TABLE OF CONTENTS

Executive Summary.............................................................................................................2

Introduction:........................................................................................................................3

Objective of the study:.........................................................................................................7

Scope of the study:...............................................................................................................8

Research Methodology:.......................................................................................................9

Limitations of the study:....................................................................................................10

Improving access for rural banking...................................................................................11

Non-life Insurance in Rural Area:.....................................................................................15

Data Analysis and Interpretation:......................................................................................19

Major Findings:.................................................................................................................21

Conclusion and Recommendations:..................................................................................22

Bibliography:.....................................................................................................................23

Annexure – I......................................................................................................................24
 Project on research methodology

Executive Summary

This project report emphasizes upon mainly to use the research methodology
appropriately for any kind of research. This research emphasise on the savings pattern
and usage of non-life insurance products and preferences in the rural market in India. The
report is based mainly only the primary data which is collected from the rural area near
Sitapur i.e. places like Tedwa, Biswan etc. Certain secondary is also being used to
highlight the rural market and the several tasks performed as per the tradition and culture
of rural area. The report accompanies the major findings, conclusions and
recommendations along with the questionnaire which was used to collect the data from
the rural people. However, due to language barriers was filled by asking them the details.
The rural people were asked about the banking preferences and their trust upon the non-
life insurers present in the rural market.

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Introduction:
WHAT RESEARCH IS
• Attempt to achieve systematically and with the support of data the answer to a
question, the resolution to a problem, or the greater understanding of a
phenomenon
• Redman and Mory define research as a "systematized effort to gain new
knowledge."
• According to Clifford Woody research comprises of defining and redefining
problems, formulating hypothesis or suggested solutions; collecting, organising
and evaluating data; making deductions and reaching conclusions; and at last
carefully testing the conclusions to determine whether they fit the formulating
hypothesis.
WHAT RESEARCH IS NOT
• Research isn’t information gathering:
– Gathering information from resources such books or magazines isn’t
research.
– No contribution to new knowledge.
• Research isn’t the transportation of facts:
– Merely transporting facts from one resource to another doesn’t constitute
research.
– No contribution to new knowledge although this might make existing
knowledge more accessible.

RESEARCH CHARACTERISTIC
• Originates with a question or problem.
• Requires clear articulation of goal.
• Follows a specific plan or procedure.
• Often divides main problem into sub problems.
• Guided by specific problem, question or hypothesis.
• Accepts certain critical assumptions.
• Requires collection and interpretation of data.
• Cyclical in nature.

RESEARCH DESIGN
• Research design is the conceptual structure within which research would be
conducted.
• It constitute the blueprint for the collection, measurement and analysis of data.
• Aids the researcher in the allocation of limited resources by posing crucial choices
in methodology.
• The design decisions happens to be in respect of
• what is study about
• why is study being made?
• Where will be study be carried out?
• What type of data is required?
• Where can the required data be found?

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• What period of time will the study include?

• What will be the sample design?
• What techniques of data collection be used?
• How will the data be analysed?
• In what style the report be prepared?
• In brief, research design must at least contain

– Clear statement of the research problem

– procedures and techniques to be used for gathering information
– The population to be studied
– Methods to be used in processing and analysing data

WHAT IS A RESEARCH PROBLEM

A research problem in general refers to some difficulty which a researcher experiences in

the context of either a theoretical or practical problem situation and wants to obtain a
solution for the same.
“What is the saving pattern and non- life insurance product in the rural market of
India”?

Think about problem in a broader sense and narrow down the research problem.
• In this form the question has a number of ambiguities such as:

– What is the present savings pattern in rural market of India?

– What is the potential of non life insurance product in this area?
– What they prefer a government or a private sector for non life insurance
product?

Rethinking and discussions about the problem may result in narrowing down the question
to:
- Which factors responsible for their such saving pattern?
- Why they prefer government than private sector for non life insurance product

SELECTION OF PROBLEM
• Before the final selection of a problem is done, a researcher must ask himself the
following questions:
– Whether he is well equipped in terms of his background to carry out the
research?
– Whether the study falls within the budget he can afford?
– Whether the necessary cooperation can be obtained from those who must
participate in research as subjects?
– The selection of a problem must be preceded by a preliminary study.
– If the answers to all these questions are in the affirmative, one may
become sure so far as the practicability of the study is concerned.

NECESSITY OF DEFINING THE PROBLEM

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• A PROBLEM CLEARLY STATED IS A PROBLEM HALF SOLVED.

• This statement signifies the need for defining a research problem.

• Helps to discriminate relevant data from the irrelevant ones.

• Enable the researcher to be on the track whereas an ill-defined problem may

create hurdles.

PROBLEM FOR IMPLEMENTATION OF RESEARCH

METHODOLOGY IS

“SAVINGS PATTERN AND NON-LIFE

INSURANCE IN RURAL INDIA”

Rural production and farm incomes in India are frequently affected by natural disasters
such as droughts, floods, cyclones, storms, landslides and earthquakes. Susceptibility of
rural to these disasters is compounded by the outbreak of epidemics and man-made
disasters such as fire, sale of spurious seeds, fertilizers and pesticides, price crashes etc.
All these events severely affect farmers through loss in production and farm income, and
they are beyond the control of the farmers. With the growing commercialization of rural,
the magnitude of loss due to unfavorable eventualities is increasing. The question is how
to protect farmers by minimizing such losses. For a section of farming community, the
minimum support prices for certain crops provide a measure of income stability. But most
of the crops and in most of the state’s MSP is not implemented. In recent times,
mechanisms like contract farming and future’s trading have been established which are
expected to provide some insurance against price fluctuations directly or indirectly. But,
Rural insurance is considered an important mechanism to effectively address the risk to
output and income resulting from various natural and manmade events. Rural Insurance is
a means of protecting the agriculturist against financial losses due to uncertainties that
may arise Rural losses arising from named or all unforeseen perils beyond their control
(AIC, 2008). Unfortunately, rural insurance in the country has not made much headway

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even though the need to protect Indian farmers from rural variability has been a
continuing concern of rural policy. According to the National Rural Policy 2000,
“Despite technological and economic advancements, the condition of farmers continues
to be unstable due to natural calamities and price fluctuations”. In some extreme cases,
these unfavourable events become one of the factors leading to farmers‟ suicides which
are now assuming serious proportions (Raju and Chand, 2007). Rural insurance is one
method by which farmers can stabilize farm income and investment and guard against
disastrous effect of losses due to natural hazards or low market prices. Crop insurance not
only stabilizes the farm income but also helps the farmers to initiate production activity
after a bad rural year. It cushions the shock of crop losses by providing farmers with a
minimum amount of protection. It spreads the crop losses over space and time and helps
farmers make more investments in rural. It forms an important component of safety-net
programmes as is being experienced in many developed countries like USA and Canada
as well as in the European Union. However, one need to keep in mind that crop insurance
should be part of overall risk management strategy. Insurance comes towards the end of
risk management process. Insurance is redistribution of cost of losses of few among
many, and cannot prevent economic loss.

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Objective of the study:

• Main objective is how to use research methodology appropriately for any kind
research
• Also this research assess the savings pattern in rural market in India
• And the usage of non-life insurance products and preferences in rural market in
India.

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Scope of the study:

The study covers the rural area near Sitapur i.e. rural area near Biswan. The study covers
the banking and non-life insurance sector in the rural areas. The study will cover different
people opting for different kind of saving pattern and non-life insurance as some people
are little literate in rural area and some are not.

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Research Methodology:
The research methodology will include following steps:

Step 1: Data collection

(a) Primary data

Sample Size: 50

It is proposed to collect primary data from homes of common people through proper
sampling

Sample Unit: Homes of relatives, friends living in nearby area

Sampling Instrument:
• Observation
• Personal Interview
• Telephonic Interview
• Internet feedback

Sample area: Biswan and Near by Area , Sitapur, Uttar Pradesh, India

(b) Secondary data

• Newspaper
• Magazines
• Journals
• Internet

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Limitations of the study:

The study may have some limitations which are listed below:
1. Primary data might not be too realistic and may suffer from personal biases of the
respondents
2. The study may suffer from financial constraints and hence the above limited
sample size.
3. Subjective nature of the study may affect its interpretation by different
individuals.

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Improving access for rural banking

Today, branches are the primary delivery channel in rural areas. Though there are 32,000
commercial bank branches in India, they cover less than 7% of total villages. Opening
more branches is not necessarily profitable as many pockets of rural areas do not have
business enough to justify an expensive branch channel. Therefore, to improve access in
rural areas, banks need to modify existing channels, introduce new channels and identify
innovative ways to integrate the two.

Modify Existing Channels

Fortunately there are a variety of options available for banks looking to modify their
existing channels. To reduce the costs imposed by branches, banks should consider the
option of sharing their branch infrastructure. This would not be too dissimilar to the
example of the telecom industry sharing network infrastructure or the fast food industry
sharing food courts in urban areas. Though infrastructure sharing may raise concerns over
client confidentiality and data leakage, in the long run banks will only benefit from such
collaboration.

ATMs are an effective channel which can deliver many of the services frequently used by
a branch customer. However, ATMs, in their current form, are not suitable for rural areas
as the literacy level and transaction ticket amount is too low. ATMs can, however, be
designed to meet the needs of rural customers. For example, ICICI Bank is working with
IIT Chennai to develop an ATM that has a biometric fingerprint login, accepts soiled
notes, and lower value denominations. In addition to modifying the design of the
machines, banks should also hold discussions with the RBI to allow an attendant to be
posted at ATMs. This will enhance the usability of ATMs.

Though phone banking and internet banking are cost-effective channels, given very low
tele-density and low internet penetration in rural areas, the ability to use these channels to

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reach the rural customer is low. However, phone and internet banking should be
considered once infrastructure and literacy levels improve in rural India. A business
correspondent could then run an e-kiosk to assist customers to transact over these
channels. For example, Centenary Bank in Uganda uses internet and phone banking to
provide bill payments, money transfers and loan repayments.

Business correspondents can be provided with point-of-sale (POS) functionality to allow

customers to deposit and withdraw cash from their accounts. Combining POS with a
smart card is one way to improve access. Brazil has successfully used banking
correspondents who use POS and card readers to provide current accounts, loans, and
insurance, accept bill payments, and perform other transactions.

Introduce New Channels

The RBI allows banks to appoint business correspondents and facilitators to be used as
intermediaries in providing banking services. NGOs, MFIs, Societies, Section 25
companies, registered NBFCs not accepting public deposits, and Post Offices can be
appointed as Business Correspondents. Business Correspondents can provide several
services which are not currently offered by SHGs and MFIs, including: (i) identification
of borrowers and fitment of activities; (ii) collection and preliminary processing of loan
applications including verification of primary information/data; (iii) creating awareness
about savings and other products and education and advice on managing money and debt
counseling; (iv) processing and submission of applications to banks; (v) promotion and
nurturing Self Help Groups/Joint Liability Groups; (vi) post-sanction monitoring; (vii)
monitoring and handholding of Self Help Groups/Joint Liability Groups/Credit
Groups/others; and (viii) follow-up for recovery; (ix) disbursal of small value credit, (x)
recovery of principal/collection of interest (xi) collection of small value deposits (xii) sale
of micro-insurance/ mutual fund products/ pension products/ other third-party products
and (xiii) receipt and delivery of small value remittances/ other payment instruments.

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The introduction of Business Correspondents may face some challenges from labor
unions. However, Diamond believes that there may be some options to address the
concerns of the current workforce while using Business Correspondents to capture more
value from rural customers.

Caixa Economica, a state-owned bank in Brazil, manages the country’s lottery network
and distributes government benefits. To increase the access of its services, Caixa
extensively utilizes the Banking Correspondent channel, with 14,000 banking
correspondents covering all of Brazil’s 5,500 municipalities. In less than 2 years, Caixa
opened about 2.8 million new accounts and estimates that 40% of its banking transactions
are handled through the banking correspondent channel.

Satellite offices are a cost-effective alternative to branches. These offices can be

established at fixed premises in villages and are controlled and operated from a base
branch located at a block headquarters. All types of banking transactions may be
conducted at these offices. Banks have, however, not used this channel actively, despite
the argument that this channel is relatively less expensive, as it can draw personnel from
the main branch and can remain open for just two days a week. This channel, therefore, is
appropriate in blocks and districts which are densely populated. In the urban areas, most
Indian banks opt for an extension counter where the business does not justify a full-fl
edged branch. Similarly, satellite branches can cater to rural areas which do not justify a
large branch.

Where banks do not find it economical to open full-fl edged branches of satellite offices,
mobile offices may be more appropriate. Mobile offices extend banking facilities through
a well-protected truck or van. The mobile unit visits villages on specified days/ hours.
The mobile office would be affiliated with a branch of the bank, and serve areas which
have a large concentration of villages. This will not be dissimilar to the mobile ATMs
implemented by some of the Indian banks in the urban areas.

Determine the Combination of Channels

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There is no one right channel or solution to improve access in rural areas. Banks have to
evaluate the trade-offs between those channels that are most convenient to customers and
those that are the most profitable. Banks are not comfortable opening new rural branches
because many of those that already exist are unprofitable. Therefore, determining the
right combination of channels is critical to improving access in profitable ways. An
innovative approach to improving access will consider a combination of these channels.
For example:

• Branches and Satellite Branches— In addition to providing regular banking operations,

providing backend support to manage and audit the operations of business
correspondents.
• A low-cost, custom-made ATM— Managed by a business correspondent to bring down
the operating cost and scale the channel.
• An e-kiosk—Managed by a business correspondent with internet banking, ATM and
POS terminal in relatively large rural areas.
• A business correspondent—Using manual ledgers or POS/Palmtop to act as deposit
collector and remitting agent in smaller rural areas.

While this list is not exhaustive, it highlights the need for creative solutions that apply the
right channel to the right market and transaction. In South Africa, Capitec has combined
convenient branches along transportation routes (for example, train and bus stations, and
taxi stops). In addition, it has rolled-out debit cards and automatic teller machines across
200 of these branches to stimulate savings among low-income earners. Between February
and August 2007, the number of customers jumped from around 30,000 to more than
90,000.

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Non-life Insurance in Rural Area:

 CATTLE INSURANCE
Cattle Insurance was governed under Market Agreement as devised by GIC and the rates,
terms, conditions etc. all were applicable to all the four Insurance Companies. However,
w.e.f May 2003, it is no longer under Market Agreement.
This policy covers indigenous cross bred and exotic cattle owned by private owners,
various financial institutions, dairy farms, cooperatives, corporate dairies etc. The word
cattle includes Milch, Cows and Buffaloes calves and heifers, stud bulls, bullocks and he-
buffaloes and mithuns. Age group is specified for all the animals.

 SHEEP AND GOAT INSURANCE

This scheme is also governed under Market Agreement. Policy provides indemnity to
indigenous cross-bred and exotic sheep and goat against death due to accident (including
fire, lightening, flood, cyclone, famine, strike, riot and civil commotion) and disease.
Earthquake and landslide
covers are also provided. Standard and common exclusions apply as per Cattle Policy.
Animals are identified by means of small brass buttons ear tags. Animals under scheme
category enjoy certain benefits in premium rate and claim

 CAMEL INSURANCE
The camels are covered against death due to accident or disease as per Standard Cattle
Insurance Policy. The maximum S.I. is restricted to Rs.3000/-.

 PIG INSURANCE
All indigenous, cross-bred and exotic pigs are covered however under scheme category
exotic animals are not covered. The age group is from 4 months to 3 years. The coverage

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is against death due to accident or disease.Exclusions as per Cattle Policy apply here also.
Permanent total disablement, breeding and furrowing risks are not covered. Vaccination
in applicable diseases is compulsory. Evaluation depends upon the age of the animal.
Animals are identified by means of small brass buttons ear tags.

 HORSE, MULE, DONKEY, PONY, YAK

 INSURANCE
The Coverage is as per Standard Cattle Policy. However the age group is restricted to 2
years to 8 years.

 POULTRY INSURANCE
This is also governed by Market Agreement, amongst all the four subsidiary companies.
The policy shall provide indemnity against death of birds due to accident (including fire,
lightning, flood, cyclone, strike, riot and civil commotion and terrorism) or diseases
contracted or occurring during the period of insurance. The word Poultry includes layers,
broilers and hatchery birds, which are exotic and cross-bred.
Indigenous and non-descript birds will not be insured

 DUCK INSURANCE APPLICABILITY

i. All types of Migratory and Non-migratory birds in India.

ii. Duck farms consisting of minimum of 100 ducks for non-
IRDP and 50 ducks for IRDP and other Government
subsidized schemes.
Note: All birds in Duckery Farm should be insured Duck Insurance Scheme shall provide
indemnity against death of ducks due to accident including lightning, flood, cyclone,
famine, riot and strike, civil commotion or diseases contracted or occurring during the
period of insurance.

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 ELEPHANT INSURANCE
This scheme is applicable to elephants used for commercial and religious purposes. This
policy covers death due to disease or accident and the coverage is given from 5 to 60
years of age. Identification is done from the records of forest department of the State
Govt. and also by measuring the trunk of each elephant. Valuation of the elephant varies
from breed to breed, area to area and time to time. Exclusions are as per Cattle Market
agreement and some specific exclusion are as per policy schedule. Company indemnifies
the insured only 80% of market value or sum insured whichever is less.

 FAILED WELL INSURANCE

The scheme is applicable only to those wells financed by banks where re-financing by
NABARD is involved and in other case where wells are financed by a nationalized bank
but not re-financed by NABARD, approval of Head Office is must .Sum Insured,
premium, perils covered and exclusions are different in both the schemes and as per
policy schedule

 HONEYBEE INSURANCE SCHEME

This policy is to cover beehives and/or colonies belonging to individual, cooperative
societies and those sponsored and subsidized under various projects of respective State
and Central Government against total loss damage to beehives and/or bee colonies as a
result of an accident caused by fire, flood, inundation, storm, tempest, cyclone, hurricane
and tornado. This cover is only for Indian Honeybee and Italian Honeybee. Sum insured
depends upon the cost of Beehives as given by the respective state KVIC Board or

 Crop insurance

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Crop insurance is purchased by Rural producers, including farmers, ranchers, and others
to protect themselves against either the loss of their crops due to natural disasters, such
as hail, drought, and floods, or the loss of revenue due to declines in the prices of Rural
commodities. The two general categories of crop insurance are called crop-yield
insurance and crop-revenue insurance.

 Crop-hail insurance is generally available from private insurers (in

countries with private sectors) because hail is a narrow peril that occurs in a
limited place and its accumulated losses tend not to overwhelm the capital
reserves of private insurers. The earliest crop-hail programs were begun by
farmers cooperatives in France and Germany in the 1820s.

 Multi-peril crop insurance (MPCI): covers the broad perils of drought,

flood, insects, disease, etc., which may affect many insureds at the same time
and present the insurer with excessive losses. To make this class of insurance,
the perils are often bundled together in a single policy, called a multi-peril
crop insurance (MPCI) policy. MPCI coverage is usually offered by a
government insurer and premiums are usually partially subsidized by the
government. The earliest MPCI program was first implemented by the Federal
Crop Insurance Corporation (FCIC), an agency of the U.S. Department of
Rural, in 1938. The FCIC program has been managed by the Risk
Management Agency (RMA), also a U.S. Department of Rural agency, since
1996.

 Crop-revenue insurance: is a combination of crop-yield insurance and

price insurance. For example, RMA establishes crop-revenue insurance
guarantees on corn by multiplying each farmer's corn-yield guarantee, which is
based on the farmer's own production history, times the harvest-time futures
price discovered at a commodity exchange before the policy is sold and the crop
planted. There is a single guarantee for a certain number of dollars. The policy
pays an indemnity if the combination of the actual yield and the cash settlement
price in the futures market is less than the guarantee. In the United States, the
program is called Crop Revenue Coverage.

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Data Analysis and Interpretation:

Among 50 sample size in rural area it was found that
Which bank they use for Savings account?
Name of the Bank Number of people having account
Bhartiya Gramin Bank 43
State Bank of India 7

Which Bank?
No. of people

50
40
30
Series1
20
10
0
Bhartiya Gramin Bank State Bank of India
Name of the Banks

Which Non-life insurance (General Insurance) Company is being used?

Name of Non – Life Insurance Number of people using the non-life
insurance
Bhartiya Gramin Bank 23
Oriental General Insurance 9
United India General Insurance 11
Reliance General Insurance 7

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Non-life Insurance

No. of people 25
20
15
Series1
10
5
0
Bhartiya Oriental GI United India Reliance GI
Gramin Bank GI
General Insurers

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Major Findings:
1. Rural people do not have many options for savings. Everybody relies on the
Gramin Bank for savings account. Moreover they are not literate.
2. Only literate people present in rural areas open their bank accounts in State Bank
of India in city branch.
3. For non-life insurance generally rural people rely on Government banks i.e.
Gramin Banks. Others who are literate take help of some other insurers.
4. Crop Insurance and other major insurance is taken care by Government itself so
rural people never get to know about from which authority they are getting their
insurance done.
5. There are lot of opportunities for private as well as public sector to explore the
rural market.

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Conclusion and Recommendations:

Thus, the report clearly finds out the trend prevailing related to the savings pattern and
usage of non-life insurance. Following are the recommendations:
1. Government and private sector must explore the rural sector. There are lot more
avenues for business in the rural areas
2. Literacy still is very less in rural areas of North. Educational institutes much come
forward to give proper education to the rural areas. Thus increasing the business.
3. Private sector should properly market their products in rural area. Many areas
related to finance are untapped.

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Bibliography:
• Rural Marketing: Indian Perspective By Awadhesh Kumar Singh
• Rural Marketing: Targeting the Non-urban Consumer By Sanal Kumar
Velayudhan

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Annexure – I

Schedule/Questionnaire
1) Name: ___________________________________________________________

2) Gender: Male Female

3) Occupation: ____________________________________

4) Qualification: (Tick Appropriate Column)

Less than High High School Intermediate Graduate Post Graduate

School

5) Income: in Indian Rupees ( )

Less than 50,000 to 1,00,000 to 2,0,000 to 3,00,000 and
50000 1,00,000 2,00,000 3,00,000 above

6) Name of the Bank where they have account: (1 or more than 1)

___________________________________________________________
___________________________________________________________
___________________________________________________________
___________________________________________________________

7) Name of non-life insurance company (where all non-life insurance is being done)
___________________________________________________________
___________________________________________________________
___________________________________________________________
___________________________________________________________

8) Preference for non-life insurance and banking: (Tick whichever is applicable)

Government

Private

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