A

Comprehensive Project Report

On

“A Study On Impact Of Demonetization Over a Banking

Sectors”
Submitted to

Narandas Jethalal Sonecha Management & Technical Institute,

Chanduvav (Veraval)
In partial fulfilment of the requirement of the award for the degree of

Master of Business Administration

Under

Gujarat Technological University

Under the -Guidance of

Miss Dhara Abhani
(Assistant professor)
Submitted by
Pooja Pajvani V. 188170592025

Urvashi Vadhavi K. 188170592040

MBA Sem-4
April, 2020
 DECLARATION

I hereby declare that the COMPREHENSIVE Project Report title

“A Study On Impact Of Demonetization Over a Banking Sectors ” in(Name of
the Company / Organization) is a result of my/our own work and my/our
indebtedness to other work publications, references, if any, has/have been duly
acknowledged. If I/we am/are found guilty of copying from any other report or
published information and showing as my/our original work, or extending
plagiarism limit, I/we understand that I/we shall be liable and punishable by
the university, which may include ‘Fail’ in examination or any other
punishment that university may decide.

Enrolment no. Name Signature

188170592025 Pooja Pajvani
188170592040 Urvashi Vadhavi

Place :- Chanduvav (Veraval) Date:

 Preface

Management is the essential part of our daily life. Corporate people know the
importance of the management very well. Management is one of the most important
ingredients for successful management of complex organization.
If one wants to be the matter in any of the area, then he must undergo at practical
experience. The student of M.B.A are future managers so they must have practical
knowledge. So, their work is an essential part of M.B.A. in project the students
develops their personal skills as well as many others skills like communication skill,
analytical skill, writing skills etc. for rising their overall personality. So, it become
practical studied for them.
This particular project allows a student to implement what she has learned within the
four walls of classroom.
I am very glad to present this report. I honestly thankful to all of those who have
helped me during my project work.
Finally, I would like to think all the depositors who helped me in providing their time
and information to complete my research work through questionnaires.
 Acknowledgement

Knowledge in itself is a continuous process. At this moment of any substantial

enhancement. I rarely find enough word to express my gratitude towards those who
were constantly involved with me during my project and making it a success. Men
become good through practice than by nature.
First of all we want to thank Gujarat Technological University, Ahmadabad for
including the comprehensive project report in a course of M.B.A.that enhances our
knowledge in practice.
We would also like to thank our HOD, Mr. Pradip I. Mehta for giving such
opportunity. We would also like to thank Assistant Professor Dhara Abhani for giving
me valuable guidance in this project and helping me in each and every stage of this
research.
Lastly, we would like to thank my beloved parents and friends for creating an amiable
and congenial environment and encouraging me in right direction. 
 INDEX

SR.NO PARTICULAR PAGE NO.

PART 1 General information
1 Introduction to the banking industry
2. History of banking
3 Major Banks
4. Product Profile
PART 2 Primary Study
5. Introduction of the study
 Literature review
 Background of the study
 Problem Statement/
 Objectives of the study
 Hypothesis
6. Research Methodology
 Research design
 Sources of data
 Data collection method
 Population
 Sampling method
 Sampling frame
 Data collection instrument
7. Data analysis and interpretation
8. Hypothesis testing
9. Result& findings
 Findings
 Suggestions
 Limitations
 Conclusion
10. Bibliography
11. annexure
PART-1
 DEMONETIZATION

What is demonetization?

Demonetization is the act of changing the existing currency in another form. The old
units should be retired and replaced by new currency. In other words demonetization
means either introducing new notes or coins of the same currency or fully replacing
the old currency with new currency. There is an one important thing exist on
economics, which is demonetization, in which forms of payment is restored as legal
tender.

It is the step taken up by the Government generally with the motive of removal of
corruption. Moreover it is the act of depriving of value of currency for official
payment. It does not only include the currency but also include the precious metals.
Originally Demonetization is the French word "demonetize" dating back to 1850-55.

Meaning

The dictionary meaning of DEMONETIZE is "To deprive (a metal) of its capacity as

a monetary standard" or To withdraw from use as currency" So, demonetization is the
act of stripping a currency unit of its status as legal tender. It is the act or process of
removing the legal status of currency unit. A currency on which Governor of RBI on
behalf of Central Government guarantees by making statement "I promises to pay the
bearer, the sum of money ...." which empowers it a Legal status. From the date of
demonetization, all old currencies which are demonetized will cease to be a legal
tender Such currency cannot be used as money to do any transaction henceforth, but
to replace with a new currency.

1
 History Around The World

Demonetization is not new to India or to the outside world, Various Governments

across the world have decided to ban currency note in circulation, rendering huge
amount of cash useless overnights, due to plethora of reasons. These include fighting
counterfeiting, stopping terror activities, battling black money etc. Many countries
have adopted this process of demonetization to overcome hyperinflation, to curb black
money, to bring economic stability, to remove counterfeit currency etc One of the best
and recent examples of demonetization is that of adoption of Euro currency among
the nations of European Union, In order to switch to the Euro currency, authorities
first fixed exchange rates for the varied national currencies into Euros. When the Euro
was introduced, the old national currencies were demonetized. However, old
currencies remained convertible into Euros for a while so that a smooth transition
through demonetization would be assure.

In 1982, Ghana took the decision to demonetize their 50 cedi currency. Which created
chaos and the decision was not well combed. Afterwards Nigeria (in 1984), Myanmar
(in 1987) Soviet Union (1991) North Korea and Zimbabwe had also took this type of
decision in past.

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What is Bank?
Introduction of Banking

A Bank is an economic instrument whose main aim is to earn profit through exchange
of money & credit instruments. It is a service oriented as well as profit oriented
organization. To perform those two functions simultaneously, the Bank divides its
operation mainly in three parts-General Banking. Loan & Advances and Foreign
Exchange.

Bank also invests their money into different financial security and also indifferent
types of project to diversify the risk and getting more profit.

3
Definition of banking

Generally, "banking means an institution, which a deal with money, a bank receives, a
bank received money in the form of deposit from the public, and lands money for the
development of traders and commerce.

Banking Regulation Act (1949), "Banking is a company which accepts money with
low rate, and makes its investment at deposit of money with high rate"

Banking is a company, which accept money with low rate, and makes its investment
at deposit of money with high rate." 

Banking in India

Banking in India is playing a very important role in development of Indian economy

The banks in India work as per the guidelines of reserve bank of India i.e. the central
bank of India. It means the reserve bank of India is the key factor of Indian economy.

The banks in India focusing towards the development of rural area as well for
balancing the overall development of India.

Phases

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The first bank in India, though conservative, was established in 1786.From1786 till
today. the journey of Indian Banking System can be segregated into three distinct
phases. They are as mentioned below:

 Banks Early phase from 1786 to 1969 of India.

 Nationalization of Indian Banks and up to 1991 prior to Indian banking sector
Reforms.
 New phase of Indian Banking System with the advent of Indian Financial &
Banking Sector Reforms after 1991 To make this write-up more explanatory, I
prefix the scenario as Phase I, Phase Il and Phase III.

PHASE - I

The General Bank of India was set up in the year 1786. Next came Bank of Hindustan
and Bengal Bank. The East India Company established Bank of Bengal (1809), Bank
of Bombay (1840) and Bank of Madras (1843) as independent units and called it
Presidency Banks. There three banks were amalgamated in 1920 and Imperial Bank
of India was established which started as private shareholders banks, mostly
Europeans share holders. 

The Bank of Bengal, which later became the State Bank of India

In 1865 Allahabad Bank was established and first time exclusively by Indian Punjab
National Bank Ltd. was set up in 1894 with headquarter at Lahore. Between 1906 and
1913, Bank of India, Central Bank of India, Bank of Baroda, Canada Bank, Indian
Bank, and Bank of Mysore were set up. Reserve Bank of India came in 1935.

During the first phase the growth was very slow and banks also experienced periodic
failures between 1913 and 1948. There was approximately 1100 bank, mostly small.
To streamline the functioning and activities of commercial banks, the Government of
India came up with The Banking Companies Act, 1949 which was later changed to

5
Banking Regulation Act 1949 as per amending Act of 1965 (Act No. 23 of 1965).
Reserve Bank of India was vested with extensive powers for the supervision of
banking in India as the Central Banking Authority.

During those day's public has lesser confidence in the bank. As an aftermath deposit
mobilization was slow. Abreast of it the savings bank facility provided by the postal
department was comparatively safer. Moreover, funds were largely given to traders.

PHASE - II

Government took major steps in this Indian Banking Sector Reform after
independence. In 1935, it nationalized Imperial Bank of India with extensive banking
facilities on a large scale especially in rural and semi-urban area. It formed State Bank
of India to act as the principal agent of RBI and to handle banking transactions of the
country. Seven banks forming subsidiary of State Bank of India was nationalized in
1960 on 19th July 1969, major process of nationalization was carried out. It was the
effort of the then Prime Minister of India, Mrs. Indira Gandhi.

14 major commercial banks in the country were nationalized. Second phase of

nationalization Indian Banking Sector Reform was carried out in 1980 with seven
more banks. This step brought 80% of the banking segment in India under
Government ownership.

The following are the step taken by the Government of India to Regulate Baking
Institutions in the country

1949: Enactment of Banking Regulation Act.

1955: Nationalization of State Bank of India.
1959: Nationalization of SBI subsidiaries.

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1961: Insurance cover extended to deposits.
1969: Nationalization of 14 major bank.
1971: Creation of credit Guarantee Corporation.
1975: Creation of regional rural banks.
1980: Nationalization of seven banks with deposits.

PHASE - III

This phase has introduced many more products and facilities in the banking sector in
its reforms measure. In 1991, under the chairmanship of M Narmasimham, a
committee was set up by his name that worked for the liberalization of banking
practices. The country is flooded with foreign banks and their ATM stations. Efforts
and being put to give a satisfactory service to customers. Phone banking and net
banking is introduced. The entire system became more convenient and swift. Time is
given more importance than money.

The financial system of India has shown a great deal of resilience. It is sheltered from
any crises triggered by any external macroeconomics shock as other East Asian
Counties suffered. This is all due to a flexible exchange rate regime, the foreign
reserves are high, the capital account is not yet fully convertible, and banks and their
customers have limited foreign exchange exposure. Before the steps of nationalization
of Indian banks, only State Act of 1955. Nationalization of Seven State Banks of
India's largest commercial bank and is ranked one of the top five banks worldwide. It
serves 90 million customers through a network of 9000 branches and it offers-either
directly or through subsidiaries.
The second phase of nationalization of Indian banks took place in the year 1980.
Seven more banks were nationalized wit deposits over 200 corers. Till this year,
approximately 80% of the banking segment in India was under Government
ownership. 

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Structure of Organised Indian Banking System:

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Scheduled Banks in India constitute those banks, which have been included in the
second Schedule of Reserve Bank of India (RBI) Act, 1934, RBI in turn includes only
those banks in this schedule that satisfy the criteria laid down vide section 42 (6) (a)
of the Act. As on 30th June 1999.

The Scheduled commercial banks in India comprise of State bank of India and Its
Associates, nationalized banks (19), foreign banks (45). private sector banks (32), co-
operative banks and regional rural banks.

“Scheduled banks in India" means the State Bank of India constituted under the State
Bank of India Act, 1955 (23 of 1955). a subsidiary bank as 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), or any other bank
being a bank included in the Second Schedule to the Reserve Bank of India Act, 1934
(2 of 1934), but does not include a co-operative bank". "Non-schedule bank in India"
means a banking company as defined in clause © of section 5 of the Banking
Regulation Act, 1949 (10 of 1949), which is not a scheduled bank". 

Resource Mobilization: Challenge before Banks in India

9
Banks in India can be categorized into non-scheduled banks and scheduled banks.
Scheduled banks constitute of commercial banks and co-operative banks, There are
about 67,000 branches of Scheduled banks spread across India During the first phase
of financial reforms, there was a nationalization of 14 major banks in 1969. This
crucial step led to a shift from Class banking to Mass banking. Since then the growth
of the banking Industry in India has been a continuous process.

As far as the present scenario is concerned the Banking Industry is in a transition

phase. The Public Sector Banks (PSBS), which are the foundation of the Indian
Banking system account for more than 78 percent of total banking industry assets.
Unfortunately they are burdened with excessive Non Performing assets (NPAS),
massive manpower and lack of modern technology.

On the other hand the Private Sector Banks in India is witnessing immense progress.
They are leaders in Internet banking, mobile banking, phone banking, ATMS. On the
other hand the Public Sector Banks are still facing the problem of unhappy
employees. There has been a decrease of 20 percent in the employee strength of the
private sector in the wake of the Voluntary Retirement Schemes (VRS). As far as
foreign banks are concerned they are likely to succeed in India.

Inducing Bank was the first private bank to be set up in India, IDBI, ING Vyasa
Bank, SBI Commercial and International Bank Ltd, Dhanalakshmi Bank Ltd.,
KarurVysya Bank Ltd.; Bank of Rajasthan Ltd. Etc are some Private Sector Banks.
Bank from the Public Sector include Punjab National bank, Vijaya Bank, UCO Bank,
Oriental Bank, Allahabad Bank, Andhra Bank etc.

ANZ Grindlays Bank, ABN-AMRO Bank, American Express Bank Ltd., Citibank etc
are some foreign banks operating in India. Rural banks have undergone many changes
due to alterations in the financial system of the country. As a result there were
changes in the functioning of the rural banks.

Rural banks have undergone many changes due to alterations in the financial system
of the country. As a result there were changes in the functioning of the rural banks.
The article below highlights some of the hindrances, which the rural banks encounter
while operating. 

Classification of Banks

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  Private Sector Banks in India

There are 20 Private Banks in India. Private banking in India was practiced since the
beginning of banking system in India. The first private bank in India to be set up in
Private Sector Banks in India was Inducing Bank. It is one of the fastest growing
Sectors in India IDBI ranks the tenth largest development bank in the banks in India
as part of the RBIS liberalization of the Indian Banking Industry.

The first Private Bank in India to receive an in principle approval from the Reserve
Bank of India was Housing Development Finance Corporation Limited to set up a
bank in the private sector was incorporated in August 1994 as HDFC Bank Limited
with registered office in Mumbai and commenced operations as Scheduled
Commercial Bank in January 1995.

 Public Sector Banks in India

Among the Public Sector Banks in India, United Bank of India is one of the 14 major
banks, which were nationalized on July 19, 1969. Its predecessor, in the Public Sector
Banks, the United Bank of India Ltd, was formed in 1950 with the amalgamation of
four banks viz Comilla Banking Corporation Ltd. (1914), Bengal Central Bank Ltd.
(1918), Comilla Union Bank Ltd. (1922) and Hooghly Bank Ltd. (1932).

Oriental Bank of Commerce (OBC), a Government of India Undertaking offers

Domestic, NRI and Commercial banking services OBC is implementing a
GRAMEEN PROJECT in Dehradun District (UP) and Hanumangarh District
(Rajasthan) disbursing small loans. This Public Sector Bank India has implemented
14-point action plan for strengthening of credit delivery to women and has designated
5 branches as specialized branches for women entrepreneurs.

There are 19 Public Sector Banks in India excluding SBI and its subsidiaries. State
Bank of India and its 7 subsidiaries fall under the head of Public Sector Banks.

 Co-operative Banks in India

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The Co-operative banks in India started functioning almost 100 years ago. The
Cooperative bank is an important constituent of the Indian Financial System, judging
by the role assigned to co offices the cooperative bank operate Though the co
operative movement originated in the West, but the importance of such banks have
assumed in India is rarely paralleled anywhere else in the operative, the expectations
the co operative is supposed to fulfill, their number, and the number of world. The
cooperative bank in India plays an important role even today in rural financing The
businesses of cooperative bank in the urban areas also have increased phenomenally
in recent years due to the sharp increase in the number of primary co-operative banks.

Co-operative Banks in India are registered under the Co-operative Societies Act. The
cooperative bank is also regulated by the RBI. They are governed by the Banking
Regulations Act 1949 and Banking Laws (Co-operative Societies) Act, 1965.

Cooperative banks in India finance rural areas under:

 Farming
 Cattle v Milk
 Hatchery
 Personal finance

Cooperative banks in India finance urban areas under:

 Self-employment Industries
 Small scale units
 Home finance
 Consumer finance
 Personal finance

 Regional Rural Banks in India

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Rural Banking in India started since the establishment of banking sector in India.
Rural Banks in those days mainly focused upon the agro sector. Regional rural banks
in India penetrated every corner of the country and extended a helping hand in the
growth process of the country.

SBI has 30 Regional Rural Banks in India known as RRBS. The rural banks of SBI
are spread in 13 states extending from Kashmir to Karnataka and Himachal Pradesh to
North East. The total number of SBIS Regional Rural Banks in India branches is 2349
(16%). Till date in rural banking in India, there are 14,475 rural banks in the country
of which 2126 (91%) are located in remote rural areas.

Apart from SBI, there are other few banks which functions for the development of the
rural areas in India. Few of them are as follows.

 Development banks

Big businesses require medium to long term capital to finance machinery, purchase of
land, setting up the entire factory and so on. During the initial years of independence,
the then private sector banks did not have the finances or willingness to support
requirements of these big industries. To support massive industrialization and to
provide techno commercial help to big industries, Government of India established a
number of development financial institution (DFI). After globalization process a
number of development finance institutions were given commercial banking licenses,
still a number of such institutes still exists such as Industrial Finance Corporation of
India (IFCI) and State Financial Corporations.

 Specialized banks

Apart from the banks mentioned above there are some specialized banks which cater
to the specific requirement of a sector.

Small Industries Development Bank of India (SIDBI) -This bank provides loan on
easy terms to establish a small scale business unit or industry. It finances
modernization, technology up gradation, and market activities. Its aim and focus is to
promote, finance and develop small scale industries as they provide large chunk of
employment to the nation.

Export Import Bank of India (EXIM Bank) -

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EXIM bank provides the required support and assistance to set up a business for
exporting products abroad and importing products from the foreign countries for sale
in our country. The bank grants loans to exporters and Importers it also provides
information about the international market and business opportunities available.

National bank for Agriculture and Rural Development (NABARD) - It is a central

or apex institution for financing agriculture and rural areas. It provides loans to those
engaged in agriculture or other activities such as handloom waving and fishing. It
provides both short term and long term loans through regional rural banks It mainly
focuses on financial assistance in the areas of agriculture, micro, small and medium
scale industries, cottage and village industries, handicrafts and allied economic
activities in rural areas.
There are many types of bank in India. Accounting to its function owners ship & other
regulation they are classified into different categories. The central bank is RBI and
under this scheduled banking and other banks are working.
Earlier the function of banks include only leading & depositing the money but now
with the development of the country and because of globalization there are the
additional functions of banks other than above two. They are as follows.
 To lend money to the common people and businessman as well.
 To provide bankers cheque.
 To deposit the money of people.
 To provide overdraft.
 To give credit card / debit card facility.
 To provide Internet banking.
 To provide any time money facility (ATM).
 To provide Demat Account.
 To provide Cash Deposit Machine.etc 

Top Player of Bank

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Public Sector Bank Private sector Bank
State bank of India HDFC Bank
Punjab National Bank ICICI Bank
Union Bank Of India AXIS Bank
Bank Of Boroda Kotak Mahindra Bank
Canara Bank YES Bank
Bank Of India Indusind Bank
Central Bank Of India Standard Chartered Bank

15
PRODUCT
PROFILE

Demonetization

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History of demonetization in India

It is not the first time in history, that government has taken this kind of step. It has
been happen twice in the past. The first currency ban was announced as on 12th
January, 1946(Saturday) by RBI headquarter. The highest denomination note ever
printed by RBI in India was Rs. 10000 note introduced for the first time in the year
1938 At that time currency notes of 1000 and 10,000 were totally removed from
economy. Both the notes were re-introduced in year 1954, At that time people had
given 10 days time period to exchange the notes. Further that was extended to 15 days
more where by people has to give reasons why they had not exchanged it in previous
10 days. It had not created much effect at that time. By the end of 1947 out of
Rs.143.97 corers, notes of only Rs. 134.9 corers were exchanged. Thus notes worth
Rs. 9.07 were perhaps "Demonetized".

The second currency ban was made on 16th January, 1978(Monday), announced by
R. Janaki Raman a senior official of RBI, and at the time of Morarji Desai led Janata
party. At that time currency ban was taken 1000, 5000 and 10,000 out of circulation.
That time the people had given only 3 days to exchange the notes. This time around
73.1 crore was demonetised.

Finally the 3rd, the most recent demonetization had been announced as on 8th
November, 2016 by Prime Minister Narendra Modi. This time the currency of 500
and 1000 notes are demonetized from economy. The Government has instructed the
hospitals, petrol pumps, airports etc to accept the old denomination notes till 11th
November, 2016.

"DEMONETIZATION AND ITS EFFECT ON BANKING SECTOR"

Banks are core part of any economy. They channelized the money to the smooth
functioning of different sectors. Initiatives of Green Banking, made the banks to
transform conventional banking services into modern banking services, The products

17
and services are offered through electronic devices with the help of internet. Now a
day, bank services are catered at the finger tip of customers. Surgical Strike on Black
Money called 'Demonetization' brought enormous changes in all the sectors of the
country. Banks are not exceptional from the influence of Demonetization and it made
vibrations in the operations as well as products and services of Banks. It created
greater demand to digital banking services where cashless transactions are prioritized.

Day to day operations of Banks are affected and found tough in Management of
liquidity and Employees. It made greater influence on Management of liquidity and
its demand raised by customers in exchanging of their banned currency notes while
minimizing risk and maximizing quality of service. At the same time meeting the
guidance of Reserve Bank of India was challenging. Demonetization has disturbed the
bank operations and made the employees to work under unconditional stress in
extended working hours of a day. Most of the banks were not able to discharge other
banking services while exchanging the banned currency notes. Hence, the present
study is made to figure out the influence of demonetization on banking sector. It
showcases post demonetization effect on banks and its operations.

It is too early to comment on the impact of demonetization or effect of

demonetization. This is still under implementation process. There are both positive
and negative impacts of demonetization.

Objectives of the Demonetization

 Aimed at combating corruption. And Check black money and fake currency
note.

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  1000 and 500 were put out of circulation and Effect on parallel economy.
 All the bank accounts are tied up to one PAN (Permanent Account Number).
 This move shows strength of the Banking system, Retail boost, and increases
deposit.
 This move will also cause short-term pain for the working class, small
businesses and nearly anybody who deals with cash on a daily basis.
 Remove black money from the economy as they will be blocked since the
owners will not be in a position to deposit the same in the banks.

Advantages

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  Limiting ATM withdrawals will encourage cash less card payments across the
country. Interest rates: There should be a rise in bank interest rates.
 Tracking of money is made easy as the exchange only available by producing
valid identity proof like Adhere, PAN, and Election Card.
 Black money transactions will be blown away as the new legislation provides
a provision for seven-year imprisonment or fine, or both.
 The decision results in more transparency in the Indian real estate industry,
Housing prices may witness a downfall restoring demand in the housing
segment. Higher Education and Healthcare transactions will come in the reach
of an ordinary man.
 The New digital Laws: step forward and bring more, new laws, and
understand the safety of digital banking.

Disadvantages

 People, who are in village, remote areas would not that much aware of
demonetization, might not be able to exchange their money.
 Farmers who don't have an account in banks won't be able to change their
whole cash into new currency as there are limits imposed.
 If somebody and couple who's has left his family was against their marriage
without any Identity proof won't be able to change their money, and will be
left with nothing but paper in their hand.
 Poor people who work on daily wages won't be able to get their wages as there
is shortage of cash.
 On the other hand, as analysts have noted, India's larger and new-age
companies will have no problems in making the switch to Rs 2,000 notes. 

These are the analyzed sectors that which most affected by de-monetization
because of the high level of cash spending.

 Agriculture and sole traders.

 Household's workers.

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  Real Estate, Gold prices.
 Banks, Entertainment/Restaurants.
 Beauty parlous and Tourism etc.

How will demonetization affect banking industry?

Now, with the huge, permanent and ample push on 'going cashless' and 'adopting
digital", the banking industry is going to adopt financial technology with a new scale
and scope. Investments will indicate the direction towards a system where intelligent
technology and software takes care of most.

Demonetization Impact on Banks:

"Bank as Biggest Beneficiaries"

 Yes, the biggest beneficiary from this policy will be the banking sector. The
reason behind being called the beneficiary is very obvious because as lot of
people are depositing cash in the banks, there will be a lot of liquidity with the
banks.
 As the deposits with the banks will increase so will increase the CASA, which
will increase the Net Interest Income and the Net earnings of the banks.
 To be secondary benefits for the insurance, asset/wealth management
companies through higher financial savings While the nifty closed 1.31%
down, Bank nifty closed higher by 0.09% giving a Confirmation of the same.

Impacts Of Demonetization In India

Black Money:

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Black money stored in the form of Rs 500 and Rs 1000 notes will be taken out of our
system. As predicted by ICICI Securities Primary Dealership the government's plan to
scrap 500 and 1,000 notes will uncover up to 4.6 lakh core in black money.

Terror funding:

Fake Indian Currency Notes (FICN) network will be dismantled by the

Demonetization measures. taking out 500 and 1000 rupee notes out of circulation will
have a lasting impact on the syndicates producing FICN's, thus affecting the funding
of terror networks in Jammu and Kashmir, North- eastern states and Nasality hit
states.

Real estate may see significant course correction:

The demonetization decision is expected to have far reaching effects on real estate.
Resale transactions in the real estate sector often have a significant cash component as
it reduces incidence of capital gains tax. Black money was responsible for sharp
appreciation of properties in metros, real estate prices may now see a sharp drop.

Political parties in crisis ahead of polls:

With nearly five state elections in 2017, demonetization has stunned political parties.
Especially, in arge states like Punjab and Uttar Pradesh, cash donations are a huge
part of "election management". In one stroke, big parties will find themselves
hamstrung as cash hoards are often undeclared money. Parties will have to completely
reign campaign strategies in light of expected cash crunch.

Moving towards digital payments:

Demonetization will likely result in people adopting virtual wallets such as Paytm,
Ola Money etc. This behavioural change could be a game changer for India.
Temporary chaos and confusion public will face minor problem for few days owing to
scarcity of lower denomination notes in the System.

Demonetization and Bank Operations

Demonetization has brought plethora of challenges in additions to the challenges
which are already facing by Banks. The influences were short-term and long-term
views. In short-term, it disrupted the banks and stressed strongly to carry out bank

22
operations and in long run it helped the banks to pool the deposits without incurring
of any cost. Here are four influences of demonetization on Banks.

 Increase in Deposits: demonetization has increased the deposits in Banks.

Unaccounted money in the form of Rs.500 and Rs, 1000 were flowing to the
Banks and the sizes of deposits have been increased. It helped the banks to
grab the deposits and increase their deposits.
 Fall in cost of Funds: Over the past few months, the deposits are increased. It
led the banks to keep a major part of deposits in the form of cash deposits.
PSU Banks have a lion share (over 70%) of the deposits and biggest gainers of
the rise in deposits, leading to lower cost of funds.
 Demand for Government Bonds: After sharp rise in deposits on post
demonetization, banks started lending such surplus deposits to the RBI under
the reverse repo options. PSU Banks, particularly, deployed excess funds in
government bonds, The return on bond investment is likely to add 15 to 20 per
cent increase in the earnings of banks.
 Sagginess in Lending: lending growth of the banks is considerably less even
after demonetization and its impact of growth in the amount of public deposit.
Banks have tried to lend the money to the needy group by reducing their
interest rates, but it shrunk over the last few months.

Results of Post Demonetization on Bank Operations

There are positive and negative results of Post Demonetization on Bank operations.
Bon have influenced Banks' liquidity and profitability and employees too. The
following are positive results of demonetization.

23
  Free flow of deposits: Banks have gained deposits substantially after
demonetization which they can invest for improving their liquidity and
profitability.
 Improved digital Interface: Improvement in digital fools and equipment to
execute bank transactions has avoided cash loss for various reasons like theft,
dacoits and misappropriation.
 People's surplus at Bank: cash is an idle asset which does not yield any
income unless kept in a bank. So, demonetization made the people to keep
their surplus money in a bank to earn some sort of income.
 Increased number of Customers: Demonetization has influenced public to
come and execute transactions with banks. It made even a non income group
people to visit bank and have an account. It increased number of account
holders in banks while increasing deposit Corpus.

Similarly, Demonetization has brought some operational issues to Banks. It disturbed

Banks' Employees, Operational Costs and Profitability. The following are negative
influences of Demonetization.

 Cash Reserve Requirement: 100% CRR on incremental deposits meant that

banks did not earn any Interest on Rs. 3 Lakh corer of deposits for nearly a
fortnight.
 Waived off ATM Charges: ATM charges were waived off during banned
note exchange and banks incurred a loss of Rs. 20 in every transaction.
 Waived off Merchant Discount Rate: Banks incurred loss of 1% discount
charges from merchants on using of every card transaction.
 Non Selling of Loans: Banks were focused on exchanging currency notes and
they were not able to sell any loan products. This made banks to curb their
lending activities. 

Procedure For Exchange Old Notes

The Reserve Bank of India laid down a detailed procedure for the exchange of the
demonetized banknotes with new Rs.500 and Rs.2000 banknotes of the Mahatma

24
Gandhi New Series and Rs. 100 banknotes of the preceding Mahatma Gandhi Series.
Following are the key points:

 Citizens will have until 30 December 2016 to tender their old banknotes at any
office of the RBI or any bank branch and credit the value into their respective
bank accounts.
 Cash withdrawals from bank accounts will be restricted to Rs.10, 000 per day
and Rs.20,000 per week from 9 November 2016 till 24 November 2016.
 For immediate cash needs, the old banknotes of value up to Rs.4000 per
person can be exchanged for the new Rs.500 and Rs.2000 banknotes as well as
Rs.100 banknotes over the counter of bank branches from 10 November 2016
by filling up a requisition form along with a valid ID proof.
 All ATMS will dispense bank notes of only 50 and 100 rupee denominations.
 Banks will provide all cash withdrawal transactions at their ATMS free of cost
to their customers till 30 December 2016. Cash withdrawals from ATMS will
be restricted to Rs.2000 per day per card up to 18 November 2016 and the
limits will be raised to Rs.4000 per day per card from 19 November 2016.
 However, exceptions were given to petrol pumps, CNG stations, government
hospitals, train and airline booking stations, state-government recognized
dairies, ration shops, and crematoriums to accept the 500 and 1000 rupee notes
until 14 November. International airports were also instructed to facilitate an
exchange of notes amounting to a total value of Rs.5, 000 (US$74) for foreign
tourists and out-bound passengers. 

25
PRIMARY STUDY

Review of Literature
Mrs. Suman, Dr. A.C. Kiran, Ms Kavya and Ms. Vimal (2018) “A Study on
impact of Demonetisation on E- banking in India” over 86% of currency in circulation

26
of rs.500 and rs.1000 notes at the time of demonetisation. The objective behind the
study is to test the pre and post effect of demonetisation on NEFT, RTGS and POS
and other are issue and challenges faced by utilisation of E-banking services in India.
The descriptive statistics is use and secondary sources of data from RBI bulletin,
NPCI platforms, different books, journals and newspapers their applied the Dummy
Regression Analysis. It means it takes the value from 0 or 1 to indicate the absence
and presence of effect that may be expected to shift the outcome. The data analysis on
the impact of demonetisation on E-banking using variables like: NEFT, RTGS and
POS where the result by using least square method and this is have the significant
impact on the transaction. Some challenges in E- banking are security risk, privacy
risk, managing technology etc. And their gave some future prospects of E-banking
like competitive advantages, increasing internet users and computer literacy etc. Some
findings behind the study from November 2016 to July 2018 and some are up to
February 2018 where as follow NEFT, RTGS, POS, IMPS, PPI were increased by
98%, 42%, 32%, 171% and 176% respectively. And conclusion behind the study is to
move India into cashless society and it has positive impact on e- banking facility
available by the people in Indian banking scenario has changed from seller’s market
to buyer’s market and from mass banking to class banking.

Suresh Lal (2018) were published the paper on the “Political economy of
demonetisation in India: issues and impact” on 28th October, 2016 the total currency
in circulation in India was 17.77lakh Crore and by the annual report of RBI on 31 st
March, 2016 stated the total bank notes in circulation valued to 16.42lakh Crore of

27
which nearly 86% was 500 and 1000 bank notes and 24% of the total 9026.6 Crore
banknotes were in circulation. In 18th century, silver and gold coins were used for
transaction in India. The European trading companies set up the bank in the region,
such as the Bank of Hindustan in Calcutta, they started issuing the first versions of
Indian paper currencies in just text-based after the Paper Currency Act,1861 the
British colonial government produced the money, establishing the paper currency as
we know it today. And money was now be issued by the state alone, not by banks. In
1867 there were Victoria portrait in denomination of 10, 20, 50 and 100 then in 1967,
the Ashoka pillar watermark were issued in rs10 denomination then in 1980 the
Satyameva Jayate was incorporated under national emblem for the first time then
from October 1987, rs.500 banknotes was having the Portrait of Mahatma Gandhi
and Ashoka Pillar watermark. After announced “Income Declaration Scheme” by
government to declare their income the Government of India has got rs.65000 Crore
of deposits, irrespective of legality. In India 1.34 Crore population, in 2016 and total
banks and ATMs were 150000 and their branches was 19000 and average one bank/
branch per was 70526 persons. An average on ATM was per 8933 person and 76% of
Indian adults and illiterate in financial aspects there are several impacts on Indian
Economy like fall in GDP, on agriculture, small traders, terror funding, tourism and
hospitality and wellness etc. there were also the several problems issued due to
demonetisation. The conclusion behind the study was that demonetization had created
long and short run problems, adverse impact on poor to rich people, economy suffered
in short period, cashless economy doesn’t replaced by traditional system of using
money for transaction.

Abhani Dhara .K. (2017) presented the research paper on the topic ”A Study on
impact of demonetisation over the banking sector with reference to Veraval city” The
objective of this study is to investigate about the impact of the demonetization over
the banking sector. She explained the originally meaning of demonetisation and it
came from the French word “demonetiser” dating back to 1850-55. In India this thing

28
is not happening first time before 2016 it was happen in 1946 and 1978 by the RBI
and R.Janaki Raman at the time of Moraji Desai that led the janata party. This thing
happened third time in India by honourable prime minister on 8th November, 2016 for
removal of the corruption and black money. The objective behind the study is to
understand the effect of demonetisation and check the awareness of online banking
among customers. Here, the descriptive research method research with convenient
sampling method was used by researcher. The primary data collection via.
Questionnaire method over 100 sample size is used. Limitation of the study is that this
concept is very depth 100 respondents is not enough and at last conclusion is that
nowadays the people are more conscious about the online banking. This step is taken
by the government to decrease the corruption, terrorism and black money etc.

Dr. Pritosh Chandra Sinha (2017) studied on the topic “Demonetization of Indian
Economy: Philosophical Critics” in their study he explained the concept of money and
the philosophy of the economics, i.e. orthodox or heterodox philosophy, and also the
two concept of the philosophical perspective i.e. State theory of money and modern
theory of money etc. It explained the political narratives for economic and
administrative on one hand like black money, corruption and counterfeit currency and
on other hand it hypothesizes to fight inflation, hawala trading, terrorism financing
and use of black money in India. The study explained the narrative chain of events:
Demonetisation can crush the black money into the banking system- black money
floated in the economy-agents of black money will caught up – country will lead to
corruption free. The objective behind the study is is money an instrument or trust?
How the state’s demonetisation affects the Indian economy? And the findings are the
money are ‘instrument of trust’ and there drawn two concept “the money is to you”.
The orthodox economic the “rationality-individualism-equilibrium”. Now the possible
query left to trace the monetisation has already taken place and money is the soul of
transaction and it is the power started the chain from transfer, exchange, consumption,
store, service, experience or a journey over time etc.

Komal Pal (2017) the research on topic “Demonetisation- Impact on Indian

Economy” in the paper their explained the meaning of demonetisation and the
objective. There use the primary and secondary data and from primary data their refer
the closed ended question were made and the sample size was 407 analyze by using
the SPSS software and the other types of data are from the review of literature,

29
journals, articles and she used the descriptive statistics by using means, standard
deviation, frequency and infinity statistic was use like correlation, regression and
Annova. She gave reason behind the implementing demonetisation and some report of
RBI, HDFC advisories group and International Journal of Research in Economic and
Social Science. According to RBI total flow of money rs.64.42 lakh Crore of 500 and
1000 notes in 31st March, 2016. In 28 November, 2016 total amount was 8.11 lakh
crore old notes till 27th November, 2016. And IJRESS has found that GDP growths
are 5% their explained the issues and impact on various areas like: impact on common
man, impact on economy, fake currency, social impact etc. She set the two hypotheses
and applies the test:

H0: There is significant relation between implication of demonetization and black

money.

H1: There is no significant relation between implication of demonetization and black

money.

After applying the demographic frequency table and test of cross tabs she conclude
that H1 is reject and H0 is accept.

H0: There is significant relation between demonetization and challenges faced by

common people.

H1: There is no significant relation between demonetisation and challenges faced by

common people.

Balween Kaur (2017) she studied on the topic “Black Money in India: Present Status
and impact on Economy”. According to the NIPFP, “black money is the aggregation
of incomes which are taxable but not reported to the authorities” it is also known as
“dirty income”. She explained the various factors behind generating the black money
and she gave the various estimation on the status of black money and from this she
concluded that India is the top position in black money deposits in Swiss National

30
Bank compare with Russia, UK and China etc. Then government of India formulated
40 committee at different level with deal with the problem of black money such as
corruption committee (1964), white paper on black money (2012), indirect taxation
enquiry committee (1978) and many other and various harmful effect of black money
on Indian economy such as less tax for government, Inflationary trend, lack of up
gradation of technology and transfer of Indian funds to other countries and the
conclusion behind the study was that different picture of Indian economy and from
their point of view the parallel economy which is running side by side in form of
unaccounted wealth was very rich. When it is converted into the white money then the
India will be richest nation of the world.

K. Veerakumar (2017) research on the topic “A study on people impact on

demonetisation” it had a great significant and immediate impact on the state of the
Indian economy. In this paper, an attempt has been made to find impact of
demonetisation on the public. The need behind the study on fake Indian currency
notes in higher denomination have increased and unaccounted money, often used in
any form of corruption and illegal activities. Coimbatore district is selected for
research where sample of 100 respondents by using random sampling method by
primary sources of data i.e. questionnaire. And uses of the statistical tools to test the
impact by simple percentage, chi-square test and ranking method. The analysis behind
the study was out of 100 respondents 63% was male, 57% was age group under 26-
50 years, 68% respondents was up to school level, 46% was businessman and the
annual income 44% is above 250000 and 64% were nuclear family. By using 5%
level of significance their does not exist any significant association between
educational qualification, type of family and level of impact of demonetisation and
with the help of chi-square there exist significant association between gender, age,
annual income, occupation and level of impact of demonetisation. The factors that
impacting the people’s on demonetisation were corruption and terrorism by using
weighted average method. The conclusion behind the study was the news was a big
shock to the citizen of India and several measures was taken for control and the
alternative methods are used to shift an efficient cashless infrastructure.

31
Mr. Kunal B. Soni (2017) prepare the research paper on the topic “Inclusive banking
in demonetized era-A review” inclusive growth was possible only through proper
mechanism which channelized all the resources from top to bottom. Financial
inclusive as per the RBI definition is aimed at providing banking and financial
services to all people in a fair, transparent and equitable manner at affordable cost. It
is an innovative concept which makes alternative technique to promote the banking
habits of the rural people because India is considered as largest rural people consist in
the world. There are several impact of demonetisation on black money, counterfeit
currency, consumption will hit and bank deposits and interest rate. He used the both
type of sources of data i.e. primary and secondary data. In primary data, comes from
the questionnaire, interview method and secondary sources of data are from
newspaper, articles, journals, books and websites etc. the data is analysed with the
help of simple pie chart. A sample size of 60 respondents taken from the city of
Mumbai around seven basic questions related to the use of ATMs and cash deposit
machine and mostly the respondents were maid servant, graduates and post- graduates
between the age group of 55-25. Some findings are out of 60 respondents 50 were
aware about E-banking. The 32% their personal visit the bank and also use the ATM
for the withdrawal of cash. Some conclusion were that rural economy was based on
cash so it the impact of demonetisation were more and the sector that adversely
affects are real e-state, construction, jewellery and travel and tourism etc. India are
still was nascent age in uses of technology for conducting banking transaction or
shopping online, more training sessions, workshops and relate measure must be taken
so that we at least try to save a bit for the future generation to come.

Problem Statement
Demonetization is put biggest impact on whole economy of India. In which they
highly affected for banking sectors. If there is a sudden change in the currency, that
put people in shocked at that time. They were not ready to digest the change and were
trying to resist to these situation.

32
In short, we need to identify what are the causes and effects faced by bank employees
and customers as well as what are the pre-post effects of the demonetization on the
banking industry.

Ultimately the problem over this area is to check either there is a positive impact of
the Demonetization or not. Because it is a country wide approach, which affects the
lives of millions of people.

Objective of the Study

The key role of the researcher is to set the clear, unambiguous objectives of the study
which may prove helpful for the understanding the study. By keeping in mind this fact
I had set the following goals.

1. To understand the effect of demonetization in terms of positive or negative.

2. To identify those accounts which are highly affected due to demonetization.
3. To analysis pre -post effect of demonetization in banking sectors.
4. To check the awareness of online banking among consumers.
5. To understand about people's attitude for keeping the money either at home or
at bank.

Hypothesis

Ordinarily, when one talks about hypothesis, one simply means a mere
ASSUMPTIONS or some to be proved or disproved. But for a researcher hypothesis
is a formal question SUPPOSITION that he intends to resolve. Thus a hypothesis may

33
be defined as, "a proposition or a set of proposition set forth as an explanation for the
occurrence of some specified group of phenomena either asserted merely as a
provisional conjecture to guide some investigation or accepted as highly probable in
the light of established facts". Thus we may conclude that a hypothesis states what we
are looking for and it is a proposition which can be put to a test to determine its
validity.

 Null Hypothesis
When a hypothesis is stated negatively, it is called null hypothesis. It is a 'no
difference, 'no relationship' hypothesis. i.e., It states that, no difference exists between
the parameter and statistic being compared to or no relationship exists between the
variables being compared. It is usually represented as HO or HO

 Alternate Hypothesis
It is the hypothesis that describes the researcher's prediction that, there exists a
relationship between two variables or it is the opposite of null hypothesis. It is
represented as HA or H1.

Formation of hypothesis:
HO - There is Positive impact of demonetization on Black money, corruption and
terrorism.
H1 - There is Negative impact of demonetization on Black money, corruption and
terrorism.

34
 RESEARCH
METHODOLOGY

Research Design

As research design expresses both the structure of the research problem and plan of
investigation used to obtain empirical evidence on relations of the problems, I have
used DESCRIPITIVE.

Source Of Data
35
Data collection is the selection of sources of information and selection of methods and
procedures for gathering the data needed for any research. "The search for answers to
research questions is Called collection of data". Data are facts and other relevant
materials serving as bases for study & analysis".

Basically there are two sources of data collection:

1. Primary sources

2. Secondary sources

1. Primary Data:

For this study the researcher has used questionnaire method for collecting the primary
data.

Primary Data Collection Methods:

 Interviews
 Questionnaires and Surveys
 Observations
 Focus group Interviews
 Ethnographies, Oral History, and Case Studies

2. Secondary Data:

Secondary data is not original it is collected by somebody else for some other
purpose.

Secondary data collection tools:

 Internet
 Magazines
 Notes etc.

Sampling Design

36
Sampling unit Employees (Bank of Veraval city)

Sample size 100

Sample techniques Convenience sampling

Data collection Instrument Questionnaire 

37
DATA ANALYSIS AND
INTERPRETATIONS

Data Analysis
1. Do you think that there was an impact of Demonetization on banking sector?

38
 OPTIONS RESPONSES %
Not at all 0 0
Somewhat 12 12
Yes 88 88

Data Interpretation

Through the responses of this question we can clearly see that those bank employees
who have filled this questionnaire do believe that there is an impact of
Demonetization on the banking sector. 

2. Did you face the inconvenience through Demonetization?

39
 OPTIONS RESPONSES %
Not at all 15 15
Somewhat 18 18
Yes 77 77

Data Interpretation

Through the responses from this question we can interpret that the people do believe
that demonetization has caused inconvenience to them. There were 47 deaths
connected to demonetization. People were forced to stand in long queues for hours
and even days. This move by the government has caused major inconvenience to the
daily wage earners as they have to leave their jobs just to stand in these long queues to
access their own money. Some of these People did not eat anything for days.
Weddings were cancelled due to the non availability of cash. Small businesses
suffered huge losses. Farmers were not able to pay for their farming expenses end
take loans. Patients were denied treatments as the doctors were not ready to accept the
old ency. Sales of the shopkeepers also suffered due to Demonetization. 

3. Do you think there was an impact of Demonetization on your workload?

40
 OPTIONS RESPONSES %
Highly Affected 62 62
Affected 16 16
Neutral 15 15
Unaffected 7 7
Highly Unaffected 0 0

Data Interpretation

Most of the people have responded yes in this case as they believe that
demonetization has an impact on their workload, Out of all the people affected
through demonetization bank employees are the most stressed due to the increase in
their workload, if it could be measured we could see arming level of stress in the bank
employees all over India because they have to serve a relentless horde of panicked
customers, bank employees are facing what is probably the most challenging period
of crisis in their careers. 

4. What is the impact of Demonetization on cash flow in banks?

41
 OPTIONS RESPONSES %
Increased 0 0
Decreased 82 82
No Impact 18 18

Data Interpretation

Through the responses of this question we can see that the cash flow in banks has
reduced we Believe that it has happened because the people are now making
cashless transitions and the RBI has not issued enough currency to match the
previous flow in cash. 

5. What is the impact of Demonetization on interest rate?

42
 OPTIONS RESPONSES %
Increased 4 0
Decreased 83 87
No Impact 13 13

Data Interpretation

Through the responses of this question we can see that the Interest Rate has Decreased
post demonetization, SBI Chairman Arundhati Bhattacharya said that all the rates will
fall post increased. Thus resulting in the fall of rates but after a period. Though the fall
in the rates is not large but it still helps. demonetization. There are high inflows of
deposits in banks but the demand of credit has increased. Thus resulting in the fall of
rates but after a period. Through the fall in the rates is not large but it still helps.

43
 6. What is the Impact of demonetization on money lending?

OPTIONS RESPONSES %
Increased 18 18
Decreased 79 79
No Impact 3 3

Data Interpretation

By analyzing the responses of this question we have noticed that money lending has
decreased post Demonetization. Demonetization has lead to cash shortage which has
dented the demand for all rates will fall. The bank has seen high inflow of deposits
but the demand of credit has decreased. loans. Banks don't have resources to provide
these loans. After demonetization banks focused on exchanging currency and were
not providing loans, All the bank staff is busy in exchanging currency they have no
time for providing loans. Arundhati Bhattacharya, Chairperson, SBI said that all rates
will fall. The bank has seen high inflow of deposits but the demand of credit has
decreased.

7. What is the impact of Demonetization on the use of online banking?

44
 OPTIONS RESPONSES %
Increased 87 87
Decreased 10 10
No Impact 3 3

Data Interpretation

Demonetization, In India people were mostly dependent on cash transactions but

after Demonetization when the supply of money was less people are Required to
the use of online rough this question we can understand that the use of online
banking has increased after eking and online payments to meet their daily
expenses. Thus we can say that the use of online 45 banking has increased after
demonetization. 

8. What is the impact of Demonetization on the use of plastic cards?

45
 OPTIONS RESPONSES %
Increased 95 95
Decreased 0 0
No Impact 5 5

Data Interpretation

Through the responses of this question we can interpret that almost 95% of the
people believe that demonetization has increased the use of plastic cards. Due to
the decrease in the supply of cash because of demonetization most of the people
have Increased the use of online banking, Plastic cards, mobile banking, etc. 

9. What is the impact of Demonetization on opening of new accounts?

46
 OPTIONS RESPONSES %
Increased 90 90
Decreased 3 3
No Impact 7 7

Data Interpretation

Through the responses of this question we can see that people believe that new
accounts are opening post demonetization. For depositing money in the banks account
after demonetization new accounts are opened.

10. What is the Impact of demonetization on the functioning of ATM?

47
 OPTIONS RESPONSES %
Increased 100 100
Decreased 0 0
No Impact 0 0

Data Interpretation

Through the responses of this question we can clearly see that the functioning of
ATM has increased after demonetization. After demonetization the government has
imposed a limit to the withdrawal of cash because of which the customers are visiting
the ATM number of times to withdraw the cash so as to meet their cash requirement. 

11. You think that there was an impact of Demonetization on banking sector?

48
 Highly Positive Neutral Negative Highly
Positive Negative
40 18 10 19 13

Data Interpretation

Most of the people have responded yes in this case as they believe that
demonetization has an impact on their workload. Out of all the people affected
through demonetization bank employees e the most stressed due to the increase in
their workload, If it could be measured we could see alarming level of stress in the
bank employees all over India because they have to serve a relentless horde of
panicked customers, bank employees are facing what is probably the most
Challenging period of crisis in their careers. 

12. Is the inconvenience of demonetization worth the effort of fighting black

money?

49
 OPTIONS RESPONSES %
Yes 60 60
No 40 40

Data Interpretation

From the above responses of the employs of bank majority of the persons are say
that this stapes is definitely fight against Black Money.

13. Do you think that Demonetization helped reduce black money, corruption and
Terrorism in India?

50
 OPTIONS BLACK MONEY CORRUPTION TERRORISM
Highly Agree 52 36 26
Agree 23 28 37
Neutral 12 20 20
Disagree 9 7 10
Highly disagree 4 10 8

Data Interpretation

Through the responses from this question we can interpret that the responses for five
options. percentage of answers which means that people believe that Demonetization
has helped reduce black money, corruption and terrorism to some extent. This move is
helpful because it has helped reduce black money, corruption and terror funding in
India to some extent. It also helped in making India a digital economy by reducing the
usage of cash. Usage of plastic cards has also increased to some extent. This move has
not been more helpful because the Black money holders, tax evaders and corrupt
officials may not necessarily keep their money in bags at home as it was the old
concept now they invest this money in the market. Hence it can be said that this move
by the 0overnment has not produced desired results and has cause inconvenience to
common man. 

14. Liquidity position of respondent has been seriously affected?

51
 Highly Affected Neutral Highly Unaffected
Affected unaffected
35 20 10 15 20

Data Interpretation

we, with the help of the above responses we conclude that liquidity conditions of the
public is definitely affected. Persons are not getting enough money at time of their
requirement. They also submitted their old notes of the currency at banks, So, they
have no enough money on hand so liquidity condition is affected.  

Hypothesis Testing

52
 ANOVAS One Way Testing in EXCEL

Step-1

In the First Step What We Want to enter in the test, DATA is excel file.

Step-2

After putting the data in excel sheet selected the excel options

53
Step-3

After the data enter go to the excel options button and select the add-ins and the press
the button.

Step-4

After the data enter go to the excel options button and select the add-ins and the press
the go button.

54
Step-5

After the completion of these you can see one box of add-ins. In these we have to
choose analysis tool park and then after press the OK button.

Step-6

Select ANOVAs single Factors

55
Step-7

After the add-in analysis tool park ANOVAs tool are installed in excel sheet. After in
the input range box enter the data column code and then after select OK button.

56
Step-8

After entering the input data in input range then after the answer of the Anova-single
factor sheet is ready and show on your desktop.

With the help of the above calculations we can say that the table value is 3.885294
and calculated value is 0 so our calculated value is less than the table value, so we can
reject alternative hypothesis and accept the null hypothesis.

57
RESULT
&
FINDING

Findings

58
This research was conducted to find the "IMPACT OF DEMONETIZATION ON
THE BANKING SECTOR". at the end of this research we can say that
Demonetization does have an impact on the banking sector. Through this study we got
an Idea about the views of bank employees towards Demonetization. After
completing this study we can say that:

 88% of the people believe that there was an impact of demonetization on the
banking sector.
 Demonetization helped reduce black money, corruption and terrorism in India.
 Because there are equal responses for the two options i.e. somewhat and yes.
 People mind the inconvenience faced through demonetization as maximum
number of people have opted for the option yes.
 Demonetization has not at all helped the bank employees.
 There was an impact of demonetization on the workload of Bank Employees.
We all know that the workload of the bank employees increased a lot. They
had to work overtime.
 The cash flow in banks decreased after demonetization. There was not much
currency in circulation after demonetization thus the government had
restricted the withdrawal amount.
 Interest rates decreased after demonetization. The interest rates were decreased
to increase lending of money.
 Money lending decreased after demonetization thus the interest rates were
decreased to increase the money lending.
 The use of online banking increased alter demonetization due to decrease in
the circulation of currency and long queues outside ATM and bank branches
people started using online banking.
 The use of Plastic cards has increased due to less circulation of money in
market.
 The number of new accounts have increased because people have to deposit
their money le the bank account to have new currency.
 The functioning of ATM has increased because more and more people are
using the ATM withdraw their cash and they are using it n number of times to
fulfill their cash requirement because of the withdrawal limit.
 The numbers of customers in the branches have increased. We have seen long
queues of people outside bank branches and ATM after this announcement. 

Suggestions

59
 The new 500 and 2000 banknotes should have been printed and kept ready for
distribution.

 Rs 100 banknotes should have been increased in circulation.

 The new notes should have been of the same weight, thickness and size as the
old ones.

 Permission should have been granted to cooperative banks to except deposits

and to exchange notes.

 To solve the problem of black money strong administrative and tax reforms
should have been implemented.

 For eliminating fake currency the government should have announced a time
period to exchange the currency (say 3 months).

 Promote the use of cashless transactions. 

Limitation of the Study

60
Despite of having a complete analysis of the topic, this research is having some of the
limitation. Those are as follows.

 This study covers only few banks of the Veraval city, which may not provide
the complete picture of the effect of demonetization over banking sector.

 Moreover demonetization is the very latest topic to study, due to that not
enough research papers are available in this sector to study.

 Some respondent's didn't show the interest to fill the questioner.

 Moreover this topic requires a very depth research whereas here only 100
respondents have taken so it may not enough for this study. 

Conclusion

61
At the end of this research we can conclude that Demonetization has helped reduce
black money, corruption and terrorism in India. People have faced inconvenience
because of demonetization and they are not happy with it. It has not helped the bank
employees as their workload has also increased because of it. The cash flow in bank
has decreased followed by the decrease in Interest Rate and money lending.
Demonetization has led to the increase in the use of plastic cards, online Banking,
opening of new accounts, and number of customers in the branches and the use of
ATM. 

Bibliography

62
Reference

 Mrs.Suman T D, Dr. A C Kiran Kumar, Ms. Kavya T K, Ms. Vimala. A Study

on Impact of Demonetization on E-Banking in India. 2018 JETIR October
2018, Volume 5, Issue 10. Journal of Emerging Technologies and Innovative
Research (JETIR)
 Suresh Lal. Political Economy of Demonetization in India: Issues and Impact.
The Indian Economic Journal. Article/10. Special Issue December, 2018.
 Abhani Dhara .k. (2017). A Study On Impact Of Demonetization Over The
Banking Sector With Reference To Veraval City. International Journal of
Marketing & Financial Management, ISSN: 2348 –3954 (online) ISSN: 2349
– 2546 (print), Volume 5, (Issue 3, Mar- 2017).
 Komal pal (2017). Demonetization - Impact On Indian Economy. International
Journal Of Advancement In Engineering Technology, Management and
Applied Science (IJAETMAS).
 Balween Kaur(2017). Black Money in India: Present Status and Impacts on
Economy. journal of research, analysis & development A Peer Reviewed
Refereed Research Journal ONLINE ISSN-2455-5835 Volume II, Issue I,
February 2017.
 Dr. Paritosh Chandra Sinha(2017). Demonetization of Indian Economy:
Philosophical Critics. SSRN Electronic Journal.
 K. Veerakumar. A Study On People Impact On Demonetization. International
Journal of Interdisciplinary Research in Arts and Humanities (IJIRAH) Impact
Factor: 4.675, ISSN (Online): 2456 - 3145 (www.dvpublication.com) Volume
2, Issue 1, 2017
 Mr. Kunal B. Soni. Inclusive Banking In Demonetized Era –A Review.
IJARIIE- ISSN(O)-2395-4396. Vol-2 Issue-3 2017.

Websites

63
https://www.adamsmith.org/blog/the-very-real-impact-of-indias-demonetization 

https://www.quora.com/in/What-are-positive-and-negative-effects-of-demonetization

https://www.blog.say2gov.com/single-post/2017/09/10/impact-of-Demonetization-on-
Indian-

https://taxguru.in/rbi/demonetization-effect-banking-sector.html 

https://www.quora.com/How-does-demonetisation-affect-the-banks-in-India 

https://www.ijser.org/researchpaper/Impact-Of-Demonetization-In-E-Banking

Books
 Deepak kumar bhattacharya
 Prasanna chandra financial management 

ANNEXURE

64
Questionnaire

Dear Sir/Madam: Many thanks for finding time to participate in this study. I Pooja
Pajvani & my partner Urvashi Vadhavi MBA candidate. The objective of our research
is to knowing the impact of demonetization banking sectors of the Veraval city.
your participation is highly appreciated. Please note that all the information provided
by you will be treated with strict confidentiality and responses to the surveys will be
anonymous.

Name:-

Post of the person:-

1) Do you think that there was an impact of Demonetization on banking sector?

Not at all
Somewhat
Yes

2) Did you face the inconvenience through Demonetization?

Not at all
Somewhat
Yes

3) Do you think there was an impact of Demonetization on your workload?

Highly Affected
Affected
Neutral
Highly Unaffected
Unaffected

4) What is the impact of Demonetization on cash flow in banks?

Increased
Decreased
No Impact

5) What is the impact of Demonetization on interest rate?

Increased
Decreased
No Impact

6) What is the Impact of demonetization on money lending?

65
 Increased
Decreased
No Impact 

7) What is the impact of Demonetization on the use of online banking?

Increased
Decreased
No Impact 

8) What is the impact of Demonetization on the use of plastic cards?

Increased
Decreased
No Impact 

9) What is the impact of Demonetization on opening of new accounts?

Increased
Decreased
No Impact 

10) What is the impact of Demonetization on the functioning of ATM?

Increased
Decreased
No Impact 

11) Do you think that there was an impact of demonetization on banking sector?

Highly Positive Neutral Negative Highly

Positive Negative

12. Is the inconvenience of demonetization worth the effort of fighting black

money?

Yes
No

13. Do you think that Demonetization helped reduce black money, corruption and
Terrorism in India?

66
 OPTIONS BLACK MONEY CORRUPTION TERRORISM
Highly Agree
Agree
Neutral
Disagree
Highly disagree

14. Liquidity position of respondent has been seriously affected?

Highly Affected Neutral Highly Unaffected

Affected unaffected

67