IJMRR/ March 2014/ Volume 4/Issue 3/Article No-10/396-402 ISSN: 2249-7196

INTERNATIONAL JOURNAL OF MANAGEMENT RESEARCH

AND REVIEW

FINANCIAL LITERACY TOWARDS BANKING PRODUCTS AND SERVICES: A

SURVEY
S.Shankari*1, Dr.K.Navarathinam2, Dr.R.Suganya2
1
Asst. Prof, R L Institute of Management Studies, T.V.R.Nagar, Aruppukottai road,
Madurai, Tamilnadu, India.
2
Assoc. Prof, R L Institute of Management Studies, T.V.R.Nagar, Aruppukottai road,
Madurai, Tamilnadu, India.
ABSTARCT
Financial Literacy means the degree to which individuals have the capacity to obtain,
process, and understand basic financial information and services needed to make appropriate
financial decisions. Assessing the levels of financial literacy in the population is a key
component of a successful national strategy for financial education, enabling policy makers
to identify gaps and design appropriate responses. In this backdrop, a study has carried out to
understand the level of the financial Literacy of the common public of Select Districts of
Tamilnadu towards Banking Products and Services. The researchers concluded that the
financial literacy level is low among the respondent and they also suggested various methods
for the Banks to enhance the financial literacy level among the public.
Keywords: Financial Literacy, Financial Inclusion, Banking Products, Banking Services,
Banks.
1. INTRODUCTION
Financial literacy refers to the ability to make informed judgment and to take effective
decisions regarding the use and management of money. Financial literacy is regarded as an
important requirement for functioning effectively in modern society and trends in retirement
income policies, work patterns and demography suggest its importance can only increase in
the year ahead. Raising financial literacy supports social inclusion and enhances the well
being of the community. Financial literacy can broadly be defined as the capacity to have
familiarity with and understanding of financial market product, especially rewards and risk in
order to make informed choices. Viewed from this standpoint, financial literacy primarily
relates to personal financial literacy to enable individuals to take affective actions to improve
overall well-being and avoid distress in matters that are financial. The need for the financial
literacy is felt in the developed and the developing countries alike. In the developed
countries, the increasing number and complexity of financial products, the continuing shift in
responsibility for providing social society from governments and financial institutions to
individuals, and the growing importance of individual retirement planning make it imperative
that financial literacy be provided to al. In the developing countries also, the increasing
participation of growing number of consumers in newly developing financial markets will

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IJMRR/ March 2014/ Volume 4/Issue 3/Article No-10/396-402 ISSN: 2249-7196

necessitate the provision of financial literacy- if these market to expand and operate
efficiently. In addition, the substantial growth of international transactions during the last
decade, resulting from new technology and growing international mobility of individuals,
makes the improvement in financial literacy, increasingly, an international concern.
From the regulatory perspective, financial literacy empower the common person and thus
reduces the burden of protecting the common person from the element of the market failure,
attributable to, de facto, information asymmetries. For example, the emphasis on market
discipline, as one of the three pillars of banking regulation, especially under Basel-II, is the
best served by participation of financially literate bank customer in the financial market
place. Financial literacy can make a difference not only in the quality of life that individuals
can afford, but also the integrity and quality of markets. It can provide individuals with basic
tools for budgeting, help them to acquire the discipline to save and thus, can ensure that they
can enjoy a dignified life after retirement. Financially educated consumers, in turn, can
benefit the economy by encouraging genuine competition, forcing the service providers to
innovate and improve their levels of efficiency. So, financial literacy is the process by which
investors improve their understanding of financial markets, products, concepts and risks.
Through information and objective advice, they develop the skills and confidence to become
more aware of financial risk and opportunities and make informed choices to improve their
financial position.
1.1. Objectives of the Study

To find out the financial literacy level of the common public of Select Districts of
Tamilnadu towards Banking Products and services.

To analyze the relationship between and age, income and education of the Respondent
towards Financial Literacy

To give suggestions to the Banks to enhance the financial literacy level among the public
1.2. Research Methodology
This Descriptive research study was undertaken with the aim of measuring the financial
literacy of the Common public. Both primary and secondary data have been used in the study.
The primary data was collected from the common public of Select Districts of Tamilnadu like
Madurai district, Trichy District, Tirunelveli District, Sivagangai District and Tuticorin
District using structured questionnaire. 100 Respondent from each District were selected by
applying Stratified Random Sampling to make it as 500.
2. RESEARCH MODEL
The researchers categorized the study to measure the Financial Level of the respondent into
three aspects namely Behaviour towards Financial Planning, Awareness of Banking Products
& Banking Services.
1. In the behavior aspect, 8 questions were asked to access their behavior towards various
financial management aspects.
2. In the aspect of awareness of the banking products, 16 questions were asked to access
their Financial Literacy level.

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 IJMRR/ March 2014/ Volume 4/Issue 3/Article No-10/396-402 ISSN: 2249-7196

3. In the advanced banking services, 8 questions were asked to assess their financial literacy
level.
And the Researchers derived the following Model and designed the score as follows:

Behavior
Score assigned: 80
Weightage: 32%

Banking Products Financial Literacy

Score assigned: 90
Weightage: 36% Total score: 250 Total
weightage: 100%

Advanced Banking Services

Score assigned: 80
Weightage: 32%

And the Researchers were measured the Financial Literacy level of the respondent by using the
total score obtained by them in a 5 point scale as Very Low(1-50marks), Low(51-100),
Moderate(101-150), High(151-200) and Very high(201-250) out of the total score 250.
BEHAVIOUR REASON Marks Assigned
(Score 80)
1.Bank Transactions Knowing bank’s transaction Yes=5
influences financial literacy. No=0
Rarely=1
Sometimes=2
2.Personally monitor Methods of keeping records Yes=5
financial matters are considered to be financial Yes, but not all revenue and
literacy behaviour. expenditure=3
No=2
No, I don’t keep record of
received and spent during a
month=0
I find it difficult=0
3.Enjoyment in The enjoyment may be Usually=5
dealing with correlated with higher level of Sometimes=2
financial matters financial literacy. Never=0
Don’t know=0
4.keeping financial It is considered to be financial Usually=5
documents literacy is keeping records. Sometimes=2
Never=0
Don’t know=0
5.Checking the Keeping records leads to Daily=5

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IJMRR/ March 2014/ Volume 4/Issue 3/Article No-10/396-402 ISSN: 2249-7196

balance keeping financial transaction Weekly=5

which is turn considered to be Every two weeks=3
financial literacy. Monthly=3
Yearly=0
Never=-1
6.Best financial This question answers Usually=5
products whether the Respondent are Sometimes=2
analyzing the product or not? Never=0
Don’t know=0
7.Complaints to the High level of confident shows Highly confident=5
respective product confidence level of financial Confident=4
regarding services literacy. Neither or nor confident=0
Not confident=-1
Highly not confident=-2
8.Overall thinking of Personal financial satisfaction Highly satisfied=5
asset, debt and shows confidence levels in Satisfied=4
savings financial conditions which Neither or nor satisfied=0
show the financial literacy. Dissatisfied=-1
Highly dissatisfied=-2

BANKING PRODUCTS REASON WEGHITAGE

(Score-90)
Satisfaction level of banking Awareness level shows the Highly satisfied=5
products like cheque book level of financial literacy. Satisfied=4
for deposit and withdrawal, Neither or nor satisfied=0
saving account, current Dissatisfied=-1
account, DD, RD,FD, Highly dissatisfied=-2
Reinvestment plan facility,
locker facility, loan facility,
nomination facility etc..,

ADVANCED BANKING REASON WEGHITAGE

SERVICES (Score-80)
To analyze the awareness and
usage of advanced banking
services like RTGS, NEFT,
ECS, EFT, Online banking,
Mobile banking, ATM,
Credit card.
Awareness level and Awareness carries 5 marks
usage level both shows Usage carries 5 marks
financial literacy. Totally 10 marks per Question
given to the Respondent for
analyzing their financial literacy
level.

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IJMRR/ March 2014/ Volume 4/Issue 3/Article No-10/396-402 ISSN: 2249-7196

3. FINDINGS
3.1. General profile
S.No S. No Gender No of Respondent
(in Percentage)
Gender Male 62%
1 Female 38%
Age 18-24 years 9%
25-34 years 22%
2
35-44 years 23%
45-59 years 25%
Above 60 21%
Educational Uneducated 16%
Qualification Schooling 39%
3 UG 19%
PG 12%
Diploma 14%
Annual Below 50000 11%
Income 50001 -100000 29%
100001-250000 32%
4 260000-400000 14%
410000-600000 11%
Above 600000 3%
Job Profile Government 14%
Employee
Private Employee 25%
5 Business 32%
Retired 8%
Housewife 21%
Source: Primary data
3.2. Behavior of the Respondent

29% of the Respondent are doing Banking transactions regularly

39% of the Respondent are monitoring and keeping all the Financial Records

27% of the Respondent are showing enjoyment in dealing with Financial Matters

27% of the respondent are checking their Balance in a weekly basis

33% of the respondent are usually aware about Best Financial Products

23% of the respondent are Confident to Complaint the respective product regarding
services

24% of the respondent are satisfied with Asset Purchase, 23% of the respondent are
Satisfied with purchasing Debt Instruments and 31% of the respondent are Highly Satisfied
with Savings.
3.3. Awareness of Banking Products

40% of the Respondent were unaware about the purpose of various accounts.

41% of the Respondent were unaware about the Cheque book facility provide by the
Bank

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IJMRR/ March 2014/ Volume 4/Issue 3/Article No-10/396-402 ISSN: 2249-7196

44% of the Respondent were unaware about the procedure to open savings account

37% of the Respondent were aware about Demand Draft facilities

44% of the Respondent were unaware about Recurring facilities

31% of the Respondent were aware about Fixed Deposit

33% of the Respondent were aware about Reinvestment plan facilities

39% of the Respondent were aware about procedure to get loan

36% of the Respondent were aware about Locker facilities provided by the bank

40% of the Respondent were aware about nomination facilities
3.4. Advanced Banking Service

46% of the Respondent were aware about RTGS and 54% of the Respondent are using
the same service

58% of the Respondent were aware about NEFT and 48% of the Respondent are using the
same service

52% of the Respondent were aware about ECS and 48% of the Respondent are using the
same service

56% of the Respondent were aware about EFT and 44% of the Respondent are using the
same service

53% of the Respondent were aware about online Banking and 47% of the Respondent are
using the same service

56% of the Respondent were aware about Mobile Banking and 44% of the Respondent
are using the same service

47% of the Respondent were aware about ATM and 53% of the Respondent are using the
same service

46% of the Respondent were aware about Credit card and 54% of the Respondent are
using the same service
3.5.Overall Findings

The average score of the Respondent towards Behavioral aspect is 28 out of 80 marks

The average score of the Respondent towards awareness of banking products is 15 out of
90marks

The average score of the Respondent towards awareness and usage level of Banking
services 40 out of 80 marks

The average total score of score of the Respondent towards Financial Literacy is 86 out of
250 marks

It is identified through Chi square test that there is no significant influence of Age ,
Gender and Educational Qualification of the respondent towards their financial literacy level

The Financial Literacy score of 14% of the respondent is very Low, 59% of the
respondent is Low , 17% of the respondent is moderate,7% of the respondent is high and 2%
of the respondent is very high
4. SUGESSTIONS
 Governments and all stakeholders of the country should promote unbiased, fair and
coordinated financial education.

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IJMRR/ March 2014/ Volume 4/Issue 3/Article No-10/396-402 ISSN: 2249-7196

 Financial Literacy Centers (FLCs) can be opened by various banks with focus on the
spread of Financial Literacy, to create awareness about financial products and provision of
counseling facilities for customers of banks.
 National campaigns, specific websites, free information services, and warning systems on
high-risk issues for financial consumers (such as fraud) should be promoted.
 RBI could set up Monetary Museum to create awareness about Money and Banking
among general public and to educate the people in the basic aspects of savings, debt,
insurance, Loan and pensions.
5. CONCLUSION
Apart from the Government and the regulatory bodies, there is a need for involving the civil
society and all other stakeholders in spreading financial literacy. The Government has to
evolve distinct strategies targeting the school children and the adult population to increase the
Financial Literacy level. Even one-time, targeted programmes are useful including financial
education into school curriculum in an on-going manner would hold the key to making our
future generations financially literate
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