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A PROJECT REPORT ON CONSUMER FINANCE

BACHELOR OF COMMERCE BANKING & INSURANCE SEMESTER V (2013-14) SUBMITTED BY:

YATITH MAHENDRA POOJARI


1382337

UNDER THE GUIDENCE OF PROF. BARKHA SHAMNANI

VIDYA PRASADAK MANDALS R.Z.SHAH COLLEGE OF ARTS, SCIENCE &COMMERCE MITHAGHAR ROAD, MULUND (EAST) MUMBAI400081.

DECLARATION
I, MR. YATITH MAHENDRA POOJARI student of B.Com Banking & Insurance Semester V (2013-14) hereby declare that I have completed the Project on CONSUMER FINANCE. The information submitted is true & original to the best of my knowledge.

D ATE: PLACE:

Students Signature YATITH POOJARI 1382337

ACKNOWLEDGEMENT
I would sincerely like to give my heartfelt acknowledgement and thanks to my parents. Any amount of thanks given to them will never be sufficient. I would like to thank the University of Mumbai, for introducing Banking and Insurance course, thereby giving the student a platform to abreast with changing business scenario, with the help of theory as a base and practical as a solution. I would sincerely like to thank our Principal Mrs. SUSY KORIAKOSE. I would also like to thank my project guide PROF. BARKHA SHAMNANI. for her valuable support and guidance whenever needed. I also feel heartiest sense of obligation my library staff members & seniors who helped in collection of Data and materials and also in this processing as well as in drafting manuscript. Last, but not the least, I would like to thank my friends & colleagues for always being there.

Contents
Part I Concepts and Theories of Consumer Finance

1 Risk Tolerance

2 Personal Financial Wellness

3 Financial Education and Program Evaluation

4 Consumer Economic Socialization

Part II Internet and Consumer Finance

1 E-banking

2 Online Shopping

Part III Consumer Finances of Special Populations

1 Risky Credit Card Behavior of College Students

2 Consumer Finances of Low-Income Families

3 Gender Differences in Investment Behavior

Part IV Consumer Finance in Various Settings

1 Workplace Financial Education

2 Promoting Applied Research in Personal Finance

Sr.no 1 2 3 4 5 6 7 8 introduction

Index

sign

Objectives of consumer finance Importance aspects Scope of consumer finance Indian view Global view Benefits of consumer loan methodology

Introduction
The middle income families are targeted for consumer finance information because it is assumed that they have a savings culture. This is true for many of them but I am of the view that things are changing. The recent credit crunch showed us that middle income families were very vulnerable to the financial problems that tended to be associated with the poorer segments of society. For example their endemic desire to uplift their living standards meant that they were not resistant to the charms of the credit card. In fact a lot of their credit card spending was simply atrocious. This was coupled with the fact that we no longer looked at debt as something to be ashamed of. In fact the mere suggestion that one is entitled to apply for credit meant that they were respected by the financial world. That means that the way that consumer finance information is targeted to the middle income families has to change. Rather than working on the basis of the old stereotypes of a savings culture, we need to present consumer finance information that addresses the reality of the situation for many of the potential applicants. We have to accept that many of them cannot simply afford some of the basic stuff that will take them to the next level on the income ladder. We also have to think about repayment. Consumer credit transaction that is secured by real property located in this state, used or indended to be used or occupied, as the principle dwelling of the consumer that is improved by a one to four residential unit Consumer finance borrower or borrower means a person who has incurred either direct or contingent liability to repay a consumer finance loan ``consumer finance loan means a loan of money credit,goods,or choses in action including, except as otherwise specifically indicated

Consumer durable loan Consumer are the centre of our world and we offer a wide range of product to make sure their world is both comfortable and secure presenting,tata capital consumer durable loans at 0%. Interest with EMI option to suit your needs best,bringing your dreams within reach and all you need is your PAN card and recidential proof In economics,consumer loan is outstanding debt of consumer,as opposed to businessor government. In macroeconomic terms, it is debt which is used to fund consumer rather than investment it include debts in incurred on purchase of goods that are consumable or do not, in recent year an alternative analysis might view consumer debt as a way to increase domestic production on the ground that if credit is easily available, the increase demand for consumer goods should cause an increase of over all domestic production. The permanent income hypothesis suggests the consumer take to smooth consumption througout their lives, borrowing to finance expenditure(particularly housing and schooling) earlier in their lives and paying down debt during higher periods. The most common forms of consumer finance are credit card debts, payday loans and other consumer finance, which are often at higher interest rates than long term of debt outstanding versus the consumers disposable income is expressed as the consumer leverage ratio. The interest rate charged depends on a range of factors including the customer to repay, competitive pressure from other lender, and the inherent structure and security of the inherent structure and security of the credit product, rates generally range from 0.25 percent above.

Defination
An amount of money lent to an individual for personal,family or house hold purpose consumer finance are monitored by government regulatory agencies for their compliance with consumer protection regulation such as the truth in lending act also called consumer credit or consumer lending.

Objectives of consumer finance


To evaluate reasons for and against using credit and decide whether credit is appropriate for you. To be able to take the necessary a credit history. To identify what is meant by sale credit and how it is use. To understand how to use credit card properly and to know your legal rights as a borrower against credit mistake. To identify the important characteristics of installment loans. To compare the various sources of credit and learn what to do if you experience credit problems. To finance all fees To meet expences To provide financial assistance To cover course fee,hostel and mess charges

Consumer finance/ loan


loan for paying the bills,education purpose,business purpose etc. and one can only get the loan with the appropriate interest rate only with good credit history.

Important Aspect
Consumer parties to the transaction Modes of finance Procedure for granting Terms of raising finance Purpose of raising fianance Benefits of consumer fianance

PARTIES TO THE TRANSACTION

In a bipartite arrangement
borrower/consumer dealer cum financer

In a triparties arrangement
customer/borrower dealer/seller financer(may be a bank or non banking finance company)

Models of consumer finance


Hire purchase Installment system Overdraft Credit loan

Scopes of consumer finance


To convert more prospects/shoppers into paying customers Allows retailer/merchant with high ticket item an avenue to make sure their client can pay for their goods and services 80% of consumer cannot pay cash for item over $1000 most pay with credit card or will leave without an alternative financing source. Most traditional banks will turn down 75% of applicant This types of financing been around for 50 years or more,but is making a comeback post credit card lines and a lack of home equity

Indian and Global view


Creating customer out of people who previously would have walked out, Increased revenue and higher ``conversation rate for higher gross revenue and increased customer base. Little risk, most programs are non-recourse,meaning once customer has been aproved and funded, there is no risk to the marchant if the loan goes default later. If a programs for your particulars business is recourse, you will know this before implementation and understand the risks and rewards before implementing. Financing enables more sales conversion some of those conversion may be at a lower profit margin but are still a superior alternative than no sale at all.

There are programs for perfect credit middle credit and difficult credit as well as unusual companies such as discount travel clubs,auction houses and ``as seen on TV type of product Successful companies or marchants that use financing understand their bottom line and know exactly what level of discount their product and services can absorb and still be profitable. Todays consumer finance products make it easy to calculate your pricing based on average discounts,quote payment rangers to the customers at your consumer loan documents completed easily. There is no `zero cost consumer financing programs while many programs do not have a sign up fee, other costs such as discounts are almost always a part of each deal. The question for any business is whether this opportunity cost will enable higher gross revenue and more sales for many companies, the answer is yes.

Installment system under hire purchase It may be of two types


1) conditional sale 2) pledge or hypothecation

Institution providing housing finance


IDBI HDFC ICICI SBI LIC housing finance Tata housing finance

Processing fees
SBI, CBI, BOB they do not charge any fees HSBC and bank of punjab they charged 1% of the loan

Repayment period
5 to 7 years after commencement of repayment

Benefits of consumer finance


Rising standard of living Forced savings Help consumer to meet emergencies Increase in demand for physical goods

Part I Concepts and Theories of Consumer Finance Chapter 1


Risk Tolerance
This chapter provides an overview of the important role nancial risk Tolerance plays in shaping consumer nancial decisions. A review of normative and Descriptive models of risk tolerance are provided. Additional discussion regarding The measurement of risk tolerance is also presented. The chapter includes the Presentation of a conceptual model of the principal factors affecting nancial risk Tolerance with recommendations designed to enhance the consumer nance elds Knowledge of risk tolerance. The chapter concludes with a summary of additional research needed to better understand the multidimensional nature of riskTolerance.The specic study of how a persons perceptions

of risk inuence behaviors have gained importance over the past two decades as consumers, investment advisers,researchers, and policy makers have come to face new and ever increasingly complex changes in the economic landscape. This is especially true in relation to the consumer nance elds examination and understanding of the role nancial risk tolerance plays in shaping individual nancial behaviors. One of the rst denitions of risk tolerance appropriate for use by researchers interested in consumer and personal nancial issues was proposed by Kogan and Wallach in 1964. They stated that risk tolerance is the willingness of an individual to engage in a behavior where there is a desirable goal but attainment of the goal is uncertain and accompanied by the possibility of loss.

The Expected Utility Theory Framework


The use of expected utility theory (EUT) modeling is the primary approach used by researchers to describe how risk tolerance is conceptually linked with risk-taking behaviors. The conceptualization of EUT was advanced by Von Neumann and Morgenstern (1947). They argued that consumers should select choices with the highest expected outcomes. A consumers utility function is typically assumed to resemble a constant relative risk aversion utility function (Hanna, Gutter, & Fan, 2001). In the expected utility framework, risk preference is operationalized as risk attitudes that are descriptive labels for the shape of the utility function presumed to underlie a persons choices.

Behavioral Finance and Psychosocial Descriptive Frameworks Even though EUT has traditionally been a favorite method for conceptualizing risk tolerance and risk-taking behaviors among economists, groups of researchers, primarily those housed in departments of psychology and behavioral sciences, have traditionally questioned the notion that risk tolerance can be represented within an economic utility framework (Olson, 2006). There is a growing body of evidence to suggest that the assumption that risk is an immutable attribute of a decision alternative that is perceived the same way by different decision makers (Weber,1997, p. 129) may be incorrect. Consider the normative directive indicated by EUT that everyone saving for a long-term goal should invest in high return investments.Only a small part of the population follows this advice. Descriptive models attempt to explain why people often stray from this and other normatively appropriate behaviors.

Risk Tolerance Measurement Issues


The formal assessment of risk tolerance can take on many forms (Roszkowski & Grable, 2005). In practice, risk tolerance tends to be measured and assessed using one of the six methods: (a) personal or professional judgment, (b) heuristics, (c) objectively, (d) single item questions, (e) risk scales, or (f) mixed measures. Those that rely on personal or professional judgments have a tendency to use one of the four methods to assess the risk tolerance of other people. A judgment can be made based on the assumption that others have the same risk tolerance as the judge. It is also possible to perceive others as less risk tolerant. This is known as risk-as-value, where the judge perceives his or her own risk tolerance as being more desirable. An alternative is to predict that others

have only slight differences in risk tolerance compared to the judge. The nal approach involves relying on stereotypes to arrive at a judgment. Unfortunately, the literature on personal and professional judgment has not shown those that use this method to be particularly accurate (Roszkowski & Grable, 2005).The use of heuristics is another way that some attempt to assess risk tolerance.A heuristic is a simplied rule that results in a mental shortcut to solve a problem. In terms of risk assessment, for instance, some people believe that, holding all other factors constant, males are more risk tolerant than females or that those that are self-employed tend to be more risk tolerant than others. Other risk-tolerance heuristic examples include associating general risk-taking behaviors with a willingness to take nancial risks (e.g., skydiving to investing) and viewing occupational choice as a proxy for risk-taking preferences. The preponderance of research on the topic of heuristic validity suggests that very few heuristic rules can be used reliably.

A Conceptual Model Of The Factors Affecting Financial Risk Tolerance


An issue of particular importance to consumers, investment advisers, researchers, and policy makers involves understanding the factors associated with risk tolerance. Because a persons tolerance for risk has such a signicant impact on the wayindividuals make decisions it is important to have a conceptual understanding of the factors that inuence risk tolerance (Campbell, 2006). There are a number of demographic, socioeconomic, psychosocial, and other factors generally thought to be

associated with nancial risk tolerance. Table 1.2 summarizes consensus ndings from the literature regarding the inuence of certain individual characteristics on risk tolerance.

Chapter 2 Personal Financial Wellness


As the importance of nancial health of individuals and families continues to grow, people often use the term nancial wellness to mean the level of a persons nancial health. Financial wellness is a comprehensive, multidimensional concept incorporating nancial satisfaction, objective status of nancial situation, nancial attitudes, and behavior that cannot be assessed through one measure. This chapter discusses the concept and measurement of personal nancial wellness and presents Financial Wellness Diagram. Future researchdirections are also discussed.

Understanding and Dening Financial Wellness


To understand nancial wellness, concepts that relate to nancial wellness should be examined. This section reviews the meaning and measurement of nancial wellness and related terms such as well-being, economic well-being, nancial well-being, and material well-being

Economic or Financial Well-Being


Economic and nancial well-beings are often used interchangeably. Generally, - nancial well-being tends to include broader aspects of nancial life, and economic well-being is most often used with income level.

Material Well-Being
Material well-being is another concept that is used as a proxy of economic and nancial well-beings. Family material well-being refers to the mix of goods, commodities, and services to which family members have access (Fergusson, Horwood, & Beautrais, 1981). Indicators of material well-being include ownership (home, car, television, etc.) and economizing behavior such as cutting down or reducing expenditures. Other examples of economizing strategies include postponed visits to a physician, money borrowed to meet everyday living costs, and reduced weekly shopping to save money

Personal Financial Wellness


Personal nancial wellness is a comprehensive, multidimensional concept incorporating nancial satisfaction, objective status of nancial situation, nancial attitudes, and behavior that cannot be assessed through one measure (Joo, 1998). Financial satisfaction is a key component of nancial health. However, nancial satisfaction does not necessarily mean good nancial health. Sometimes, people can be satised with their nancial situation, even though they have large debts. This is why an objective assessment of a

persons nancial situation is an important component of personal nancial wellness. With an objective diagnosis, personal nancial wellness can be measured reliably. In addition to subjective nancial satisfaction and objective measures, individual perceptions (i.e., nancial attitude) and nancial behaviors are important components because these measure the potential of change in personal nancial wellness. An individuals personal nancial wellness can be said to be high (or a person is well) when individuals are satised with their nancial situations, their objective status is desirable, they have positive nancial attitudes, and exhibit healthy nancial behavior.

Money Income
Recently, researchers have recognized the potential weakness of money income as a measure of economic well-being. Weaknesses include the possibility that money income measures only a portion of the economic well-being of individuals, and income measures may create potential nonsampling errors. For example, Weinberg, Nelson, Roemer, and Welniak (1999) indicated that Money income does not reect the fact that some families receive part of their income in the form of noncash benets, such as food stamps, health benets, rent-free or subsidized housing, and goods produced and consumed on the farm. In addition, money income does not reect the fact that some people receive non-cash benets as fringe benets.In many surveys, there is a tendency for respondents to underreport their income

wealth
Wealth is often used with other types of wellness measures, especially with income. Radner (1990) used income-wealth measures that include money income and stock of wealth. The stock of wealth is calculated from an annuitized value of wealth, and property income was excluded from the money income.

Financial Satisfaction
l satisfaction with ones nancial situation is often used as a measure of -nancial well-being. According to Godwin (1994), there was no consensus on best measure of nancial satisfaction. Some researchers have measured nancial satisfaction with a single item, while others have used multiple-item measures. The pioneer work of developing a nancial satisfaction measure was conducted by Cantril(1965). He developed a self-anchoring ladder scale. Researchers, such as Davis and Schumm (1987), Porter and Garman (1993), and Greenley, Greenberg, and Brown(1997), utilized a single-item scale to measure nancial satisfaction by assessing the overall satisfaction of respondents. Researchers like Lown and Ju (1992), Wilhelm, Varcoe, and Fridrich (1993), and Hira and Mugenda (1999) used multiple-item measures for nancial satisfaction. Typically, nancial satisfaction was measured with satisfaction on the level of income, money for family necessities, ability to handle nancial emergencies,amount of money owed, level of savings, and money for future needs.

Financial Wellness Measurement


Personal nancial wellness is a comprehensive, multidimensional concept incorporating objective and subjective components of well-being. Previous research showed that proxies for personal nancial wellness (i.e., economic well-being, - nancial well-being, material well-being) were measured with one or a combination of constructs such as money income, non-money income, wealth, consumption, nancial behavior, nancial satisfaction, nancial attitudes, and nancial ratios. However, except for Joo (1998), no research in study measured personal nancial wellness with the four comprehensive sub-concepts of nancial wellness: nancial satisfaction, nancial behavior, nancial attitudes, and objective status (such as income, wealth, consumption, and nancial ratios).

A Study of Financial Wellness


This section presents ndings from a study designed to further explore the meaning and measurement of personal nancial wellness. A survey result with 216 randomly chosen nancial counseling and planning professionals (educators, researchers, professors, and CFPpractitioners) is presented.

The Meaning of Personal Financial Wellness


Respondents were asked to provide their own denition of personal nancial wellness. The answers were evaluated using a key word content analysis. Common key words included components of nancial wellness as described in the literature. Examples include debt, credit, income,

expenses, insurance, investment, asset, nancial goals, knowledge, money, planning, saving, and stress. Descriptive words for nancial wellness, such as enough, happy, healthy, health, need, satisfaction, security, well, and well-being, were also used in dening nancial wellness.

Heath
When respondents were asked to provide a denition of nancial wellness, they indicated that the word health was most appropriate. Response examples include nancial health of a family the level of health of a familys nances a state feeling of healthy, and stress-free regarding ones nances maintaining a state of nancial health In addition, other respondents provided more detailed answers, such as a healthy and prosperous nancial environment that compliments and individuals lifestyle the degree to which an individual feels secure happy and healthy with their nancial status

Income and Saving


The second most common set of terms used to describe nancial wellness included income and saving. Phrases to describe nancial wellness include the following:

The second most common set of terms used to describe nancial wellness included income and saving. Phrases to describe nancial wellness include the following having enough income having sufcient income and assets to live the life you desire without having a signicant debt ratio sufcient income and assets to support nancial goals In most cases, respondents who used income and savings to describe nancial wellness also offered more comprehensive denitions of the term. Examples include

a state of being in balance with plans for saving/investing/retirement in place. Income exceeds expenses, debt and funding future needs having enough income to meet ordinary and unexpected expenses/save 10 % of income/contributing to retirement plans/able to balance and prioritize needs and wants to meet goals

Goal
Goal was the next most frequently used term to describe nancial wellness. Respondents who used this word did so, most often, in conjunction with the following terms: investment, money, need, planning, retirement, and security. Other responses are listed below:

being

aware of ones goals

a sound plan, emergency fund established and living a productive nancial life living within a spending and saving plan

Other Terms
Respondents also mentioned credit management, asset, budgeting, controlling expenses, stress-free, and satised as being associated with a persons current nancialsituation, and as such, as components of nancial wellness. Respondents who usedthese types of words dened nancial wellness as. overall satisfaction with ones nancial situation and behavior the management of money, banking, investments and credit that fosters good physical and mental health maintained by positive habits freedom from stress being sound of ones nances due to proper knowledge and management of all nancial aspects of their life, household, business, etc. Respondents also considered well-being or nancial wellbeing as concepts similar to nancial wellness. Respondents answered how well someone is doing nancially as nancial wellness.

The Measurement of Personal Financial Wellness


A key element of this study was to arrive at a consensus method for measuring personal nancial wellness. A series of questions were asked to help arrive at a consensus. These questions included (a) whether nancial status of individuals should be measured in a subjective way,objective way, or both?

(b) whether the nancial status should be measured with a single item or multipleitems? (c) whether income should be used to measure nancial status, and if yes, whatinformation should be gathered? (d) whether debt should be used to measure nancial status, and if yes, what information should be gathered?The majority of the respondents (76.1 %) answered that the nancial status ofindividuals should be measured both subjectively and objectively. Slightly morethan 18 % of respondents answered that nancial wellness should be measured usingonly objective factors, while only seven professionals answered that wellness shouldbe measured using subjective tools.

A Conceptual Framework of Personal Financial Wellness


The four sub-constructs of personal nancial wellness include objective status, nancial satisfaction, nancial behavior, and subjective perception. Objective status refers to objective aspects of persons economic status, such as income, debt, net worth, and household wealth. Even though it certainly cannot buy the entire

happiness, income is one of the signicant aspects of nancial health. Objectivestatus can be measured with various nancial ratios as mentioned earlier.Financial satisfaction is a signicant sub-construct of personal nancial wellness.It can be measured with one global item of overall nancial satisfaction, or multipleitems of nancial satisfaction, such as satisfaction with income, amount of moneyfor leisure, amount of

savings, amount of emergency funds. Research has shownthat single-item measurement can be equally representative as multiple items. Financial behaviors include proper behavior with various personal nances topics. To become nancially healthy, individuals need to exhibit desirable behaviors with cash management, credit and debt management, planning for various lifecycle events (e.g., marriage, college planning, retirement, estate planning), and consumerism.Finally, subjective perception is the driving force for savvy nancial behaviorsand becomes part of the fourth construct of personal nancial wellness. Individualsattitudes toward personal nancial wellness on the various personal nance topicscan lead to proper behaviors. Financial knowledge is also a signicant component ofsubjective perception. As in the marketing theory of knowledge attitudebehaviormodel, nancial knowledge can inuence nancial attitudes and leads to betternancial behavior, thus better nancial wellness.

Chapter 3 Retirement Savings


The topic of retirement savings can be considered from a prescriptive(normative) approach, for which the primary question is how much should a household accumulate for retirement. The topic can also be considered from a descriptive(positive) approach, for which the most important question is whether householdsare saving enough for retirement. Because analyses using the descriptive approachdepend on assumptions about whether households are saving enough for retirement,the two approaches are related. In this chapter we review concepts and literaturerelated to both approaches. We conclude with a discussion of whether householdsin the United States are saving enough for retirement.ughly half of working households in the United States are not saving enoughto be able to maintain their current spending after retirement. Scholz et al. (2006)obtained an estimate of 80 % of working households saving enough because of theirassumptions that implied much lower optimal spending in retirement than beforeretirement. If Scholz et al. are correct, a large majority of households are behavingneeded to explain household retirement savings behavior. If the more pessimisticstudies are correct, then as Mitchell and Moore (1998) noted, it is importantto ascertain why people do not behave rationally and what can be done to improvethe situation. Mitchell and Moore discuss possible explanations, including lack ofinformation and lack of self-control. Encouraging employers to have automatic enrollment in retirement plans and preset increases in contribution rates, as suggestedby Thaler and Benartzi (2004) would improve the retirement situation for workers.Autoenrollment plans started increasing after 2006 (Mincer, 2007). Workers

whocan start investing for retirement 2030 years before retirement should be able toaccumulate enough assets for retirement, and given the outlook for Social Securityproviding lower replacement rates, investing early for retirement seems prudent.Future research on retirement adequacy should include careful estimation ofspending needs in retirement, as that has been the weakest part of all retirementadequacy studies. More research on pre-retirement withdrawals from retirementaccounts would provide more accurate estimates of future retirement adequacy.Normative portfolio studies should focus on more specic advice to workers saving.

Chapter 4 Financial Education and Program Evaluation


This chapter provides an overview of the wide range of nancial education programs aimedat improving Americans nancial literacy as well as a reviewof the current program evaluation evidence demonstrating the impact of nancialeducation programs. We advocate for the adoption of a comprehensive frameworkfor evaluation to assist

those currently delivering, and planning to deliver, nancialeducation while highlighting some of the key challenges. Jacobss (Evaluating familyprograms, pp. 3768, 1988) ve-tier approach to program evaluation is describedand outlined to provide a general framework to guide nancial education evaluation. Among Americans, burdensome consumer debt, low savings rates, and recordbankruptcies are commonly considered the result of low nancial literacy levels.As a result, both public and private initiatives have called on Americans to learn thebasics of saving and investing for long-term nancial independence, or otherwise toimprove their level of nancial literacy. Collectively, the scope and size of the nancialeducation effort have been signicant, although undoubtedly some initiativesare experiencing greater success than others.In this review, the overview of programs is followed by a short summary of thecurrent evidence of the impact of nancial education programs. We then outlinea comprehensive framework for nancial education evaluation. Our intention is tohighlight some of the key challenges facing providers of nancial education programs whowish to evaluate the effectiveness of their program. As a tool, we suggesta framework to guide the evaluation of nancial education programs. Without question, thecosts of deliberate program evaluation methods can be prohibitive for someeducation providers. However, the adoption of a more consistent and comprehensiveframework to evaluation will better capitalize on economies of scope. Widespreadadoption of a more consistent approach to program evaluation will facilitate programcomparison and aid in identication of best practices in nancial education.

Guiding the Evaluation Process


her nancial education focuses on community-sponsored general nancial literacy programs,employer-sponsored retirement programs, or bank-sponsored homeownership programs, design, delivery, and evaluation have tended to occur in isolation.Efforts in designing and delivering nancial education programs often takeplace without considering whether such efforts are effective and without integratingthe evaluation component as part of design and delivery.Meaningful program evaluation is an essential and integrated element of successfulprograms. Well-designed evaluations will document individual program implementationand effectiveness, but also address collectively and cumulatively whichprograms work for whom, how, when, where, and why . Witha more systematic, consistent, and collaborative approach to program evaluation,stronger evidence of any link between nancial education and targeted outcomesmay emerge.Most programs appear to be making some effort toward evaluation; however,there are few clear commonalities in the approach taken. Limited and inconsistentmeasurement inhibits our ability to understand how outcomes and effects areachieved by programs . Some programs conduct informal evaluations.

Part II Internet and Consumer Finance Chapter 1 E-banking


The rst application of electronic banking took place in 1969, when ChemicalBank placed a cash dispenser at a branch in Queens, New York (Drennan, 2003).Subsequently, many other banks joined in to experiment with various forms ofebanking services. While some disappeared after the introduction stage (e.g., smartcards), some e-banking technologies blossomed over time (e.g., ATMs).In the late 1990s, e-banking embraced a new wave of technology innovation, theInternet. Incorporation of the Internet improved the benets of existing e-bankingservices. In particular, it greatly enhanced the consumers ability to manageinformation. Financial transactions made by ATM, direct deposits and payments, and debitcard transactions are recorded and veried instantly from a distant location via theInternet, which further reduces the need for brick-and-

mortar banking institutionvisits. Now, e-banking is viewed as a sustainable innovation in its maturity stage,reaching to the late majority in the diffusion process.

Literature Review
he banking industry is on the forefront of adopting innovation, both to reducethe costs of bank operations and to improve services to customers. During the1950s, when the computerization of business transactions was in its infancy,Bank ofAmerica initiated an effort to automate the banking system, whichincludedERMA (electronic recording method of accounting computer processing system) and MICR(magnetic ink character recognition) (Bellis, 2003). These systems computerizedmanual records as well as checks processing, account management, and electronically updated and posted checking accounts. Technology innovation in the bankingindustry further accelerated during the 1960s and 1970s, with particular focus onmoving away from manual and paper recording to electronic and paperlesstransactions. Indeed, technology has transformed the way banks offer nancial services toU.S. consumers.However, consumers adoption of banking technologies had been rather slow upuntil about 10 years ago. While electronic banking has been available for some 35years in various forms, it was only after the late 1990s that it became so clearlyvisible to consumers. Infact, a study by Lee and Lee (2000) with the Survey ofConsumer Finances shows that even in 1995, consumer adoption of bankingtechnologies was not to the extent that the industry had thought it would be and that thosewho adopt e-banking technologies still have the characteristics of innovators. Fromthe late 1990s and forward, however, a

U.S. consumers usage of e-bankingtechnology rose substantially. For example, according to First Data Survey, veout ofevery six ATM/debit cardholders surveyed used their ATM/debit card at least oncein the 30 days prior to the survey in 2003, while about 80 % of U.S. consumersusedat least one form of e-banking technology (Bucks, Kennickell, & Moore, 2006).

Adoption of E-banking Technologies


There have been two distinct theoretical approaches to understanding consumersadoption of banking technologies. The rst approach is to focus on consumercharacteristics linked to the amount of time he/she takes to adopt or acquireinnovation. The second approach is to examine consumer technology adoption by wayof consumer predispositions, such as overall feelings, attitudes, perceptions, and/orintentions toward using a given technology. The most inuential research model that concerns the rst approach is the diffusion of innovation (DI), a conceptual framework that is formalized by Rogers (1965). DI posits that innovations spread through society in an S-curve, as early adopters select the innovation rst, followed by the majority, until a technology or innovation becomes common. DI is also a cumulative model in that the total number of people who accept innovation only increases over time. Bass (1969) further renes DI by conceptualizing the adoption of an innovation as the probability of adopting an innovation at any point in time. Thus, Bass model recognizes the existence of non-adopters, even at the maturity stage of a new technology, while Rogers model assumes that all consumers will

eventually adopt the innovation as it moves through its product life cycle.

Methods Data
ploy the 1995 and 2004 Surveys of Consumer Finance (SCF) for this study. The SCF is a triennial survey sponsored by the Federal Reserve Board with the cooperation of the Statistics of Income Division of the Internal RevenueService. The SCF collects information on the number of nancial institutions with whicha respondent (or the respondents family member living in the same household) currently has accounts or loans or regularly does personal nancial business. Financial institutions include banks, savings and loans, credit unions, brokerages, loan companies, and so forth, but not institutions where consumers only have credit cards or business accounts. In this study, only the respondents who are afliated with at least one nancial institution are included in the sample, since

consumers who have no nancial afliation cannot make electronic nancial transactions

Dependent Variables
The probability of a consumers adoption of e-banking technologies is employed as a set of separate, dependent variables. First, the dependent variables include a set of binary variables that indicate whether or not a respondent has adopted each of the four electronic banking technologies: ATMs, debit cards, direct deposit, and direct payment. We did so given that the effects of explanatory variables could vary across different types of electronic services. We note that, while signicant and increasingly noticeable, Internet banking is not included in our data analysis, as the current data sets do not contain comprehensive information concerning consumersonline banking behaviors.

Explanatory Variables
following variables are included as explanatory variables: education, income, age, communication patterns, and other demographic variables, such as gender of household head, race, and martial status. Education. To reduce potential multicollinearity with income and nancial asset variables, as well as to examine potential non-linearity of educational impact, a set of dummy variables is included with high school graduates, or equivalent, as the base. Other categories include: less than high school education, some college, bachelors degree, and graduate degree. Income. To reduce heteroskedacity (unequal variance of the disturbances), the natural logarithm of the reconciled annual total household income before taxes is employed.

Data Analysis
In order to analyze the extent of consumers adoption of electronic banking technologies, we employ descriptive statistics, which examine the extent to which consumers adopt each of the four electronic banking technologies. To examine individual group differences, we conduct pairwise tests and adopt Bonferroni adjustments to reduce the type 1 error. To investigate the effects of potential determinants on consumers adoption of nancial innovation, we estimate the probability of consumers adoption of each of the four e-banking technologies, using the 2004 SCF. Given that all of the dependent variables are binary, probit or logit analysis is appropriate. We thus employ logistic analyses. Using the RII (repeated imputed inference) technique, estimates are derived from all implicates, and the variability in the data due to missing values and imputation is incorporated in the estimation.

Discussion and Implication


Based on the theoretical framework of innovations diffusion, we investigate consumer characteristics of e-banking technology laggards with data from the 1995 and 2004 Surveys of Consumer Finance (SCF). While some variations exist for different types of e-banking technology, e-banking laggards tend to be older, less educated, have less income, and divorced/separated than adopters of e-banking. The overall proles of laggards did not change drastically between 1995 and 2004, although we nd some differences in the effects of demographics on a specic type of e-banking technology between these two time periods. In the following section, we highlight these differences and offer implications of these ndings. First, we nd that consumers with graduate degrees are more likely to adopt debit card usage than high school graduates in 1995, but such difference disappears in 2004. These results may reect the fact that debit cards were relatively new in 1995 and those who had adopted it had one of the most signicant characteristics of innovators, i.e., high

education. As a debit card moves through the adoption curve, the impact of education on its adoption becomes less signicant. We note a couple of limitations to our study. First, the types of e-banking technology we investigate do not include online banking. This is largely due to the unavailability of data concerning online banking in the 1995 SCF data set. As a result, any inferences made with regard to online banking should be interpreted with caution. In fact, it would be an interesting future study to examine the consumer characteristics associated with online banking and to test whether and how these characteristics differ from those found with more traditional banking technologies. Second, our results are based on two-time observations of two independent consumer sets. The results should not be interpreted as the changes in the adoption behavior of a given individual over time. To reveal such information requires a panel study with observations at multiple time periods. To examine whether and why a particular consumer chooses to adopt or abandon a specic banking technology over time is another interesting avenue for future study.

Chapter 8
Online Shopping: By Consumers and for Consumers
Just as the invention of the horseless carriage and other technological developments improved peoples lives, online shopping has overcome many of the physical limitations of brick-and-mortar stores. However, every technological development also creates problems for consumers. The challenge is to nd a balance of costs and benets that works for both retailers and consumers. There are many opportunities for future researchers to nd ways to more accurately balance these costs and benets as well as to understand how they inuence consumers use of the Inter0net. Some of the areas highlighted in this chapter are as follows: Investigation of a wide range of factors that inuence consumers acceptance and use of the Internet as a retail channel and interactions among inuential factors Development of a valid, reliable, and complete measure of the costs of online Search The inuence of economic vs. non-

economic factors on the appropriate amount of online search Exploration of consumers use of online reviews in purchase decisions A more comprehensive assessment of consumers online privacy concerns and their inuence on online shopping behaviors Another area that is worthwhile for researchers to pursue is that of the online relationship between consumers and market agents such as department store sales persons and travel agents. As consumers interactions with markets and market agents become easier and (potentially) less costly online compared to ofine, do consumers see these relationships as less favorable, equal, or superior to relationships established ofine? How willing are consumers to substitute online relationships for face-to-face relationships? What may be the costs and benets from such substitutions? Finally, Pitt, Berthon, Watson, and Zinkhan (2002) have written about the potential of the Internet to transform the balance of power in the market. As they state it, Websites allow better informed consumers to interact, band together, become more aware of corporate shortcomings, and gain easier access to the legal system (p. 7). A fruitful area for research is an investigation of why the Internet has not achieved its potential to increase consumer power in the market. Is it because the tools that consumers need are unavailable or too difcult to use? Is it because the tools are available but consumers have not used them to their advantage? Or are there other explanations.

Consumer Acceptance of Online Shopping


though some people cannot or choose not to be online, it is almost unanimously accepted that the technology offers an opportunity for business transactions that cannot be ignored (Kraut et al., 2002). As a growing retail channel, the special characteristics and benets as well as

limitations of the Internet have been discussed extensively (Hoffman et al., 1996; Hoffman, Novak, & Chatterjee, 1996; Krantz, 1998). The online shopping channel can be a valuable, interactive communication medium that facilitates exible search, comparison shopping, and product and service evaluation. The attributes of the channel and their ability to match the users purposes can facilitate usage. Several theories have been used to explain how and why consumers choose to use the Internet. The media choice theory proposes that selection of media for a specic task is a function of the characteristics of the medium and the task (Fulk, Steinfeld, Schmitz, & Power, 1987). According to the theory, media can be differentiated by the degree of interactivity, communication richness, social presence, and vividness. Researchers have evaluated those characteristics and applied them to the choice of the Internet for shopping (Hoffman et al., 1996; Palmer, 1997). Hoffman et al. (1996) described the ow experience in a computermediated environment, which is characterized by interactivity, intrinsic enjoyment, and loss of self-consciousness and is self-reinforcing; the ow experience can be a determining factor in consumers use of the Internet as a shopping channel. As the authors note, skills and focused attention are necessary antecedents for consumers to start the ow process on the Internet. Davis (1993) and OCass and Fenech (2003) used the technology acceptance model to explain the linkage between consumers perceptions of the usefulness of the Internet and its ease of use with their acceptance and usage of online shopping.

Part III Consumer Finances of Special Populations Chapter1


Risky Credit Card Behavior of College Students
This chapter provides an overview of the credit card practices of college students and identies specic groups of students who are more likely to be at risk for mismanaging and misusing credit. It specically highlights ndings from one particular study that collected data from a large sample of college students on multiple campuses in the Midwest. In this chapter, educational recommendations are made to nancial professionals, who are interested in using this research to develop and provide more effective nancial education to college students. Also included is a discussion of emerging research related to college students nances and directions for future research. Across college campuses, there has been considerable debate about the heavy debt burdens that students are incurring. Trends in college pricing show that tuition and fee levels have been rising dramatically over the last 20 years (College Board, 2005a). Additional trends show that student aid has not kept pace with rising college costs (College Board, 2005b). With rising costs and nancial aid packages falling short of covering these expenses, more and more students are turning to higher cost alternatives to nance their education (College Board, 2005b; Lyons, 2007a; The Education Resources Institute & The Institute for Higher Education Policy, 1998). These alternative forms of borrowing have included private educational loans, home equity loans and lines of credit, and even credit card debt. Private borrowing and home equity nancing can be a sound nancial decision, especially if interest rates on these loans are competitive with other college nancing options.

However, only in rare instances is credit card nancing a rational option, because of higher interest rates and how quickly the interest compounds.

Chapter 2 Consumer Finances of Low-Income Families


Serious challenges face families at the bottom of the economic ladder. The difculties of balancing low incomes against expenditures are exacerbated by a lack of assets and insurance. We examine patterns of family asset ownership and health insurance coverage rates. A review of research focuses on selected dimensions of the nancial environment of low-income families: the phenomena of the unbanked, home ownership trends, credit use and predatory lending. In each of these areas, additional research is needed to identify ways to help families not only meet their needs, but also to accumulate assets that promote long-term economic well-being. Serious challenges face families at the bottom of the economic ladder. Stagnant wages and increasingly restrictive public transfer programs have stied income growth among low-income families. At the same time, in an effort to expand markets, those with marginal incomes have become the targets of marketing campaigns

promoting middle-class lifestyles and extending credit to consumers traditionally viewed as unacceptably high-risk customers. Together, these forces are putting pressures on the nances of low-income consumers. The difculties of balancing low incomes against expenditures are exacerbated by a lack of assets and insurance. Limited access to earnings, other income, assets and health insurance coverage affects the ability of families to weather nancial difculties or generate income in ways other than by working. For example, middle- and high-income families can access savings when earnings are disrupted; low-income families may have to resort to short-term loansoften those available only from lenders in the fringe economy. Investment opportunities with greater returns often require minimum balances. Maintaining minimum investment levels is more difcult for families with limited incomes compared to families with greater resources. Having health insurance allows families to withstand nancial shocks associated with expensive or unexpected.

Chapter 3 Gender Differences in Investment Behavior


The objectives of this chapter are to identify signicant personal and environmental factors that inuence investment behavior and to specify the investment decision-making process, particularly with respect to female investors. It is expected that the results presented here will help readers to consider new approaches to investment education. Specically, this chapter aims to: (a) explore differences between men and women in a variety of nancial behaviors, investment decision-making process; (b)

identify patterns of investment involvement and learning preferences; and (c) determine socio-economic and behavior factors that explain gender differences in specic investment behavior (portfolio diversication). Despite a narrowing of the gender differences in education, income, and wealth over time, the measures of long-term nancial security for women are still at lower levels compared to men (U.S. Department of Labor, 2003). In general, women invest less money and invest their money in less risky investments compared to men. Some explanations for this behavior include lower earnings, lower nancial knowledge, lower comfort levels with math, or smaller retirement benets (National, 2000). Women may also differ from men in their access to information, as well as the ability or inclination to use available information (Bajtelsmit & Bernasek, 1996).Although women have become more interested in, and better informed about, investments (OppenheimerFunds Distributor, 2004), the NASD Investor Literacy Research stresses that women still miss basic market knowledge (Applied Research &Consulting LLC, 2003), have lower levels of math comfort (Hayes & Kelly, 1998),prefer traditional print media to software or the Internet to gather nancial information (Loibl & Hira, 2004), and favor stable, easy-to-manage investments (National Center for Women and Retirement Research, 1998). Although there is a large body of literature on gender differences in a variety of areas, the examination of differences in investment decision-making and behavior is a relatively new avenue for researchers. Furthermore, to date, the research has not produced a clear understanding of the underlying causes of gender differences in investment behavior. The overall objectives of this study was to select a sample of highly educated and high-income household to detail gender differences in investments behavior in general and to specically explore how men and women differed in handling nancial tasks, assets ownership, risk

tolerance level, investment preferences, investment actions steps taken in the past 12 months and planned for the next 6 months, patterns of involvement in investing, learning preferences, and gender differences. This study also identies factors that inuence ones investment behavior and if they differ by gender.

Part IV Consumer Finance in Various Settings


Chapter 1 Workplace Financial Education
With the shift in retirement plans, workplace nancial education has emerged as a key area of nancial education. To date, more workers receive a variety of nancial education program provided at workplaces than before. It has been assumed that workplace nancial education inuences participants nancial situation in a positive way. Although few conclusive studies about the effects of workplace nancial education

exist, a number of studies documented positive impacts of workplace nancial education on nancial knowledge, nancial behaviors, retirement saving, and nancial well-being. After existing literature is reviewed, conclusions and suggestions for future research are presented. Types of workplace nancial education programs vary. Print materials, such as newsletters and retirement statements, are widespread. Some employers provide extensive year-around nancial education programs that include personal counseling while others send only print materials to their employees. Generally, workplace nancial education programs include retirementbenet statements, brochures, newsletters/magazines, seminars or workshops, workbooks or worksheets, faceto-face counseling, telephone counseling, web-based services, software programs, videos, and CD-ROMs (Kim, Kwon, & Anderson, 2005). Recently, some employers have started to provide employees with access to professional investment advice in-person or via the telephone or the Internet. Although it has been assumed that workplace nancial education inuences nancial behaviors in a positive way, research on the evaluation of such programs is not extensive. Arnone (2004) argues successful evaluation programs should dene the objectives of programs and how to measure the goals. He continues that good evaluations should assess the changes in the actual impact of various educational programs over time, using both quantitative and qualitative measures. However, this level of evaluation has not been available. To date, most research has been limited to qualitative surveys with small samples or quantitative studies with cross-sectional data sets.

Chapter 2
Promoting Applied Research in Personal Finance
The purpose of this chapter is to briey summarize the role that a national professional association plays in bringing quality research to professional nancial counselors and educators. This chapter also includes a brief, non-exhaustive review of personal nance research. A research agenda from the perspective of nancial counselors and educators is proffered. During the past decade, for a variety of reasons, a marked increase in improving the nancial literacy of Americans has developed. The media, policymakers and changing landscape of retirement plan programs have all contributed to the increased attention. Government entities, nancial institutions and their foundations, community and social organizations and specialized nancial education foundations serve the public interest through educational programming and research initiatives. The eld of personal nance research can play a signicant role in fullling the needs

of consumers, practitioners and policymakers. But, it is at crossroads. While it is interesting to know what people know and do, it is more important that practitioners understand what motivates a consumer to implement planned behaviors that increase the potential for long-term nancial stability and security. In addition, studies that conrm best practices in terms of marketing and delivering nancial education and counseling programs and common nancial messages would be quite useful to practitioners. Policymakers rely on quality research to inform issues and outcomes. The health care industry provides a suitable analogy for how the eld of personal nance research needs to adapt to be more relevant. The counseling practitioner needs tools for diagnostic purposes and wants treatments that are effective in reducing nancial distress and increasing a clients sense of nancial well-being. Experts know what behaviors clients need to change to prevent nancial instability and insecurity. But, counselors and educators will be more successful if they understand how to increase the likelihood that a family will accept and implement preventive practices. Professional organizations, such as AFCPE, serve the personal nance profession best by uniting professionals with a diversity of perspectives to focus on common issues. Researchers, practitioners and educators, working together, can produce great outcomes from a well-designed national research program.

The Future of Personal Finance


The ultimate goal of a personal nance research program should be to enhance the long-term nancial security and stability of all Americans. What the eld of personal nance research neglects, and good practice

requires, are studies related to the behavioral aspects of personal nance, the development of diagnostic and treatment tools and appropriate and useful delivery methods for nancial counseling and education services. In addition, studies resulting in policy recommendations can enhance the awareness and importance of personal nance as a eld of study. Such studies call for an interdisciplinary approach using the collaborative efforts of both researchers and practitioners. Studies from the elds of behavioral economics and neurobehavioral sciences that may link the areas of personal nance and behavior change are emerging. In addition, evaluation experts are setting standards for developing and using both knowledge and outcome measures and reporting tools. Hopefully, personal nance researchers and practitioners will be involved with the design and implementation of such work.

Punjab National Bank (PNB) is an Indian financial services company based in New Delhi, India. PNB is the third largest bank in India in terms of asset size. It was founded in 1895 as a private banking company by Lala Lajpat Rai and is currently the second largest state-owned commercial bank in India ahead of Bank of Baroda with about 5000 branches across 764 cities. It serves over 37 million customers. The bank has been ranked 248th biggest bank in the world by the Bankers'

Almanac. The bank's total assets for financial year 2007 was about US$60 billion. PNB has a banking subsidiary in the UK, as well as branches in Hong Kong, Dubai and Kabul, and representative offices in Almaty, Dubai, Oslo, and Shanghai.

History
Punjab National Bank was registered on 19 May 1894 under the Indian Companies Act , with its office inAnarkali Bazaar, Lahore. The founding board was drawn from different parts of India professing different faiths and a varied back-ground with, however, the common objective of providing country with a truly national bank which would further the economic interest of the country. PNB's founders included several leaders of the Swadeshi movement such as Dyal Singh Majithia and Lala Harkishan Lal, Lala Lalchand, Shri Kali Prosanna Roy, Shri E.C. Jessawala, Shri Prabhu Dayal, Bakshi Jaishi Ram, and Lala Dholan Dass.[2] [3] Lala Lajpat Rai was actively associated with the management of the Bank in its early years. The board first met on 23 May 1894. Ironically, the PNB Website now claims Lala Lajpat Rai to be the founding father, surpassing Rai Mul Raj and Dyal Singh Majithia.[4] The bank opened for business on 12 April 1895 in Lahore. PNB has the distinction of being the first Indian bank to have been started solely with Indian capital that has survived to the present. (The first entirely Indian bank, Commercial Bank, was established in 1881 in Faizabad, but failed in 1958.) PNB has had the privilege of maintaining accounts of national leaders such as Mahatma Gandhi, Shri Jawahar Lal Nehru, Shri Lal Bahadur Shastri, Shrimati Indira Gandhi, as well as the account of the famous Jalianwala Bagh Committee.

Timeline
In 1900, PNB established its first branch outside Lahore in Rawalpindi. Branches in Karachi and Peshawar followed. The next year, PNB absorbed Bhagwan Dass Bank, a scheduled bank located in Delhi Circle. In 1947, at the Partition of India and the commencement of Pakistani independence, PNB lost its premises in Lahore, but continued to operate in Pakistan. Partition forced PNB to close 92 offices in West Pakistan, 33% of the total number, and which held 40% of the total deposits. PNB still maintained a few caretaker branches. On 31 March 1947, even before Partition, PNB had decided to leave Lahore and transfer its registered office to India; it received permission from the Lahore High Court on 20 June 1947, at which time it established a new head office in New Delhi. 1951: PNB acquired the 39 branches of Bharat Bank (est. 1942); Bharat Bank became Bharat Nidhi Ltd. 1960: PNB again shifted its head office, this time from Calcutta to Delhi. 1961: PNB acquired Universal Bank of India. 1963: The Government of Burma nationalized PNB's branch in Rangoon (Yangon). September 1965: After the Indo-Pak war the government of Pakistan seized all the offices in Pakistan of Indian banks. PNB also had one or more branches in East Pakistan (Bangladesh). 1960s: PNB amalgamated Indo Commercial Bank (est. 1933) in a rescue. 1969: The Government of India (GOI) nationalized PNB and 13 other major commercial banks, on 19 July 1969.

1976 or 1978: PNB opened a branch in London. 1986 The Reserve Bank of India required PNB to transfer its London branch to State Bank of India after the branch was involved in a fraud scandal. 1986: PNB acquired Hindustan Commercial Bank (est. 1943) in a rescue. The acquisition added Hindustan's 142 branches to PNB's network. 1993: PNB acquired New Bank of India, which the GOI had nationalized in 1980. 1998: PNB set up a representative office in Almaty, Kazakhstan. In 2003, PNB took over Nedungadi Bank, the oldest private sector bank in Kerala. At the time of the merger with PNB, Nedungadi Bank's shares had zero value, with the result that its shareholders received no payment for their shares. PNB also opened a representative office in London. The next year, PNB established a branch in Kabul, Afghanistan and a representative office in Shanghai. PNB also established an alliance with Everest Bank in Nepal that permits migrants to transfer funds easily between India and Everest Bank's 12 branches in Nepal. Currently, PNB owns 20% of Everest Bank. In 2005 PNB opened a representative office in Dubai. Two years later, PNB established PNBIL Punjab National Bank (International) in the UK, with two offices, one in London, and one in South Hall. Since then it has opened more branches, this time in Leicester, Birmingham, Ilford, Wembly, and Wolverhampton. PNB also opened a branch in Hong Kong. In January 2009, PNB established a representative office in Oslo, Norway. PNB hopes to upgrade this to a branch in due course. In 2010, PNB purchased a small minority stake in Kazakhstan-based JSC Dana Bank. Within the year PNB increased its ownership and now PNB

owns 84% of what has become JSC (SB) PNB. The subsidiary has branches in Almaty, Astana, Kangandu, and Pavlodar. Danabank was established on 20 October 1992 in Pavlodar. Also, in January 2010, PNB established a subsidiary in Bhutan. PNB owns 51% of Druk PNB Bank, which has branches in Thimpu, Phuentsholing, andWangdue. Local investors own the remaining shares. Then on 1 May, PNB opened its branch in Dubai's financial center. In September 2011, PNB opened a representative office in Sydney, Australia. In December 2012 it signed an agreement with US based life Insurance company Metlife to acquire a 30% stake in MetLife's Indian affiliate MetLife India Limited. The company would be renamed PNB MetLife India Limited and PNB would sell MetLife's products in its branches.

Vision
``to be a leading global bank pan india footprint and become a household brand in the indo gangetic plains providing entire range of financial services and product under one roof.

Mission
Bank for unbank

Punjab National Bank caters to a wide variety of audience through spectrum of services including corporate and personal banking, industrial finance, agricultural finance and international finance. Sitting on a vast banking resources and significant presence in almost every lending sphere, the bank has a capital adequacy ratio (CAR), well above the Basel-2 regulatory requirement, at 12.96% as on June 2008, despite being exposed to numerous market and credit risk elements. Constantly strengthening the capital adequacy ratio through internal accruals and a regular increase in Tier 1 capital has put the bank on a very comfortable and formidable position. Punjab National Bank has a net interest margin (NIM) higher than the industry average due to a mix of improving yields and low cost funding base and has one of the healthiest low cost current accounts saving account (CASA) ratio of 41.31%. It also enjoys the highest rating by all four domestic rating agencies and one of the few banks to boast a AAA rating on its perpetual debt issue.

The bank has ambitious plans of major technological up-gradation to establish capability of having 100,000 terminals under the Core Banking Solutions (CBS) with a greater thrust on increasing international footprints. The bank has successfully migrated to the Basel 2 accord in February this year. Punjab National Bank has always stood with the time even in the most dire of circumstances. The bank is facing stiff challenges from its private sector counterparts. According to the RBI data, the banking business composition breakup between private sector banks and nationalized banks stood at 4% and 60% respectively, But the equation has taken a paradigm shift in favors of private sector banks owing to phased liberalization of the BFSI sector, the composition stood at 21% as against nationalized banks share with reduced 49% in 2007. In a macro-prudential analysis of the Indian economy, it seems as the Indian banking industry has come a long way and entered in its ever challenging growth phase in a very prominent time as more than 49% of population financially excluded offers immense opportunity to the bank. Pursuing its financial inclusion, Punjab National Bank has opened more than 7.86 lakh No frills Accounts and intends to cover 30,000 villages, 75 million people by 2010 through Biometric Technology apart from comprehensive scheme launched for covering finance and insurance (health and life) for rickshaw pullers, project for empowering women weavers, vegetables vendors, etc. The core focus of the bank will be on retaining and further improving low cost deposits, lending to agriculture and small and medium enterprises and repositioning of subsidiaries and joint ventures. At the time of global financial turmoil, where the banks all over the world are creeping under tremendous pressure, Punjab National Bank has

managed to insulate itself away from fatal transactions and has strictly adhered to the RBI guidelines. In July 2011, Punjab National Bank agreed to pick up a 30% stake in MetLife India which will make it the single largest shareholder in the private insurance company. The two parties have agreed that once the deal is finalized the company will be renamed PNB MetLife India. Awards:

National Award for Excellence in SSI Lending- Ranked 2nd for four consecutive years from 2002 to 2005 The Banker's Almanac - Ranked 3rd amongst banking sector in India and 323rd rank in the world in 2006 The Banker, London- Ranked 386 amongst Top 1000 Global Banks in July 2005 AC Nielson Survey - 9th amongst Top 50 Most Trusted Services Brands in India Golden Peacock Award- for excellence in corporate governance in 2005

Subsidiaries of Punjab National Bank PNB Gilts PNB Housing Finance PNB Investment Services PNB Insurance Broking PNB Life Insurance Co.

Joint Ventures of Punjab National Bank Principal PNB Asset Management Company Principal Trustee Company Assets Care Enterprises India Factoring & Finance Solutions

About karnataka bank

At Karnataka Bank, we understand that all customers are different in unique ways, which is why, regardless of the size of your business or your aspirations, we treat every one as individual and special. This means offering you choices, not only in relation to our products and services but also in the way you interact with us. We understand the changes in your lifestyle, recognize these changes and support you with a high standard of professionalism and service.

As a premier bank, we have developed comprehensive range of customized products & services suitable for every kind of market, trade or perceived need - Business or Personal. They include, borrowing facilities, deposits, providing optimum returns on surplus funds or helping with overseas transactions.

We believe in total quality at all levels. We have deployed the most modern information technology to deliver products & services for your benefit with an aim to develop an effective long-term relationship. But most of all, Technology is matched to your expectations of service, for today & for the future.

Karnataka Bank Limited (Kannada: private sector banking institution based in the town

) is a

of Mangalore in Karnataka, India. The Reserve Bank of India has designated Karnataka Bank as an A1+-class scheduled commercial bank. The bank now has a national presence with a network of some 555 branches across 22 states and 2 Union territories. It has over 5844 employees and 4.84 million customers, including farmers and artisans in villages and small towns throughout the country. Its shares are entirely privately owned by some 86,868 shareholders.

History
The Karnataka Bank was incorporated on February 18, 1924, as the Karnataka Bank Limited and commenced business on May 23, 1924. Its founders established it at Mangalore, a coastal town in the Dakshina Kannada district of Madras Presidency. Among the founders, who created the bank to serve the South Kanara region was B. R. Vysaray Achar. Another important personality associated with the bank was K. S. N. Adiga, who served as Chairman from 1958 to 1979 1960: Karnataka Bank acquired the Sringeri Sharada Bank, which was established in 1942 and which had four branches when Karnataka acquired it. 1964: Karnataka Bank took over the assets and liabilities of the Chitradurga Bank (also known as Chitladurg Bank), which was established in 1868 inMysore State and was the oldest bank in Mysore. 1966: Karnataka Bank took over the assets and liabilities of the Bank of Karnataka, in Hubli. Bank of Karnataka was established in 1946 and had opened one branch in Belgaum in 1947. At the time of the acquisition, Bank of Karnataka had 13 branches.

Services
In August 2008,the Karnataka Bank introduced Quick Remit, a facility to make money transfer easy for Non-Resident Indians living in Canada, USA and theUK. The bank also runs a 24-hour Internet banking service called Moneyclick. Karnataka Bank offers multi-branch banking, deposit schemes as Abhyudaya cash certificate, fixed deposits, ready money deposit, Soulabhya deposit, cumulative deposit, Platinum lakhpathi, insurance linked savings bank deposit, K-Flexi deposit, resident foreign currency (domestic) account, NRI services, Senior Citizens Deposit Scheme and loan schemes as Vidyanidhi education loans, Apna ghar home loans, car finance scheme, Varthak loans, Easy ride, Scheme for salaried persons, Udyog mithra, Niveshan loans, Krishi card, K-Power, Lease n Encash, Suvarna Nidhi, InstaCash and VahanaMitra.

Data Sources
Primary data
Most of the data about the schemes of HDFC has been provided by the HDFC Asset Management Company. My industry mentor helped me obtain monthly portfolios and returns data of schemes which were available to him and also helped me acquire data from companys intranet.

Secondary data
Data collection: Secondary data is collected from various published journals, company fact sheets, books and from Internet.

QUESTIONNAIVE TO BANKERS
What is consumer finance? What are the guidline principles fir operation of consumer finance? What kind of project can be supported under consumer finance Prefered sectors? Who are eligible to apply? How to apply? What happens after I apply for a loan? I saw an advertisement for 0% finance how can I find out if I am qulify?

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