1.

INTRODUCTION TO THE STUDY

Financial literacy is the ability to understand finance. More specifically, it refers to the set of
skills and knowledge that allows an individual to make informed and effective decisions through
their understanding of finances. Raising interest in personal finance is now a focus of state-run
programs in countries including Australia, Japan, the United States and the UK. Financial
inclusion is the delivery of financial services at affordable costs to sections of disadvantaged and
low income segments of society. It is argued that as banking services are in the nature of public
good, it is essential that availability of banking and payment services to the entire population
without discrimination is the prime objective of public policy. The term "financial inclusion" has
gained importance since the early 2000s, and is a result of findings about financial exclusion and
its direct correlation to poverty. Financial inclusion is now a common objective for many central
banks among the developing nations. The Reserve Bank of India has set up a commission (Khan
Commission) in 2004 to look into financial inclusion and the recommendations of the
commission were incorporated into the mid-term review of the policy (2005–06). In the report
RBI exhorted the banks with a view of achieving greater financial inclusion to make available a
basic "no-frills" banking account. In India, Financial Inclusion first featured in 2005, when it was
introduced, that, too, from a pilot project in UT of Pondicherry, by K C Chakraborthy, the
chairman of Indian Bank. Mangalam Village became the first village in India where all
households were provided banking facilities. In addition to this KYC (Know your Customer)
norms were relaxed for people intending to open accounts with annual deposits of less than Rs.
50,000. General Credit Cards (GCC) were issued to the poor and the disadvantaged with a view
to help them access easy credit. In January 2006, the Reserve Bank permitted commercial banks
to make use of the services of non-governmental organizations (NGOs/SHGs), micro-finance
institutions and other civil society organizations as intermediaries for providing financial and
banking services. (Recently financial inclusion plan will be an important criteria for getting new
bank license in private sector) These intermediaries could be used as business facilitators (BF) or
business correspondents (BC) by commercial banks. The bank asked the commercial banks in
different regions to start a 100% financial inclusion campaign on a pilot basis. As a result of the
campaign states or U.T.s like Puducherry , Himachal Pradesh and Kerala have announced 100%
financial inclusion in all their districts. Reserve Bank of India’s vision for 2020 is to open nearly
600 million new customers' accounts and service them through a variety of channels by

1
leveraging on IT. However, illiteracy and the low income savings and lack of bank branches in
rural areas continue to be a road block to financial inclusion in many states. Apart from this there
are certain in Current model which is followed. There is inadequate legal and financial structure.
India, being a mostly agrarian economy, hardly has schemes which lend for agriculture. Along
with microfinance we need to focus on Micro insurance too. Financial Literacy can broadly be
defined as the capacity to have familiarity with and understanding of financial market products,
especially rewards and risks in order to make informed choices. The article covers the concept of
Financial Literacy, its focus i.e. individual, different Global Practices on Financial Literacy; the
Indian Realities-covering the position in India, why do we need Financial Literacy; Possible
Themes -issues that could be addressed effectively through a financial literacy and which one we
should use. In the end It covers possible approaches to Financial Inclusion; role of RBI and
banks. The article concludes with importance of objective and focus. Financial inclusion is not a
onetime effort; it is an ongoing process. It is a huge project which requires concerted and team
efforts from all the stake holders – the Government, financial institutions, the regulators,
the private sector and the community at large. From the sporadic attempts of today dispersed
across the nation, it should gather momentum and grow in geometric proportions and develop
into a focused and effective movement. If this is to be achieved, it requires the passionate
involvement, dedication and commitment of all stake holders. It requires a major mindset
change in the minds of every individual involved – banker, bureaucrat, regulator et al, and,
therefore, creating awareness at all levels. At the same time, the role of technology in the whole
scenario cannot be undermined either. It has to be admitted that today, more than even before,
technology plays a vital role in bringing about integration in society of all social and economic
classes. Accessibility, affability, appropriateness and benefits determine how deep financial
inclusion penetrates the social fabric of the village. Financial inclusion can empower even the
poorest person and bring about a dramatic change in his fate.

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1.2 OBJECTIVES OF THE STUDY
PRIMARY OBJECTIVE:

 To analysis Financial literacy of people in Chennai and to make Financial inclusion to

capital market

SECONDARY OBJECTIVE:

 To analysis Indian capital market potential in International level

 To find modern reform for acquire the fund for corporate from public in India
 To test awareness of financial product on general public
 Retailing investment involvement in capital market in India
 To analysis Indian economy saving tendency of public

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1.3 SCOPE AND SIGNIFICANCE:

This research is focus on Indian economy elaboration of capital market to general public on
awareness about capital market and people involved with more rationale and strategically on
Indian share market with knowledge of risk and return. This research help to encourage of
retailing investment and make more dynamic in Indian stock .After modern reforms by
companies to public investment reduce the cost of capital (expenses for acquiring funds for
company).This research help to analysis potential of Indian capital market on International level.
Encourage the investor to Indian stock market. This study conclude modern fund acquiring
strategic Since the importance of having both personal financial literacy skills and knowledge is
expected to grow financial literacy will continue to be a prominent research topic both in India
and overseas and it is predicted that the focus will lean towards the implementation and
evaluation of strategies to improve the financial literacy levels of certain cohorts of populations
where a lack of financial knowledge and skill has been identified by previous research. Although
the above studies have identified segments of the population that have poor financial literacy,
there are significant limitations, suggesting further areas of research. All the studies showed that
individuals with higher education levels, or those students with business majors as opposed to
other majors, generally have higher levels of financial literacy. However, no study investigated
or makes comparisons between the educational details of individuals such as major areas of
study, current year of study or performance, nor has any attempt being made to make
comparisons between students from different educational institutions. One area of research could
then focus on gathering detailed information on higher education courses studied, make
comparisons between students across different years of study and also make comparisons
between different educational institutions, which could identify any institution that has superior
methods of delivering financial education to its students. Because financial literacy has become
increasingly important for the economic well being of the nation’s future, it is important that it
can be explicitly linked with financial behavior, and hence financial success and sustainability.
No financial literacy study has yet achieved this. Another area of research could then focus on
the components of financial literacy and determine which are the most and least critical to
financial success and sustainability. Several studies revealed that personal financial skills and
knowledge are acquired mostly through ‘trial and error’, but no research to date has actually

4
attempted to investigate what types of financial experiences and characteristics have the most
influence on an individual’s personal financial literacy or competence. Hence another area of

Research could focus on gathering extensive details of financial experience and characteristics,
which may prove to be important influential variables in modeling financial literacy among
general populations. Finally, further research could focus on the actual measurement of financial
literacy. Extensive research and testing is needed to determine consistency and more realistic
benchmarks for the ongoing measurement of financial literacy.

1.4 RESEARCH METHODOLOGY

Research:

‘Research’ is a systematic and scientific activity to achieve the truth. Research includes
procedures of collecting data, analysis the data and finding the conclusion or truth.

Research Methodology:

‘Research Methodology’s a way of systematically solves the research problem. It is a

science of studying how the research is done successfully.

RESEARCH DESIGN

‘Research Design’ means the exact nature of Research work in a systematic manner. It
involves the information about the research work in view of the framework of the study,
availability of various data, observations, analysis, sampling etc.,

5
Descriptive Research Design:

The researcher has followed the descriptive research by using primary and secondary data
collections.

Descriptive studies try to discover answers to the questions who, what, when, where and
sometimes how the researcher attempts to describe or define a subject, often by creating profile
of a group of problems. People or events such studies may involve the collection of data and the
creation of distribution of the number of times the researcher observes a single event or
chararacteristics or they may involve relating the interaction of two or more variables.

SAMPLING:

Once the Researcher has clearly specified the problem and developed an appropriate design and
data collection instruments, the next step in research process is to select those elements from
which the information will be collected. Following sampling methods may collect the required
information in any scientific enquiry.

SAMPLE SIZE:

The research is need to conduced in survey like census with total population. But the time
constrain the sample size of my project is limited to 100 people only.

Methods Sample:

The researcher has followed Simple Random sampling method in this project.

SIMPLE RANDOM SAMPLING:

A subset of a statistical population in which each member of the subset has an equal
probability of being chosen. A simple random sample is meant to be an unbiased representation
of a group.

6
1.5 DATA COLLECTION TOOLS:

Primary Data:

The Research collect the primary data by using questionnaire.

Secondary Data:

Secondary data are past research data, census, literacy survey on public , SEBI
regulation, financial product information guides

1.6 STATISTICAL TOOLS OF TECHNIQUES:

1. Financial literacy ‘s model

2. Percentage Method
3. Weighted average Method
4. Estimation

1.6.1 Financial literacy Model

We are stimulating Financial Literacy Model for analyzing Literacy level
for sample by considering various financial variables from the questionnaire. For analyzing
financial literacy we consider 6 variables as subset on this Model:

 Banking
 Insurance
 Loan
 Mutual fund
 Shares
 Debentures &Bonds

7
Banking

We consider as Banking are most important factor as in financial literacy Model. Banking
is considered as saving tendency of people. On this we consider 9 subsets for banking variable.
We make weightage of these subsets on correlation and dependency level of these 9 variables
knowledge level

 Saving account
 Fixed deposit
 Recurring deposit
 Current account
 Mobile banking
 Online banking
 RTGS
 Debit and credit card
 Standing instruction on payment & receivables

Insurance

Insurance is a form of risk management primarily used to hedge against the risk of a
contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from
one entity to another, in exchange for payment. An insurer is a company selling the insurance; an
insured, or policyholder, is the person or entity buying the insurance policy. The insurance rate is
a factor used to determine the amount to be charged for a certain amount of insurance coverage,
called the premium. Risk management, the practice of appraising and controlling risk, has
evolved as a discrete field of study and practice. On this we consider 6 subsets for Insurance
variable. We make weightage of these subsets on correlation and dependency level of these 6
variables knowledge level on:

8
  Life insurance
 Health or medical insurance
 Group insurance
 Vehicle insurance
 Retirement plan
 Tax benefit

Loan
A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial
assets over time, between the lender and the borrower. In a loan, the borrower initially receives
or borrows an amount of money, called the principal, from the lender, and is obligated to pay
back or repay an equal amount of money to the lender at a later time. Typically, the money is
paid back in regular installments, or partial repayments; in an annuity, each installment is the
same amount. The loan is generally provided at a cost, referred to as interest on the debt, which
provides an incentive for the lender to engage in the loan. In a legal loan, each of these
obligations and restrictions is enforced by contract, which can also place the borrower under
additional restrictions known as loan covenants. Although this article focuses on monetary loans,
in practice any material object might be lent. On this we consider 3 subsets for Loan variable.
We make weightage of these subsets on Approach level of these variables of the sample.
The variable are
 Urgent approach of samples
 Shortage funds approach of samples
 Capital Borrowing approach of samples

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Mutual fund

A mutual fund is a professionally managed type of collective investment that pools money from
many investors to buy stocks, bonds, short-term money market instruments, and/or other
securities. On this we consider 4 subsets for Mutual Funds variable. We make weightage of these
subsets on Awareness level of these Mutual Funds of the sample.

The variable are

 Aware of Mutual Funds
 Tax benefits of Mutual Funds
 Pension plan on Mutual Funds
 SIP system on Mutual Funds

Shares

A joint stock company divides its capital into units of equal denomination. Each unit is called a
share. These units are offered for sale to raise capital. This is termed as issuing shares. A person
who buys share/shares of the company is called a shareholder, and by acquiring share or shares
in the company becomes one of the owners of the company. Thus, a share is an indivisible unit
of capital. It expresses the proprietary relationship between the company and the shareholder.
The denominated value of a share is its face value: the total capital of a company is divided into
number of shares. On this Share variable we consider awareness as weightage of this share
Variable

Debentures &Bonds

A debenture is a document that either creates a debt or acknowledges it. In corporate finance, the
term is used for a medium- to long-term debt instrument used by large companies to borrow
money. In some countries the term is used interchangeably with bond, loan stock or note.
Debentures are generally freely transferable by the debenture holder. Debenture holders have no

10
rights to vote in the company's general meetings of shareholders, but they may have separate
meetings or votes e.g. on changes to the rights attached to the debentures. The interest paid to
them is a charge against profit in the company's financial statements. On this we consider 5
subsets for Bonds variable. We make weightage of these subsets on Awareness level of these
Bonds of the sample

The variable are

 Debentures awareness
 Gilt- market Awareness
 Govt-bond Awareness
 No Risk debts Awareness
 Tax Benefits of debts

Financial literacy Model

In financial literacy model, 6 variables considering awareness for Financial Literacy Model On
this we are treating all 6 variables as equal weightage for finalizing financial literacy level of
sample. On these a sample getting more than 60% consider as Financial Literacy person or less
than 60% consider as not have Financial Literacy

Financial Literacy = {0.167(Banking) + 0.167(Insurance) + 0.167(Loan) +

0.167(Mutual fund) + 0.167(Shares) +0.167(Bonds) *1/6 variable =0.167}

In this sample getting percentage depend on their awareness of this financial services .On this
we make financial literacy level of individual.

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1.6.2 PERCENTAGE METHOD:

Percentage refers to a special kind of ratio percentages are used in making comparing
between expectations, awareness and satisfaction with various other factors

Observed Data

Percentage= --------------------- x 100

Sample size

1.6.3 WEIGHTED AVERAGE

The average of a quantity is calculated after summing up all the value of that quantity and then
dividing it by the total number. A weighted average is calculated by taking into consideration,
additional conditions associated with each of the values for the data. That is, some values are
multiplied by an extra multiplicative factor as they occur more often. Unlike an average value, in
which all the values of a quantity contribute equally, in a weighted average, they contribute
unequally. Some values of the particular quantity contribute more than others and that is why it
is called Weighted Average. Weighted average calculation is an important tool in descriptive
statistics and mathematics. If all quantities are weighted equally or contribute equally, while
calculating the weighted average, it is equal to the arithmetic mean. It comes in handy when you
have to combine the averages of two different sets of values and get an overall average value.

Here is the general formula for weighted average calculation:

Weighted Average = (x1 w1 + x2 w2. .+ xn wn) / (w1 + w2. . + wn) = Σi = 1 to n (xi wi) / Σi = 1 to n wi

Here 'xi' are values of the quantity whose weighted average is being calculated, while 'wi' are the
values of the corresponding weights. So, for calculating weighted average, you must multiply
values of the quantity with their corresponding weights, add all them up and divide them by the
sum of the weights. Let me explain weighted average calculation through an example in the next
section.

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1.6.4 ESTIMATION

Estimation theory is a branch of statistics and signal processing that deals with estimating the
values of parameters based on measured/empirical data that has a random component. The
parameters describe an underlying physical setting in such a way that the value of the parameters
affects the distribution of the measured data. An estimator attempts to approximate the unknown
parameters using the measurements.

1.7 LIMITATION OF THE STUDY

The project is “An Empirical analysis on Financial Opportunities for Indian Corporate based on
Financial Literacy in Chennai”

 Time limitation, its main constrain for this study

 Population size is very big , but due to time limit of study , we only consider 100 sample
from bonanza portfolio ltd investor clients
 This research need to conduct like a census calculation, but we conduct on only with
samples
 This study is limited with Chennai city
 Some of respondents are not cooperative for research ,it’s also effect in the data collected
 Financial literacy is new venture topic for India M.Com students. so very hard to make
literature review and pivot study
 For making the financial literacy model, it’s very difficult in level of study and making
with statistical tools for designing financial literacy model for this study
 Real sampling techniques is not used in this study , because of time constrain of this
study .we used 100 samples as random sampling on investor

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 CHAPTER 2

REVIEW OF
LITERATURE

14
2.1 US research
One of the earliest studies on financial literacy in the US was a national survey conducted by
Cutler (1997) who concluded that the American public was not well informed about financial
matters, in particular, insurance, social security and health care. Mandell (1997), Huddleston-
Casas et al (1999), Williams-Harold (1999), the National Council on Economic Education
(NCEE, 2005) and the Jump$tart Coalition (2005, 2006) investigated financial literacy levels
among US high school students and concluded that they demonstrated a lack of both personal
financial skills and knowledge. Studies have also shown that university students in the US have
inadequate knowledge on personal finance (Chen and Volpe, 1998; Volpe, Chen and Pavlicko,
1996). Chen and Volpe (1998) conducted a financial literacy survey involving 924 college
students from thirteen colleges and that the overall mean percentage of correct scores was just
52.87 percent. The survey examined literacy across four main areas, investigated the relationship
between literacy and the student characteristics, and analysed the impact of literacy on student
opinions and decisions. They found that those students with a non business major and who were
female, in a lower class rank, under the age of 30 and with little work experience had lower
levels of knowledge. The study indicated that these students with less knowledge were more
likely to hold wrong opinions and make incorrect decisions. Chen and Volpe (1998) used
analysis of variance techniques to demonstrate the variation in the levels of financial literacy
among subgroups of students. In addition, logistic regression models were used to examine the
financial literacy levels of students across different demographic characteristics. This method of
analysis was adopted by other researchers, including Beal and Delpachitra (2003). Joo and
Garman (1998) investigated the relationship between personal financial wellness and worker job
productivity and found that personal financial wellness affects worker job productivity which
suggests that the potential effects of workplace financial education are positive for both workers
and employers. A recent study on the financial literacy of US workers found that they too, had
inadequate financial skills and knowledge (Chen and Volpe, 2005). The results showed that
participants ranked all of the surveyed personal finance topics as important and that they
believed that employees did not have adequate knowledge about these topics. Retirement
planning was ranked as being the most important topic, followed by personal finance basics,
insurance, company benefit plans, taxes, investments and estate planning. Results of the survey
also showed that respondents believed that outsourcing to outside financial planners was the

15
most effective approach to educating employees on personal finance. Chen and Volpe (2005)
asserted that importance of personal financial literacy in workplace results because of the
national debate about social security reform, with the President’s call to allow workers to invest
in stock and bond funds in their private accounts representing a fundamental change in the social
security system. Chen and Volpe argued that for employees to be ‘better off’, they must be
financially knowledgeable in order to make informed investment decisions and take advantage of
investment opportunities.

2.2 UK research

Schagen and Lines (1996) conducted a financial literacy survey of the general population but
with a particular focus on four groups: young people in work or training, students in higher
education living away from home, single parents and families living in subsidized housing. The
survey results indicated that most participants were confident in their financial dealings. The
notable exceptions were single parents and students, which is particularly significant in the light
of the rising debt levels of university students in the UK (Graduate Prospects, 2005). The Adult
Financial Literacy Advisory Group (AdFLAG) undertook a study to determine “how to promote
better access to financial education to young people and adults” (AdFLAG, 2000, p. 10). They
concluded that the need for financial literacy would continue to grow because individuals were
expected to become more self-reliant. Added to this were the difficulties arising from changing
work patterns, an ageing population, less government involvement and increasingly complex
financial products. AdFLAG recommended that short term financial literacy education should be
built around education, employment, housing, financial services and communication, with
particular focus on needy population sectors such as older people, young people, sole parents,
ethnic minorities, people with disabilities and people living in social housing.

2.3 The Beal and Delpachitra Study (2002)

The first Australian financial literacy surveys was conducted on a sample of first-year students
from the University of Southern Queensland across five faculties and tested five main skill areas:
basic concepts, markets and instruments of the financial markets, planning, analysis and decision

16
making, and insurance. The major analytical method was logistic regression modelling with a
total of ten independent variables collected from the survey questions. A dichotomous dependant
variable was defined by classifying respondents into two groups, high achievers and low
achievers. Analysis of the full model showed that students with higher financial literacy scores
were more likely to be male, have greater work experience, have a higher income and have a
lower aggregate risk preference. While the study showed that students with higher general
financial knowledge and skills were more likely to be studying business, be male, work in a more
highly skilled occupation and have more work experience, the researchers reached the overall
conclusion that university students were not skilled, nor knowledgeable in financial matters and
that this would tend to impact negatively on their future lives through incompetent financial
management (Beal and Delpachitra, 2003).

2.4 Financial Literacy Research: Current Literature and Future Opportunities

The need for financial literacy has become increasingly significant with the deregulation of
financial markets and the easier access to credit; the ready issue of credit cards; the rapid growth
in marketing financial products and the Government’s encouragement for its citizens to take
more self-responsibility for their retirement incomes. This paper reviews, compares and analyses
studies conducted in Australia, the United States and the United Kingdom to determine areas of
both commonality and inconsistency. As a result of this analysis, the paper presents recurrent
themes that could be extended, together with potential new areas for financial literacy research.

Marcolin, S. and Abraham, A.: Financial Literacy Research: Current Literature and
Future Opportunities 2006.
http://ro.uow.edu.au/commpapers/223

17
2.5 Empirical Evidence on Indian Stock Market Efficiency in Context of the
Global Financial Crisis

The study of stock market efficiency has been the objective of many researches across the globe
since the last few decades. But the evidence is mixed on whether the stock market is efficient.
While some studies conclude that the stock markets are efficient, other studies cast doubt on this
conclusion. Stock market efficiency suggests that stock prices incorporate all relevant
information when that information is readily available and widely disseminated, which implies
that there is no systematic way to exploit trading opportunities and acquire excess profits. In
other words, stock prices follow a random walk which holds that stock price changes are
independent of one another. This paper is an attempt to provide some empirical evidence on the
efficiency of Indian stock market in the context of recent global financial crisis. The study by
employing the unit root tests on the sample of daily stock returns, presents the evidence of weak
form market inefficiency in India. The study further examines the mean reversion implication of
market inefficiency and suggests the existence of mean reversion illusion in India.

Financial literacy key to financial inclusion:

Pranab Mukherjee
http://beta.thehindu.com/business/article267686.ece?homepage=true

2.6 Financial Inclusion and Financial Literacy: Andhra Bank’s Initiatives

Future Plans of Andhra Bank

1. To extend the smart card scheme to all our lead districts viz. Srikakulam, Guntur, East
Godavari, West Godavari, Ganjam and Gajapathi districts in First Phase and to cover the
remaining districts in Andhra Pradesh.
2. To give loans through smart cards to the farmers and other weaker sections.
3. To install more biometric ATMs in rural and semi urban areas.
4. To open exclusive Micro Finance branches
5. To introduce “Mobile” bio-metric ATMs.

18
6. To open Financial Literacy centers in all six Lead Districts.
7. To finance number of Urban Self Help Groups.
8. To implement total financial inclusion project in selected slums in urban areas.
9. To cover all SHGs under Micro Insurance.
10. To cover all Tenant Farmers in service area of the bank through Joint Liability Groups
(JLGs) /Rythu Mithra Groups (RMGs in AP).
11. To develop ‘Model’ villages in each of 22 districts in Andhra Pradesh

2.7 GAPS IN THE FINANCIAL LITERACY RESEARCH

Studies of financial literacy targeting university students have shown that, in general, students
with a business major are more financially literate than other students. However, no attempt has
been made to track financial knowledge and skills as students move through to the completion of
their studies. Furthermore, no attempt has been made to compare financial literacy levels of
students from different disciplines. All studies conducted so far simply use a dichotomous
variable to represent major area of study, but it may be valuable to examine exactly what
students are studying and to make comparisons against several disciplines and years of study.
Financial literacy studies focusing on general populations show that people with higher levels of
education generally have higher levels of financial literacy, although there has been no
information about the type of educational attainment, the education institution or the level of
performance. Several financial characteristics have been included in most studies, although little
details are known about their structure and complexity and whether this contributes differently to
financial literacy acquired over time. A number of studies revealed that personal financial skills
and knowledge are acquired mostly through ‘trial and error’, hence it could be that extensive
details of financial experience and characteristics influence financial literacy levels and would
prove to be important covariates in modeling financial literacy among general populations.
Furthermore, there has been no attempt in the current research to explicitly link financial literacy
with financial behavior. It is possible that certain aspects of financial literacy are more or less
significant in an economic sense in determining good or bad financial behavior, and
consequently, high or low levels of financial success and sustainability of such success. It would
be useful to determine specific components of financial literacy, that when combined with

19
certain demographic characteristics, have maximal influence on the level of financial success.
Studies have attempted to reveal the main sources of financial knowledge, although details of
obtaining such information have been overlooked. For example, a respondent may indicate that
their main source of financial knowledge is school, but it is likely that financial knowledge is
gained from many other significant sources, both direct and indirect. In general, studies have
shown that individuals with a higher level of education have higher levels of financial literacy;
although all studies conducted specifically targeting university students have actually revealed
that these students have low levels of financial literacy. For example, Beal and Delpachitra
(2003) conducted the first and only study in Australia targeting first-year university students, and
found that financial literacy was poor. Similar results were found in the US (Chen and Volpe,
1998) and the UK (Schagen and Lines, 1996) indicating that while financial literacy was low
across the entire population, higher educated individuals were expected to have better financial
skills and knowledge than those who were less educated. These findings raise some concern
about the actual measurement of financial literacy. Although definitions of financial literacy
appear to be consistent and agreeable across all nations, little focus has been given to
implementing congruency in the actual measurement of financial literacy. Further research and
testing is needed to determine more realistic benchmarks for the ongoing measurement of
financial literacy. This will also help to determine the validity of implementing educational
strategies in order to improve financial literacy in schools, universities, colleges and workplaces.

20
 CHAPTER 3

COMPANY
PROFILE

21
3.1 COMPANY PROFILE

Bonanza a leading Financial Services & Brokerage House working diligently since 1994 can be
described in a single word as a "Financial Powerhouse". Bonanza developed into one of the
largest financial services and broking house in India within a short span of time. Today, Bonanza
is the fastest growing financial service with 5 mega group companies under it. With diligent
effort, acknowledge industry leadership and experience, Bonanza has spread its trustworthy
tentacles all over the country with more than 1784 outlets spread across 560 cities.

It provides an extensive smorgasbord of services in equity, commodities, currency derivatives,

wealth management, distribution of third party products etc. Keeping in par with the modern
tech-savvy world , Bonanza makes an integrated and innovative use of technology; it also
enables its clients to trade online as well as offline and the strategic tie-ups with the latest
technology partners has earned Bonanza this prestigious place in one of the top brokerage houses
in the country. Client -focused philosophy backed by memberships of all principal Indian Stock
and Commodity Exchanges makes Bonanza stand apart from its competitors and a preferred
service provider in the industry for value-based services.

To add to our ever-growing achievements, a study by Dun and Bradstreet has rated
Bonanza as the SIXTH largest broking house in terms of equity terminal listings in the country.
If this is not enough, Bonanza Portfolio Ltd was recently nominated amongst the Top 3 Retail
Financial Advisors of the country in an event conducted by CNBC-TV18 and OptiMix Financial
Advisor Awards 2008. Also Bonanza has been awarded by BSE the "Major Volume driver for
the year 2004-2005, 2006-2007 and 2008-2009".

22
MILESTONES:

1. India’s NO.1 valuable financial advisory and stock broking company- as per business
leadership award 2012 organized by the India Leadership Conclave and Indian Affairs
Magazines.
2. Ranked 2nd by UTI MF & CNBC TV 18 Financial Awards 2009 in the category Best Financial
Advisor- Retail.
3. Nominated among the Top 3 for the "Best Financial Advisor Awards 09" in the category of
National Distributors – Retail instituted by CNBC-TV18 and OptiMix.
4. Awarded by BSE Major Volume Driver 04-05, 06-07, 07-08

5. 4th in terms of Trading terminals for the year 2010 - 2011.

6. 5th largest in terms o no. of offices for the year 2010-2011

7. Top Equity Broking House in terms of branch expansion for 2008*.

8. 3rd in terms of Number of Trading Accounts for 2008*.
* As per the survey by DUN & BRADSTREET.

CORPORATE TIE UPS

The company has Corporate Tie ups with Birla Sunlife ,Bajaj Allianz, ICICI Prudential, SBI ,
Aviva , Kotak Mahindra and Reliance for Life Insurance and General Insurance.

In General Insurance, Bonanza provides Insurance for Motor, Health, Travel,

Housekeeper, Shopkeeper, Marine, Personal and Group Insurance.

23
3.2 REASONS TO CHOOSE Bonanza Portfolio LTD .

EXPERIENCE
Bonanza Portfolio ltd has more than eight decades of trust and credibility in the Indian stock
market. In the Asia Money broker’s poll held recently, SSKI won the ‘India’s best broking house
for 2004 award. Ever since it launched Sharekhan as its retail broking division in February 2000,
it has been providing institutional-level research and broking services to individual investors.
TECHNOLOGY
With our online trading account you can buy and sell shares in an instant from any PC
with an Internet connection. You will get access to our powerful online trading tools that
will help you take complete control over your investment in shares.

ACCESSIBILITY
Sharekhan provides ADVICE, EDUCATION, TOOLS AND EXECUTION services for
investors. These services are accessible through our centers across the country (over
250 locations in 123 cities), over the internet (through the website www.sharekhan.com) as well
as over the voice tool.

KNOWLEDGE
In a business where the right information at the right time can translate into direct profits, you get
access to a wide range of information on our content-rich portal, sharekhan.com. You will also
get a useful set of knowledge-based tools that will empower you to take informed decisions.
CONVENIENCE
You can call our Dial-N-Trade number to get investment advice and execute your transactions.
We have a dedicated call-centre to provide this service via a toll free number from anywhere in
India.
CUSTOMER SERVICE
Our customer service team will assist you for any help that you need relating to transactions,
billing, Demat and other queries. Our customer service can be contracted via a toll-free number,
email or live chat on sharekhan.com.

24
INVESTMENT ADVICE
Sharekhan has dedicated research teams for fundamental and technical research. Our analyst
constantly track the pulse of the market and provide timely investment advice to you in the form
of daily research emails, online chat, printed reports and SMS on your phone.

BENEFITS
 Secure Order by Voice Tool Dial-n-Trade.
 Automated Portfolio to keep track of the value of your actual purchases.
 Personalized Price and Account Alerts delivered instantly to your cell phone & email
address.
 Special Personal Inbox for order and trade confirmations.
 On-line customer service via web chat.
Anytime Ordering

3.3 SERVICE PROVIDED BY BONANZA

1. Mutual Funds
2. Insurance
 Life Insurance
 General Insurance
3. PMS
4. Share Broking
5. IPO
6. Currency Derivatives
7. Share Broking
8. Commodity Broking

25
 CHAPTER 4

ANALYSIS
AND
INTERPRETATION

26
4.ANALYSIS AND INTERPRETATION OF DATA

4.1 Financial Literacy Model

4.1.1Banking Variable

4.1.1 TABLE FOR BANKING VARIABLE

Frequency

Aware 82
Not Aware 18

Total 100

Inference

From the above figure we can observe that majority of respondents have awareness in banking
field. In this 82% of respondents have aware about banking and 18% of respondents not have
more aware about banking industrial.

27
4.1.1 FIGURE FOR BANKING VARIABLE

Banking knowledge Level

Not Aware
18%

Aware
82%

28
4.1.2 Insurance Variable

4.1.2 TABLE FOR INSURANCE VARIABLE

Frequency

Aware 58

Not Aware 42

Total 100

29
 Insurance Variable

Not Aware
42%

Aware
58%

4.1.2 FIGURE FOR INSURANCE VARIABLE

Inference:

From the above figure we can observe that majority of respondents not have awareness in
insurance field properly .In this 58% of respondents have aware about insurance and 42% of
respondents not have more aware about insurance industrial.

30
4.1.3 LOAN VARIABLE

4.1.3 TABLE FOR LOAN VARIABLE:

Frequency

Aware 38
Not Aware 72

Total 100

Inference:

From the above figure we can observe that majority of respondents have awareness in Loan
borrowing field .In this 38% of respondents have aware about borrowing and 72% of
respondents not have more aware about borrowing from reliable sources.

31
 4.1.3 FIGURE FOR LOAN VARIABLE:

LOAN BORROWING

Aware
35%

Not Aware
65%

32
 4.1.4 SHARES

4.1.4 TABLE FOR AWARENESS ON SHARES :

Frequency

Aware 58

Not Aware 42

Total 100

Inference:

From the above figure we can observe that not that much majority of respondents have
awareness in shares field properly .In this 58% of respondents have aware about shares and 42%
of respondents not have more aware about shares.

33
4.1.4 FIGURE FOR AWARENESS ON SHARES

SHARES

Not Aware
42%

Aware
58%

34
4.1.5 MUTUAL FUND VARIABLE

4.1.5 TABLE FOR MUTUAL FUND VARIABLE

Frequency

Aware 33

Not Aware 67

Total 100

Inference:

From the above figure we can observe that majority of respondents NOT have awareness in Mutual
Funds field .In this 33% of respondents have aware about Mutual funds and remaining 67% of
respondents not have more aware about Mutual funds.

35
 4.1.5 FIGURE FOR MUTUAL FUND VARIABLE

Mutual Fund

Aware
33%

Not Aware
67%

36
4.1.6 DEBENTURES AND BONDS VARIABLES

4.1.6 TABLE FOR DEBENTURES AND BOND VARIABLES :

Frequency

Aware 9

Not Aware 91

Total 100

Inference:

From the above figure we can observe that majority of respondents not have awareness in
Debentures & Bonds. In this only 9% of respondents have aware about Debentures & Bonds and
remaining 81% of respondents not have more aware about Debentures and Bonds.

37
4.1.6 FIGURE FOR DEBENTURES AND BOND VARIABLES

Debentures

Aware
9%

Not Aware
91%

38
 4.1.7 FIANANCIAL LITERACY MODEL
We consider all variable based on respondents’ Awareness as knowledge level of individual. We
give equal weightage on their subsets variable as pre-determinate. But is not aware for
respondents on survey level.

The variable are

 Banking
 Insurance
 Loan
 Mutual fund
 Shares
 Debentures &Bonds

Financial Literacy = 0.167(Banking) + 0.167(Insurance) + 0.167(Loan) + 0.167(Mutual

fund) + 0.167(Shares) +0.167(Bonds)

*1/6 variable =0.167 & * “Aware = 1 and Not aware = 2” on weightage

On this we treat all 6 variables as equal weightage for finalizing financial literacy level of
sample. On these a sample getting more than 80% consider as Financial Literacy person or less
than 80% consider as not have Financial Literacy . On considering all awareness level of subset
of financial literacy Model. We concluded that financial literacy of individual (sample)

39
4.1.7 TABLE FOR FINANCIAL LITERACY MODEL

Frequency

Aware 15

Not Aware 85

Total 100

Inference:

From the above figure we can observe that even though respondents deal with these 6
variables only 15% of respondents have financial inclusion on all 6 variables and majority of
respondents i.e. 85% does not have financial inclusion in all 6 variables.

40
4.1.7 FIGURE FOR FINANCIAL LITERACY MODEL

Financial Literacy Model

Aware
15%

Not Aware
85%

41
PERCENTAGE ANAYLSIS

GENDER

4.1.8: TABLE FOR GENDER OF RESPONDENTS

DEMOGRAPHIC FACTOR
Percentage (%)

Male 74

Female 26

Total 100

Inference
Out of 100 samples, 74 are male respondents and 26 are female respondents

42
4.1.8 FIGURE FOR GENDER OF RESPONDANTS

GENDER OF RESPONDANTS

FEMALE
24%

MALE
76%

43
AGE

4.1.9 TABLE FOR AGE OF RESPONDENTS:

DEMOGRAPHIC FACTOR Percentage (%)

18-25 3

26-30 43

31-35 32

36-55 10

55& above 12

Total 100

Inference:

Out of 100 samples 3% are in the age group of 18-25, 43% are in the age group of 26-30 ,
32% are in the age group of 31-35, 10% are in the age group of 36-55 and 12% are in the age
group of above 55. The table shows most of the respondents are in age group of 26-30.

44
 4.1.9 FIGURE FOR AGE OF RESPONDENTS

AGE OF RESPONDENTS

43

32

12
10

18-25 26-30 31-35 36-55 55 & above

45
SALARY

4.1.10 TABLE FOR SALARY OF RESPONDENTS

Salary Range Percentage (%)

Below 60000 5

60001-120000 10

120001-300000 70

300001-600000 10

600001 & above 5

Total 100

Inference:

Out of 100 samples 5% are getting salary below 60,000 per year, 10% are getting salary
between 60,001 to 1,20,000 per year, 70% are getting salary between 1,20,001 to 3,00,000 per
year , 10% are getting salary between 3,00,001 to 6,00,000 per year , 5% are getting salary above
6,00,000. “This shows most of them are earning between 1,20,001 to 3,00,000”.

46
 4.1.10 FIGURE FOR SALARY RANGE OF RESPONDENTS

Salary Range
80

70
70

60

50

40
SALARY

30

20

10 10
10
5 5

0
below 60000 60001-120000 120001-300000300001-600000 600001 &
above

47
EDUCATIONAL QUALIFICATION

4.1.11 Table for Educational Qualification of Respondents

Percentage (%)

Professional Degree 7

Bachelor Degree 61

Master Degree 23

Others 9

Total 100

Inference:

Out of 100 respondents 7% are professional degree holders , 61% are bachelor degree holder ,
23% are master degree holders and 9% are other degree holders.

48
4.1.11 Figure for Educational Qualification of Respondents

Educational Qualification of Respondents

professional
Others Degree
9% 7%

PG
23%
UG
61%

49
FAMILY EXPENSES RECORD MAINTENANCE

4.1.12 Table For Record Maintenance of Respondents:

Percentage (%)

YES 2
NO 98

Total 100

Inference:

Out of 100 respondents only 2% are maintaining the record for home’s expenses and
majority i.e 98% are not maintaining the record for home’s expenses.

50
 4.1.12 Figure for Record Maintenance of Family Expenses

Record maintenance
120

100 98

80

60

40

20

2
0
YES NO

51
SAVING PERCENTAGE

4.1.13 TABLE FOR SAVING PERCENTAGE OF RESPONDENTS:

Percentage (%)

Upto 10% 5
10-20% 9
20-30% 62
30-40% 24
Above 40% 0
Total 100

Inference:

Out of 100 respondents 5% are saving up to 10% from their monthly income, 9% are
saving up to 10% -20% from their monthly income, 62% are saving up to 20%-30% from their
monthly income, 24% are saving up to 30%-40% from their monthly income, and no one saves
above 40% from their monthly income.

52
 4.1.13 Figure for Savings Percentage of Respondents

SAVINGS PERCENTAGE
70

62

60

50

40

SAVINGS PERCENTAGE

30

24

20

10 9

0
0
Upto 10% 10-20% 20-30% 30-40% Above 40%

53
 METHOD OF SAVINGS OF RSPONDENTS

4.1.14 Table for Method of Savings :

Percentage (%)

On consumer goods 27

Keep it in cash 10

Invest it in business 40

Invest in jewellery 15

Others 6

Total 100

Inference:

Out of 100 respondents 27% are saving in the method of consumer goods , 10% are
saving in the method of cash, 40% are investing in business, 15% are investing in jewellery, and
6% are using other method of saving.

54
 4.1.14 FIGURE FOR METHOD OF SAVING OF RESPONDENTS

Method of Savings of Repondents

40

35

30

25

20

15

10

0
on consumer keep in cash invest in invest in others15
goods business jewwellary

55
 4.1.15 Financial literacy increasing of Indian people, increase make financial
opportunities on fund from people

Percentage (%)

Agree 100
Not Agree 0
Total 100

Inference:

Out of 100 respondents whole 100 respondents are agreed with the fact that financial
literacy increasing of Indian people, increase make financial opportunities on fund from people.

56
4.1.15 Figure for Financial literacy increasing of Indian people, increase make financial
opportunities on fund from people

Increase of Financial Literacy Increase make

financial fun from people

Agree
Not Agree

57
 4.1.16 Table for Willing to learn financial literacy of respondents

Percentage (%)

Willing 97
Not Willing 3

Total 100

Inference:

Out of 100 respondents 97% of the people are willing to learn financial literacy and
3% of the people are not willing to learn financial literacy.

58
4.1.16 Figure for willing to learn Financial literacy by Respondents

Willing To Learn Financial Literacy

Not Willing
3%

Willing
97%

59
 HOLDING PERIOD OF RESPONDENTS

4.1.17 Table for Holding Period of Respondents

Percentage (%)

Less than 3 Months 27

4 to 12 Months 38

1 to 2 Year 11

2 to 3 Year 16

Above 3 year 8

Total 100

Inference:
Out of 100 respondents 27% of the respondents are having a holding time less than 3
months. 38% of the respondents are having an holding between 4-12 months, 11% of the
respondents are having a holding time of 1 to 2 year, 16% of the respondents have an holding
time of 2 to 3 year and 8% having an holding time of above 3 years.

60
 4.1.17 Figure for Holding Period of Respondents

Holding period of Respondants

Above 3year
8%
2to3year less than 3months
16% 27%

1to2year
11%

4to12months
38%

61
 CHAPTER 5

SUMMARY
AND
CONCLUSION

62
5.1 ESTIMATION

In this sample study for 100 people 85 are not financially literate.

100 people savings amounts to Rs. 27,10,500.

Per head 27, 10,500/100 = Rs. 27,105 per individual respondent saving.

So for Indian population 1,210,000,000= 1,210,000,000*27,105= Rs. 32797.05 billion

So 32797.05*85% = Rs. 27877.50 billion

Inference

Thus estimating, we able know in India, at 85% not financial literate individual investment /
saving for per year nearly coming 27877.50 billion

63
5.2 FINDINGS

 From this study we came to know in Chennai there is 15 %of people are financial
literate, other 85 % of people are not very much aware about the financial products in
current trend
 In this study, find that out of respondents most of us are using banking product ,but only
82 % of person only aware about current product from banking industries and other 18%
of person only using this but not have aware about banking product
 In this study, find that Most of us are using insurance product ,but only 58% of person
only aware about current product from insurance industries and other 42% of person
using this but not have aware about insurance product
 In this study , find that In loan (borrowing),38% of people have aware about best
utilization of loan products and 72% not having aware about loan products
 In this study , find that in mutual fund , only 33% of people have aware about best
utilization of mutual funds and risk & return and 67% not having aware about mutual
funds
 In this study , find that in shares , only 58% of people have aware about best utilization of
buying and selling of shares and risk & return and 42% not having aware about shares
 In this study ,find that , 9% of people have aware about debts and bonds and other
remaining 91% of people not have aware about debts and bonds
 In this study, find that , most of active investor in age group of 26 to 30 in Chennai
 In this study , it is found that most active investor in the market in the salary group of
120000 to 300000
 In this study ,we find most active investor in the market in bachelor degree group people
only
 In this study , we able to find most of us in investor saving 20% to 30 % for investing
 In this study , most of us are agreed “Financial literacy increasing of Indian people,
increase make financial opportunities on fund from people”
 In this study , Most of us ready to learn about latest financial product in industries , but
3% of people are not willing for learning

64
 In this study , we able to find every investor have his own strategic for investment
holding time
 In this study , Estimated in Chennai from 100 people , average of rupees 27,105 its being
invested by every individual by annually
 In this study , Estimated in India from 1.21 billion people , average of rupees 27,105 its
being invested by every individual by annually.
 In this study , we able know in India, individual investment / saving (who financially not
fully literate) for per year nearly amounts to Rs. 27877.50 billion

65
5.3 SUGGESTION

 It is suggested that the Indian corporate has to concentrate on financial literacy to public
to make great financial opportunities with very low cost of capital
 In international level , India has strong potential economy in future , With strong saving
attitude of every individual in Indian make economy more stable in future
 Awareness is to be created about new issue and acquiring funds, among the general
public, then people will invest in all financial product.
 For making awareness suitable media should be selected. most preferable media is
Television
 Even though all of them generally aware about debentures product , But many of
respondents not know real benefits of debentures in current trend so corporate people
need to make aware on investors

66
5.4 CONCLUSION

From study “An Empirical analysis on Financial Opportunities for Indian Corporate based on
Financial Literacy in Chennai”. We came to know in Chennai there are only 15% have financial
literacy on financial products. On that remaining 85%%, all are ready to learn about the financial
products and its opportunities. On this Indian companies have great opportunities for making
financial inclusion for acquiring funds from public. But need to make a new marketing strategic
for aware them about real potential of financial market product in current financial markets. On
also make awareness about risk involved in markets and highest return acquiring from latest
financial products. In this research we able find Indian economy have great opportunities from
attitude of Indian people. Indian people have strong attitude on saving money for future and
believe in financial uncertainty. And from the research we suggest the Indian corporate and
government to concentrate on financial literacy of people in our India. It does create more
opportunities to Indian economy. It’s make financial stability on our country. And also effective
money circulation on our country to all sector in our economy. It’s also make economical
development in our country. And this research needs to conduct in national level as census
(population) for accurate. Make real strategic for aware the public about the current financial
product. Its lead strong financial opportunities to Indian corporate.

67
 BIBLIOGRAPHY

http://en.wikipedia.org/wiki/Financial_literacy

http://www.pollinateproject.org/

68
 ANNEXURES
Questionnaire
Gender: Male female

Age: 18 -25 26-30 31-35 36-55 above 55

Marital status: Single Married Divorced

Salary: Below 60,000 60001 to 120000 120001 to 300000

300001 to 600000 Above 600000

Educational Qualification (if “others” please mention on the underline given below)

Professional degree Bachelor degree Master degree others ________

1) Is your family keeping records of income and expenditures? a. Yes b. NO

2) How much percent of salary do you keep towards for savings? (If “not have saving” leave
this)

a. Up to 10 % b. 10% to 20% c. 20% to 30% d. 30% to 40% e. Above 40%

3) How many months’ expenses can you cover from your savings for emergency?

a. 1-2 months b. 3-4 months c. 5-6 month’s d. 7 or more months’ e. I don’t have savings
4) Are you having any money left at the month end? If “yes” then how do you use it?
a. On consumer goods b. Keep it in cash c. Invest it in business
d. Invest in jewellery e. Others (mention here) ______________
5) Are you pan card holder? a. Yes b. No

6) Are you an investor on any stock of Indian companies? a. Yes b. No

7) Have you invested in MF? a. Yes b. No

69
8) Are you holding any debenture, bonds, commercial paper, treasury bills of any Indian
Companies? a. Yes b. No

9) Do you have any life insurance policy? a. Yes b. No

Knowledge and attitude on finance

1) Bank

Rate your knowledge about these services’ from “1 to 5”

Saving account 1 2 3 4 5

Fixed deposit 1 2 3 4 5

Recurring deposit 1 2 3 4 5

Current account 1 2 3 4 5

Mobile banking 1 2 3 4 5

online banking 1 2 3 4 5

RTGS 1 2 3 4 5

Debit and credit card 1 2 3 4 5

Standing instruction on payment 1 2 3 4 5

& receivables

2) Insurance

Rate your knowledge about these insurance from “1 to 5”

Life insurance 1 2 3 4 5

Health or medical insurance 1 2 3 4 5

Group insurance 1 2 3 4 5

Vehicle insurance 1 2 3 4 5

70
Retirement plan (pension plan) 1 2 3 4 5

Deduction allowable on Income 1 2 3 4 5

tax for payment of Life
Insurance Premium (Sec. 80C).

3) Loan

Rank them “from 1 to 5”: best source for getting loan

Rate your knowledge about these loan from “1 to 5”

Interest free 1 2 3 4 5
Educational
Loan

Personal Surety 1 2 3 4 5
loan

Reverse 1 2 3 4 5
mortgage

Required 1 2 3 4 5
documents

Government 1 2 3 4 5
subsidy on loan
for
entrepreneurs

Mutual fund

Rate your knowledge about these loan from “1 to 5”

System of MF 1 2 3 4 5

Tax benefit on 1 2 3 4 5
Section 115R

71
Pension plans 1 2 3 4 5
in mutual fund

SIP 1 2 3 4 5
(systematic
investment
plan) in
mutual funds

4) Shares (Stocks)

Rate your knowledge about these loan from “1 to 5”

Awareness level 1 2 3 4 5
on capital
market

How much you 1 2 3 4 5

aware of risk
level in capital
market

Analysis tool in 1 2 3 4 5
capital market

Mobile stock 1 2 3 4 5
trading

Debenture and Bonds

Rate your knowledge about these loan from “1 to 5”

Gilt edged 1 2 3 4 5
market

Benefit of 1 2 3 4 5
government
security bonds

72
Risk free bonds 1 2 3 4 5

Exemptions of 1 2 3 4 5
bonds on
Income tax

10) If you think, you are not financial literate? Are you ready to learn about latest strategic of
investment?

Yes No

11)Our company is ready to literate you about investment strategies, then are you ready to invest
on Indian companies? Yes No

12)If you investing in companies, which form strategies you follow

a). below 3 months holding b). 4 to 12 months c). 1 to 2 year d). 2 to 3 year e). Above 3 year

73