fooling around about
the usage of unlawful and phony cash to help illegal development and dread based persecution.
This arrangement enormously influences the associations, normal natives, and money related
foundations close by multi-grouped mechanical establishment of India. Demonetization addresses
impressively more than destabilization; it has struck a body blow on the money related activity in
India. While the protectors of demonetization may have had incredible desires, the anguish it has
caused to a large number of Indians is outlandish. Since Rs500 and Rs1000 notes make up about
86% of the total cash accessible for use in India, especially in the colossal provincial locales, the
desolation to what individuals may understanding whether 86% of their blood was removed from
their bodies. The poor were taken altogether level footed and the dealing with a record
establishment in the hinterland is genuinely obliged. The tech class has poor introduction to
fundamental social speculation with a particular ultimate objective to grasp the impact on the
ground. There is a sympathy inadequacy.

The term demonetization isn't new to the Indian economy. The most raised class note anytime
printed by the Reserve Bank of India was the Rupees 10,000 note in 1938 and again in 1954. In
any case, these notes were demonetized in January 1946 and again in January 1978, as shown by
RBI data. The goal was to fight charge shirking by "dull money" held outside the formal financial
structure. In 1946, the pre-self-rule government believed demonetization would rebuff Indian
associations that were masking the fortunes amassed giving the Allies in World War II. It wound
up winding up increasingly like a cash change drive as the governing body couldn't achieve a
considerable amount of advantage in the down and out economy around at that point. In 1978, the
organization demonetized banknotes of 1000, 5000 and 10,000 rupees, again in the desires for
checking counterfeit money and dull money. The Wanchoo Committee had recommended the
organization to pull back the money in light of the way that the country was encountering a
troublesome period In 2012, the Central Board of Direct Taxes had proposed against
demonetization, saying in a report that "demonetization may not be a response for dealing with
dim money or economy, which is, all things considered, held as benami properties, bullion and
decorations."

Demonetization is a device to battle Inflation, Black Money, Corruption and Crime, unsettle a cash
subordinate economy and help trade. Its system of the lawmaking body by disallowing Rupees
500 and 1000 money notes has affected all the side of the economy. Its effect on Banking Sector
is basic as Bank is a center for guiding the legal fragile money to all needs of the overall population.
The best beneficiaries of demonetization are Banks. It affected the banks to recognize the stores
with no expense of headway and profoundly extended liquidity to position of the banks. The
present examination is made out of open composition on post demonetization. It delineated the
effect of demonetization on Banking Sector. It incorporated the present decision of the central
government on Demonetization and its consistent effect on Indian setting aside some cash part.
Banks are focus bit of any economy. They channelized the money to the smooth working of
different fragments. Exercises of Green Banking, made the banks to change standard keeping cash
organizations into present day setting aside extra cash organizations. The things and organizations
are offered through electronic devices with the help of web. By and by multi day, bank
organizations are given nourishment at the fingertip of customers. Careful Strike on Black Money
called 'Demonetization' got gigantic changes all of the sections of the country. Banks are not
noteworthy from the effect of Demonetization and it made vibrations in the undertakings and also
things and organizations of Banks. It made increasingly noticeable solicitation to mechanized
keeping cash organizations where cashless trades are sorted out. Regular exercises of Banks are
impacted and found exceptional in Management of liquidity and Employees. It made progressively
conspicuous impact on Management of liquidity and its solicitation brought by customers up in
exchanging of their confined money notes while constraining peril and intensifying nature of
organization. Meanwhile meeting the heading of Reserve Bank of India was trying.
Demonetization has disturbed the bank undertakings and made the delegates to work under
inadequate stress in extended working hours of multi day. A huge part of the banks were not
prepared to discharge other setting aside extra cash organizations while exchanging the precluded
money notes. Hereafter, the present examination is understands the effect of demonetization on
keeping cash section. It grandstands post demonetization sway on banks and its exercises.
4.2 Data Analysis
1. GENDER

Figure 4.1: Gender of Respondents

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

Gender No of Responses Percentages (%)

Male 24 65

Female 16 35

Table 4.1: Gender of Respondents

2. AGE

Figure 4.2: Age of Respondents

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

Figure 4.3: Education Level of Respondents

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

Profession %(percentages)

Students 92.5

Professional 2.5

Post Graduate 5

Table 4.2: Education Level of Respondents

4. OCCUPATION

Figure 4.4: Occupation of Respondents

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

Figure 4.5: Using Internet Since

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

Figure 4.6: Use of Internet Every Day

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

Figure 4.7: Respondents are Aware About

Table 4.3: Respondents are Aware About

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

Figure 4.8: Frequency of Usage of Services before Demonetization

Figure 4.9: Frequency of Usage of Net Banking before Demonetization

Figure 4.10: Frequency of Usage of Mobile Banking before Demonetization

Figure 4.11: Frequency of Usage of Payment Wallets before Demonetization

Figure 4.12: Frequency of Usage of Cryptocurrency before Demonetization

Figure 4.13: Frequency of Usage of Online Trading before Demonetization

Figure 4.14: Frequency of Usage of Online Insurance Purchase before Demonetization
9. What is the frequency of usage of these services? (After Demonetization)

Figure 4.15: Frequency of Usage of Services after Demonetization

Figure 4.16: Frequency of Usage of Net Banking after Demonetization

Figure 4.17: Frequency of Usage of Mobile Banking after Demonetization

Figure 4.18: Frequency of Usage of Payment Wallets after Demonetization

Figure 4.19: Frequency of Usage of Cryptocurrency after Demonetization

Figure 4.20: Frequency of Usage of Online Trading after Demonetization

Figure 4.21: Frequency of Usage of Online Insurance Purchase after Demonetization
10.Since how many years are you using these service?

Figure 4.22: Since how many years respondents are using these service
11.Which attribute of the bank do you value the most?

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

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

Figure 4.24: Which Factor Promotes to Use New Technologies?

13. Customer level of usage of technology

Figure 4.25: Usage of Technology

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

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

Figure 4.27: Frequency of Usage of Branch Banking per month before Demonetization
 Figure 4.28: Frequency of Usage of ATM per month before Demonetization

Figure 4.29: Frequency of Usage of Internet Banking per month before Demonetization
Figure 4.30: Frequency of Usage of Telephone Banking per month before Demonetization

Figure 4.31: Frequency of Usage of Mobile Banking per month before Demonetization
15. How frequently did you use the following banking services per month (After
Demonetization?)

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

Figure 4.33: Frequency of Usage of Branch banking per month after Demonetization
 Figure 4.34: Frequency of Usage of ATM per month after Demonetization

Figure 4.35: Frequency of Usage of Internet Banking per month after Demonetization
Figure 4.36: Frequency of Usage of Telephone Banking per month after Demonetization

Figure 4.37: Frequency of Usage of Mobile Banking per month after Demonetization
16. Attitude of Bank employees during demonetization period

Figure 4.38: Attitude of Bank employees during demonetization period

 CHAPTER-5

CONCLUSION AND FUTURE PROSPECTS

5.1 Conclusion

Demonetization however it has made some positive and some negative effects on various divisions
yet in long run it certainly will have positive effect in controlling dark cash and phony cash.

So the investigation demonstrates that at first the demonetization impacts on market were
excruciating yet this additionally incite the businesspeople and purchasers to embrace cashless
methods, for example, paytm, check card use, web banking to purchase products. By receiving the
cashless methods economy will be sound in coming time and Indian Economy will get advantages
of ahead of schedule and bother free exchanges. Demonetization impact will be certain in coming
time for Indian Economy. Indian customers will endeavors to adapt better approaches for cashless
exchanges. By embracing the cashless methods positively there will be a keep an eye on dark cash.

The demonetization attempted by the legislature is a substantial stun to the economy. The effect
of the stun in the medium term is an element of the amount of the money will be supplanted toward
the finish of the substitution procedure and the degree to which cash available for use is doused.
While it has been contended that the money that would be quenched would be "dark cash" and
subsequently, ought to be legitimately smothered to set right the unreasonable motivating force
structure in the economy, this contention depends on impressions instead of on realities. While the
realities are not accessible to anyone, it is imprudent to contend this is the main probability. As
contended above, it is conceivable that these money adjusts were utilized as a vehicle of trade. At
the end of the day, while the money was intervening in genuine financial action, if this cash is
smothered there would be a withdrawal of monetary action in the economy and that is a cost that
should be figured in while surveying the effect of the demonetization on the economy and its
operators. All things considered, there would be a spurt in the financial stores. While translating
the marvel, be that as it may, one needs to remember that a vast piece of their stores were prior
utilized for value-based purposes. For instance, if a little merchant stores 2 lakh Rupees in the Jan
Dhan account since the cash in which he held these parities in for value-based purposes has been
rejected, it is mistaken to decipher this as accomplishment of the developer in acquiring individuals
who were concealing dark cash. Nor would they be able to be deciphered as extra adjusts that the
financial area can loan out on a similar premise as prior stores, since the stores currently would
stay in records for a lot shorter periods that stores dependent on investment funds would be
The achievement and the proficiency of executing demonetization lies in the readiness of
The whole economy, the administration hardware and the mindfulness among the overall
population and the whole political framework being taken into certainty through a compelling
correspondence by all methods and by the straightforward methodology of the legislature
actualizing Demonetization.

5.2 Future Prospects

It is ahead of schedule to arrive at any resolutions. Scarcely any months' outcomes may not finish
up long haul sway. This investigation has further degree to think about long haul sway with
increasingly explicit and more extensive variables covering the effect.