RESEARCH PROPOSAL REPORT

TOPIC: PAYMENT BANKS AS A TOOL FOR IMPROVING

FINANCIAL INCLUSION

SUBMITTED BY
MEERA JOSHY
1927436

UNDER THE GUIDANCE OF

NISHA P

Institute of Management
CHRIST (DEEMED TO BE UNIVERSITY), Bengaluru

MAY 2020
Research title:

An empirical study on the awareness and usage of payment banks among the population in Bangalore
city.

Introduction:

Payments Bank is actually a new and evolving concept in India and its goal is to raise awareness of the
financial system among more people in rural areas and to facilitate the entire process of opening and
running a bank account by making it available at their disposal. (MISHRA, SINGH, & WALI, 2018) The
main purpose of setting up of payment banks is to enhance financial inclusion. Payments banks is new
model of banks conceptualised by the Reserve Bank of India (RBI). These banks can accept a restricted
deposit, which is as of now constrained to ₹100,000 per client and might be expanded further. These
banks cannot issue loans and credit cards. Both current account and savings accounts can be operated
by such banks. They can accept demand deposits, offer remittance services, mobile payments,
transfer/ purchases and other banking services like ATMS, Net banking and third-party fund transfer.
Payments banks can issue services like ATM cards, debit cards, net-banking and mobile-banking. Bharti
Airtel set up India's first live payments bank. In August 2015, the RBI of India gave ―in-principle
licenses to 11 entities to launch payment banks out of these 3 were surrendered.

Problem statement:

Indian Banking Sector is experiencing a tremendous change due to digitalization. Recently, with the
emergence of the Internet and digitalization, a variety of alternatives have arisen that make digital
economy a reality. This can be characterized as a situation in which all transactions are by electronic
means, and physical cash flow is negligible. This is not limited to apps, but also improvements in the
structure of organizations, as well as delivering programs that go beyond traditional facilities. It
requires the services which are made in real time easy and accessible. The digitization trying to
completely transform the economy into cashless economy and this is possible only if there is financial
inclusion. Hence this study is made to study the awareness and Usage of Payment Banks among the
population in Bangalore.

Objectives:

• To know the concept of payment banks.

• To check the awareness of payment Banks among the population in Bangalore.
• To know the demographic factors, payment factors and customer satisfaction influence on
usage of payment banks among population in Bangalore city.

Literature review:

1. (Singh & Bhadouria, 2019)Payment Banks on Improving Financial Inclusion in India

Objective:

To evaluate the present conditions of financial exclusion of the vulnerable and weaker sections of the
society in India. To analyze the impact of payment banks and their introduction in order to improve
financial exclusion and bring out digitalization of banks to extend reach to masses. To consider the
challenges and recent shortcomings of payments bank in their operations. To suggest changes that
can be introduced for aiding the development and growth of payment banks in the coming future.

Results:
Airtel, having over 25, 00, 00,000 users in India, can effectively use its first mover advantage to convert
these users into payment bank users as well and also create a dial-up toll-free system for convenience
of a major percentage of people in rural areas who have telephone connectivity but no internet or a
smart-phone. Acceptance as an alternate source of transfer is necessary for the people to start using
payment bank accounts for transaction for example at websites, portals, payment gateways and
online transfers. Also, at government authorized stores or ration shops, payment through these
payment banks should be accepted for people to actually start using it for transactions. The use of QR
card will provide a unique, secure and convenient way to access an account without the hassle of
remembering the account number. There will be no need to remember the PIN/Password, as
transactions can be initiated by using OTP (One Time Password) authentication.

Limitations:

They have only considered the introduction and impact of payment banks in helping in the
improvisation of financial exclusion in India, thus not considering other measures such as micro
finance institutions and several schemes introduced by the government for the same.

As only secondary data has been considered for the purpose of our study, there is limitation to the
understanding of the popularity and actual use of payment banks amongst the target group consisting
of low-income households and small businesses.

2. (Chanderprabha, 2017)Payment banks: fulcrum for less cashless economy as well as for
financial inclusion

Objective:

To have an insight about the concept of payment bank and also to know the importance of payment
banks for less cashless economy and for bringing financial inclusion in India.

Results:

In Indian economy, there persists the digital divide among the rural areas. E- Wallets and mobile
payment systems need a smart phone and an internet connection, but less than a quarter of the
population owns a smart phone. Fast and reliable internet connection is expensive and it is difficult to
find Wi-Fi hotspots and mobile phone battery charging stations.

Limitations:

The researchers did not find out how the present financial inclusion can be solved and also how to
bring many rural people into it.

3. (M.S.Kokila & Krishnan, 2019)An Empirical study on the awareness and usage of payment
Banks among College students in Bangalore city

Objective:

To test the awareness among college students in Bangalore of payment banks. Knowing the
demographic variables has an effect on Bangalore college students ' perception and use of payment
banks. Identifying the most commonly used payment bank among Bangalore college students. Identify
the reasons why you use payment banks. Identify preferences on payment banks services.

Results:
They found out that most of the students who used payments banks are from urban Bangalore. They
also found that there is a significant relationship between demographic variables and Satisfaction on
Payment Banking. Perception on Digital and Cashless economy do not differ significantly across the
demographic variables

Limitations:

They studied only the college students in Bangalore city, therefore we didn’t get to know the
importance of age factor in the study. For better results they must have focused on the entire
population.

Variables:

• Demographic variables like age, gender.

• Satisfaction variables

• Payment factor variables

Data:

The data used in this research is both primary and secondary data. The primary data is collected using
the structured close ended questionnaires. The secondary data is collected from existing data sources,
catalogues, internet, books, newspapers, magazines and Journals.

Methodology:

The data is collected using structured Questionnaire method, and the secondary data will be collected
from existing data sources, catalogues, internet, books, newspapers, magazines and Journals. Some
200-300 people from the Bangalore population are taken for this research work. The stratified random
sampling is used for carrying out the research work. A sample of 200 respondents were studied
gathering their demographic variables such as age, gender, education, place of stay, parent’s
occupation is used.

Scope of the study:

Payment banks were one of the most innovative ideas and reality which the banking sector had. All
the other innovations try to bring a cashless economy with little limitations but the payment banks
could make it happen easily. With the use of payment banks, it has been made very easy for the people
to make payments anywhere and anytime without the need of cash in hand (M.S.Kokila & Krishnan,
2019). Payment banks have removed the traditional concept of people always travelling with money.
At present, the use of payment banks is comparatively less but the users of payment banks are
increasing every day. Many researchers have conducted studies on the Payment banks but it remains
to be a conceptual study. Based on the review of the literature it is clear that most of the researchers
have concentrated on the conceptual side. There is further scope for finding out whether which age
group uses it more, check awareness among people regarding payment banks and to find out which
payment bank is used most. Hence, the researcher has attempted an empirical study on the
awareness and usage of Payment Bank among the population in Bangalore city.
References
• Chanderprabha. (2017). PAYMENT BANKS: FULCRUM FOR LESS CASHLESS ECONOMY AS WELL
AS FOR FINANCIAL INCLUSION. International Journal of Research -GRANTHAALAYAH, 174-179.

• M.S.Kokila, & Krishnan, S. (2019). An Empirical study on the awareness and usage of payment
Banks among College students in Bangalore city . International Journal of Research, 1004-
1024.

• MISHRA, P., SINGH, U., & WALI, S. (2018). IS PAYMENTS BANK A VIABLE BUSINESS OPTION IN
INDIA? Journal of Management Research and Analysis, 89-94.

• Singh, A., & Bhadouria, S. (2019). Payment Banks on Improving Financial Inclusion in India.
International Journal of Business and Management Invention, 78-83.