A Dissertation on

IMPACT OF DEMONETIZATION ON BANKING HABITS

WITH SPECIAL REFRENCE TO ONLINE BANKING IN
INDIA
Submitted to
Amity University Madhya Pradesh

In partial fulfillment of the requirements for the award of the degree of

Bachelor of Commerce (Honors)

In
Finance & Marketing

By
SIDDARTHA GABRA

Under the guidance of

Ms. CHHAVI AGRAWAL
Assistant Professor

AMITY BUSINESS SCHOOL

AMITY UNIVERSITY MADHYA PRADESH

April 2019
 Amity Business School

DECLARATION

I Siddartha Gabra, student of B.Com. (H) hereby declare that the dissertation titled “Impact of
Demonetization on banking habits with special reference to online banking in India” which
is submitted by me to Amity Business School, Amity University Madhya Pradesh, in partial
fulfillment of requirement for the award of the degree of Bachelor of Commerce (H) has not been
previously formed the basis for the award of any degree, diploma or other similar title or
recognition.

Gwalior

Date Siddartha Gabra

i
 Amity Business School
CERTIFICATE

It is to certify that the dissertation titled “Impact of Demonetization on banking habits with
special reference to online banking in India” which is submitted by Mr. Siddartha Gabra to
Amity Business School, Amity University Madhya Pradesh, in partial fulfillment of the
requirement for the award of the degree of Bachelor of Commerce (H) is an original contribution
with existing knowledge and faithful record of work carried out by him under my guidance and
supervision.

To the best of my knowledge this work has not been submitted in part or full for any Degree or
Diploma to this University or elsewhere.

Gwalior
Date
Ms. Chhavi Agarwal
Asstt. Professor

HOI / HOD

Amity Business School,

Amity University Madhya Pradesh, Gwalior

ii
 ACKNOWLEDGEMENT
I extend my deep sense of gratitude and sincere thanks to Prof. (Dr.) Anil Vashisht, Director,
Amity Business School for allowing me to take up this dissertation. I would also like to thank
Ms. Chhavi Agrawal, Asstt. Professor-ABS for continuous support in my dissertation. I also thank
my parents for their continuous support, understanding and patience without whose support and
understanding this endeavour would never have been fruitful. I also thank all my friends for
helping me out in completing this dissertation and helping me in solving various problems
encountered during the progress of this dissertation.

SIDDARTHA GABRA

iii
 ABSTRACT
The objective of this study is to investigate about the impact of the demonetization over the
banking habits with special reference to online banking.

Demonetization is the act of stripping a currency unit of its status as legal tender. It is a process of
removing a currency from general usage or circulation of money in a country. Demonetization is
an act where the old unit of currency gets retired and replaced with a new currency unit. It can also
be considered as withdrawal of a specific currency from market.

To check undisclosed black money, corruption and fake currency the Government of India on the
8 November 2016 announced demonetization of high denomination currency notes Rs 500 and
Rs1000. A new redesigned series of Rs 500 and Rs 2000 banknote is in circulation since 10
November 2016.

Banking can be defined as the business activity of accepting and safeguarding money owned by
other individuals and entities, and then lending out this money in order to earn a profit.

In this paper I want to discuss the impact of demonetization on the banking habits with special
reference to online banking.

iv
 CONTENTS
Front page
Declaration i
Certificate ii
Acknowledgement iii
Abstract iv
Contents v
List of figures vi-vii
List of tables viii
Chapter 1: Introduction
1.1 Demonetization History and Background in India.......................................... 3-4
1.2 Facts about Demonetization 1946, 1978 And 2016………………………… 4-6
Chapter 2: Literature Review
2.1 literature review……………………………………………………………... 7-10
Chapter 3: Research Methodology
3.1 Methodology………………………………………………………………... 11-12
Chapter 4: Results And Discussions
4.1 Discussions………………………………………………………..……….... 13-14
4.2 Data Analysis…………………………………………..………………….... 15-40
Chapter 5: Conclusion And Future Prospects
5.1 Conclusion…………………………………………………………………... 41-42
5.2 Future Prospects…………………………………………............................... 42
Chapter 6: Summary
6.1 Summary 43
References
Appendix
Questionnaire
Plagiarism Report

v
 LIST OF FIGURES
Figure 4.1 Gender of Respondents Pg. 15

Figure 4.2 Age of Respondents Pg. 16

Figure 4.3 Education Level of Respondents Pg. 17

Figure 4.4 Occupation of Respondents Pg. 18

Figure 4.5 Using Internet Since Pg. 19

Figure 4.6 Use of Internet Every Day Pg. 20

Figure 4.7 Respondents are Aware About Pg. 21

Figure 4.8 Frequency of Usage of Services before Demonetization Pg. 22

Figure 4.9 Frequency of Usage of Net Banking before Demonetization Pg. 22

Figure 4.10 Frequency of Usage of Mobile Banking before Demonetization Pg. 23

Figure 4.11 Frequency of Usage of Payment Wallets before Demonetization Pg. 23

Figure 4.12 Frequency of Usage of Cryptocurrency before Demonetization Pg. 24

Figure 4.13 Frequency of Usage of Online Trading before Demonetization Pg. 24

Figure 4.14 Frequency of Usage of Online Insurance Purchase before Pg. 25

Demonetization
Figure 4.15 Frequency of Usage of Services after Demonetization Pg. 26

Figure 4.16 Frequency of Usage of Net Banking after Demonetization Pg. 26

Figure 4.17 Frequency of Usage of Mobile Banking after Demonetization Pg. 27

Figure 4.18 Frequency of Usage of Payment Wallets after Demonetization Pg. 27

Figure 4.19 Frequency of Usage of Cryptocurrency after Demonetization Pg. 28

Figure 4.20 Frequency of Usage of Online Trading after Demonetization Pg. 28

vi
Figure 4.21 Frequency of Usage of Online Insurance Purchase after Pg. 29
Demonetization
Figure 4.22 Since how many years respondents are using these service Pg. 30

Figure 4.23 Which Attribute of the Bank is Valued Most by Respondents Pg. 31

Figure 4.24 Which Factor Promotes to Use New Technologies? Pg. 32

Figure 4.25 Usage of Technology Pg. 33

Figure 4.26 Frequency of Usage of Services per month before Demonetization Pg.34

Figure 4.27 Frequency of Usage of Branch Banking per month before Pg. 34
Demonetization
Figure 4.28 Frequency of Usage of ATM per month before Demonetization Pg. 35

Figure 4.29 Frequency of Usage of Internet Banking per month before Pg. 35
Demonetization
Figure 4.30 Frequency of Usage of Telephone Banking per month before Pg. 36
Demonetization
Figure 4.31 Frequency of Usage of Mobile Banking per month before Pg. 36
Demonetization
Figure 4.32 Frequency of Usage of Services per month after Demonetization Pg. 37

Figure 4.33 Frequency of Usage of Branch banking per month after Pg. 37
Demonetization
Figure 4.34 Frequency of Usage of ATM per month after Demonetization Pg. 38

Figure 4.35 Frequency of Usage of Internet Banking per month after Pg. 38
Demonetization
Figure 4.36 Frequency of Usage of Telephone Banking per month after Pg. 39
Demonetization
Figure 4.37 Frequency of Usage of Mobile Banking per month after Pg. 39
Demonetization
Figure 4.38 Attitude of Bank employees during demonetization period Pg. 40

vii
 LIST OF TABLES

Table 4.1 Gender of Respondents Pg. 15

Table 4.2 Education Level of Respondents Pg. 17

Table 4.3 Respondents are Aware About Pg. 21

viii
 CHAPTER-1
INTRODUCTION
On 8 November 2016 midnight, the Government of India reported the demonetization of every
one of the 500 and 1000 category monetary certificates of the Mahatma Gandhi Series. The
legislature guaranteed that the activity would shorten the shadow economy and get serious about
the utilization of unlawful and fake money to support illicit movement and fear based oppression.
This plan greatly affects the organizations, average citizens, and monetary establishments
alongside multi-assorted mechanical foundation of India. Demonetization speaks to considerably
more than destabilization; it has struck a body blow on the monetary action in India. While the
defenders of demonetization may have had great expectations, the anguish it has caused to a great
many Indians is baseless. Since Rs500 and Rs1000 notes make up about 86% of the aggregate
money available for use in India, particularly in the immense rustic regions, the agony to what
people may understanding if 86% of their blood was expelled from their bodies. The poor were
taken thoroughly flat footed and the managing an account foundation in the hinterland is fairly
constrained. The tech class has poor presentation to basic social hypothesis with a specific end
goal to comprehend the effect on the ground. There is a compassion deficiency.

The term demonetization isn't new to the Indian economy. The most elevated category note at any
point printed by the Reserve Bank of India was the Rupees 10,000 note in 1938 and again in 1954.
Be that as it may, these notes were demonetized in January 1946 and again in January 1978, as
indicated by RBI information. The objective was to battle tax avoidance by "dark cash" held
outside the formal monetary framework. In 1946, the pre-autonomy government trusted
demonetization would punish Indian organizations that were disguising the fortunes amassed
providing the Allies in World War II. It ended up becoming more like a money change drive as
the legislature couldn't accomplish quite a bit of benefit in the destitute economy around then. In
1978, the administration demonetized banknotes of 1000, 5000 and 10,000 rupees, again in the
expectations of checking fake cash and dark cash. The Wanchoo Committee had prescribed the
administration to pull back the cash in light of the fact that the nation was experiencing a
troublesome period In 2012, the Central Board of Direct Taxes had suggested against

1
demonetization, saying in a report that "demonetization may not be an answer for handling dark
cash or economy, which is to a great extent held as benami properties, bullion and adornments."

Demonetization is an apparatus to fight Inflation, Black Money, Corruption and Crime, demoralize
a money subordinate economy and help exchange. Its strategy of the legislature by forbidding
Rupees 500 and 1000 cash notes has impacted all the side of the economy. Its impact on Banking
Sector is critical as Bank is a middle for directing the lawful delicate cash to all needs of the general
public. The greatest recipients of demonetization are Banks. It influenced the banks to
acknowledge the stores with no cost of advancement and radically expanded liquidity to position
of the banks. The present investigation is made out of accessible writing on post demonetization.
It depicted the impact of demonetization on Banking Sector. It included the current choice of the
focal government on Demonetization and its steady impact on Indian saving money part.

Banks are center piece of any economy. They channelized the cash to the smooth working of
various segments. Activities of Green Banking, made the banks to change regular keeping money
administrations into present day saving money administrations. The items and administrations are
offered through electronic gadgets with the assistance of web. Presently a day, bank
administrations are provided food at the fingertip of clients. Surgical Strike on Black Money called
'Demonetization' got tremendous changes every one of the segments of the nation. Banks are not
remarkable from the impact of Demonetization and it made vibrations in the tasks and additionally
items and administrations of Banks. It made more prominent request to computerized keeping
money administrations where cashless exchanges are organized. Everyday activities of Banks are
influenced and discovered intense in Management of liquidity and Employees. It made more
prominent effect on Management of liquidity and its request brought by clients up in trading of
their restricted cash notes while limiting danger and amplifying nature of administration. In the
meantime meeting the direction of Reserve Bank of India was testing. Demonetization has irritated
the bank tasks and made the representatives to work under unqualified worry in expanded working
hours of a day. A large portion of the banks were not ready to release other saving money
administrations while trading the prohibited cash notes. Henceforth, the present examination is
made to make sense of the impact of demonetization on keeping money segment. It grandstands
post demonetization impact on banks and its activities.

2
1.1 Demonetization History and Background in India
 This is not the first time when Indian currency is demonetized in India.
 The first instance was in 1946 and the second in 1978 when an ordinance was promulgated to
phase out notes with denomination of Rs 1,000, Rs 5,000 and Rs 10,000.
 The highest denomination note ever printed by the Reserve Bank of India was the Rs 10,000
note in 1938 and again in 1954. But these notes were demonetized in January 1946 and again
in January 1978, according to RBI data.
 Rs 1,000 and Rs 10,000 bank notes were in circulation prior to January 1946. Higher
denomination banknotes of Rs 1,000, Rs 5,000 and Rs 10,000 were reintroduced in 1954 and
all of them were demonetized in January 1978.
 The Rs 1,000 note made a comeback in November 2000. Rs 500 note came into circulation in
October 1987. The move was then justified as attempt to contain the volume of banknotes in
circulation due to inflation.
 However, this is the first time that Rs 2,000 currency note is being introduced.
 Bank notes in Ashoka Pillar watermark series in Rs 10 denomination were issued between
1967 and 1992, Rs 20 in 1972 and 1975, Rs 50 in 1975 and 1981 and Rs 100 between 1967-
1979.
 The banknotes issued during this period contained the symbols representing science and
technology, progress and orientation to Indian art forms.
 In the year 1980, the legend Satyameva Jayate - ‘truth alone shall prevail’ - was incorporated
under the national emblem for the first time.
 In October 1987, Rs 500 banknote was introduced with the portrait of Mahatma Gandhi and
Ashoka Pillar watermark. Mahatma Gandhi (MG) series banknotes – 1996 were issued in the
denominations of Rs 5, (introduced in November 2001), Rs 10 (June 1996), Rs 20 (August
2001), Rs 50 (March 1997), Rs 100 (June 1996), Rs 500 (October 1997) and Rs 1,000
(November 2000).
 The Mahatma Gandhi Series – 2005 bank notes were issued in the denomination of Rs 10, Rs
20, Rs 50, Rs 100, Rs 500 and Rs 1,000 and contained some additional/new security features
as compared to the 1996 MG series.

3
 The Rs 50 and Rs 100 banknotes were issued in August 2005, followed by Rs 500 and Rs
1,000 denominations in October 2005 and Rs 10 and Rs 20 in April 2006 and August 2006,
respectively.

1.2 Facts about Demonetization 1946, 1978 And 2016

Demonetization and Bank Operations

Demonetization has acquired plenty of difficulties increments to the difficulties which are as of
now looking by Banks. The impacts were here and now and long haul sees. In here and now, it
upset the banks and focused on unequivocally to complete bank activities and in long run it helped
the banks to pool the stores without acquiring of any cost. Here are four impacts of demonetization
on Banks.

1. Increase in Deposits: Demonetization has expanded the stores in Banks. Unaccounted cash as
Rs.500 and Rs.1000 were streaming to the Banks and the sizes of stores have been expanded. It
helped the banks to get the stores and increment their stores.

2. Fall in cost of Funds: In the course of recent months, the stores are expanded. It drove the
banks to keep a noteworthy piece of stores as money stores. PSU Banks have a lion share (more
than 70%) of the stores and greatest gainers of the ascent in stores, prompting lower cost of assets.

3. Demand for Government Bonds: After sharp ascent in stores on post demonetization, banks
began loaning such surplus stores to the RBI under the invert repo alternatives. PSU Banks,
especially, sent abundance subsidizes in government bonds. The arrival on bond speculation is
probably going to add 15 to 20 for every penny increment in the income of banks.

4. Sagginess in Lending: Loaning development of the banks is impressively less even after
demonetization and its effect of development in the measure of open store. Banks have endeavored
to loan the cash to the destitute gathering by lessening their financing costs, however it contracted
in the course of the most recent couple of months.

4
Results of Post Demonetization on Bank Operations

There are certain and negative aftereffects of Post Demonetization on Bank activities. Both have
impacted Banks' liquidity and productivity and workers as well. The accompanying are sure
consequences of demonetization.

1. Free flow of deposits: Banks have picked up stores considerably after demonetization which
they can contribute for enhancing their liquidity and benefit.
2. Improved digital Interface: Change in advanced devices and gear to execute bank exchanges
has kept away from money misfortune for different reasons like burglary, dacoits and
misappropriations.
3. People’s surplus at Bank: Money is a sit still resource which does not yield any wage unless
kept in a bank. Along these lines, demonetization made the general population to keep their
surplus cash in a bank to procure a type of wage.
4. Increased number of Customers: Demonetization has impacted open to come and execute
exchanges with banks. It made even a non-salary assemble individuals to visit bank and have
a record. It expanded number of record holders in banks while expanding store corpus. So also,
Demonetization has conveyed some operational issues to Banks.

It disturbed Banks’ Employees, Operational Costs and Profitability. The following are
negative influences of Demonetization.

1. Cash Reserve Requirement: 100% CRR on incremental stores implied that banks did not
acquire any enthusiasm on Rupees 3 Lakh crore of stores for about a fortnight.
2. Waived off ATM Charges: ATM charges were postponed off amid restricted note trade and
banks acquired lost Rupees 20 in each exchange.
3. Waived off Merchant Discount Rate: Banks brought about loss of 1% markdown charges
from traders on utilizing of each card exchange.
4. Non Selling of Loans: Banks were centered on trading money notes and they were not ready
to offer any advance items. This made banks to control their loaning exercises.

5
5. Reduced SMEs Sale and influence on NPAs: Amid demonetization, some SME
organizations had seen their business drop by 50-80 percent and could default in their portions
to banks. This drove the banks to consider it as NPA and influenced its level in banks.
6. Stress on Employees: Bank Employees were put under strain and extra time workplace. It
discouraged them and kept imbalanced way of life. Barely any cases were discovered where
the representatives submitted suicide because of work weight.

6
 CHAPTER-2

LITERATURE REVIEW

2.1 Literature Review

1. Manpreet Kaur (2017) directed an investigation on demonetization and effect on Cashless
Payment System. She said that the cashless framework in the economy has numerous
productive advantages less tedious, less cost, paper less exchange and so forth and he
expected that the future exchange framework in every one of the parts is cashless exchange
framework.
2. Lokesh Uke (2017) researched on demonetization and its belongings in India. He
contemplated positive and negative effect of defamation in India. The examination
depended on optional information accessible in daily paper, magazines and so forth. The
primary reason for demonetization is to kill the dark cash and reduce the debasement. He
communicated that Government of India has progressed toward becoming accomplishment
to some degree. Demonetization had negative effect for a brief length on Indian money
related markets. Yet, he said that the genuine effect will be appeared in future.
3. Sweta Singhal (2017) completed research on Demonetization and E Banking in India. It
was a contextual investigation to check the mindfulness level of individuals of provincial
territories in India about e-managing an account offices and the amount it has expanded
after demonetization. An example size of 100 was utilized with ANNOVA test to
demonstrate that rustic individuals contrast much with urban individuals in their
mindfulness level and also utilization level of e-keeping money. It was discovered that
urban male youth have higher mindfulness and use of e-managing an account. She felt that
the investigation might likewise supportive for banks to enhance their e-managing an
account offices.
4. M. Angel Jasmine Shirley (February, 2017) has contemplated about the "Effect of
Demonetization in India" in her examination paper. In the initial segment of the paper, the
effect over Indian economy had been clarified. According to the examination, the BSE
SENSEX and NIFTY 50 stock had been fall close around 6% on the precise following day.
Besides on the later on days, the nation felt extreme deficiency of the money. Besides

7
 because of absence of money general generation had diminished. Banks had insufficient
new cash for the trading of the old notes, which breakdown the general financial
framework. Additionally in the paper effect of the demonetization over world economy
likewise appeared. The primary thing that occurred after demonetization was decrement in
to general utilization of wares which brings about to diminish in the fare import.
Additionally there was a noteworthy effect over the local parts, diminishment in the
Government obligation, cultivating and angling industry, business, drop in modern yield,
dark cash, affect over fake money, hawala, bank stores, adornments and land, IT segment
and so forth. Discoveries in this segments says that, however demonetization is a decent
idea to snatch the dark cash holders, the greater part of dark cash is kept in type of land,
gold, land and so forth. "Not all dark cash is in real money, not all money is dark cash".
Individuals confront excessively inconveniency because of dishonorable arranging about
post demonetization. In addition for number of days they had invested their energy by
remaining in lines. To decrease over all negative effect of it, routes are to centering over
duty perspective, money accessibility, and disposal of escape clauses.
5. Mr. Brijesh Singh and Dr. N. Babitha Thimmaiah (January 2017) in their exploration
paper examined the impact of demonetization as far as "Won or lost". By utilizing the
auxiliary information technique i.e. articles, they had directed their examination. In the
examination report they had attempted to clarify the idea of cashless economy by taking
the reference of Woodford (2003). It isn't about how much cash you are having in your
wallet, you can pay by any of the bank card or keeping money exchange. In the examination
paper they had demonstrated the impact of demonetization in the territories like, money
surge, securities exchange, transportation, horticulture, managing an account, business, pay
impose, railroads and so on. There are no correct evidences of correct dark cash holding in
real money yet ponders demonstrate that around 8% of dark cash is held in real money. As
indicated by the Center for Monitoring the Indian Economy (CMIE), the exchange cost of
demonetization until 30th December, 2016 is evaluated around Rupees 1.28 lakh crore.
According to R. Gandhi, Deputy Governor of RBI, talking on seventh December 2016,
Rupees 11.5 lakh crore has been now stored at bank out of aggregate 14.5 lakh crore which
implies still 3 lakh crore are unidentified.

8
6. Shweta Mehta & Kruti Patel & Krupa Mehta, (2016) "Demonetization: Shifting Gears
from Physical Cash to Digital Cash," Working papers 2016-12-14, Voice of Research. In
this paper researchers aim to study the advantages and disadvantages of demonetization
and its impact on Indian banking sector. Despite major developments in paperless currency
over the past decade, physical cash remains widely used throughout the world. Therefore
one of the main motivating factors for this study is to find out the alternatives of physical
cash payments such as online bank transfer, e- clearing, e- KYC, digital locker and Unified
Payment Interface.
7. Tax Research Team (2016) in their working paper stated in favor of demonetization its
main objective is to analyze the impact of demonetization on Indian economy. This paper
shows the impact of such a move on the availability of credit, spending, and level of activity
and government finances.
8. Banerjee & Chatterjee (2016). Writes in their blog about impact of demonetization on
Indian auto industry and its impact on car market. The major factor like non cash
transactions has considered to be harder hit for the sale of car. The impact results in
inventory piling issue, increased fear among the end customer regarding changing
government norms for possession of wealth and assets.

9. Sherline T.I (December 2016) has undertaken the research on “Demonetization as a

prelude to complete financial inclusion “. The main objective of the study was to
understand the importance of demonetization as a measure of financial inclusion. Financial
inclusion mainly stands for, the delivery of the financial services at the affordable cost to
the low income segments of society. As per the report financial inclusion can boost the
savings as well as credit availability. The study shows that this move of the Government
has likely to create long term benefits. Moreover medium to long term Current account and
saving account (CASA) ratio could improve. Moreover demonetization would reduce cash
transaction the real estates, which may decrease the price of that avenues which make it
affordable to general public. Moreover the near future inflation will decrease due to less
cash transaction.

9
10. Sukanta Sarkar (2010) conducted a study on the parallel economy in India: Causes,
impacts & government initiatives in which the researcher focused on the existence of
causes and impacts of black money in India. According to the study, the main reason behind
the generation of black money is the Indian Political System i.e. Indian govt. just focused
on making committees rather than to implement it .The study concludes that laws should
be implemented properly to control black money in our economy.
11. Arpit Guru and Shruti Kahanijow (2010) researcher analysed the black money income?
Need for amendment in DTAA &ITEA and analyzed that black money is spread
everywhere in India up to a large extent International Journal of Interdisciplinary Research
in Arts and Humanities (IJIRAH) Impact Factor: 4.675, ISSN (Online): 2456 - 3145
(www.dvpublication.com) Volume 2, Issue 1, 2017 10 which continuously stashed towards
abroad in a very large amount. The researcher also identified how black money had caused
menaces in our economy and in what ways it is used.

10
 CHAPTER-3
RESEARCH METHODOLOGY
3.1 Methodology
In this study, a combination of both Primary & Secondary data has been used. Primary data is used
in the form of questionnaire method, which has been created using Google forms & distributed
among internet & social media users. In addition to it, secondary data has been used to support the
study.

OBJECTIVES OF STUDY

1. To get idea about demonetization.

2. To identify the reasons for demonetization.

3. To analyze the demonetization post effects on banking habits.

4. To know the trends and behavior change in consumers buying.

5. To know the effects of demonetization on general public.

METHODOLOGY OF THE STUDY

The research project is mainly based on primary data. Some part of investigation depends on
Secondary Sources of information. The sample size is 40 consumers. The questionnaire survey
was conducted on students based on convenience sampling method. It incorporates accessible
distributed literary works, for example, daily papers and significant government sites. The
examination goes for the degree of demonetization impact on banking habits and change in buying
behavior of consumers.

SAMPLE SIZE
40 samples were selected for the study at Gwalior. Sample consists of professionals, graduates,
post graduates etc.

11
 SAMPLE AREA
Gwalior is area from where all this information collected.

DATA COLLECTION
Both primary and secondary data were used.

i. Primary data: data regarding the topic is collected directly by interacting with the employees
by using structured questionnaire method.
ii. Secondary data: the secondary data was collected from the existing data sources, catalogues,
and internet.
SAMPLING
The questionnaire was initially pilot-tested by trainer. The results of the pilot test proved to be
satisfactory, since all the respondents found most of the questionnaire items understandable.
Nevertheless, some wording mistakes and unwanted questions were found, which were corrected
in the questionnaire’s version that was finally distributed in the field research. Respondents were
approached randomly.

MODE OF ANALYSIS
The instrument used for data collection was in the form of questionnaire. The questionnaire was
used as it facilitated the tabulation and analysis of the data to be collected. The data collected was
subjected to simple frequency distribution and percentage analysis.

12
 CHAPTER-4
RESULTS AND DISCUSSIONS

4.1 Discussion

On 8 November 2016 midnight, the Government of India reported the demonetization of every
one of the 500 and 1000 category monetary certificates of the Mahatma Gandhi Series. The
legislature guaranteed that the activity would shorten the shadow economy and get serious about
the utilization of unlawful and fake money to support illicit movement and fear based oppression.
This plan greatly affects the organizations, average citizens, and monetary establishments
alongside multi-assorted mechanical foundation of India. Demonetization speaks to considerably
more than destabilization; it has struck a body blow on the monetary action in India. While the
defenders of demonetization may have had great expectations, the anguish it has caused to a great
many Indians is baseless. Since Rs500 and Rs1000 notes make up about 86% of the aggregate
money available for use in India, particularly in the immense rustic regions, the agony to what
people may understanding if 86% of their blood was expelled from their bodies. The poor were
taken thoroughly flat footed and the managing an account foundation in the hinterland is fairly
constrained.

The term demonetization isn't new to the Indian economy. The most elevated category note at any
point printed by the Reserve Bank of India was the Rupees 10,000 note in 1938 and again in 1954.
Be that as it may, these notes were demonetized in January 1946 and again in January 1978, as
indicated by RBI information. The objective was to battle tax avoidance by "dark cash" held
outside the formal monetary framework. In 1946, the pre-autonomy government trusted
demonetization would punish Indian organizations that were disguising the fortunes amassed
providing the Allies in World War II. It ended up becoming more like a money change drive as
the legislature couldn't accomplish quite a bit of benefit in the destitute economy around then. In
1978, the administration demonetized banknotes of 1000, 5000 and 10,000 rupees, again in the
expectations of checking fake cash and dark cash. The Wanchoo Committee had prescribed the
administration to pull back the cash in light of the fact that the nation was experiencing a
troublesome period In 2012, the Central Board of Direct Taxes had suggested against

13
demonetization, saying in a report that "demonetization may not be an answer for handling dark
cash or economy, which is to a great extent held as benami properties, bullion and adornments."

Demonetization is an apparatus to fight Inflation, Black Money, Corruption and Crime, demoralize
a money subordinate economy and help exchange. Its strategy of the legislature by forbidding
Rupees 500 and 1000 cash notes has impacted all the side of the economy. Its impact on Banking
Sector is critical as Bank is a middle for directing the lawful delicate cash to all needs of the general
public. The greatest recipients of demonetization are Banks. It influenced the banks to
acknowledge the stores with no cost of advancement and radically expanded liquidity to position
of the banks. The present investigation is made out of accessible writing on post demonetization.
It depicted the impact of demonetization on Banking Sector. It included the current choice of the
focal government on Demonetization and its steady impact on Indian saving money part.

Banks are center piece of any economy. They channelized the cash to the smooth working of
various segments. Activities of Green Banking, made the banks to change regular keeping money
administrations into present day saving money administrations. The items and administrations are
offered through electronic gadgets with the assistance of web. Presently a day, bank
administrations are provided food at the fingertip of clients. Surgical Strike on Black Money called
'Demonetization' got tremendous changes every one of the segments of the nation. Banks are not
remarkable from the impact of Demonetization and it made vibrations in the tasks and additionally
items and administrations of Banks. It made more prominent request to computerized keeping
money administrations where cashless exchanges are organized. Everyday activities of Banks are
influenced and discovered intense in Management of liquidity and Employees. It made more
prominent effect on Management of liquidity and its request brought by clients up in trading of
their restricted cash notes while limiting danger and amplifying nature of administration. In the
meantime meeting the direction of Reserve Bank of India was testing. Demonetization has irritated
the bank tasks and made the representatives to work under unqualified worry in expanded working
hours of a day. A large portion of the banks were not ready to release other saving money
administrations while trading the prohibited cash notes. Henceforth, the present examination is
made to make sense of the impact of demonetization on keeping money segment. It grandstands
post demonetization impact on banks and its activities.

14
4.2 Data Analysis
1. GENDER

Figure 4.1: Gender of Respondents

The pie chart above shows that proportion of the gender differs by 30% where the females have
responded by 35% and male by 65%. The pie chart above shows that the research done on the
people doesn’t differ much in the gender which means that the report is not bias towards any side
of the gender.

Gender No of Responses Percentages (%)

Male 24 65

Female 16 35

Table 4.1: Gender of Respondents

15
2. AGE

Figure 4.2: Age of Respondents

This shows that people who have filled this questionnaire falls in the category of 18-30 age group.
Not even single person has responded from the age group above 30 category which shows that the
most of the respondents are youth. In the pie chart above the 100% of the respondents fall in the
18-30 age group category.

16
3. EDUCATION LEVEL

Figure 4.3: Education Level of Respondents

The above pie chart shows the education level of the respondents which mainly constitutes of
graduates. 92.5% of the respondents are graduates which means the research is mainly from the
perspective of students than any other profession. 2.5% of the respondents are professional and
only 5% respondents are post graduate. The education level is necessary in the research as it shows
the view of the different people with different opinions.

Profession %(percentages)

Students 92.5

Professional 2.5

Post Graduate 5

Table 4.2: Education Level of Respondents

17
4. OCCUPATION

Figure 4.4: Occupation of Respondents

The above pie chart shows the occupation of the respondents which mainly constitutes of students.
87.5% of the respondents are students which means the research is mainly from the perspective of
students than any other profession. 5% of the respondents are self-employed and 5% respondents
are employees. The occupation is necessary in the research as it shows the view of the different
sectors of the profession.

18
5. SINCE HOW MANY YEARS ARE YOU USING INTERNET?

Figure 4.5: Using Internet Since

The above pie chart shows since how many years the respondents are using internet. 40% of the
respondents are using internet since more than 10 years. 25% of the respondents are using internet
since more than 7 years but less than 10 years and 32.5% respondents are using internet since last
4 to 7 years. Only 2.5% respondents were new to internet since they have started using internet
just 4 years back. So this pie chart states that majority of respondents are aware about internet
since many years and some of them are even using internet since more than 10 years.

19
 6. How often do you use internet every day

Figure 4.6: Use of Internet Every Day

The above pie chart shows how often the respondents use internet every day. 65% of the
respondents spend more than 4 hours daily on internet. 22.5% of the respondents spend 2 to 4
hours every day using internet and 12.5% respondents use internet for 1 to 2 hours daily. So this
pie chart states that all the respondents are aware about internet and spend at least 1 hour daily on
internet.

20
7. Are you aware about

Figure 4.7: Respondents are Aware About

Table 4.3: Respondents are Aware About

21
8. What was the frequency of usage of these services? (Before
Demonetization)

Figure 4.8: Frequency of Usage of Services before Demonetization

Figure 4.9: Frequency of Usage of Net Banking before Demonetization

22
Figure 4.10: Frequency of Usage of Mobile Banking before Demonetization

Figure 4.11: Frequency of Usage of Payment Wallets before Demonetization

23
Figure 4.12: Frequency of Usage of Cryptocurrency before Demonetization

Figure 4.13: Frequency of Usage of Online Trading before Demonetization

24
Figure 4.14: Frequency of Usage of Online Insurance Purchase before Demonetization

25
9. What is the frequency of usage of these services? (After Demonetization)

Figure 4.15: Frequency of Usage of Services after Demonetization

Figure 4.16: Frequency of Usage of Net Banking after Demonetization

26
Figure 4.17: Frequency of Usage of Mobile Banking after Demonetization

Figure 4.18: Frequency of Usage of Payment Wallets after Demonetization

27
Figure 4.19: Frequency of Usage of Cryptocurrency after Demonetization

Figure 4.20: Frequency of Usage of Online Trading after Demonetization

28
Figure 4.21: Frequency of Usage of Online Insurance Purchase after Demonetization

29
10.Since how many years are you using these service?

Figure 4.22: Since how many years respondents are using these service

30
11.Which attribute of the bank do you value the most?

Figure 4.23: Which Attribute of the Bank is Valued Most by Respondents

31
12. Which factor promotes you to use the new techniques in banking?

Figure 4.24: Which Factor Promotes to Use New Technologies?

32
13. Customer level of usage of technology

Figure 4.25: Usage of Technology

33
14. How frequently did you use the following banking services per month
(Before Demonetization?)

Figure 4.26: Frequency of Usage of Services per month before Demonetization

Figure 4.27: Frequency of Usage of Branch Banking per month before Demonetization

34
 Figure 4.28: Frequency of Usage of ATM per month before Demonetization

Figure 4.29: Frequency of Usage of Internet Banking per month before Demonetization

35
Figure 4.30: Frequency of Usage of Telephone Banking per month before Demonetization

Figure 4.31: Frequency of Usage of Mobile Banking per month before Demonetization

36
15. How frequently did you use the following banking services per month (After
Demonetization?)

Figure 4.32: Frequency of Usage of Services per month after Demonetization

Figure 4.33: Frequency of Usage of Branch banking per month after Demonetization

37
 Figure 4.34: Frequency of Usage of ATM per month after Demonetization

Figure 4.35: Frequency of Usage of Internet Banking per month after Demonetization

38
Figure 4.36: Frequency of Usage of Telephone Banking per month after Demonetization

Figure 4.37: Frequency of Usage of Mobile Banking per month after Demonetization

39
16. Attitude of Bank employees during demonetization period

Figure 4.38: Attitude of Bank employees during demonetization period

40
 CHAPTER-5

CONCLUSION AND FUTURE PROSPECTS

5.1 Conclusion

Demonetization though it has created some positive and some negative impacts on different sectors
but in long run it definitely will have positive impact in controlling black money and fake money.

So the study shows that initially the demonetization effects on market were painful but this also
instigate the shopkeepers and consumers to adopt cashless means such as paytm, debit card use,
internet banking to buy goods. By adopting the cashless means economy will be sound in coming
time and Indian Economy will get benefits of early and hassle free transactions. Demonetization
effect will be positive in coming time for Indian Economy. Indian consumers will strives to learn
new ways of cashless transactions. By adopting the cashless means certainly there will be a check
on black money.

The demonetization undertaken by the government is a large shock to the economy. The impact of
the shock in the medium term is a function of how much of the currency will be replaced at the
end of the replacement process and the extent to which currency in circulation is extinguished.
While it has been argued that the cash that would be extinguished would be “black money” and
hence, should be rightfully extinguished to set right the perverse incentive structure in the
economy, this argument is based on impressions rather than on facts. While the facts are not
available to anybody, it would be foolhardy to argue that this is the only possibility. As argued
above, it is possible that these cash balances were used as a medium of exchange. In other words,
while the cash was mediating in legitimate economic activity, if this currency is extinguished there
would be a contraction of economic activity in the economy and that is a cost that needs to be
factored in while assessing the impact of the demonetization on the economy and its agents. It is
likely that there would be a spurt in the banking deposits. While interpreting the phenomenon,
however, one has to keep in mind that a large part of their deposits were earlier used for
transactional purposes. For example, if a small trader deposits 2 lakh Rupees in the Jan Dhan
account since the currency in which he held these balances in for transactional purposes has been

41
scrapped, it would be incorrect to interpret this as success of the programmer in bringing in people
who were hiding black money. Nor can they be interpreted as additional balances that the banking
sector can lend out on the same basis as earlier deposits, since the deposits now would remain in
accounts for much shorter periods that deposits based on savings would be

The success and the efficiency of implementing demonetization lies in the preparedness of
The entire economy, the government machinery and the awareness amongst the general public and
the entire political system being taken into confidence through an effective communication by all
means and by the transparent approach of the government implementing Demonetization.

5.2 Future Prospects

It is early to come to any conclusions. Few months’ results may not help to conclude long term
impact. This study has further scope to study long term impact with more specific and wider factors
covering the impact.

42
 CHAPTER-6

SUMMARY

6.1 Summary
On 8 November 2016 midnight, the Government of India reported the demonetization of every
one of the 500 and 1000 category monetary certificates of the Mahatma Gandhi Series. The
legislature guaranteed that the activity would shorten the shadow economy and get serious about
the utilization of unlawful and fake money to support illicit movement and fear based oppression.
This plan greatly affects the organizations, average citizens, and monetary establishments
alongside multi-assorted mechanical foundation of India.

Demonetization though it has created some positive and some negative impacts on different sectors
but in long run it definitely will have positive impact in controlling black money and fake money.

So the study shows that initially the demonetization effects on market were painful but this also
instigate the shopkeepers and consumers to adopt cashless means such as paytm, debit card use,
internet banking to buy goods. By adopting the cashless means economy will be sound in coming
time and Indian Economy will get benefits of early and hassle free transactions. Demonetization
effect will be positive in coming time for Indian Economy. Indian consumers will strives to learn
new ways of cashless transactions. By adopting the cashless means certainly there will be a check
on black money.

The demonetization undertaken by the government is a large shock to the economy. The impact of
the shock in the medium term is a function of how much of the currency will be replaced at the
end of the replacement process and the extent to which currency in circulation is extinguished.
While it has been argued that the cash that would be extinguished would be “black money” and
hence, should be rightfully extinguished to set right the perverse incentive structure in the economy
The success and the efficiency of implementing demonetization lies in the preparedness of The
entire economy, the government machinery and the awareness amongst the general public and the
entire political system being taken into confidence through an effective communication by all
means and by the transparent approach of the government implementing Demonetization.

43
 REFERENCES
Web Sources:

1) http://www.businessdictionary.com/definition /demonetization.html
2) http://www.investopedia.com/terms/d/demo netization.asp#ixzz4PhFwOAeH
3) http://www.investorguide.com/definition/demonetization.
4) http://www.careratings.com/upload/NewsFiles/SplAnalys
is/Effects%20of%20Demonetization%20of%20500%20a nd%201000%20notes.pdf
5) http://www.careratings.com/upload/NewsFiles/SplAnalysis/Effects%20of%20Demonetiz
ation%20of%20500%20and%201000%20notes.pdf
6) https://www.thequint.com/india/2016/11/09/rs-500-1000- notes-scrapped-narendra-modi-
a-look-back-at-1977- when-notes-were-scrapped-demonetization-blackmoney-rbi
7) http://www.livemint.com/Politics/uzZItqeHdMPHHgFJaq2BnM/A-history-of-
demonetization-in-India.html
8) http://blogs.timesofindia.indiatimes.com/paperweight/ind ia-repeatedly-ruled-out-
demonetization-in-the-1970s/
9) http://indianexpress.com/article/business/banking-andfinance/rs-500-rs-1000-notes-
declared-illegal-rbi-issues25-point-faq-explaining-move-4365032/
10) Padmini Sivarajah. (2016, Nov. 11). Demonetisation: Madurai Corporation makes record
tax collection on a single day. The Times of India. Retrieved from
http://timesofindia.indiatimes.com/city/chennai/Demonetisation-Madurai-Corporation-
makes-ecordtax-collection-on-a-single-day/articleshow/55374378.cms
11) (2016, Nov. 9), Demonetisation will benefit economy in long run: Jaitley. The Hindu
Business Line.Retrieved from
http://www.thehindubusinessline.com/economy/demonetisation-to-increase-ecosize-
enhance-revenue-base-says-jaitley/article9324312.ece
12) (2016, Nov. 12). Hyderabad civic body collects Rs 65 crore of property tax. The Indian
Express.Retrieved from
http://indianexpress.com/article/india/india-news-india/demonetisation-hyderabadcivic-
body-collects-rs-65-crore-of-property-tax-4372156/
 13) The Hindu. Retrieved from
http://www.thehindu.com/business/Economy/rbi-urges-public-to-adoptdigital-as-atms-
run-dry/article9339020.ece
14) http://www.indianeconomy.net/splclassroom/309/whatare-the-impacts-of-demonitisation-
on-indianeconomy/#sthash.wIhn787q.dpuf
15) https://en.wikipedia.org/wiki/2016_Indian_banknote_de monetisation
16) http://www.moneycontrol.com/news/economy/impactanalysisdemonitizationindia
8044821.html?utm source=ref article

Books:

17) Prelec, Drazen, and Duncan Simester. "Always leave home without it: A further
investigation of the creditcard effect on willingness to pay." Marketing letters. 12.1 (2001):
5-12.
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Savings and Debt.” Marketing Science. 17:4–28.
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to go digital.
 Appendix-1
QUESTIONNAIRE
Name of the employee…………………………..

Designation………………………………………..

Contact no…………………………………………..

1. What is your gender?

a) Male
b) Female
2. From which age group do you belong from?
a) 18-30 years old
b) 30-50 years old
c) 50-65 years old
3. What is your educational level?
a) Professional
b) Post graduate
c) Graduate
4. What is your occupation?
a) Self-employed
b) Employee
c) Student
5. Since how many years are you using internet?
a) 0-4 years
b) 4-7 years
c) 7-10 years
d) More than 10 years
6. How often do you use internet every day?
a) 1-2 hours
b) 2-4 hours
c) More than 4 hours
7. Are you aware about?
a) Net banking
b) Mobile banking
c) Payment wallets
d) Cryptocurrency
e) Online trading
f) Online insurance purchase
8. What was the frequency of usage of these services? (Before Demonetization)
a) Net banking
b) Mobile banking
c) Payment wallets
d) Cryptocurrency
e) Online trading
f) Online insurance purchase
9. What was the frequency of usage of these services? (After Demonetization)
a) Net banking
b) Mobile banking
c) Payment wallets
d) Cryptocurrency
e) Online trading
f) Online insurance purchase
10.Since how many years are you using these services?
a) 0-4 years
b) 4-7 years
c) 7-10 years
d) More than 10 years
11.Which attribute of the bank do you value the most?
a) Location
b) Trust
c) Technology
d) Security
e) Quality of service
12.Which factor promotes you to use the new techniques in banking?
a) Cost effectiveness
b) Technology savvy
c) Reduced time of transactions
d) Ease of use
13.How many of these technologies are been used by you?
a) ATM/Debit card services
b) Connected to the internet at home or work to do their financial
transactions
c) Uses E-mail
d) Online banking services
e) E-payments
f) Electronic Fund Transfer(EFTs)/NEFT/RTGS
g) Credit card services
14.How frequently did you use the following banking services per month?
(Before Demonetization)
a) Branch banking
b) ATM
c) Internet banking
d) Telephone banking
e) Mobile banking
15.How frequently did you use the following banking services per month?
(After Demonetization)
a) Branch banking
b) ATM
c) Internet banking
d) Telephone banking
e) Mobile banking
16.Rate out of 5 the attitude of bank employees during demonetization period.
a) 1
b) 2
c) 3
d) 4
e) 5